Monday, November 23, 2020

MMT bleg — Scott Sumner

Scott Sumner challenges MMT economists to show him where he is wrong in this understanding of their position.

The Money Illusion
MMT bleg
Scott Sumner | Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center at George Mason University


Matt Franko said...

"Now consider this thought experiment. The Fed buys another $500 billion in Treasury bonds, paid for with zero interest base money. Is that action actually “irrelevant” because the sum of base money and publicly held debt doesn’t change?"

No its not irrelevant because it would reduce the SLR and LCR below threshold and cause a catastrophic failure in the credit and payments system... like happened in 2008 when they actually did do something like this...

Calgacus said...

He is basically an astrologer confronted by common sense, telescopes etc - and who assumes that the astrology with which he has fuddled his mind with for years and years is "reality", while what is derived from common sense, logic and observation is "mere assumption". E.g that fiscal - the state spending money in the real world doesn't really do anything. Monkeying around with tiny changes of interest rates does. Zero Interest would cause explosive hyperinflation. Yeah Right.

They're like mentally challenged children on an airplane who are given a plastic toy steering wheel, indoctrinated that it has a wi-fi connection to the cockpit and really believe they are flying the plane.

Of course it is intrinsically basically irrelevant whether the state issues the bonds called "base money" or issues the form of money called "bonds". There could be a regulation that when the number of bonds outstanding minus the total base money issued is divisible by 17, the USA invades Canada. The invasion of Canada is then due to the crazy regulation, not the financial asset issuance - the regulation/invasion could be just as well based on bird migration. Those Canadians are stealing our geeses!

Might or might not reply there. This way of not-thinking cannot be insulted enough; the practitioner/victims of it have been insulting everyone's - including whatever remains of their own - intelligence with this nonsense long enough.