This is ZH after all, so the article is critical of MMT for the usual reasons having nothing to do with reality.
The fact is that MMT is NOT being implemented by the Biden Administration, which is continuing on the neoliberal mode of the Democratic Establishment.
And MMT doesn't recommend UBI but warns away form it as inflationary. Rather, a universal job guarantee should be implemented to create a buffer stock of employed in place of the existing buffer stock of unemployed ("reserve army of the destitute"), along with a safety net for those unable to work.
But MMT will get blamed for any failures and shortcomings anyway.
Zero Hedge
The Back Door To Universal Basic Income
Tyler Durden
Zero Hedge
The Back Door To Universal Basic Income
Tyler Durden
Also
But a bigger problem emerging is that we are now nearing that inflection point in the market when traders recall that more than 100% of all US net Treasury issuance in the past year was monetized by the Fed, and with everyone now selling - including hedge funds, CTAs, and primary dealers - it will be up to central banks to step up their intervention and prop up the bond market once again, or all those fans of MMT who have zero comprehension about how anything works in the real world, will realize just why we have been it Magic Money Tree all these years, and that without the Fed purchasing debt, there is simply no more "magic".
What is the problem exactly with the Fed purchasing US government securities? Other than heresy that is.
Even The Banks Are Bailing Now: Dealers Dump Record Amount Of Treasurys
Tyler Durden
Also
Another post supposedly about MMT that is isn't. Janet Yellen is not an MMT convert.
At least MMT is presented correctly:
If you haven’t heard about Modern Monetary Theory, or “MMT” for short, by now, you will soon. MMT is gaining traction by economists and politicians from both sides of the aisle as the economic prescription, even panacea, to cure our economic ills. Regardless of your view, MMT will have large effects on economic growth and prosperity.
“Modern Monetary Theory is a macroeconomic theory that contends that a country that operates with a sovereign currency has a degree of freedom in their fiscal and monetary policy which means government spending is never revenue constrained, but rather only limited by inflation.” – Kevin Muir
So, there you have it.
Debts and deficits do not matter as long as the Government can print the money it needs to pay for its wants.
In other words:
“Deficits are self-financing, deficits push rates down, deficits raise private savings.” – Stephanie Kelton
That is the “you can have your cake and eat it too” theory in a nutshell.
They don't get it that the MMT "manifesto" is not the Communist Manifesto but rather is similar to Martin Luther's Ninety-Five Theses, challenging institutional behavior and doctrinal orthodoxy. Heresy!
The article is a bit longish but it contains some interesting points along with its superficial criticism of MMT.
Yellen's "Go Big" MMT Plan May Disappoint
Tyler Durden
So much for the paradigm shift.
ReplyDelete“ or all those fans of MMT who have zero comprehension about how anything works in the real world, will realize just why we have been it Magic Money Tree all these years, and that without the Fed purchasing debt, there is simply no more "magic".
ReplyDeleteLOL this from the crew that thinks there exists a literal “pool of savings!” out there in their cloud cuckoo fantasy land...
Bill Mitchell's allegedly big insight, his "buffer stock" idea is nonsense. A buffer stock, e.g. of wheat or crude oil is HOMOGENOUS or at least nearly so. In contrast, the stock of unemployed people, or those on JG are nowhere near homogenous: they all have different skills and aptitudes.
ReplyDeleteThat means it is possible to run a buffer stock of wheat or oil down to near zero with a view to controlling price rises. In contrast, when it comes to the stock of unemployed people, employers run short of specific skills long before the "buffer stock" of unemployed people reaches zero, thus the price of labour starts to rise well before the stock reaches zero. Ergo the two word phrase "buffer stock" is wholly inappropriate: just one word, i.e., "stock" would do.
"In contrast, the stock of unemployed people, or those on JG are nowhere near homogenous: they all have different skills and aptitudes. "
ReplyDeleteThe buffer stock is unskilled labour hours. That is homogenous, because everybody has the same amount of unskilled labour hours available.
Differentiating the skills bit is the job of the private sector, and their opportunity for profit by hiring people away from the buffer stock.
The price of labour rising in the skilled sector is a feature not a bug. Should the level of productivity not justify that expansion then the business will fail and the people transitioned back to the unskilled sector.