Wednesday, November 8, 2023

MMT and the Deficits That Matter — Bethesda 1971

For the record, a MTT promo piece on the "left." 

Daily Kos
MMT and the Deficits That Matter
Bethesda 1971


Peter Pan said...

A link to the Daily Kos on MNE - must be good.

Matt Franko said...

Coming into the realization (at an advanced age) that Scientific abstractions of Accounting and Finance are not real is nothing to brag about..

It’s embarrassing… or should be….

NeilW said...

You'd be surprised. It's amazing how many matters of opinion in accounting are used as facts.

Only debits and credits are facts. Everything else is a matter of interpretation.

Peter Pan said...

Transfer debits must always equal transfer credits. No interpretation allowed.

Konrad said...

“This country and the Democrats have been constricted by the false premise that low deficits in and of themselves are an important goal, permitting Republicans to be predators and Democrats suckers.”

So says the “Daily Kos” blog, which has been militantly pro-Democrat and anti-white for 21 years. Indeed it is an unofficial mouthpiece for Democrats.

In reality both Democrats and Republicans use the same lie when it suits them (“The U.S. government is broke”) and they ignore the lie when it suits them. Also, both parties love to spend. Democrats want to spend endless billions for Ukraine, and Republicans want to spend endless billions to sustain the bombardment of women and children in Gaza. Both parties vote to continually increase spending every year for the Military Industrial Complex.

When Obama was in the White House, he and the US Congress established the Congressional Joint Select Committee on Deficit Reduction. On 2 Aug 2011 Obama signed the Budget Control Act of 2011, which both parties proceeded to ignore. In 2010 Obama established his National Commission on Fiscal Responsibility and Reform (aka the “Cat-food Commission”) to push for deficit reduction and tax increases.

Democrats and Republicans both play the same game for their own political reasons. Both parties falsely claim for their own political reasons that Social Security is “about to go bankrupt,” and that the USA has a “national debt crisis.”

It was the same with the “gold standard” nonsense, which the US government mercifully did away with in 1971. Politicians used this gimmick when they didn’t want to spend federal money, and ignored the gimmick when politicians did want to spend.

Konrad said...


I have a hypothesis

First, Bank of America investment strategist Michael Hartnett forecasts that the U.S. “national debt” (now at $33.6 trillion) will continue to grow by $5.2 billion each day for the next 10 years, arriving at ~ $54 trillion by 2033.

Hartnett sees two causes for this rise in the “national debt.”

Factor # 1 is a sharp increase in federal deficit spending, which jumped by $320 billion to $1.7 trillion this year, thereby “forcing” the Treasury Department to sell trillions of dollars’ worth of new T-securities.

(I say “forcing” with tongue-in-cheek, because if no one buys T-securities, then the Fed “buys” T-securities itself in a kind of digital shell game.)

Factor # 2 is the rise in annual interest payments from soaring T-security yields.

Hartnett has a point, but then he spouts garbage by claiming that the rising “national debt” means that U.S. government spending is reliant on loans, and that central banks will soon have to bail out central governments that have monetary sovereignty. This is nonsense, but such stupidity is what makes a Bank of America “expert.”

Anyway my hypothesis is that the reason why the Fed is keeping interest rates so high has nothing to do with “inflation.” Rather, it is an attempt to prop up the U.S. dollar in a global environment of increasing de-dollarization.

Treasury yields are determined by interest rates, inflation, and economic growth. These three factors influence each other. I propose that the Fed keeps interest rates high in order to keep Treasury yields high. This makes U.S. dollars seem attractive, since dollars can be used to buy lucrative T-securities.

Naturally the Fed must walk a tightrope between using high interest rates to boost Treasury yields, and not letting high interest rates crash the U.S. economy.

All indications are that if the Fed is not careful, its high interest rates will plunge us into a severe recession by next year.

Matt Franko said...

Your probably right wrt them trying to keep USD higher…

Stronger USD makes imports cheaper and leads to less “inflation “ too…

If Trump gets back in (currently ahead in polls) then he’s going to fire Powell and reverse all of this… slash rates, make US exports cheaper, etc.,,