The Deficit Myth (MMT) by Stephanie Kelton

warning just in case

Don't Get Political

MMT is just another rationalization to justify stealing someone else's property or work effort. That such foolishness is actually believed as a potential "solution" is also an indication that those who otherwise should know better are aware that exponential debt increases are approaching the "end game".

It could in theory work in an economy composed of robots who act like most economists occasionally believe. It's never going to work in one populated by actual humans beings.

@Higashiyama said:
Basically she says that with the new found understanding provided by MMT, the Federal government, not the markets, will control interests rates, for the benefit of all!

Benefit for all? Good luck wid dat.

Government control is a not a "new found" understanding. Control has been the purpose of governments from the day they were created, rarely for the benefit of all, usually for the benefit of a few. It is why there are three economic classes of people in a society.

MMT works as long as interest rates are low.

But not after that.

It only "works" in the sense that the numbers don't blow up immediately.

The caveat is that in order to keep rates low, even more money has to be created, exponentially in order to roll over even more debt - thus insuring a blowup.

MMT stands for Magic Money Tree.

Mostly tax policy, yup.

@Higashiyama said:
@derryb said "The true endgame for MMT"

Stephanie Kelton would presumably observe that the Venezuelans missed the part about using tax policy (and other measures) to mute inflation.

Just how much tax can be collected from a population earning poverty wages who are already collecting massive government subsidies? Taxes can be a policy only when the population has the money to pay them. MMT requires a capitalistic economy where there are taxable incomes and even then ever growing taxes will eventually reduce the economy to a socialist existence.

Socialism works until you run out of other people's money.

"They see Modern Monetary Theory as the answer – create money at will under the new theory that there will never be inflation." -- Martin Armstrong

MMT is the 'solution' to having run out of other people's money.

@Higashiyama said:
@derryb, you should read the book, you'd find it entertaining.

Stephanie Kelton does mention this Margaret Thatcher quote, and, of course, says that Thatcher just didn't get it. Kelton says that if you can print money, you don't need anyone else's money. You just go ahead and print. After that, if inflation begins to creep up, then you might start taxing people to mop up excess money in the system.

I've read enough about MMT to know it is a dangerous replacement for monetary discipline and restraint, as is QE. Like QE it is an effortless, temporary 'solution' for leaders without the guts to do what is right. It is just a different shoe kicking the same can a little further down the road. It only delays the day of reckoning. The longer that delay the worse the reckoning. Imagine where we would be now if we had bit the bullet and applied a proper, painful fix to the 2008 crisis.

Kelton is the one who doesn't get it. MMT simply replaces "other peoples money" with "nobody's money:"

• If you recklessly print money you make it worth less (and eventually worthless). We have seen this without MMT. MMT will only expedite and worsen the day of reckoning - the death of the dollar.
• Inflation will always appear when there is more money chasing the same amount of what it is spent on. In recent years it has been chasing assets and only because it has not been put into the hands of the buyers of goods and services. As more effort is made to put this new "nobody's money" into consumer hands, prices in goods and services will rise accordingly.
• Reducing inflation by taking away the ability to spend by increasing taxes is terrible plan - the delay between tax increases that reduce disposable income and the eventual reduction/stabilization in prices will adversely affect the consumers' quality of life. Paul Volcker proved that the best cure for inflation is to reduce consumer debt by raising interest rates. Tax hikes take away money that people have (and need). Raising interest rates only takes away their immediate access to money that they will have in the future. Volcker made them wait until they earned the money, far less painful than tax increases yet very effective in controlling inflation simply by reducing demand.
• MMT will increase the occurrence of boom/bust economic cycles. Each cycle throws the economy into further turmoil causing leaders to recklessly grasp for the next form of QE/MMT. Desperation has put us in the economic fix we now find ourselves in.

The Magic Money Tree is here:

23.6% of All US Dollars Were Created in the Last Year

Which means:

Hyperinflation is here

Gold, the simple math:

Paper Money Supply Growth Will Outstrip Available Gold

It's just paper and some random numbers on a computer screen. Print away, and don't forget to send me and the misses another stimulus welfare check. I need a new zero turn and end of season is the best time to buy. Thanks!

@Meltdown said:

@blitzdude said:
It's just paper and some random numbers on a computer screen. Print away, and don't forget to send me and the misses another stimulus welfare check. I need a new zero turn and end of season is the best time to buy. Thanks!

Load back up on more of that gutter metal Blitz! You know you can't help yourself.

If she breaks back down under $20 it will be tempting. Guess I'm a sucker for punishment. lol

@derryb said:
Ha, I can remember when the mention of "QE Forever," like price manipulation, was just another conspiracy theory. LOL

Must of been before my time here. My only recollection of conspiracies involved, the comex is imploding. JPM owns so much silver they are gonna make the price go to the moon, Bulguaria is set to take over the world etc.

Well, they can't print gold:

New Gold Standard: Orderly or Chaotic?

"The dollar collapse has already begun and the need for a new monetary order is now emerging. I believe it will involve gold. The question is whether it will be an orderly process resulting from a new monetary conference, or a chaotic one."

For all practical purposes, US dollar hyperinflation is a zero probability event.

How many trillion dollar bailouts for people, states, corporations, hedge funds, junk bond funds, ETFs and municipalities will it take before people figure out that they're being had and they lose complete confidence in the US currency?

The Ctrl Prt key does seem to be stuck. John Williams notes unemployment at 28% - more than the Great Depression, and 60% of the lost jobs are said not to be coming back. Doesn't seem to bode well for the tax base in most places.

The bailout money seems to be going mainly into the stock market, which begs the question as to whether or not company profitability justifies the rise, since actual sales performance isn't driving the increases. It's an amazing phenomenon, but it's not real.

Be advised.

I don’t think you know what “begs the question” means

I had to look it up, and I see nothing wrong with my usage of "begs the question". When money is created out of thin air and the majority of it goes into the stock market when the main economic event seems to be high unemployment, it does not seem logical that stocks would be valued higher without commensurate increase in sales and/or earnings.

What is YOUR interpretation? Do you somehow see higher profitability from lower sales numbers, layoffs, bailouts and cutbacks in company spending? Please explain.

@jmski52 said:
I don’t think you know what “begs the question” means

I had to look it up, and I see nothing wrong with my usage of "begs the question". When money is created out of thin air and the majority of it goes into the stock market when the main economic event seems to be high unemployment, it does not seem logical that stocks would be valued higher without commensurate increase in sales and/or earnings.

What is YOUR interpretation? Do you somehow see higher profitability from lower sales numbers, layoffs, bailouts and cutbacks in company spending? Please explain.

It means one is assuming or restating their conclusion without actually supporting it with any facts.

It doesn’t mean a statement that raises a question that is just begging to be asked.

It appears to me that Stephanie 1) believes in unconstrained government spending and 2) has never run a business.

John Rubino gives a fairly good summation of the debt problem and its inevitable endpoint, in a recent interview with Greg Hunter on USAWatchdog.

MMT?

Simon Black calls it "classic empire arrogance."

I think we should lock up the Fed presidents in the same room with the "infectious disease experts" (and Bill Gates) and see who wins.

@dpoole said:
The Covid pandemic has required massive infusions of cash to keep people afloat. Well and good.

Well and good. . . for those who benefited.

Coincidence? $15 Trillion in new global money in 2020. $15 Trillion gain in global equity market cap in 2020.

"While much of the world grappled with soaring unemployment and plunging growth, Bloomberg notes that the 0.001% benefited from an unprecedented period for wealth creation. The world’s 500 richest people added $1.8 trillion to their combined net worth in 2020 for a total of $7.6 trillion, according to the Bloomberg Billionaires Index. Equivalent to a 31% increase, it’s the biggest annual gain in the eight-year history of the index and a $3 trillion jump from the market’s nadir in March."

That extra $1400 would have been "well and good" for Americans who need it. Our leaders found it more important to send that money out of the country. Americans obviously don't pay them near what foreigners do.