Debt Rattle May 2 2015
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NPC National Service Co. front, 1610 14th Street N.W., Washington DC 1920 • Grantham Says Fed “Bound And Determined” To Engineer “Full-Fledged Bubble”
[See the full post at: Debt Rattle May 2 2015]What does the AE think of MMT? MMT forced me to climb down from my hard money high horse. Fiscal stimulus directed at employment seems logical…
@ GeoLib, reply # 20826
I would not pretend to speak for TAE, but your question is a good one that should have a response. MMT is part of the heterodox cathedral of economic ideas, the other being the so-named neoliberal or orthodox edifice, a theology having roots going back to mercantilist perceptions dating from about the beginning of the modern era (~1500 A.D.). Historically Adam Smith’s “Wealth of Nations” began as a rational argument against obvious fallacies of mercantilism and began the heterodox economic tradition which passed through other (political-)economic observers e.g. Malthus, John Mill, Ricardo, John Stewart Mill, Jevons and Marshall with John Maynard Keynes as the latest master of heterodox economic philosophy. MMT grew out of the American academic (mis)interpretation of Keynesian economics (and great care must be taken to differentiate the American form from the original but that takes a thorough study of economic history). MMT is actually closer to the Keynesian original but carries some of the genetic markers of its American antecedents (IIRC Samuelson’s misunderstandings which led Samuelson into the orbit of neoliberal orthodoxy from the University of Chicago – free markets, invisible hands, etc., etc.). MMT provides economic pathways not available in the prevailing economic theology, for that is what now governs economic thought – beliefs and opinions only, reestablishing rational approaches to economic problems as was done by Keynes. MMT as it is now is incomplete but still offers a sounder economic outcome than that offered by the neoliberal orthodoxy. But it does require some real knowledge of economics to understand.
On MMT, setting aside everything about its ideas or theories about money and credit the main thing worth considering is that it would not work for most of the nations in the world. Could Brazil or South Africa, Vietnam or Greece if it leaves the EU just follow the tenets of MMT and live happily ever after? Of course not. There is that little problem of being included in the worlds financial transaction systems and they won’t take any newly ‘printed’ Reals or Drachmas. No, only the US, and Japan, maybe the EU could get away with it. Any country could one can suppose might operate internally with a monetary system that is explicitly based upon MMT but show me a country that can’t trade with their currency and I will show you a country that doesn’t really have a monetary system.
MMT will work when there is a single world currency, or maybe 2 or 3.
Now on MMT theory itself. XX,XXX thousand years of human existence has always had an intrinsic understanding of debt. Long before there was money there was debt. Things granted, things repaid, some basic idea of fairness built in. If MMT is right than all human history is wrong. The long history of human ‘austerity’ simply a mistake of not ‘printing’ enough money.
This is from The Vineyard of the Saker.
It is the best strategic analysis I’ve read of the current global struggle to retain American global hegemony, and the different interests of Russia, embodied in Vladimir Putin.
If Ukraine cannot be won by the US, as a power hostile to Russia, on Russia’s border, then it must be so destroyed when it is lost, that Russia is bled dry to rebuild it.
This cannot be done while sparing Europe. Europe will be deeply wounded in this, and then where will Europeans turn? Various ways? To Eurasian Union?What does Putin want? A major analysis by Rostislav Ishchenko (must read!)
GeoLib – “Fiscal stimulus directed at employment seems logical.”
It’s not as if the government isn’t stimulating all over the place, spending a ton of money (welfare, food stamps, disability insurance, subsidized housing, guaranteeing student loans, free cell phones, etc.) This is providing support and employment for the 7-11’s, Walmarts, colleges, universities, phone companies, supermarkets, without which these companies would surely be suffering (J.P. Morgan issuing the food cards). In fact, the reason the above entitlements and subsidies are given is probably more to benefit the corporations than the unemployed citizenry. I really believe that if these things didn’t benefit the corporations, they wouldn’t be done.
Mish had a post up today about Hostess Twinkies new robotic plant. They replaced 14 factories and 8,500 out of their 9,000 employees with robots, all while producing the same amount of Twinkies and cupcakes. More and more of this is happening.
Karl Denninger had a post up today re Baltimore, the fact that they’d lost 100,000 manufacturing jobs by 1995. 100,000 jobs! Offshored to China or some other low-wage country. Most good-paying, productive jobs have gone. What are people going to do? We can’t keep offshoring jobs, then turn around and deficit spend to try to fill in the gap. Without jobs, who is going to be paying taxes in a few years?
https://market-ticker.org/akcs-www?post=230090
Ilargi has posted articles on TTIP and TPP (the secretive trade treaties). Who is up in arms about this? Millions more jobs will be lost. If people’s jobs weren’t offshored, they wouldn’t need the government to be providing assistance. It’s ridiculous that there aren’t riots on every street corner. You can’t have a marriage or run a country when you’re diddling around in the Orient. It just won’t work.
MMT tells us that what we thought was a bug is in fact a feature, one we can take advantage of even if the overall system is flawed. It tells us that post 1971 public debt for states with their own currencies is not an issue, that the level of unemployment is thus a policy decision – astonishing but worth serious debate….
@Rapier – you said “If MMT is right than all human history is wrong. The long history of human ‘austerity’ simply a mistake of not ‘printing’ enough money.”
This is not what MMT says. MMT says austerity is is mistake if there is labour available to generate wealth. Ancient history in particular is punctuated with regular debt cancellations.
No Job?
Grow Food.
It’s the human way, after all.
This is simplistic, but it can be brought up to speed and be self perpetuating, once in place.
Growing your own food is valuable employment.
https://www.oftwominds.com/blogmay15/cash-gardens5-15.html
Sadly, it does weaken the control of the oligarchs a bit, but it is also stabilizing to society.@John Day – Grow food? By all means – if you have land…. have you seen the stats on the concentration of land ownership?
Re: • Your No. 1 End-Of-The-World Investing Strategy (Paul B. Farrell)
“Farrell misses out on the no. 1: people and communities.”
Farrell misses out on far more than that. It looks like his TEOTWAWKI strategy involves “investing” in the very murderous corporations (eg., Monsanto, GE) which have brought us to this point of collapse in the first place. A despicable article.
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