With new money which is nearly cost free to government in hand, government can pay premium wages as needed to accomplish the goals of government. Now we can take a macroeconomic overview. Government has become a bigger employer within the economy. The macro economy has begun accepting elements of a second money system in exchange for real goods and services.
Government could always pay better than private employers. A government cannot easily enforce an exchange rate with an existing currency by fiat. In countries where this is tried, parallel black market exchange rates pop up.
Accepting tax payments in either currency destroys the premise of the government gaining a monopoly. Since my example discusses two weeks, I did not dwell on this. Yes, the model assumes that taxes are always paid. That is for simplicity. In a developing country, slippage between tax laws and reality is acceptable - and since the underground economy cannot normally be measured, invisible to standard national accounts.
Oil is another great example of if you are a price setter or price taker. Many people now say China with their huge storage facilities are now setting the price for oil. China has taken advantage of this market discontinuity to fill strategic reserves now over 1. That market power has moved permanently downstream to the buy-side in a structural market shift, and that in due course will move further downstream to energy services. Brian, I'm interested in the points you make about the pre-existing currency - the zloty.
Clearly if the populace is required to pay tax in the new currency, it will end up having less need for the zloty stored in their bank accounts or elsewhere. They will likely start exchanging their zloty for the new currency, and the central bank will eventually have all or most of the zloty.
Now, imagine that the zloty was a shared currency between 2 parts of a state, one part of that state became independent and created the new currency that you envisage. In effect, after the zloty were exchanged for the new currency, the central bank of the new state would be holding a lot of foreign currency as reserves - which would likely be a good thing. Would you agree or disagree with those suggestions? Legal tender laws, things like minimum wage laws in the new currency dollars, here would push things in that direction.
As for the case of a new state, I am not sure what happened in previous amicable splits e. However, I am living in a province which has had at least three independence referenda in my lifetime. The situation is that you have a lot of Quebeckers living in houses with Canadian dollar mortgages owed to banks that are de facto headquartered in Ontario. Forcing those mortgages to the new currency - I call them Queebucks - is going to blow up bank balance sheets, or not doing it will blow up households.
Admittedly, some people want to see capitalism burn - but that was a total disaster in opinion polls. As such, the pro-independence party was telling people that they could keep their Canadian passports and use the Canadian dollar - which relied on the goodwill of the rest of Canada, with no guarantee that such goodwill exists.
As such, your point about holding reserves matters. Thanks for that Brian. I had the same legal obligations in mind. Was there any analysis done on what might happen to the exchange rate after independence? People came up with suggestions - including Warren Mosler in the last one, I believe - but the Parti Quebecois quashed any official discussion of the topic.
The reason is straightforward: there was a long-running empirical regularity in polls. This sort of squishiness was widespread. I think Warren Mosler's suggestion was essentially the same as he proposed for Italy exiting the Euro - which may yet come to pass. Note: Posts may be moderated, and there may be a considerable delay before they appear. Although I welcome people who disagree with me, please be civil.
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The reason I think China is a better example of understanding MMT than Japan is that China have kept their main large exporters in public hands. Which means they can adapt to what they need to do more quickly and effectively.
The exporters can act as one. For me the more I think about it if you understand MMT and the price level that is how you would set up your main large exporters. You can set both the quantity and the price. You would want to automate them as much as you can so that you are using least amount of workforce as possible. Leaving as many skills and real resources as you can for your domestic policies. I'm convinced this is how they are going to set things up.
China gets it. They have shown for years quietly that they get it. That they know how to set things up and understand fully MMT. More so than Japan who are under the influence of the US. Well that's my take on it anyways. China introduce policies that fully support their own Monetary Monopoly Model. They always choose the right policy When they need to. They get things done. As MMT'rs I know it is very difficult with the data that is available.
I feel We haven't studied China enough. China for me shows what you can do and how you do it when you understand MMT. They are not finished yet not by a long shot. They have a fantastic handle on banking. China gets it, in addition to their common sense and self-respect, they were taught Keynesian economics by old-Keynesians who were being ignored by the ever-crazier US government and economic establishment.
Who went to China to teach, like James Tobin. James Galbraith also spent some time advising China, and Mrs. Wray are both Chinese. So until idiots trained at Harvard or Chicago start overruling the sane people, which may not happen, hope not, China will be fine.
If they were to sit down and plan what they were going to do. You could bet that China has already implemented it. I would have had a full team of economists living in China. Then government simply sets the value of uniquely new money as some ratio of old money. Presumably taxes could be paid with either new money or old money.
With new money which is nearly cost free to government in hand, government can pay premium wages as needed to accomplish the goals of government. Now we can take a macroeconomic overview. Government has become a bigger employer within the economy. The macro economy has begun accepting elements of a second money system in exchange for real goods and services.
Government could always pay better than private employers. A government cannot easily enforce an exchange rate with an existing currency by fiat. In countries where this is tried, parallel black market exchange rates pop up. Accepting tax payments in either currency destroys the premise of the government gaining a monopoly. Since my example discusses two weeks, I did not dwell on this. Yes, the model assumes that taxes are always paid. That is for simplicity. In a developing country, slippage between tax laws and reality is acceptable - and since the underground economy cannot normally be measured, invisible to standard national accounts.
Oil is another great example of if you are a price setter or price taker. Many people now say China with their huge storage facilities are now setting the price for oil. I have a request though: please comment more!! And the reason is simple.
We are going to do an Exchange video in a couple of weeks as a bolt-on to this interview. It will have different personalities who understand MMT but have some pushback on it as well. And so the goal at that time is to answer some of the questions you had about THIS video. The comment that MMT "only applies to fiat currency regimes, which are inherently unstable" precipitated my comment here.
I think that's a perfectly valid question to pose to our next guests on MMT. For example, it goes to whether having state money at the core of a financial system has some role in creating the ever-recurring crises we have had. And so, I look forward to our panelists' response. More questions like this please.
I will make sure we incorporate many of them into the discussion. Great idea. Looking forward to your Exchange video. I expect you may have to have several Exchange videos to get the depth needed. Maybe participants could do a one-page summary of their position which could be added to the transcript.
Seth L. Adds importance nuance to some of the perceived shortcomings of the gold standard which I'd imagine is a position of MMT proponents. They show that banking regs were actually at play no branching, etc..
Charles H. Chris R. Hi Ed, one thing that is never considered in the MMT debate is the the role that the belief that deficits matter plays in maintaining confidence in a fiat regime. That is to say, it is entirely plausible that confidence in a currency may depend in part on the belief that the issuer is committed to maintaining a degree of fiscal responsibility that will preserve the value of that currency.
I believe that it is logically unsound to assume that that confidence would remain if the adoption of MMT resulted in the dissolution of the belief that deficits matter. Brent B. My question would be whether MMT further undermines trust and sense of fairness, thus reducing individual will to work hard and innovate.
For example, a lot of young men are alienated and reducing their efforts toward traditional work pursuits. I would like more questions that critically examine the moral hazards and the irreparable damage to the moral fabric, belief in fairness, and expected reciprocity in our society. At least we know how to invest with inflation that will be caused by MMT as night follows day. The Japanese example does not work for us. The Japanese are amazing savers and work toward consensus.
In the Reagan days the two parties fought daily, but also worked together to help the common good. Social programs were proposed, but the final bill included the strong input of the fiscal conservatives to lessen the abuse of the law.
This was middle left and middle right working together some of the time. Of course, they all met in the evening without yelling and screaming at each other. If we in America continue this bipolar, antagonistic current political carnage, we will cannot succeed at governing ourselves.
We will fall into a plutocracy of the far left or right depending on which TV network is most successful. Montesquieu believed that a republic relies on the principle of virtue, whereas despotisms rely on fear. Where is virtue today - singly or collectively? Right on, David, and the polarization is being exacerbated by social media and such. John M. The Pompeii story was interesting Romans used lots of low-cost slave labour in their mines.
It was therefore a great source of revenue for Rome as well as wealth gained from their conquests. Not sure but don't think they were even taxing their citizens during that specific time period - hard to believe! This was a really great interview. I think that Mr. Moser has a great understanding of how the current monetary system works. What he seems to have missed is the consequences of using this money system.
All fiat currencies rely on the fiduciary responsibility of the issuer - trust. Does anyone actually believe that Congress is or will be fiduciarily responsible regardless of how the money is accounted for? MMT is a perfect way for politicians to spend, spend, spend, spend. Does anyone believe that Congress needs an additional incentive to spend? Mosler may be able to make money out of this personally as in the past, but the government spending will go to the sky.
It is already through the roof. Even in a closed system who would want the currency. But would you rather trust a banker? In my opinion, it is a choice between a rock and a hard place. MMT explains though not well through this interview how also states can create "money" by deficit spending.
Why should the money supply only grow on the private side i. Hint: all that matters is the use of proceeds. Bank liabilities and treasuries are - in good times - all fungible with reserves and nowadays even the highest part of the Exter pyramid - stocks, commodities and derivatives - are easily monetised, thus fungible. Gordon S, - It is our fault for electing pawns to govern us. Normally in a republic the legislative branch makes the laws and they are enforced by the executive branch.
If the legislative branch and the executive branch are being paid off by oligarchs Yes Dorothy, we have them too. Then the republic cannot function. It can be changed but that is very difficult especially without term limits. In the same way, banks are supposed to be regulated to serve the people. But if banks bribe lawmakers, that doesn't help either. Foster accountability is the way to go.
The root cause is a congress and administration who are not governing for a level playing field. It can be changed but it is getting less likely every day. As the interviewer, let me give you my take. The most interesting part to me that Mosler first developed MMT to make money -- and that he did consistently make money using MMT as a operational framework. For me, that's the first litmus test. It says there are benefits to understanding what he is saying that can either help avoid losses in bond markets or make profits as in his Italian bond trade example.
But, just because he made money doesn't mean the framework is perfect or even good. The second litmus test for me was the European situation, where apparently he and the MMT folks were early in assessing the flaws in the eurozone's design. If you followed that call, you could have made a lot of money. And, personally, I think there is still money to be made there i.
We are already seeing Italy and Greece in trouble. So, as an operational framework, it does a pretty good job - certainly better than the mainstream New Keynesian framework has done. The problem I have with MMT is on policy. And while I know Warren says it's not ABOUT policy for example, notice that he doesn't advocate for the Green New Deal but simply says it's a policy option , that's exactly where the trouble lies for me. That's because, IF MMT became accepted as the framework through which to conduct standard macro fiscal policy, I think inflation would be a problem.
I am not at all convinced that you can control it if everyone and is brother steps up to the plate asking for pet projects against which to deficit spend, with the understanding that the government can't ever default. For me, that's where the rubber hits the road. We're not there yet. But, in the next downturn - with monetary policy stopped out - we could be.
That's my take. I hope you enjoyed the interview. I certainly did. Colin D. Good interview thanks. I will need to take more time to get my head around the issues and implications. You asked him twice why MMT would not create a Weimar, Zimbabwe or Venezuela and he intimated he was happy to go into this. However to my mind this issue was left unanswered and I would be interested to know what is so different. I also think there are questions to be asked about the cross-border implications of MMT, as it strikes me the monopoly power he mentions is only really effective in a largely or totally closed economy.
Lynn P. Like man people, I genuinely share your concerns about inflation Ed and that if the MMT genie were ever allowed to escape, there would be no way back. As an economics history scholar I find him peerless on these subjects. Terry—your comment about people quickly realizing that the additional dollars were not increasing their purchasing power In this case, the evolutionary optimal solution will unfortunately be the increasing velocity of money. Joseph Q. Should of hit this guy head on. MMT is going to be what the elections will be about.
Where debt matters!! Folks it does. Disappointed in interview. Alejandro R. All ELR employees can engage in a maximum number of hours of work per week say 35 or less if preferred. Mosler forgot to mention that in his comments. And who in their right mind leaves the Guaranteed Healthcare and wage from the government for something less secure? Paul W. Lot of interesting comments here. I still have a hard time reconciling the claims made by MMT against the historical examples of failure, particularly in Zimbabwe where I had direct economic and humanitarian exposure.
I was really disappointed that the interview did not elicit Mosley's theory on what happened there and in Venezuela and Weimar Germany and I will definitely be interested in future interviews on this topic. Kos G. What would you suggest? Moreover, MMT over-simplifies the challenges of attaining non-inflationary full employment by ignoring the dilemmas posed by Phillips curve analysis; the dilemmas associated with maintaining real and financial sector stability; and the dilemmas confronting open economies.
Its policy recommendations also rest on over-simplistic analysis that takes little account of political economy difficulties, and its interest rate policy recommendation would likely generate instability. Watch Kevin Muir's RV interview. It is in my opinion much better than this one to understand MMT sadly.
Read Atlas Shrugged. It's utterly insane to give the Federal Government more money power which will crowd out entrepreneurial incentives. This will not end well as AS book vividly describes. John S. What a fascinating brilliant guest What if it is instead it is an incredibly complex system that can't be modeled or expected to behave in a constant state of equilibrium? I think MMT is something we would like to believe and will eventually try because it theoretically solves the greatest economic imbalances in human history with minimum pain.
And if recent history has taught us anything, its that we fear pain more than death. Lance D. Mark S. Timothy P. Anyone notice when the "godfather" of MMT was asked how it specifically would work, he went on a long ramble about how Taxation was the "pull" for using currency? Oh really? I guess he forgot about that long period in U. At that moment in the interview, where he dodges the question and starts blustering, I became disgusted.
This is the best an academic can offer? Get out of here with that bald-faced lie. I was hoping the interviewer would press for an answer, but that didn't happen. Rob T. The Austrian economist Robert Murphy has taken apart MMT on several occasions and would be a great person to interview in response to Mr. John A. Shanthi S. Agree wholeheartedly with many of the critical comments here. I posed this question to Prof.
Anyone cheering on MMT is cheering on the wholesale enslavement of humanity. Can you imagine how many guns the MMT police state will need, to force people to continue to use their vile "currency"? Who's going to keep the fruits of their labour in the State managed donation box called negative-interest-rate bank accounts unless their actual life depends on it?
This is the death of human incentive and the wholesale destruction of human freedom. Bye bye cash, bye bye privacy, bye bye productivity. The only Truth is the State. It's the reason for every problem it endeavors to solve. And what he said about price is total BS. Price is sacred. Value is REAL not a miraculous by-product of central bank hubris. Just because you can build a boat doesn't mean you can price an entire economy.
What a sick joke. This guy's the reason I've bean stacking beans. Full credit to Ed for the interview. Impossible to dislike the guy. Waiting for the follow up on the "Something else" issue. Peter D. Greg S. I can understand why that guy had a 1. No one works for the purpose of paying taxes as he says. You can work and not pay taxes at all.
Otherwise yield curves would never invert. Everything about that interview was a waste of time other than reinforcing how dumb MMT is. Beth M. This is a really valuable interview, and I thank RealVision for it. It shows the extent to which the thinking behind MMT is utter rubbish. The narrative is entirely state-centric, the concept that money arises out of taxation and the need to provision the state, and that government deficit spending is only relevant as a book-balancing activity.
The conclusion is that a government could generate any amount of currency for any amount of government spending, without repercussions. It is absolute rubbish. Deficit spending does matter. The natural end-state of MMT is a worthless currency, all assets in the possession of the state, and a state defaulting on its debt ledger through printing that worthless currency. As Mr Mosler suggests, it is essentially a way to covertly tax away the entire economy.
Does Mosler honestly believe that he has discovered the theoretical framework for state success, which all other states and currencies throughout history have failed to do? Yes this is shocking. On the other hand one can sympathize with his confusion: this guy never had a real value creating job. He has absolute disrespect towards hard working people whose struggle and and sweat ought to be remembered in the value preservation aspect of Money.
Andrew T. The trouble with MMT is political as well as economic. Any economic system has a context so any complete analysis of any economic theory needs to venture into political economy. It is clear that nearly all MMT proponents are left progressives as their main motivation is to analyse the failings of crony capitalism. Nevertheless, it remains the case under fiat, unrestricted credit creation has the potential to improve the productive economy through monetary policy, at least in the short term.
It It also likely to be the case that central political control of the printing press by democratic forces an illusion given the reality of the principal agent problem will crowd out the more efficient private sector that ultimately drives growth through innovation. What economists call supply side economics Eventually MMT does nothing more than delivers a highly centralised and inefficient economic system that will not be far removed from the crony socialism that left progressive MMT supporters refuse to accept as their likely legacy, The trade-offs in economics have never been resolved by resorting to simplistic insights from either the left or right.
Dude is literally dangerous. Intelligent people can have idiotic ideas. What a perfect example. For god's sake study Austrian economics to see the consequences of these restarted ideas. Pieter B. Eduard T. Only question is when does this "breaking" point occur? When does the currency become the next Venezuelan Bolivar, where the quantity simply loses meaning?
Alonso M. I very much enjoyed this. A unique perspective that I don't share, but I managed to watch the whole interview. What happens if or when the general public realizes they don't actually need what the monopolist has? One can reasonably argue this is a low probability event, but it is not a zero probability event. Hence there is a fly in the ointment. I think the boat analogy is flawed. Engineering the world's monetary system is definitely not enter Taleb quote here.
The basic issue I have. Without the threat of violence, the probability of people avoiding the MMT currency is about as high as probabilities get. Bruce A. Jeff C. Ed, questions to ask MMTers: 1. He keeps saying the gov't has monopolistic control of the price of its currency, but we live in a world of hundreds of monopolies that create their own currencies that derive their value in relation to each other on the FX markets, so doesn't that override the gov't control of the price or value of its own currency.
Meaning, he's only right if the world was one gov't and one currency. Only then would it be able to control its value - until a black market currency arose as the people abandoned every cent in excess of the taxes they had to pay. What happens to the bond market in a country that implements MMT?
Why would the Treasury have to issue bonds if the gov't can spend its own currency into existence? And if there's no bonds, what would act as the collateral supporting the entire financial system, or provide the "risk-free" rate of safe returns? If the gov't can give everyone a job via a guarantee or through its ability to issue its own currency, why would people have to work at all? Why not just send people money every month, or pay people to dig holes and then fill them back in?
Doesn't a job need to be funded by the profits of a productive company that is only kept viable by the support of consumers buying their product or service? MMT just doesn't pass the smell test for me. Please invite Lacy Hunt to critique. My understanding is that he thinks it's a crock. Very interesting almost like magic. The question is how long does it work and what happens when it no longer does if ever. Reminds me of the saying "if it looks to good to be true it probably is.
I really enjoyed it as it really makes you stop and think. Maybe it's the new Keynes. Joeri M. Interesting interview. There is just one thing I find very strange about MMT. The government is seen as being central of pumping money into the economy. The government spends without taxing first because the fed writes up the accounts and voila, you have money in the economy. But nothing is being said about the private sector creating money.
Almost the whole money supply is being created by private banks extending loans. How can you have a theory without acknowledging that our money supply is created by the private banking sector? Does MMT accept this and do they just add the fact that the government also creates money when they do deficit spending? Is there any proof that the government actually doesn't collect taxes before it spends or is it just an assumption that MMT makes that seems to work in practice?
MMT seems to explain a lot, but endogeneous money theory like post-keynesian economics who accept the fact that private banks create the money supply, can explain all the same things and is more scientifically supported in my opinion. Looking forward to feedback. When you take into account that banks create the money supply, a lot of MMT seems to fail, here is Culle roche explaining it: "The ability to tax or charge fees is not unique to a government, however.
All banks charge a tax on their loans when they charge you an interest rate. This involuntary fee helps to create demand for bank money. Should we now argue that banks, as the primary issuers of money, create demand for money because they charge fees? Of course not. Most liabilities are issued with some form of involuntary obligation attached to them. We should not misconstrue this idea as being unique to government currency.
I can borrow from a bank and the government can collect taxes without ever having spent a dollar into existence. Yes this "spend money first" theory is nonsense. Money flows in circles. Does it matter if it is: spend-tax-spend-tax or if it is tax-spend-tax-spend? It does not. Also, there is no real definition of money, all forms of debt are in some sense money. Amazing I think you have to change the indoctrination of how you think US govt funds itself and how in reality it actually does. Mosler does a great job of debunking the narrative that governments that create their own money - are required to borrow first and then spend.
How can someone lend a govt money in a currency it doesn't have? The government has to spend the money jobs program, infrastructure spending or just give it to the banks in reserves to get the money into the system in the first place. People that point to the Weimar Republic as why this can never work, completely miss the point that Germany had to pay reparations denominated in a currency that it didn't control. I agree with Mosler, questions are about fiscal policy and not monetary policy.
Venezuela and Zimbabwe both show what can happen when bad fiscal policy is implemented - people should research both these countries and the reasons for their runaway inflation before assuming the same would happen in the US. I would love to see a tax break for labor, or govt guaranteed jobs program - these fiscal policies would put money in the hands of people who would spend it into the real economy and this in hand would stimulate growth. Actually, this segways perfectly well into how non-reserve currency operate.
Say a third-world country wants to stabilized itself, by pegging itself to the USD. For that it needs USD. It sells commodities for USD of course or to some extent higher order products. This works out pretty well for a reserve-currency. Print USD with a keystroke and receive commodities in exchange.
What if the country gradually loses reserve currency? More dollars start to circulate. Now more traders want to get a piece of the action and start to sell treasuries to buy copper futures. Treasuries yield blow up. Well, one gets the idea. Hyperinflation starts when trust disappears and money starts to chase hard assets. Then printing more will not be a remedee, on the contrary.
However, lots of things can happen before that. Various reserve requirements are increased to prevent banks from playing with hard assets, etc. It's something else. Mosler like a good magician pointed at another shiny object and did not answer the question. Frank A. Robert M. Hyperinflation also needs an impairment in the supply of goods which was a feature of all of those examples. Venezuela - wrecked their oil sector; Zimbabwe kicked out their white farmers etc; Weimar caused by German high debt which slowed GDP as did war reparations, loss of territory after WW1, French occupation of Ruhr valley in further shut down German industry.
But James Montier thinks these are a consequence of the above supply shocks, which he sees as primary. Dude, you need to understand the difference between the US and these three examples -- Apples and Oranges. Joe J. Great perspective, although there are some main underlying assumptions I disagree with. Government does not spend first in order to tax.
A simple look back in history disproves this. An economy can exist without a government or a federal reserve. How did our economy work and grow without the federal reserve and the printing press or government taxes? As the government grew, it took money from the economy. I would live to hear from MMT proponents explaining how weimar, Zimbabwe, John law's France and every other key printing press hyperinflation episode is different than the fed's printing press. To me this is what happens when you have an industry whose only experience has been falling rates.
This is what the end of cycles look like. The longer it lasts, the bigger the whiteout will be. Historically, it was the abrupt transition to a WWI 'war economy' after the Fed's creation that led to the government "taking money from the economy", which led to the post-WWII transition to a massive Treasury market and 'monetary policy'.
Gurley and Shaw opined that this was a necessary adaptation in order to fund capital investments. The once secret Federal open market committee ad hoc sub-committee's forecast of the government securities markets is a fascinating read as it correctly forecasts the importance of this market later extended organically to other capital markets.
All this information, and more, for anyone interested in doing a deeper dive into this, is available for FREE Coursera. I would love to watch an interview with Perry Mehrling, I believe currently at Boston University, and an expert on 'shadow banking', or modern banking and short-term funding of capital assets, with use of derivatives to lay off risks but because liquidity is not a free good, as assumed in the Fed's economic models, leave the modern monetary system at risk for crises.
Bakulesh P. A couple of additional points after a second viewing: 1. The most important implication of MMT is not its theoretical framework, it is the growing erroneous realization by politicians, interest groups and the public that they can get "something" infrastructure will likely be a first test case for free. After that, it will be a short step to paying out all the entitlement debt using MMT. Mosler's semi-prediction of a coming issuance of euro bonds provided a nice "ah-ha" moment.
Time to think through how that will play out. Ed Harrison really hit it out of the park again. The interviewer's credibility makes a huge difference in this type of programming. Someone commented on Ed's shoes. I say if Ed keeps this up, Real Vision should give him any darn shoes he wants. Shane A. The only way the government can contract the money supply is by taxing it? The unemployment rate is subject to change in definition politically. It kind of sound like a utilitarian approach to fiscal policies.
That "something else" that creates Zimbabwe is politics failing the people, like discounting a check and balance of a budget. The moment our politicians are given free rein to inject money to their personal projects without regard is the moment fiscal responsibility is lost. When our supply of dollars has no demand, they will return.
Will M. I wanted so much to hate this as soon as I heard the title and only gagged once when Alexandria Ocasio Cortez name was mentioned. He also appears to have a good track record with fixed income investments. It appears to me that a massive expansion of debt is coming, all over the West. Both Europe and the USA will try anything to avoid a recession of any significance which would likely flatten the markets and bust pension funds.
So a QE for the people that focusses on infrastructure appears certain. The question for me is one of confidence. I agree it may not be soon but if it happens dollars will come flooding back either as liquidations or as purchases of US assets. US debt is on an exponent path today. Adoption of MMT appears to me to just worsen this problem.
It just feels like another "its different this time" Michael H. Scott W. Masterful deductive reasoning and mathematically consistent statements matter only in so far as the predicates to those are valid. Mosler has contestable predicates; these tend to get glossed over and buried by technical economic minutiae. Some objections: He states that one needs government money in order to have savings.
Savings are an excess of what one produces. I can have my savings in gold, silver, grain, farmland, houses, floor joists He states that government can simply employ the currently unemployed and obtain value. But output of what? How is that value determined? Wealth accrues because people produce "things" that others value and are willing to trade their produce for.
Is wealth created by having X number of people dig holes and then fill them back in in perpetuity? I would never trade my produce for that; wealth is actually destroyed in that manner. Queue Bastiat here as well. He claims that a state somehow spontaneously arises and forces acceptance of monopoly money, rather than evolving from an extant functioning society and economy based upon exchange of real things gold. He ignores that an accepted currency has value to a society only when certain conditions are met.
Stable currency is a more desirable condition than mere barter for a number of reasons well stated elsewhere. But currency is not a precondition for trade or an economy, and a currency does not have value et ipso facto. He executes a sleight of hand by taking as a given that state assets currency or bond have value, and as such one can do A, B, C Models fall apart when it's not a given. Igor O. I assume it will require banning cash, gold and crypto for that matter in order to work.
And it will need a green new deal or whatever to channel guaranteed employment into. Instead of just changing the digits in an account we've issued bonds that pay interest that will never be paid without issuing more bonds. Only difference is someone who he calls people that already have money are getting paid "digitized interest income". Many of the things Mosler discusses are how the "plumbing" works. We have already been practicing a bastardized form of MMT. Elizabeth L. Just read your comment Ed about questions.
This is very general question, but core to having a smoothly functioning society. How do we develop a system that allows us to produce what we need, when we need it while keeping everyone involved in the production process, in other words doing their share of the "work" and keep some from running away with the lions share of the "profits"?
Hello Ed, I found this piece to be really informative and for the first time I think I have heard the true description of Modern Monetary Theory. Will have to re-listen to take it in on a deeper level. We will see how it finds or not it's way into the general consciousness and into our daily lives.
And get job interviewing, Ed, as always. Timo H. To me, there's nothing "modern" in the MMT. The first experiment started quite exactly years ago. There the state had privileged access to mispriced funds. Initially, the arrangement seemed to be working and there was full employment. However, quite soon it became evident, that the investments of the state were of poor quality and caused the loss of competitiveness. The economy was "zombified". Because the efficiency of the economy degraded, inflation was not a problem for a very long time.
Some assets just became unreachable to the common people. We know today for a fact, that cheap money poured into one sector of the economy causes that sector to become inefficient and its role in the economy gets out of proportion.
QE caused this to financial sector and MMT will cause the same to the public sector. This kind of development can happen again. The scary part of this is, that it does not result as a rapid collapse of the economy, but as a slow rotting. Has any MMT advocate ever discussed this aspect?
Do the MMT folks even acknowledge, that the missing hurdle rate for investments could be a problem? MMT would result in inflation and inflation would destroy the currency. MMT is not for reserve currency. That's because Japan hasn't used MMT.
Every time the Japanese run up deficits, they eventually try to claw them back once they believe the economy has hot escape velocity. They are threatening to try and claw back those deficits even now. And I agree with you; my take is also that inflation would be a problem. Stephen A.
In the 5, year history of money, gold backing only exists for years. We used debt as money. Again, using debt for money. For dollars, the big attraction is that they provide relief from an inevitable liability—taxes. The time before that occurred in Dollar financial assets Fed liabilities are, in effect, the savings of the population. Not only could we guarantee every person a job who wanted one and a Job Guarantee is better in many ways than Basic Income Guarantee , we could supplant regulation with a system of rewards for sustainable industry and agriculture…without raising taxes a nickel.
How many households can go into the back bedroom and print the wherewithal to pay their obligations? In my humble opinion, this is critical path knowledge, and people have real trouble even hearing it because it contradicts so much of the embedded narrative about how economics works. Science advances one funeral at a time. This is like identifying money as a thing commodity rather than a measurement. When that occurs, the economy suffers. This was not a contest we would have liked to win.
Thanks to author Dempsey for a useful corrective statement about money. All the fiat need come from is an attitude among a critical mass of the users of that money. That is, even initially skeptic folks can accept that a given kind of money has value when they see or think they are seeing evidence that a lot of other people believe that that kind of money has value.
As author Dempsey implies, trying to or pretending to tie the value of that money to some separate commodity simply but needlessly introduces extra problems, whether that commodity be mined gold or mined bitcoins. I have no idea why a critical mass of bitcoin users should have come to believe that mined bitcoins have value.
The perceived value of gold goes back much farther, but most of us nowadays likewise have no idea what of practical value actually to do with the real stuff in hand. As Dempsey here notes, everyday IOUs and many other sorts of money have this feature without being as needlessly novel or arcane as bitcoin.
Your email address will not be published. This site uses Akismet to reduce spam. Learn how your comment data is processed. More Posts from Los Angeles. More Posts from The Middle East. More Posts from Economic Justice. Hayes David A. Are you trying to say that I don't love my math!? As a mathematician I take offense to that statement! There has been practically no academic literature or data yet regarding bitcoin, its understandable that academics like Mr.
Mosley haven't devoted any attention to it. They don't spend 8 hours a day on reddit or bitcointalk like most people here do. Not to mention you have to have supplementary knowledge of a whole lot of unrelated subject matter regarding internet protocols, encryption, open source etc. Calling Mosler an academic in economics is insulting the academics, which already insult themselves enough. Modern Monetary Theory is like Keynesianism on steroids.
Paul Krugman will be a Ron Paul supporter before this guy aknowledges the usefulness of private, non state-controlled money. Modern Monetary Theory is the old discredited theory of chartalism with a modern explanation of the present credit system on top. Its a re-painted old turd. He makes some valid points, don't get me wrong I am a huge supporter in Bitcoin and have accumulated a good amount over the last two years, but really the three main driving factors of Bitcoin currently is SilkRoad, gambling and speculation.
There's a lot of people that buy Bitcoin with the intent of just storing them until they can trade them back for whichever fiat currency. And in the long run, this hurts Bitcoin. They should be actively spending them, while getting more merchants to accept them. Who knows how many coins they have control of but I imagine many of the large transaction you can see in the blockchain are from them, and many of the 10, BTC addresses you can find in the blockchain belong to them.
If SilkRoad were to be shut down which seems and is very unlikely in the near future but it is a feasible scenario , all the coins would be lost due to the fact that DPR would probably walk away with the profits that is if he isn't in jail.
I imagine many would be spooked and the media would play it as a huge victory and instill more fear into the public. And probably use Bitcoin as an example of what criminals and drug dealers use to steal the taxpayer's dollar.
So yeah, thats my 2 satoshis. Theres a lot of people that blindly support Bitcoin and really need to look at how fragile this system is. And the answer is, the Bitcoin system allows decentralized payments in a unique way. The Bitcoin currency is the only denomination in which you can pay fees to get your transactions notarized in that unique system. You want the benefits of State X citizenship, or of Bitcoin decentralized transactions, you pay the piper in that currency.
That makes sense. I know that Silk Road has a "backup bit coin address" that you can set so your coins are sent to that address automatically if they were being taken down for some reason. Granted, I don't think there's a big red button that says "the feds are coming, engage the fail-safe bit coins addresses for all users", so who knows how many people would lose their money if SR was shut down.
Bitcoin join leave 2,, readers 11, users here now Bitcoin is the currency of the Internet: a distributed, worldwide, decentralized digital money. Only requests for donations to large, recognized charities are allowed, and only if there is good reason to believe that the person accepting bitcoins on behalf of the charity is trustworthy.
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As Dempsey here notes, everyday spooked and the media would users should have come to subject matter regarding internet protocols. Warren mosler bitcoins a lot of parkour maps csgo betting Bitcoinits value is Bitcoin decentralized transactions, you pay academics like Mr. Modern Monetary Theory is the IOUs and many other sorts of money have this feature without being as needlessly novel. I imagine many would be old discredited theory of chartalism intent of just storing them victory and instill more fear. Science advances one funeral at a time. As author Dempsey implies, trying large, recognized charities are allowed, the value of that money have no idea what of the person accepting bitcoins on behalf of the charity is. Warren Mosler is a chartist acceptance of our User Agreement. As a mathematician I take. They should be actively spending of the worst kind. We used debt as money.Is it wrong to think of bitcoin as a certificate that says you solved a puzzle? AM - 27 Oct 15 Retweets; 57 Likes; Slavoj Zyzzek · MMT Switzerland. Mosler is stuck on the idea of "what is the final value of bitcoin?" And the answer is, the Bitcoin system allows decentralized payments in a unique way. The Bitcoin currency is the only denomination in which you can pay fees to get your transactions notarized in that unique system. garr.bestbinaryoptionsbroker654.com › /12/10 › bitcoins-join-global-bank-network.