Modern Monetary Theory discussion

Should a government protect contracts?
Should a country have a currency?
AND, should a country enforce contracts not denominated in its currency?

I had thought these questions were already answered in the days of the Hanseatic League and the Northern Italian Mercantilist Republics...

Of course, in those days, money actually had an intrinsic, sold, real value and wasn't not worth the paper or polymer it was printed on.
 
Who is running a surplus while being a net importer and has full employment? If they aren’t crushed by the next margin call I will happily rethink everything.
Denmark, Luxembourg and Iceland on my list.

I assure you they will be entirely fine in the next "margin call".

Rethinking is good! MMT is bad.
 
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Bonds are just money with extra steps @amadeus - assuming people buy them of course.
That's a big assumption to make; I wouldn't want to be stuck holding the bag with my bolivar-denominated bonds.

Who is running a surplus while being a net importer and has full employment? If they aren’t crushed by the next margin call I will happily rethink everything.
Are they connected in any meaningful way?
 
I don't see how issuing bonds is the same as printing the money.

Yeah, because it's not the same as printing money. The money-printing, or rather, digital money-creation via keystroke, is a process that is not directly related to bond issuance. We could stop issuing bonds and announce we weren't making service payments on outstanding US debt, and it would have no effect on the federal government's ability to finance its own operations via keystroke. I'm not saying it would be a good idea, but the government is in no sense dependent on money from people who purchase bonds to finance itself.

Budget deficits as a percentage of GDP are higher than they should be, but they are not at present unmanageable or irreversible.

I disagree. Our spending priorities are terrible, we need to change them, and we should probably be spending more.

Defense spending is also historically lower than in the post-WWII period; it hanged around 10% between the 1950s and 1960s and then closer to 8% afterwards.

What a lot of the left doesn't realize is that while much of the defense budget goes to armaments, all the military spending is someone's income, mostly people who live (thus, mostly, consume) and work in the US, so there are large tangible social benefits we realize from much military spending. The critique the left needs to be making is that the state should be investing heavily in allowing people to collectively manage their communities through the climate crisis rather than in armaments and a vast hierarchical, bureaucratic thing whose purpose is to kill people.

Everyone in the thread should also realize that what luiz means by "reach full employment" is actually just "reach the peak of the business cycle" in many cases. It's a pattern of neoliberalism to point to the upswing side of the business cycle as an example of capitalism working really well...
 
Except of course that among the countries I mentioned that run surpluses and have full employment there are also some who are net importers.

What now, MMT supporters?

Could it be that the whole edifice of economic thought is not wrong and rather its your little sect that didn't get it?

Where do you think the money came from that allowed the debt to come down in those countries? Like, what's your intuition?

I'm not an MMT supporter
 
Everyone in the thread should also realize that what luiz means by "reach full employment" is actually just "reach the peak of the business cycle" in many cases.
What peak of the business cycle?
Denmark, a net importer running a government surplus in most years, has had low unemployment for a very long time. Indeed, during the crisis of 2008-9, when even low unemployment countries saw their unemployment rate go to double digits, it peaked at around 6% in Denmark, going down to 3% quickly afterwards. What kind of peak of the business cycle is this?

Again, some Rethinking looks in order.

BTW, the list of countries I gave that run surpluses and have full employment is by no means exhaustive... I can give more examples if you'd like.
 
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Where do you think the money came from that allowed the debt to come down in those countries? Like, what's your intuition?

I'm not an MMT supporter
It came from gains in their productivity, as standard economic theory goes.
 
Comparing countries...

Would it not matter whether countries have a low or high money extraction towards the very wealthy, accumulating wealth with => the effect that less money stays in the consumption circulation supporting jobs


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From the top of my head:
In the Netherlands, Denmark etc, the richest 1% own only around 5-6% of the total wealth
That is totally differing from for example the US where that percentage is 20%
How are these percentages in for example Brazil and Argentina ?
 
Where do you think the money came from that allowed the debt to come down in those countries? Like, what's your intuition?

I'm not an MMT supporter

It was conjured out of the magical void of valueless fiat, like all money today. As I said above, money no longer has any solid, intrinsic, real value anymore. The world economy might as well be run with Monopoly money. It's a hoodwink and deception of massive proportions - and should be ended and owned up to before it was it is no longer viable.
 
....

Wait, you think that new money comes from productivity?
You don't?
More productivity - > higher GDP - - > more taxes raised - > debt goes down.

BTW it's not "Luiz" who says this, it's basically the entire economic profession, from Nobel laureates to Central Bank governors.
 
Denmark, Luxembourg and Iceland on my list.

I assure you they will be entirely fine in the next "margin call".

Rethinking is good! MMT is bad.
Ok I will check them out later. We’ll see how they stack up over the last 13 years in terms of deficits and net exports and employment.
You don't?
More productivity - > higher GDP - - > more taxes raised - > debt goes down.

BTW it's not "Luiz" who says this, it's basically the entire economic profession, from Nobel laureates to Central Bank governors.
Ah yes, because if I become more productive, money magically appears in my wallet as if it didn’t have to come from an issuing authority down the chain.
 
It was conjured out of the magical void of valueless fiat, like all money today. As I said above, money no longer has any solid, intrinsic, real value anymore. The world economy might as well be run with Monopoly money. It's a hoodwink and deception of massive proportions - and should be ended and owned up to before it was it is no longer viable.

So you want the gold standard, or what?
 
You don't?
More productivity - > higher GDP - - > more taxes raised - > debt goes down.

BTW it's not "Luiz" who says this, it's basically the entire economic profession, from Nobel laureates to Central Bank governors.

I'm stunned. Like, if we raise productivity, dollars magic into existence? What creates a new circulating dollar? Raising my productivity obviously increases wealth. But the new dollar has to come from somewhere ...
 
So you want the gold standard, or what?

Maybe not gold, specifically. It was originally chosen, long, long, ago, for it's esthetic value, relative rarity, and commonplace religious significance in many faiths of the Greater Mediterranean Region. But, that said, something that will allow a more credible and viable gaging of currency values without the flimsy and paranoid fiat roller coaster that has reliably, since the end of WW2, led to AT LEAST ONE global economic recession, crisis, or crash EVERY DECADE, and causes economies to summersault on an investor spook, commodity concern, or otherwise the drop of the hat. How can any sane or rational person praise and laud the fiat currency economy after seeing it's repeated handiwork?
 
I think that's just capitalism in general, not much to do with the removal of the gold standard. There were and remain practical reasons to use fiat.

Like, sell me on the idea that with a gold or platinum or whatever backed currency, sell me on the idea that these crashes wouldn't happen. I don't see how one relates to the other, at all.
 
Ok I will check them out later. We’ll see how they stack up over the last 13 years in terms of deficits and net exports and employment.
They seem to be doing better than most countries running deficits in the last 13 years, for what it's worth.

Ah yes, because if I become more productive, money magically appears in my wallet as if it didn’t have to come from an issuing authority down the chain.

I'm stunned. Like, if we raise productivity, dollars magic into existence? What creates a new circulating dollar? Raising my productivity obviously increases wealth. But the new dollar has to come from somewhere ...
Jesus, stop thinking like bean counters.

Productivity matters to increase real output. Real output will determine the well-being of a country, not running deficits.

Of course the government can create money. Wow, what a great discovery! Nobody had realized that before the MMT sect came along and enlightened us silly mortals! Except of course this is a silly truism. The government creates the government-approved medium of exchange, who would have guessed!

But no matter how much money you create, you cannot guarantee full employment. Because money is just a medium of exchange, not a real resource.
 
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