What is Modern Monetary Theory?

[sophie]

i do not know what sealioning is or means.

More formally, it's this:

Sealioning (also spelled sea-lioning and sea lioning) is a type of trolling or harassment which consists of pursuing people with persistent requests for evidence or repeated questions, while maintaining a pretense of civility.[1][2][3] It may take the form of "incessant, bad-faith invitations to engage in debate".[4] The troll feigns ignorance and politeness, so that if the target is provoked into making an angry response, the troll can then act as the aggrieved party.[5][6] Sealioning can be performed by a single troll or by multiple ones acting in concert. The technique of sealioning has been compared to the Gish gallop and metaphorically described as a denial-of-service attack targeted at human beings.[7]

As noted in the quote, Sealioning is also often combined with Gish-Galloping in internet settings. Gish-Galloping being an attempt to flood/overwhelm debate by throwing lots of little arguments at a debater, banking on the fact that responding properly to each point in detail is so time-consuming and mentally taxing that the debater will either cede the point (at which point the Gish-Galloper can claim absolute victory), or else they will lash out in exasperation, at which point sea-lioning comes into play.

 

[Lexicus]

Sealioning (also spelled sea-lioning and sea lioning) is a type of trolling or harassment which consists of pursuing people with persistent requests for evidence or repeated questions, while maintaining a pretense of civility.[1][2][3] It may take the form of "incessant, bad-faith invitations to engage in debate"

 

[Birdjaguar]

From my perspective what you're doing looks a lot like sealioning

That is certainly a quick way to end the conversation. So, your inability to explain yourselves to those unfamiliar with MMT becomes trolling on my part. Enjoy your day.

 

[Lexicus]

That is certainly a quick way to end the conversation. So, your inability to explain yourselves to those unfamiliar with MMT becomes trolling on my part. Enjoy your day.

I mean you literally just told me a few posts ago that when I use words it sounds like intellectual masturbation. good thing I have a thick skin or that might have been a conversation-ender! talk about 'dish it out but can't take it'...

 

[Birdjaguar]

I mean you literally just told me a few posts ago that when I use words it sounds like intellectual masturbation. good thing I have a thick skin or that might have been a conversation-ender! talk about 'dish it out but can't take it'...

Yes, that is why I suggested a graphic. The conversation so far has sounded like a philosophical discussion and not an economic discussion. You haven't presented any substance that is rooted in real world activity. To help things along i then asked for a list of basic principles or assumptions. If MMT is just theoretical, how is it valuable? If it has real application, show me what that is.

 

[sophie]

It is a reflection on the fact that you don't seem to get your fundamental principles across to others. If you cannot explain what you are talking about to non believers, your pool of adherents won't grow. I'm open and willing to learn, but so far you haven't presented anything convincing or even particularly enlightening. Mostly you seem to be saying is "we are right and your are wrong."

What are the three? basic principles/assumptions of MMT?

I mean, it's pretty straight forward:

(T-G) + (S - I) + (M - X) = 0

That is to say: public sector net in/out + private-domestic sector net in/out + foreign sector net in/out = 0.

 

[Birdjaguar]

Thanks @Owen Glyndwr Why is that true? Or is it an assumption? How would changes in population affect things?

 

[Farm Boy]

Thanks @Owen Glyndwr Why is that true? Or is it an assumption? How would changes in population affect things?

It's easy to confuse deficit with debt, when they aren't the same at all.

If there are 300 million dollars and 300 million people, there is one dollar per person to go around. If the government farts a new million fiat dollars into existence("prints" them), what is it going to do with the dollars? It could sit on them, or it could spend them. If it spends them, there are now 301 million dollars in play. Or more dollars per person(broadly inflationary, but that doesn't mean actually in circulation, right?). The actual effect is going to depend on how the government spends them and where the dollars wind up. If the government never farts out new dollars, only collects existing dollars through taxes and then spends those same dollars back out, assuming population growth you will have less dollars per person over time, so broadly deflationary with the same caveats. If the government constantly farts out new dollars, but those dollars constantly wind up where most of the dollars are already, then you wind up with concentration of real assets as the relative purchasing power of real/productive resources of people with old same same dollars are outbid by nubucks. At least that's the part I follow roughly, I think.

There's stuff in there then about how people not working on things that people want them working on(policy) or not getting money for things they want to be doing(policy) and how one accounts for unproductive(policy) and waste(policy) and the application of spending. If people are willing to work harder at chasing nubux than other people, the other people will fall behind and people can be persuaded into chasing nubux(policy again). Basically, if people are looking for work and they want work and you don't have inflation, the government can hire them to do work The People want done(ta dahhh, an application).

 

[Lexicus]

Yes, that is why I suggested a graphic. The conversation so far has sounded like a philosophical discussion and not an economic discussion. You haven't presented any substance that is rooted in real world activity. To help things along i then asked for a list of basic principles or assumptions. If MMT is just theoretical, how is it valuable? If it has real application, show me what that is.

Well, El_Mach asked you a little while ago to give an account of how you think dollars are created, which you evidently decided not to do. It would be very helpful for you to talk some about your own knowledge of economics, because I don't know what level of understanding to assume when I post. My posts in this thread thus far have assumed some knowledge of economics.

I have already indicated a few different real-world applications of MMT. @Hygro listed even more in his last post.

I also think there are some philosophical assumptions I disagree with embedded in the last couple of questions you ask here. My view is that accurate theories about the world are essential to guide action and make sense of things. I guess it's also worth noting that it took me months and months of reading to wrap my head around MMT - it wasn't something that someone explained to me in 5 minutes.

Thanks @Owen Glyndwr Why is that true? Or is it an assumption? How would changes in population affect things?

It is true for the same reason that double-entry bookkeeping is "true." It's just applying the principles of double-entry bookkeeping to the economy as a whole.

 

[sophie]

Thanks @Owen Glyndwr Why is that true? Or is it an assumption? How would changes in population affect things?

It’s true because money is zero-sum.

Let’s say you and I live together on an island. You have ten dollars and I have zero. You pay me 5 dollars for a coconut that I have. In terms of transactions, you are now -5 and I am +5, which equals 0. The amount of dollars on the island hasn’t changed; it still equals 10, all that has changed is the distribution of those 10 dollars.

This is an extremely simplified example, obviously, but it can be analogized to the wider world. The amount of money is fixed for a given moment, and all of the transactions which occur have to sum to the amount of money which exists.

If the government pays a contractor to build a road, then the government has spent that money, and is net-negative, while the contractor has gained money, and so is net-positive. The net of both, ignoring foreign spending/investment has to be 0. One has to be in deficit and one has to be in surplus. The difference, and key point which MMT makes, is that the government can sustain a deficit because they are the ultimate arbiters of how much money exists; they definitionally cannot go bankrupt. The private sector cannot do the same. A chronic deficit is not sustainable for a private firm. This is evidenced in both graphs I showed above: the recessions in both 2001 and 2007-2008 were preceded by sustained deficits in the private sector.

 

[Birdjaguar]

Well, El_Mach asked you a little while ago to give an account of how you think dollars are created, which you evidently decided not to do. It would be very helpful for you to talk some about your own knowledge of economics, because I don't know what level of understanding to assume when I post. My posts in this thread thus far have assumed some knowledge of economics.

I am still thinking about how dollars are created. The word dollars is undefined at this point and could mean different things. How does MMT define a dollar?

I have already indicated a few different real-world applications of MMT. @Hygro listed even more in his last post.

I also think there are some philosophical assumptions I disagree with embedded in the last couple of questions you ask here. My view is that accurate theories about the world are essential to guide action and make sense of things. I guess it's also worth noting that it took me months and months of reading to wrap my head around MMT - it wasn't something that someone explained to me in 5 minutes.

You looked back to explain past recessions, kinda. If MMT is a guide, what does it say government should do now or in the next year? To be useful, MMT needs to be able to look forward. Does it do that?

It is true for the same reason that double-entry bookkeeping is "true." It's just applying the principles of double-entry bookkeeping to the economy as a whole.

OK We know that DE bookkeeping is useful for matching income and expense accounts to make sense of transactions. Like most of accounting it is backward looking. It is not so good as a forecasting tool. Does MMT have the ability to forecast?

 

[rah]

Sealioning (also spelled sea-lioning and sea lioning) is a type of trolling or harassment which consists of pursuing people with persistent requests for evidence or repeated questions, while maintaining a pretense of civility. It may take the form of "incessant, bad-faith invitations to engage in debate".

God, I'm slow, I'll blame old age.

 

[El_Machinae]

Thanks El Mach.

You bet. A 'dollar' doesn't need to be undefined. It's the literal dollar in your wallet, or all of its legal equivalents. It's not anything that can be exchanged for a dollar. It's a dollar. A can of soup isn't a dollar, it's just worth a dollar. Same with IBM shares or a nugget of gold. Or even my promise to pay you a dollar.

Okay, the underlying premise is that an economy is running just fine if people are employed making stuff that other people want. It can almost be viewed as a barter system, and we often do. We just use dollars as a proxy. It's where we run into the problem of thinking of a can of soup AS a dollar. In the end, I'm trading gardening for roofing. And me tending your garden in exchange for you roofing my house is better than both of us just sitting at home doing nothing, or me just wasting my time roofing when I garden so much better. The thing is, in our economy, we need dollars to start the process. I come to you with $100 so that you'll roof my house and then you'll hand back that $100 for me to garden. The net spending is zero, but we're both better off. Even if your result of the transaction is zero savings (in dollars) the fact that you got stuff done means you're better off.

So, then we get into the reality of how money works. All dollars (except printed ones, infra) are borrowed into existence. This means that interest is owed and also the dollars are temporary. If I go to the bank and borrow $100, then two things are created at the same time. The first is my debt to the bank. The second is literally the $100 bill. In the United States, y'all use fractional reserve banking, so there's a second set of debt created as well, but it's completely immaterial to the discussion except when we're explaining why certain organizations were buying negative-yielding bonds.

But in Canada, it literally just happens at our bank level. One second there're zero dollars. The next second there's a hundred dollars and a debt for one hundred dollars plus interest.

It's the 'plus interest' part that matters. This means that there's never enough money to pay off all the debts outstanding. When I borrowed the $100 so that you'd roof my house, I can only (at most) get back $100 from you by gardening. It doesn't matter how much I garden. I could garden like a gardening-gardener-who-really-knows-how-to-garden and the most I can get back from you is $100. Unless new money is created in the meantime. Then I can hustle for those dollars to pay my interest. Without new dollars, either I default on my loan OR I'm tricked into being endlessly enslaved thinking that I could possibly work off my debt. But the outright worst scenario is that I don't actually do any gardening. The money is fiat and doesn't really exist. The fact that my house needs a better roof and your garden needs tending *actually* matters with regards to how tomorrow looks. If there's no money available for me to pay off my loan, then I'm going to huddle and do nothing, because I can afford nothing.


When I pay back the $100 to the bank, that money just (literally) disappears. It's gone. No one owns it. My debt disappears and the money disappears at the same time. The bank owns the interest I paid, though. So, next time I go out looking for money, I could approach the bank to see if they need any gardening done. Keep in mind, with the profitable exchange to happen (roofing for gardening) there must be more than one hundred dollars in the economy, or else the profitable exchange results in one person defaulting ... and there's no 'real' reason that should happen.

The really important part is that the $20 I currently (literally) have in my wallet means that someone is in debt $20 (plus interest). It could be a household. It could be a business. It could be a government. Somebody owes the money that I have. The entire system is stable if someone else borrows a new dollar into existence for us to scramble over. Now, eventually everyone realizes that they've borrowed too much, because all the dollars are being held by people who feel no need to spend them (you've nothing they want). We then all hunt for dollars to pay off our loans, but there's not enough money available to pay them all off. So, to save money, I delay roofing my house and you delay gardening. Because I delayed, you don't get paid. Because you delayed, I don't get paid. And our assets materially crumble for no real reason other than the economy is 'broken'. Because of this potential damage, the government can literally just print money and hand it to one of us and then we both employ each other again (in the US, this takes the form of the Fed buying something). And then there are extra dollars that can actually land in a savings account, even if it's not backed by debt. Since a lot of savings are perpetually unspent, it doesn't matter. It just sits in a savings account. It's an economic reality that those dollars could be spent, but it's also a behavioural reality that some won't be.

 

[Birdjaguar]

It’s true because money is zero-sum.

Let’s say you and I live together on an island. You have ten dollars and I have zero. You pay me 5 dollars for a coconut that I have. In terms of transactions, you are now -5 and I am +5, which equals 0. The amount of dollars on the island hasn’t changed; it still equals 10, all that has changed is the distribution of those 10 dollars.

This is an extremely simplified example, obviously, but it can be analog used to the wider world. The amount of money is fixed for a given moment, and all of the transactions which occur have to sum to the amount of money which exists.

If the government pays a contractor to build a road, then the government has spent that money, and is net-negative, while the contractor has gained money, and so is net-positive. The net of both, ignoring foreign spending/investment has to be 0. One has to be in deficit and one has to be in surplus. The difference, and key point which MMT makes, is that the government can sustain a deficit because they are the ultimate arbiters of how much money exists; they definitionally cannot go bankrupt. The private sector cannot do the same. A chronic deficit is not sustainable for a private firm. This is evidenced in both graphs I showed above: the recessions in both 2001 and 2007-2008 were preceded by sustained deficits in the private sector.

Nice. Now if a new coconut drops from a tree, the equation gets out of balance.

This gets back to the question of creating money. If I write a 200 word children's book that sells well, have I created money/dollars/wealth? Have I conjured a new coconut?

 

[sophie]

Nice. Now if a new coconut drops from a tree, the equation gets out of balance.

This gets back to the question of creating money. If I write a 200 word children's book that sells well, have I created money/dollars/wealth? have I conjured a new coconut?

The equation remains the same because the amount of money hasn't changed. There are two coconuts, yes, but there are still only $10 on the island.

If you print five more dollars, the equation still hasn't changed, because the equation is concerned with transactions, not raw total. A dollar is a meaningless piece of paper unless and until you use it to represent a transaction. If you print five more dollars, and use those five dollars to buy another coconut from me (the one which fell from the tree and which I collected), then now you are -10 and I am +10. The net sum is still 0.

 

[El_Machinae]

Nice. Now if a new coconut drops from a tree, the equation gets out of balance.

This gets back to the question of creating money. If I write a 200 word children's book that sells well, have I created money/dollars/wealth? have I conjured a new coconut?

You've created new wealth, for sure. But not money. New money is created when someone borrows money into existence to buy your book. Wealth is transferred if someone uses existing money to buy your book. Because you now have dollars (and the buyer doesn't), you then have a say on what the person who owes money should do with their labour to earn the money required to pay off the debt.

The new coconut is wealth as well. But you've not created new dollars. Reread Owen's post, none of his equation changes because of the new coconut. There are no new dollars. There's just a new balance of real wealth.

 

[Farm Boy]

Coconuts are just now worth less. Welcome to the trap when the farm program is sucking. Everything else works the same way, but since you plant 1 seed and magic up a whole ear, it's usually relatively simple to picture.

 

[Birdjaguar]

The equation remains the same because the amount of money hasn't changed. There are two coconuts, yes, but there are still only $10 on the island.

If you print five more dollars, the equation still hasn't changed, because the equation is concerned with transactions, not raw total. A dollar is a meaningless piece of paper unless and until you use it to represent a transaction. If you print five more dollars, and use those five dollars to buy another coconut from me (the one which fell from the tree and which I collected), then now you are -10 and I am +10. The net sum is still 0.

You've created new wealth, for sure. But not money. New money is created when someone borrows money into existence to buy your book. Wealth is transferred if someone uses existing money to buy your book. Because you now have dollars (and the buyer doesn't), you then have a say on what the person who owes money should do with their labour to earn the money required to pay off the debt.

The new coconut is wealth as well. But you've not created new dollars. Reread Owen's post, none of his equation changes because of the new coconut. There are no new dollars. There's just a new balance of real wealth.

Coconuts are just now worth less. Welcome to the trap when the farm program is sucking. Everything else works the same way, but since you plant 1 seed and magic up a whole ear, it's usually relatively simple to picture.

OK, so to keep the equation in balance, you have to change the values of the components. To means that means what MMT does is force all transactions into its equation such that things equal zero. Then from that if one component gets too far out of whack, trouble ensues. Given the three main parts are government+domestic+foreign = 0, does the trouble usually arise in the domestic section?

 

[El_Machinae]

I have a lot of sympathy for Farms, because they are the very embodiment of the weakness of our free-market system. They are tricked into borrowing in order to increase productivity, and then competition drives profits to zero. Now, we like it when competition drives other people's profits to zero, and the entire system models from that premise. But the fact that the farms were tricked into borrowing means that they suffer from a lack of dollars, not real wealth. Every year, a successful Farm is using better Capital more effectively, and somehow owning less of it every turn of the seasons

 

[El_Machinae]

OK, so to keep the equation in balance, you have to change the values of the components. To means that means what MMT does is force all transactions into its equation such that things equal zero. Then from that if one component gets too far out of whack, trouble ensues. Given the three main parts are government+domestic+foreign = 0, does the trouble usually arise in the domestic section?

You lost me a bit. I'm not quite sure what you're asking. Mmt notices that things work best when there is light inflation and high levels of productive employment. But this is a mainstream viewpoint, not specific to the theory