Ep. 18 warren mosler defends the essential insights of modern monetary theory (mmt) – bob murphy ways to make more money show

This was very interesting, though sadly it confirmed my suspicions. Is there really anyone who disagrees with the MMT premise ways to make more money “the government can’t go bankrupt in terms of currency only it can ways to make more money produce if it’s willing to print the difference?” that’s just trivially true. Duh. I don’t understand why MMT proponents act as if that weren’t completely obvious to everyone. That’s not a revelation.

What people do object to is their ridiculous hand-waving of the very real – and very negative – resource misallocations or real economy effects this has. It seems to me like a theory where somebody found ways to make more money something they thought of revolutionary, the aforementioned trivial truth, and then went on to build on that a whole ways to make more money host of (completely unrelated) theories about under-utilization and idle capacity. Our belief in monetary constraint didn’t hold us back in that regard before. What we call “monetary constraint” are exactly those overwhelming real effects this kind of socialization ways to make more money and expansion of the public sector would cause.

MMT is not actually a modern monetary theory. The only “monetary” part of that theory is what everyone had already known, and nobody in the economics profession ever rejected (hence not “modern”). The accounting nature of assets/debts is trivial, and so is the insight that the government technically can’t go bankrupt (or illiquid), as long as the fed monetizes the debt. So why the “controversy” over MMT? Because from that, it does not follow that “the debt doesn’t matter.”

This is typically where MMT proponents come back with, “we’re not saying that!” yet in response to another comment you, yourself, made fun of bob (murphy) for warning about inflation, calling him “living in a fantasy.” let’s assume for a second that the rate of inflaiton ways to make more money should always be 0%, just for the sake of the argument. Otherwise, we might reasonably conclude that the fed’s actions in response to 08 DID create tons of ways to make more money harmful inflation, during a period where we SHOULD have had high rates ways to make more money of deflation, but instead got moderate inflation. Also, let’s assume just because an event didn’t occur, it was silly to warn about its possibility. Ee don’t even need to talk about any of that. The very obvious direct consequence of increasing the net public ways to make more money debt is to increase the share of spending coming from ways to make more money the government. And with it, an accompanying resource misallocation. Hence the empirical reality of high rates of debt/GDP destroying economic growth in the long run. Mosler has a few distinct arguments for specific avenues where ways to make more money this wouldn’t occur. Permanently under-used labor and other reasons why we’re supposedly below capacity, that government spending could allegedly remedy. The health care system ostensibly being more efficient when collectivized, rather than private. Etc.

None of those are “monetary” arguments at all. You could achieve everything mosler wants through some kind of ways to make more money unavoidable tax on money holdings instead of money creation. The only way you could claim that’s different is the old keynesian “price rigidity” argument. Now, if you want a critique of why all those things ways to make more money mmters champion (from the “green new deal,” over socializing health care, to a public jobs guarantee and more) are bonkers, then that’s gonna take ages. But none of them are unique to MMT, and none have anything to do, technically, with monetary theory. Yes, people might say, “we can’t afford that.” what that means, though, is “it’s gonna take away resources from the private economy and ways to make more money we don’t want to spend money on this.” technically, we could “afford” to make a ditch spanning from one ocean to the ways to make more money other…

And, last but not least, it’s just annoying to talk with them. All those, “public debt is just private savings! Don’t you like private savings?!” arguments are not clever. They’re banal. You could just turn that around and argue it doesn’t matter if the private sector increases its net debt ways to make more money forever, as that would constitute public savings. Duh. Irrelevant. Also, why are MMT proponents not arguing to get rid of ways to make more money all federal taxes? Are they afraid of hyperinflation?! They only seem to use their brilliant theory to advocate ways to make more money for spending-based public deficits. Why not revenue-based ones?

It’s a pattern I’ve seen in other domains of life, for example diet. There’s the “CICO” (=calories in, calories out) crowd. They take the question of “how do I lose fat” so literally that they are unable to see or accept ways to make more money any idea that does not take place on the pure, mechanistic level they’re thinking in. Duh, to lose fat, you have to lose calories. Duh, to create money, the fed changes numbers on a computer.

I think the average non-economist layman has a pretty good intuitive grasp that while ways to make more money this might technically work in the MMT sense, it would not be a good idea. What’s the distinction between MMT and every private person or ways to make more money company printing their own dollars? Why not simply allow everyone to print their own money, or allow people to take out money at the ATM ways to make more money without debiting their account? Is there some reason the government’s decisions here are much wiser with regard to resource ways to make more money allocation than those of the people who voted for them?

The problem is, of course, that we have money for a reason. Namely, allocate scarce (real) resources efficiently. Forcing the government to borrow and pay interest at least ways to make more money pays lip service to the idea that markets decide how ways to make more money these resources should be allocated. A policy like that advocated by mosler would be a ways to make more money huge jump towards a centrally planned command economy. Recipe for disaster.

I am unsure if mmters don’t even get that this is what deficit hawks mean ways to make more money by “how’re you going to pay for it”, or if they just don’t think centrally planned economies are a problem. Are they really just limiting their field to the trivial ways to make more money mechanical parts, or is this a rhetorical ploy to avoid talking about ways to make more money the problems with central planning?

He cites argentina and india as examples of where employment ways to make more money programs “worked”. Why not cite successful programs in nigeria and north korea ways to make more money as well? Libertarians don’t dispute that government can create jobs. The dispute is that those jobs are unproductive and do ways to make more money not improve our living standards. They actually serve to reduce living standards by misallocating capital.

It’s true that the government doesn’t really have the threat of bankruptcy because it can ways to make more money print (digitally speaking) money. This is what libertarians point out frequently. It is why state spending is more constrained than federal ways to make more money spending. This is why central banking (and federal control of the money supply) is so harmful. It isn’t just that central banking allows deficit spending. It is the fact that it allows increased spending than ways to make more money what would otherwise be tolerated under direct taxation. And virtually all government spending is a misallocation of resources. The more that government spends that isn’t directly related to protecting life and property, the more resources that are misallocated.

Mosler’s understanding of accounting (as demonstrated in this interview) is quite sketchy and indeed meanders around in self-contradictory ways. If you listen at around 09:20 he shows knowledge that modern accounting is double-entry and that every debit automatically must imply a credit. Then around 11:30 bob specifically asks whether this is a fundamental principle ways to make more money of all accounting with or without the gold standard, and mosler confirms yes it always applies. So far so good.

Wait, what? That’s not a property of double-entry accounting … any credit to one account implies a perfectly simultaneous debit ways to make more money to a different account. The total credits and debits in the system must at ways to make more money all times precisely subtract out to zero, therefore if you ever see an account with a credit ways to make more money balance you MUST somewhere have an account with a debit ways to make more money balance. This is fundamental mathematics and exactly what had mosler said ways to make more money earlier. So what is mosler talking about here?!?

Some people might have a built-in assumption that the largest debtor in the “big picture” chart of accounts will always be government (thus forcing non-government entities to be creditors in order for the system ways to make more money to balance) … but that’s a separate assumption (and a questionable one) which should be presented as an independent axiom, rather than quietly rolled into double-entry accounting.

Then around 41:00 on the question of “how are you going to pay for it?” we get the answer “the treasury instructs the fed to credit the appropriate account.” then elaborates, “… gives instructions to change the number in the account of ways to make more money whoever is getting the money from a lower number to ways to make more money a higher number …” and mosler goes on to provide a football analogy “… the same way if you kick a field goal and ways to make more money your score is 7 points and then the stadium gives ways to make more money you 3 points they just change the 7 into a ways to make more money 10.”

That said, if you believe that football has rules, and if you believe the scoring system displayed on the ways to make more money board comes about as a byproduct of the game and ways to make more money the rules, then the score is highly constrained. Any person watching a video replay of the players on ways to make more money that field should be able to independently reconstruct the score ways to make more money and if the rules of football are in operation then ways to make more money the answer is guaranteed to always be the same number. It becomes no longer arbitrary because of the tie to ways to make more money the physical events on the field. You have to physically kick that field goal BEFORE the ways to make more money points are awarded. Once it is tied together like that it can be ways to make more money audited (presuming you have some recording of the game).

“it’s true that the government doesn’t really have the threat of bankruptcy because it can ways to make more money print (digitally speaking) money. This is what libertarians point out frequently. It is why state spending is more constrained than federal ways to make more money spending. This is why central banking (and federal control of the money supply) is so harmful. It isn’t just that central banking allows deficit spending. It is the fact that it allows increased spending than ways to make more money what would otherwise be tolerated under direct taxation. And virtually all government spending is a misallocation of resources. The more that government spends that isn’t directly related to protecting life and property, the more resources that are misallocated.”

Without any degree of restraint on the financial power of ways to make more money the state, the government can fund wars near endlessly with its infinite ways to make more money power of wealth extraction via the mechanism of currency speculation. It’s amazing to me that mmters will scoff at the ways to make more money banks for receiving payoff in an economic collapse but when ways to make more money the speculation is done at the behest and pretense of ways to make more money populism suddenly it’s a great idea and the math will work out ways to make more money somehow.

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