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Modern Monetary Theory 101

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quixote's picture
Submitted by quixote on

Not to start anything or anything but ... it seems to me that the linked article (which is very lucid by the way, even for me!) supports exactly what I see people here saying:

MMT's main contribution is making clear that money is a human construct and, as the last sentence says "Knowledge is no substitute for political power. It is merely somewhere to start." Which I think was danps's main point in his post?

(It took me a long time to get around to reading it, which is why this comment is so late. It's my impression there have been voices since forever pointing out that money is a human construct? :amazement: They just don't always draw the conclusion that it means one can alter its supply as needed, for some values of "need.")

danps's picture
Submitted by danps on

It is a very well written and lucid piece. But then there's this:

Bill Mitchell warns that giving away money is more inflationary than purchasing labor; a basic income would have to be balanced by more vigilant taxation for its value to not be rapidly inflated away...Job and income guarantees are complementary policies.

So MMT favors, at least conditionally, a basic income. Except when it doesn't:

basic income guarantees are unlikely to achieve the objectives of alleviating poverty, income inequality or poor standards of living, because the proposals have an inherent highly inflationary bias with disastrous consequences for the currency.

Once again, as soon as we leave the "monetary theory" part of MMT everything is up for grabs. I think Rainbow Girl summed it up pretty well a little while ago:

Does this mean that "MMT" is whatever one's "construct" or "definition" of it is? Like a Roscharch test? Is it even possible to provide citations or links in responding to a discussion or post about MMT that consists of a "construct" or "definition" or "interpretation" of the large opus of MMT -- which is a corpus of separate writings by separate people several of whom seem not even to agree with each other on essential features like "public purpose," "tool" vs. "Policy," etc. (for example: you and Ben right here; another writer responding to a critique of Wray's "no taxes" post at NC saying "Wray is not MMT").

Once you get past currency creation there's, let's say, quite a bit of latitude in how one defines or constructs the thing. (Bonus points to Tcherneva and Wray for raising the specter of "highly inflationary bias" with the basic income.)

Submitted by lambert on

political being "up for grabs."

Vulgar whacky MMT h8terz say "ZOMG!!!! Zimbabwe." More sophisticated MMT h8terz will take a claim like inflationary tendencies can be managed with taxation and call that "up for grabs." Match with the straw?

Sounds to me like the old progressive failing of being afraid to use political power; they'd rather have a perfect theory that makes the dirty bits go away. Of course, there's no such thing, which leaves them analytically paralyzed.