Mainstream economists testify under oath to UK House of Lords that BoE, BoJ & US Fed. are doing MMT. - Politics Forum.org | PoFo

Wandering the information superhighway, he came upon the last refuge of civilization, PoFo, the only forum on the internet ...

"It's the economy, stupid!"

Moderator: PoFo Economics & Capitalism Mods

Forum rules: No one line posts please.
#15166344
The cat is progressively getting out of the bag – Part 1 & 2.

Part 1. . http://bilbo.economicoutlook.net/blog/? ... ment-71715
Part 2. . http://bilbo.economicoutlook.net/blog/?p=47257

In Part 2 the MMTer Prof. Mitchell wrote, "In relation to the helicopter money question, Charles Goodhart, a banking academic and former Bank of England Monetary Policy Committee member, then added:"

Charles Goodhart testified, "Under the Biden stimulus programme, every family will be sent a cheque for $1,400. If that is not helicopter money, I do not know what is.

"The Fed is now arguing that it will not raise interest rates effectively until it sees inflation occurring. If that is not modern monetary theory, I do not know what is.
"We are in a very weird world where we are actually undertaking helicopter money; we are following exactly the precepts of modern monetary theory, otherwise known as the magic money tree; and at the same time we are claiming that we are not doing it. We are doing what we claim we are not doing. I find this situation absolutely weird."


OTOH, I see this BS fear mongering. All the examples given involved a supply shortage and not JUST exces deficit spending.

Economics Explained says Hyperinflation is Already Here – You Just Haven't Realised It Yet.
#15166574
Steve_American wrote:"The Fed is now arguing that it will not raise interest rates effectively until it sees inflation occurring. If that is not modern monetary theory, I do not know what is."

Of course the danger is there might be some alternative explanation for why inflation is not occurring, and that could possibly even lead to very sudden inflation later.

Sometimes there is a disconnect between the numbers and market perceptions, and once the market realizes the fundamental numbers are a certain way, things can "snap into place" like a rubber band.


This may not be related to what's happening here, but one example I will relate to you comes from the housing bubble. The Central bank printed massive amounts of money, without observable inflation effects.
However, during the lead up to the bubble there was considerable inflation, caused by people thinking there was more money and more housing equity than there actually were. Of course, that inflation at the time was not noticed due to apparent increasing prosperity. But both that money and prosperity were illusory and not sustainable. When the Central Bank printed money, it did so with the understanding of filling the hole in the economy of money that had disappeared, to prevent housing prices from going down in nominal terms. In other words, they cemented the inflation that had previously taken place so that there would not be deflation back down to normal levels.

Sometimes there can be a strong inflationary effect, but that inflation is not observable because it is canceling out a deflationary pressure from something else (typically an economy deflating).
#15166592
Puffer Fish wrote:Of course the danger is there might be some alternative explanation for why inflation is not occurring, and that could possibly even lead to very sudden inflation later.

Sometimes there is a disconnect between the numbers and market perceptions, and once the market realizes the fundamental numbers are a certain way, things can "snap into place" like a rubber band.


This may not be related to what's happening here, but one example I will relate to you comes from the housing bubble. The Central bank printed massive amounts of money, without observable inflation effects.
However, during the lead up to the bubble there was considerable inflation, caused by people thinking there was more money and more housing equity than there actually were. Of course, that inflation at the time was not noticed due to apparent increasing prosperity. But both that money and prosperity were illusory and not sustainable. When the Central Bank printed money, it did so with the understanding of filling the hole in the economy of money that had disappeared, to prevent housing prices from going down in nominal terms. In other words, they cemented the inflation that had previously taken place so that there would not be deflation back down to normal levels.

Sometimes there can be a strong inflationary effect, but that inflation is not observable because it is canceling out a deflationary pressure from something else (typically an economy deflating).

IMHO, the US Gov. has been captured by the 1%.
Because the Fd. Res. Bank is an arm of the Gov. it is likely to also have been captured.
IMHO, since 2000, at least, the Fed. has been acting to control inflation AND to avoid deflation in stock prces and Real Estste prices. [It has ignored its other statutory goal of full employment, real full employment not fictional full employment.]
In the 2 articles above Dr. Mitchell explaind that QE does not add net funancil assets to the economy, that QE exchanges bonds for dollars. I think these dollars then need to be invested somehow. OTOH, sending a check to everyone does add net finncial assets to the economy.

Again, you are making a claim that the theory is correct. That therefore, someday the inflation will happen. What evidence is there that it is correct? Tell me.
I claim the theoory is not correct. I claim that the evidence that I'm right is very easy to see.
. . a] Reagan tripled the national debt in 8 years. There was no hyper inflation. If Biden was planning to triple the debt in 8 years all maunstream economists would be screaming, "Don't do it!" Yet, when Reagan did it nothing happened.
. . b] Japan since 1992 has increased its national debt a lot and so far it has had no problems.
. . c] Obama increased the debt a lot and there were no problems, in fact many economists say he increased it too little.

Yes, I know, someday all these will be a problem. Someday.

I lived though the 70s. I survived. Most people did. Who suffered? I don't know. Was it the rich? If so, I don't care. Really, why should I demand the Gov. follow polcies that let/make the mass of the people suffer for years or even decades so that the rich will [maybe] not suffer someday? It makes no moral sense!!! Does it even make economic sense?
If the ones who suffered were those on Sec. Sec., that could easily have been solved by increasing their checks. The Gov. can't run out of money.
.
#15166599
Steve_American wrote:
Yes, I know, someday all these will be a problem. Someday.


So kicking the can down the road is ok for the future generations to sort out? :eh:

It is difficult to make a prediction what is going to occur in the future because we have been wrong before. I would be surprised if we don't have some inflation issues given we have been supplying everyone with free money so people will be able to spend to keep the economy running (increase cash flow) whilst in 2008 it was to bail out toxic loans so the money was theoretically already in the economy due to banks lending money people didn't have (and incidentally neither did the banks).

I guess what I am saying is until everything is back to normal and people begin spending again we will not know what the affects of mass borrowing has. We do however know what affects we can expect if you flood a market with currency without a plan to draw that back via taxes. I think America is in a fortunate position given it is the reserve currency and used for commodity exchange so demand for Dollars is greater than what it should be. But debt has still reached 200% and your economy is based on huge debt. So I cannot see how that is sustainable. So these are problems today actually and not in the future. Very much like climate change. Thinking we can just spend our way out of debt is ignoring all the lessons we do know from the past.
#15166606
B0ycey wrote:So kicking the can down the road is ok for the future generations to sort out? :eh:

It is difficult to make a prediction what is going to occur in the future because we have been wrong before. I would be surprised if we don't have some inflation issues given we have been supplying everyone with free money so people will be able to spend to keep the economy running (increase cash flow) whilst in 2008 it was to bail out toxic loans so the money was theoretically already in the economy due to banks lending money people didn't have (and incidentally neither did the banks).

I guess what I am saying is until everything is back to normal and people begin spending again we will not know what the affects of mass borrowing has. We do however know what affects we can expect if you flood a market with currency without a plan to draw that back via taxes. I think America is in a fortunate position given it is the reserve currency and used for commodity exchange so demand for Dollars is greater than what it should be. But debt has still reached 200% and your economy is based on huge debt. So I cannot see how that is sustainable. So these are problems today actually and not in the future. Very much like climate change. Thinking we can just spend our way out of debt is ignoring all the lessons we do know from the past.

IMHO, it is alsoquite possible to kick the can down the road for future generations to sort out while spending no money on the problem.
. . The annalogy is naval ships. If you cut down the crew to just enough to run the ship in peacetime, then in battle you will find that you don't have enough crew to repair dmage or replace casulties. The extra crew are for when the sh*t hits the fan.
. . In the same way the nation should spend to get redy for a pandemic. The people and businesses can't do this, only the national gov. can. It needs to have extra hispitals with empty beds just for infectious cases. It needs masks, millions of masks. It needs extra doctors and nurses. Etc. Yes, it is ineffecient until the sh*t hts the fan. We lost 1/2 M people because we were not ready.

The same thing applies to infrastructure. Someday a rusting bridge will fall down. When it does it will kill people and also cause economic problems for the area.

The same thing applies to education. The netion needs trained workers. If the poor can't pay to get their children trained for the jobs needed, then who is going to pay for this.

I lived through 15% inflation for a few years, it was no big deal for me. Why is everyne so scared of a little inflation? Why do some people not fear a little deflation, some even work to cause it? Isn't deflation much worse than inflation?

Why can't all those here who oppose MMT grok that the economic theory they beieve is literally designed to cause recessins so that the 1% can goddle up houses at fire sale prices? It is designed to keep the mass of the people on the edge of disaster. It is designed to cause effects that Jesus would call evil.
. . MMT is designed to avoid recessons and to provide a real job to everyone who wants one. To provde welfare for only those who can't work. It is designed to be stable, not un-stable. It is designed to be moral, to cause effects that Jusus would call moral. Yet, it is still capitalism.
.
#15166609
Steve_American wrote:IMHO, it is alsoquite possible to kick the can down the road for future generations to sort out while spending no money on the problem.
. . The annalogy is naval ships. If you cut down the crew to just enough to run the ship in peacetime, then in battle you will find that you don't have enough crew to repair dmage or replace casulties. The extra crew are for when the sh*t hits the fan.


How about this for an analogy. If the ship is sinking, you don't continue to play poker in the Casino. You actually abandon ship!

. . In the same way the nation should spend to get redy for a pandemic. The people and businesses can't do this, only the national gov. can. It needs to have extra hispitals with empty beds just for infectious cases. It needs masks, millions of masks. It needs extra doctors and nurses. Etc. Yes, it is ineffecient until the sh*t hts the fan. We lost 1/2 M people because we were not ready.


We never planned for a pandemic and that has costed lives which is true. The problem we had was this pandemic was selective on who it killed and as such the advice should have been to isolate them rather than shutting down the entire economy. Lockdowns have repercussions which I would expect to be worse for the young of society than the pandemic itself. Besides, I don't have an issue with MMT or deficit spending for growth. I do have a problem with borrowing to increase spending because we shut down the economy. But if we are insistent on borrowing for this faux issue that is given more prominence than it deserves and governments refuse to acknowledge they over reacted at the start of all this, then they need a sustainable solution of drawing that back in via taxes in the next year or two. Borrowing upon borrowing just makes the solution worse when you do have to deal with it. In other words kicking the can down the road isn't delaying the issue. It makes the issue worse.

The same thing applies to infrastructure. Someday a rusting bridge will fall down. When it does it will kill people and also cause economic problems for the area.


What a selfish thing to say. Fuck it I'm old. Give me my lockdown and let everyone else suffer for my greed. How about financing the bridge with taxes so it has annual repairs so it doesn't collapse to begin with?

I lived through 15% inflation for a few years, it was no big deal for me. Why is everyne so scared of a little inflation? Why do some people not fear a little deflation, some even work to cause it? Isn't deflation much worse than inflation?


Inflation in the 70s was due to a fuel crisis. And that had problems with economic output which had a problem with public spending but was temporary nonetheless. What is different this time is inflation is during a time of low interest rates and as such the government doesn't have any mechanisms to deal with inflation any more if it becomes a MAJOR problem. Inflation during high credit borrowing is also an issue due to default of debt and would create something significantly worse than 2008 today. Also put in the notion that inflation stops spending which would increase job losses and you can see why many people worry about high inflation. Can you imagine everyones bills going up 15% ( or greater) today when people are already protesting they are getting left behind in America today?

Why can't all those here who oppose MMT grok that the economic theory they beieve is literally designed to cause recessins so that the 1% can goddle up houses at fire sale prices? It is designed to keep the mass of the people on the edge of disaster. It is designed to cause effects that Jesus would call evil.
. . MMT is designed to avoid recessons and to provide a real job to everyone who wants one. To provde welfare for only those who can't work. It is designed to be stable, not un-stable. It is designed to be moral, to cause effects that Jusus would call moral. Yet, it is still capitalism.
.


Capitalism in my opinion is doomed. I don't dispute MMT actually, I just don't think mass borrowing without at least balancing the books is sustainable. In fact, the tax gained could be capital from businesses that have done well under the pandemic or by increasing the income tax threshold or closing all loopholes.
#15166750
Steve_American wrote: "Under the Biden stimulus programme, every family will be sent a cheque for $1,400. If that is not helicopter money, I do not know what is.

Just to point out, for those who may not be familiar with this or informed, less than 18% of that total extra spending bill is going directly to Americans. Only about 9% if we only count those $1,400 cheques.

It's a little disingenuous and a red herring to be using this direct free money as something that is representative of what is actually going on in the spending bill.

If government were simply printing money to hand it out free to the people, that would be one thing, but that's only a small part of what's going on here. Most of that newly printed money will be going to other things.
#15166771
B0ycey wrote:


How about financing the bridge with taxes so it has annual repairs so it doesn't collapse to begin with?





Because we can't.

It's ironic, the New Deal deficit spending built roads, now we need a project like the New Deal just to repair them.

Americans have been ignoring sustainability problems like they will just go away. They're gonna get a lot worse.
#15166828
@B0ycey, you wrote,
"We never planned for a pandemic and that has costed lives which is true. The problem we had was this pandemic was selective on who it killed and as such the advice should have been to isolate them rather than shutting down the entire economy. Lockdowns have repercussions which I would expect to be worse for the young of society than the pandemic itself. Besides, I don't have an issue with MMT or deficit spending for growth. I do have a problem with borrowing to increase spending because we shut down the economy. But if we are insistent on borrowing for this faux issue that is given more prominence than it deserves and governments refuse to acknowledge they over reacted at the start of all this, then they need a sustainable solution of drawing that back in via taxes in the next year or two. Borrowing upon borrowing just makes the solution worse when you do have to deal with it. In other words kicking the can down the road isn't delaying the issue. It makes the issue worse."

Well, there are a lot of things to say to that.
1] If the US had responded like New Zeland, Vietnam, and Thailand did, there would have been no need for those lockdowns. I can say from personal experience that in Thailand I was hardly effected at all. Yes, our favoriite restaurant was closed for months, but the Gov. kept the owners afloat. Now, it is open again.
2] Half-ass lockdowns are the worst of all possible responces.
. . a] In 1918 the nnation just let it rip. Many people died, but the economy kept everything going more or less fine.
Now, we know much more about such diseses AND can make a vacine in about a year. This was an option even now.
. . b] We could have used real lockdowns like the most successful nations did. They can be seen now as being the most successful in this pandemic. They closed the borders to everyone right away. This was key. Here in Thailand the Gov. leased hotels to house people returning home for 2 weeks in 'isolation'. Aso, in Thailand we got extra payments and extra food without even asking for a thing. This is evidence of just how generous the Gov. was to everyone. As a result Thailand had about 1/100 the percapita death toll as the greatest richest nation the world has ever known (America) suffered from the pandemic.
. . c] Instead of either of the 2 options above the US went with no universal mask wearing, half-ass lockdowns, and a slightly open border with no isolation. The result was about as many deaths as if they had chosen option a] above, AND massice ecomonic damage to the nation while the 1% sucked, literally, over a trillion dollars out of the economy.

Whose fault was this? IMHO, 1st, it was Trumps fault. Obama had provided a plan and Trump ignored it. 2nd, it was Congress's fault because they threw dollars at the wrong part of the economy. The 1% didn't need or deserve $1 of help in the crisis. They had caused the lack of preparedness and had money to burn while they rode out the pandemic. Congress gave dollars to their donors instead of the citizens and voters. 3rd, I blame the state and local offiicials who didn't do the right thing. (Of course, knowing what the right thing was, was not as obvious a year ago than it is now. See what Vietnam did, to know what the right thing was.) 4th, it was the fault of the neoliberal economists who taught everyone the wrong thing. In the name of efficiency they stopped the nation from being ready for the pandemic that *every* expert said was just a matter of time. The economists taught that inflation 'someday' was the real threat and not the disease that was sure to come along.

Some people here on this site are still saying that the possibility of inflation 'someday' is the greater worry than repairing the economic damae that the horrible handling of cocid-19 caused to the US economy. Damage to an economy is really the sum of a lot of damage to people. And, Jesus taught that, it is how you treat other people that is the measure of a man or a system. Neoliberal economics teaches the opposite. It teaches that everyone should think only of what is good for themselves and screw all others every legal chnce they get; and, in fact, try to make the illegal things you'd like to do, legal.
.

If there is evidence showing that it is more plaus[…]

Yes, we know you believe Amit Soussana is a liar ([…]

Russia-Ukraine War 2022

^ I shared the Sachs and Meirsheimer videos in her[…]

Hmmm, it the Ukraine aid package is all over mains[…]