[Steve_American]

This is 51 min. long, but you can skip to the part from 6 min. to 15 min. to see why I'm posting this.

Richard Werner. What's wrong with mainstream economics.

At about the 24 min. mark he talks about his experiment in 2014 that proved that banks create money with every loan.
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[late]

https://evonomics.com/

[Steve_American]

Some more videos along these lines are =>

Richard Werner on how CBDC [Central Bank Digital Currency] could be the end of banking and on the Sovietization of Europe
Reinvent Money 1 hr., 11 min. long

By the Sovietization of Europe, he means that the ECB is destroying the good small European banks in favor of large to huge banks that make loans to buy assets (real estate) instead of lending to firms that want to increase production like small banks do. Thus leading to too much concentration in decision making like in the USSR.

_________________________________.____________________________________

Joseph E. Stiglitz: The Role of Government in the Modern Economy | Webinar
The Australia Institute 1 hour long

Here he says that he is in favor of an MMT-like national Job Guarantee Program, among many other things.

[Puffer Fish]

What's wrong with mainstream economics. It uses a deductive methodology w/false premises

Failed post. You did not proffer any explanation why your claim was true.

You just expect us to watch that video. This is not acceptable post etiquette.

At about the 24 min. mark he talks about his experiment in 2014 that proved that banks create money with every loan.

So what? That additional money is not necessarily more wealth.

Any explanation for that? I didn't think so. This does not support your MMT theory claims at all.

[Steve_American]

Failed post. You did not proffer any explanation why your claim was true.

You just expect us to watch that video. This is not acceptable post etiquette.


So what? That additional money is not necessarily more wealth.

Any explanation for that? I didn't think so. This does not support your MMT theory claims at all.

I thought that you-all might believe a Prof. of economics, better than you believe me.

The part you need to hear is just a few min. long.

Lets see how many agree with you and 'like' your reply.

However, I'll post some of what he said, in my words.

. . . Prof. Werner lists some of their assumptions that MS Econ makes as => everyone is very selfish and doesn’t care about the welfare of anyone else, nobody is ever influenced by anyone else (so advertising is useless), the market is perfect with millions of corps selling each different item, in the market there is perfect knowledge where everyone knows everything about everything, there are no transaction costs, and capital (machines & things) that instantly converts to what is needed (mature grape vines convert to mature apple trees or steel mills convert to computer chip factories *whenever* the owner wants), etc. Remember this is his list.
. . . He also asserts there that MS Econ. Theory has factored banks and money out of the model.

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[Puffer Fish]

I want to show you a video too, Steve.

It's a place in Africa where they have "lots of money".

[late]

I want to show you a video too, Steve.

Was there a point?

[Rancid]

Dirty cash I need you.
Dirty cash I want you all.

[Steve_American]

I want to show you a video too, Steve.

It's a place in Africa where they have "lots of money".

https://www.you[==]tube.com/watch?v=iCDQpm6f_pU

Nice try. The US and other advanced nations are not failed states, yet.
They, therefore, have functioning tax systems. They also mostly sell bonds to the public to balance deficit spending.
. . . I gather that you don't yet understand that money being saved can't cause inflation. and that money that buys a bond is saved. And, in fact, can't be unsaved until its due date, because any buyer must also be saving it.
. . . I know that you are still captured by the groupthink that is mainstream econ.. That you sill can't wrap you head around how they lied to you in economics class as they allowed false premises into their proofs. If you had taken a logic class like I did, you would have learned that deductive logic takes the form of => "if A & B are true, then C is true." So, if A or B are false, C has not been proven as true.
. . . Yet, in Econ. class they do this on most days, if we include them using C & D to prove E as true because they had 'proven' C with a false A.
. . . So, almost every "proof" in MS econ. has proven nothing about reality. We live in reality, so MS econ. has not said anything useful about reality.

In one of the videos that I posted Richard Werner explains that his study showed no inverse relationship between interest rates and a growing GDP. If anything, it is a slight positive relationship. meaning high interest rates go with a strong economy. He points to Japan that reduces interest rates to zero over 15 years and it didn't slow the economy, so they kept lowering them to zero, then they tried negative rates. And this didn't work either.

Anyway, taxes give fiat money its basic value, because people need the fiat money, at least, to pay taxes. So, if a Gov. can't force the people to pay its taxes, its fiat money has no basic value and can inflate very easily.
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[Rancid]

Lots of money if flying into the dollar right now.

[Steve_American]

Was there a point?

Yes, Puffer Fish had a point.
It was that in all cases large amounts of deficit spending will always cause inflation and it will always become hyperinflation.

Of course, he only thinks this is true because MS econ. proved it. But, its proof used false premises, so their proof only proved what would happen in the fantasy world they had created and so, proved nothing about the real reality in which he and we live.

He refuses to grok this important fact.
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[Unthinking Majority]

I invested in the US dollar today. I bought $25,864 US dollars. I paid $25,864. Going to sell when it's worth 30k.

[ckaihatsu]

It was that in all cases large amounts of deficit spending will always cause inflation and it will always become hyperinflation.

I think what the regular observer of economics may miss is that it's not just about the *absolute* number of dollars in circulation ('money supply') -- it's also about the number of dollars in relation to *what they represent*, which is more like GDP (and the annual *growth* in GDP, or lack thereof).

The up-until-recently *deflationary* / low-prices regime was, in my estimation, due to the *surfeit of production* (capitalist 'overproduction'), meaning that more goods were chasing after fewer dollars.

These totalities of supply and demand should be recognized and understood, I would say. Incidentally, here's an illustration of totalities-all-lined-up, though it's meant for a *post*-capitalist context.


Pies Must Line Up

Spoiler: show

[Steve_American]

I think what the regular observer of economics may miss is that it's not just about the *absolute* number of dollars in circulation ('money supply') -- it's also about the number of dollars in relation to *what they represent*, which is more like GDP (and the annual *growth* in GDP, or lack thereof).

The up-until-recently *deflationary* / low-prices regime was, in my estimation, due to the *surfeit of production* (capitalist 'overproduction'), meaning that more goods were chasing after fewer dollars.

These totalities of supply and demand should be recognized and understood, I would say. Incidentally, here's an illustration of totalities-all-lined-up, though it's meant for a *post*-capitalist context.


Pies Must Line Up

Spoiler: show

Prof. Bill Mitchell is a Marxist and a founder of MMT. Maybe you should look closer at MMT.

Anyway, MMT also demands that the Gov. look at what all proposed new spending will require in terms of actual resources.
. . . MMT asserts that only when the available labor and resources are already being used doing something in the economy will more spending cause inflation. Thus, MMT sees shortages as causing inflation. MMT also asserts that selling bonds is saving and saved money doesn't cause inflation. So, the inflation of the 70s was caused by a reduced food harvest and OPEC tripling the cost of oil and imposing a shortage to start with. So, shortages.
. . . MMT asserts that it has been proven by looking at reality that simple deficit spending often does not cause inflation. OTOH, mainstream econ. refuses to look at reality, except when it suits them. So, now they blame the inflation on the deficit spending and not on shortages and corps price gouging to have larger profit. This suits them just fine, but it has not been proven that it isn't really the shortages and price gouging.
. . . MS economists just look at the money and ignore the needed real resources, maybe because they assume resources are infinite.

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[Unthinking Majority]

Prof. Bill Mitchell is a Marxist and a founder of MMT.

I didn't actually know that until now but NO FUCKING SHIT.

Holy fuck.

[ckaihatsu]

Prof. Bill Mitchell is a Marxist and a founder of MMT. Maybe you should look closer at MMT.

I may have brought-up parts of this earlier -- I *don't mind* the Fed increasing the money supply, because it's better than the opposite, which is tantamount to *austerity*.

That said, though -- since you made a point of it -- I don't think the (U.S.) capitalist economy can survive any kind of excessive debt-to-GDP ratio, and *no country* can. The past 20 years is a history of *bad debt*, and we've seen that (EU) countries themselves are not immune to becoming overextended, with their 'sovereign debt' at-risk (2012), especially when the economy *snaps back* at times.

Right *now*, in the U.S., we're seeing 'enthusiasts' shall-we-say -- like cryptocurrencies -- exposed.

Anyway, MMT also demands that the Gov. look at what all proposed new spending will require in terms of actual resources.
. . . MMT asserts that only when the available labor and resources are already being used doing something in the economy will more spending cause inflation. Thus, MMT sees shortages as causing inflation. MMT also asserts that selling bonds is saving and saved money doesn't cause inflation. So, the inflation of the 70s was caused by a reduced food harvest and OPEC tripling the cost of oil and imposing a shortage to start with. So, shortages.

There's the Marxist critique that the standard explanation of '70s stagflation can't account for really *why* the economy went to shit so suddenly -- sure, it was several factors, of course, but the cause-and-effect of it all is usually less-than-forthcoming. Some mention the national costs of the war on Vietnam, some mention deindustrialization / foreign competition, but there's also the factor of the huge *class war* measures taken at the time:

Interest rates were raised to historic levels for the purpose of inducing a recession that was utilized by the bourgeoisie to mount the most sustained offensive against the working class since the end of World War II. The recession spread to Europe within a matter of months. By 1982, the number of unemployed was double what it had been in 1975.

https://www.wsws.org/en/special/library ... 88/11.html

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. . . MMT asserts that it has been proven by looking at reality that simple deficit spending often does not cause inflation. OTOH, mainstream econ. refuses to look at reality, except when it suits them. So, now they blame the inflation on the deficit spending and not on shortages and corps price gouging to have larger profit. This suits them just fine, but it has not been proven that it isn't really the shortages and price gouging.
. . . MS economists just look at the money and ignore the needed real resources, maybe because they assume resources are infinite.

.

Yup, no argument.

[Steve_American]

@ckaihatsu,
If I understood you correctly, you didn't disagree with much of what I had said. Fine.

We do disagree on the sustainability of a debt to GDP ratio above 100%. You think it's a problem and I say it can be sustained forever, as long as the Gov. refuses to sell bonds with an interest rate above 1 or 2%. This will be a good thing as the economy contracts as the population declines and the people learn to consume less. A whole new theory of Econ. is needed for this inevitable outcome of our current climate crisis.

You are right that a debt to GDP ratio over 100% is different. I did some math a few years ago and realized that if the ratio is less than 100% cutting spending to have a surplus does not automatically make the ratio increase which it must do if the ratio is over 100%. But so what?

One more critical thing. Please get it through your head that Europe is in the grip of the EU & EZ rules. It functionally doesn't have a fiat currency in any EU nation. This because the rules keep nations from rolling over debt forever, and changing the exchange rates to protect their currency from attacks.
. . . Please, never compare the US to Greece or Spain. Never. Functionally they are as if they are still on the gold standard.

This is a basic huge gross error.
.

[ckaihatsu]

@ckaihatsu,
If I understood you correctly, you didn't disagree with much of what I had said. Fine.

We do disagree on the sustainability of a debt to GDP ratio above 100%. You think it's a problem

Only in *systemic* terms. I'm *not* a defender of capitalism, so I'll be glad to *discuss* these things empirically, but I have no interests in the continuation of capitalism. The system has actually become a *fetter* to further, greater social activity because of all of this necessary *fussing* over where it's going to go next, since everything's left to the 'invisible hand'.

and I say it can be sustained forever, as long as the Gov. refuses to sell bonds with an interest rate above 1 or 2%.

Wouldn't this artificially invert the yield curve, though -- ?

It would tend to subsidize the *short-term* at the expense of the *long-term*.

This will be a good thing as the economy contracts as the population declines and the people learn to consume less.

Why should people 'learn to consume less' -- ? (And why should the economy *contract*?)

That's definitely a systemic 'market failure', if the economy isn't providing for *people* in the ways that they require.


Social Production Worldview

Spoiler: show

---

A whole new theory of Econ. is needed for this inevitable outcome of our current climate crisis.

You're content to blame *global warming* for a failure of *capitalist economics* -- ?

You are right that a debt to GDP ratio over 100% is different. I did some math a few years ago and realized that if the ratio is less than 100% cutting spending to have a surplus does not automatically make the ratio increase which it must do if the ratio is over 100%. But so what?

Steve, this part of yours doesn't make any sense -- the thing that causes the debt-to-GDP ratio to *increase* is *more borrowing* (from savers, for 'economic nationalism'). I'm not a moralist about it, I'm just saying that, as with *any* investment, the 'opportunity' looks less and less attractive to the prospective investor as its *risk of default* increases (as with any corporate bond).

One more critical thing. Please get it through your head that Europe is in the grip of the EU & EZ rules. It functionally doesn't have a fiat currency in any EU nation. This because the rules keep nations from rolling over debt forever, and changing the exchange rates to protect their currency from attacks.

Okay, I don't think I said anything to indicate anything otherwise.

. . . Please, never compare the U to Greece or Spain. Never. Functionally they are as if they are still on the gold standard.

Yup, agreed.

This is a basic huge gross error.
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[Rancid]

I invested in the US dollar today. I bought $25,864 US dollars. I paid $25,864. Going to sell when it's worth 30k.

USA! USA!

That said, I wouldn't call it an investment, it's really a trade. Investment implies some sort of additional value to society/people/customers will be created. Buying/selling currency is basically just bet.

Should I short the Euro? Is that even possible.. can you short currency?

[Truth To Power]

At about the 24 min. mark he talks about his experiment in 2014 that proved that banks create money with every loan.

A fact he could have determined by consulting any good accounting textbook that describes banks' ledger entries.