[Steve_American]

"Why The Government Has Infinite Money" or how money really works with fiat currencies.

Another youtuber explains how money really works, and that MMT is right, in that it is real resources that constrain Gov. actions.
Also, that 85% of the money supply was created by banks when they made loans. Note that, no fiscal conservative cares about excessive loans being made by banks. This is because banks are private and so their profits are more important than the economic health of the nation.

Remove the [==] to see it.
https://www.you[==]tube.com/watch?v=kFhKVCaadzE&list=TLPQMjIwOTIwMjOPrm5iey569g&index=6

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[Truth To Power]

"Why The Government Has Infinite Money" or how money really works with fiat currencies.

Another youtuber explains how money really works, and that MMT is right, in that it is real resources that constrain Gov. actions.
Also, that 85% of the money supply was created by banks when they made loans. Note that, no fiscal conservative cares about excessive loans being made by banks. This is because banks are private and so their profits are more important than the economic health of the nation.

Remove the [==] to see it.
https://www.you[==]tube.com/watch?v=kFhKVCaadzE&list=TLPQMjIwOTIwMjOPrm5iey569g&index=6

Prof Michael Hudson had a lot to say about this in his book, "Killing the Host," which basically describes how private commercial banksters have used debt money to legally steal from everyone else. Have you read it?

[Steve_American]

Prof Michael Hudson had a lot to say about this in his book, "Killing the Host," which basically describes how private commercial banksters have used debt money to legally steal from everyone else. Have you read it?

No. I have not read that book, but I would believe it.

I also wonder why everyone is so intent on people repaying loans for which the money was created out of thin air by a bank. Like student debts.
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[Truth To Power]

No. I have not read that book, but I would believe it.

Have you read any of Hudson's stuff? He is one of a handful of contemporary economists I have time for.

I also wonder why everyone is so intent on people repaying loans for which the money was created out of thin air by a bank. Like student debts.

That is the major theme of "Killing the Host": that insistence on full repayment of unpayable debts with no write-downs is toxic for the economy, flouts the principle of market-based risk management for debt instruments, and contradicts centuries of jurisprudence regarding treatment of unpayable debts.

[Steve_American]

Have you read any of Hudson's stuff? He is one of a handful of contemporary economists I have time for.

That is the major theme of "Killing the Host": that insistence on full repayment of unpayable debts with no write-downs is toxic for the economy, flouts the principle of market-based risk management for debt instruments, and contradicts centuries of jurisprudence regarding treatment of unpayable debts.

Truth to Power, it is nice to see that sometimes you agree with reality.

Yes, in reality bad loans are just as much or more the fault of the bank that made them, as the borrower is.

Note, the fact that many loans are sold complicates things. Computers could keep track of it, though. Going forward, why should we let loans be sold? It lets banks make stupid loans that might not be repaid because they are able to sell them to suckers, who take on that risk with less info. This was toxic in 2008 with bundled mortgages.

One solution to student debts is this.
1] Banks write off the student loans.
2] 1st they calculate the interest payments owed each month. They save that info.
3] They send a bill to the borrower each month, and they pay only the interest.

Again, the principal was created out of thin air, and it is cancelled (sent back into the thin air) as the banks slowly get the repayments.
. . Again, my proof of the truth of that fact is that the principal can't be spent by the bank because otherwise the supply of money would grow very fast. What stops that is that only new loans add to the money supply. The money of old loans is not retained as they are paid off. So, year after year, the money supply grows with repayment principal money (of loans made over the last 30 yr.) being destroyed and new money being added from the new loans.

I'm not sure about the World Bank and IMF. If it is true for them also, then IMHO, the world would be a much better place while climate change is doing whatever it is going to do, if my plan above was used for those international loans also.
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[Puffer Fish]

"Why The Government Has Infinite Money" or how money really works with fiat currencies.

I notice that once again you did not make any attempt to explain how that works in your post. You just provided a link.

(A link that doesn't even work and takes a lot of trouble on our part to get it to work)

When you talk about "money", what you are obviously referring to is spending power. It remains a mystery how shuffling around some paper could increase overall wealth in the economy.

[Steve_American]

I notice that once again you did not make any attempt to explain how that works in your post. You just provided a link.

(A link that doesn't even work and takes a lot of trouble on our part to get it to work)

When you talk about "money", what you are obviously referring to is spending power. It remains a mystery how shuffling around some paper could increase overall wealth in the economy.

By spending power, you must mean that you think that dollar for dollar inflation will reduce the spending power of all dollars.

IIRC, it was wat0n who agreed that recently the MS Economic theories were changed so that only recent deficit spending is going to cause inflation. Do you agree with that?

I remind everyone that you can choose to google MMT along with Wray, Mosler, Kelton, or Bill Mitchell to get the complete arguments straight from the founders' mouths.

_____________________________._________________________________________

I can only try to explain it to you.
1st I'm not an expert. The final claims are not in doubt, only my understanding of how to get there may be wrong.

The expert founding MMTers assert that it is only the availability of labor and other real resources to the nation that limits how much it can spend.

For example, if the labor and other real resources are available to the nation, it can deficit spend to open a mine and mine a mineral or many, along with building a factory to make something and give it to the people for free. This will IMHO certainly increase the real wealth of all the people.
. . Doing this will increase the incomes and therefore the spending of the workers. This increased spending is included in the assumption that the real resources are available to the nation. The additional energy use to do it is covered by the same assumption.
. . In fact, the nation could sell the something to all the people who want it at a low price.

Do you agree that that would increase the real wealth of the nation? If not, why not?

________________________._____________________________________________

The claim of MMTers is that this is also true when the deficit spending increases demand in the economy and the corps invest to increase output to meet that demand. [They assume a good economy with no monopolies, etc.]
So, the claim is that there are labor and real resources available to the nation that are going unused. The Free market doesn't use them because there is no demand (with money to pay) for whatever could be made out of those resources.
. . MMTers assert that the problem in such a nation is a lack of enough money to create the demand to buy more stuff.

OTOH, MMters all also agree that ACC is going to end civilization soon if we don't act now.
. . So, what they really want is to massively increase deficit spending on green stuff. Also, support the minimum needs of all the people while ACC is doing its thing.

At least, Prof. Bill Mitchell has said repeatedly that he doesn't care if some businesses can't make a profit after the MMT national Job Guarantee Program has raised the min. wage to over $20/hr. with full benefits. Note that, he is assuming that prices will increase and level off. And also that, workers will have more to spend and so small businesses will sell more and can charge more.
. . He asserts that prices will level off, because the national JGP will anchor the price level and not let inflation continue.
. . Also Soc. Sec. will pay more to keep up with prices, until they have leveled off.
Etc.

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[wat0n]

IIRC, it was wat0n who agreed that recently the MS Economic theories were changed so that only recent deficit spending is going to cause inflation. Do you agree with that?

That's an empirical regularity, not a theoretical result.

[Steve_American]

That's an empirical regularity, not a theoretical result.

For me, empirical regularity trumps theory every time.

Do you agree?
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[wat0n]

For me, empirical regularity trumps theory every time.

Do you agree?
.

Yes.

Of course, deficits can and do still cause inflation. And that inflation can become persistent if deficits themselves are, even more so if they're high enough that they end being covered by seigniorage.

[Steve_American]

Yes. [Empirical regularities trump theory.]

Of course, deficits can and do still cause inflation. And that inflation can become persistent if deficits themselves are [persistent], even more so if they're high enough that they end being covered by seigniorage.

There is always a huge difference between "Inflation __blank_ cause inflation."
Fill on the blanks with these different levels of cause or correlation.
1] Will always very soon
2] Will usually
3] Will eventually
4] Will about half the time
5] Will sometimes after long enough
6] Will sometimes
7] Will rarely
8] Will never
9] Will not cause inflation IF the Gov. makes sure the economy is not dominated by a few corps with monopoly pricing power and the Gov. makes sure that there exists in the nation or it can impost the required labor and real resources.

You see how what you wrote is not very informative for policy makers?

If you want, you could try again with what you think would help policy makers decide what to do now.

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[wat0n]

Fill with number 2.

The exception is when the banking system is broken and lending stops.

[Potemkin]

Fill with number 2.

The exception is when the banking system is broken and lending stops.

In other words, when there are unused resources, unused means of production and unused labour power. Under those special circumstances, printing money can actually stimulate demand by increasing people’s spending power and thereby bring those unused economic resources back into use to meet the extra demand. After all, most recessions and depressions are caused by a collapse of demand due to the collapse of people’s spending power. Factories lie idle while people starve.

[annatar1914]

In other words, when there are unused resources, unused means of production and unused labour power. Under those special circumstances, printing money can actually stimulate demand by increasing people’s spending power and thereby bring those unused economic resources back into use to meet the extra demand. After all, most recessions and depressions are caused by a collapse of demand due to the collapse of people’s spending power. Factories lie idle while people starve.

@Potemkin :

Metallists like Metal Money for a reason, they like the artificial scarcity. Debt? Debt to whom exactly?

[wat0n]

In other words, when there are unused resources, unused means of production and unused labour power. Under those special circumstances, printing money can actually stimulate demand by increasing people’s spending power and thereby bring those unused economic resources back into use to meet the extra demand. After all, most recessions and depressions are caused by a collapse of demand due to the collapse of people’s spending power. Factories lie idle while people starve.

Indeed, hence monetary stimulus and the lowering of interest rates by the Fed.

[Potemkin]

Indeed, hence monetary stimulus and the lowering of interest rates by the Fed.

And this does not cause inflation so long as the increased amount of money in circulation is chasing an increased amount of goods and services. This will be the case so long as there is unused productive capacity in the economy, as there is during a recession or depression, by definition. Printing extra money does not necessarily lead to inflation.

[annatar1914]

And this does not cause inflation so long as the increased amount of money in circulation is chasing an increased amount of goods and services. This will be the case so long as there is unused productive capacity in the economy, as there is during a recession or depression, by definition. Printing extra money does not necessarily lead to inflation.

@Potemkin :

Heresy! Lol....

Would this also not necessitate a watchful government monitoring the economic indicators and applying the brakes or printing more money as needed?

[Potemkin]

@Potemkin :

Heresy! Lol....

Would this also not necessitate a watchful government monitoring the economic indicators and applying the brakes or printing more money as needed?

Yes.

[wat0n]

And this does not cause inflation so long as the increased amount of money in circulation is chasing an increased amount of goods and services. This will be the case so long as there is unused productive capacity in the economy, as there is during a recession or depression, by definition. Printing extra money does not necessarily lead to inflation.

Indeed, and that cannot be persistent. It's why the typical Quantity Theory of Money Equation should be interpreted as a description of what happens in the long run. At any point in time, there can be deviations from that rule but the tendency will be spot on.

And it's so intuitive that it's been mentioned by all sorts of schools of thought - monetarists and new monetarists (e.g. Milton Friedman being one of the former) are just the most recent ones, but the concept goes back all the way to the 16th century and was restated in slightly different terms in Das Kapital (vol I). I honestly don't get why do MMTers have so much trouble with it, it's not controversial at all.

[Puffer Fish]

By spending power, you must mean that you think that dollar for dollar inflation will reduce the spending power of all dollars.

Well, if there are $2 Trillion dollars in the economy, and we suddenly print another $2 Trillion, do you think that's going to mean the society has more wealth?