I wonder how many of you (because of the Gov's. actions in the covid crisis) now think MMT is right? - Politics Forum.org | PoFo

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Everything from personal credit card debt to government borrowing debt.

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#15150294
It seems like the US's deficit planned for the 12 months starting March 1, 2020 was going to be over $2T.

Then the Gov. added$2.2 more to the deficit with the CARES Act. To this we might add the trillions of $$ that the Fed. has dumped into the economy by its actions. Then in Dec. it added another about$1T and now Biden is planning on adding another $2.2T.

None of this was "paid for" with Pay go or anything.

The (very rough) total of planned deficit spending = $2T+$2.2T+maybe $2T+$1T+$2.2T== $9.4T in just the 12 months starting in March 1, 2020.

Biden said in a speech I saw that almost all economists have told him that now is the time to deficit spend to save the economy by a] controlling covid and b] keeping people afloat.

Only the very committed Libertarians have said one word against this. There is no chatter about how this will be a burden on the people over the next 200 years. NOT ONE WORD.

Does all this convince you that MMT is right when it says that the US national debt is not a burden; that rather, it is just assets of Corps. and the wealthy?

I have claimed that the rich don't want to be taxed to pay off the asses that *they* hold, and that the poor can't be taxed to pay off the assets of the rich, and that taxing the middle class will destroy the economy. This means that it is not possible to pay down (let alone 'payoff') the US debt much. Given that it was over $23Tand we are adding over $9T, it will soon be over $30T. And, no mainstream economist is worrying about this at all. No MMT economist is ether, but they have been not worrying about this for over 28 years now.

So, are you convinced by the above that mainstream economists have been spreading fear for no good reason for decades, and that therefore, MMT is right?

Or, do you believe that the US economy will be destroyed by all this spending. Are you willing to 'eat your hat' when the US economy is not destroyed? Because I'd bet you $1M that it will not be destroyed. Maybe damaged, ... but who can say if any damage was the result of covid pandemic or of the deficit spending?
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#15168274
Puffer Fish wrote:Isn't it still too premature at this point to say?

The economy could just be in a bubble, and if that was the case more stimulus would not have been a good thing.


IMHO, it was a sure thing that the econmy was in deep trouble by Nov. of 2020. This was because of the rapid sppread of covid-19 and the lockdowns that were ncessary to contain that spread. That is, many 100Ks of Americans (& maybe millions) would die or suffer lifelong income loses as a result. This was a sure thing. We will never be able to prove how many would die and how many would have lifelong income loses, because steps were taken to avoid that. But, we know the numbers were going to have been large.

Could there be a problem in the future as a result of the spending so far? Maybe. If there is, will it be worse than the losses above? Who knows? IMO, most likely not.

IMHO, it easy to decide between a large certian disaster NOW and a maybe disaster of unknown size later (if the size is just moderate, maybe 'problem' is a better word than 'disaster'). This is especially true when we look at the track record of correct predictions of disaster by mainstream economists. [It is a terrible record. I have asked for a list of such. I got 1 attempt and it was just 6 predictions long and 4 of them were by non-mainstream economists. So, 2 correct over a 40 year time span. I can list 4 totally wrong mainstream econ. predictions that were wrong and led to disaster. And I'm no expert.]
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Last edited by Steve_American on 21 Apr 2021 17:16, edited 1 time in total.
#15168277
Steve_American wrote:
So, are you convinced by the above that mainstream economists have been spreading fear for no good reason for decades, and that therefore, MMT is right?

Or, do you believe that the US economy will be destroyed by all this spending. Are you willing to 'eat your hat' when the US economy is not destroyed? Because I'd bet you $1M that it will not be destroyed. Maybe damaged, ... but who can say if any damage was the result of covid pandemic or of the deficit spending?
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Well it is definitely too early to tell what will happen actually. Economists were wrong about 2008 and by and large divided this time round so they are merely spectators like anyone else at the moment. The difference is the money in 2008 was already in the economy and the liability just moved to the government and today the money is being handed over to circulate in the economy to stimulate (or in reality retain) growth. So let's just see what happens when people begin spending again. Because MMT are correct that no nation can bankrupt themselves but confidence in dollars does depend on tax revenues and GDP and at the moment both are areas of concern given the pandemic.
#15168340
I wouldn't say that MMT is right, but I am more open to the idea. That said, I think I'm one of the few people that is more open to your ideas around MMT @Steve_American :lol:.

I also think that MMT has stronger legs because of China, believe it or not. Basically, the more authoritarian China is, the safer the US dollar looks. The safer the US dollar is, the more flexible you can get with it.
#15168935
It is now quite obvious that monetarily sovereign govts have spent huge amounts which they have neither taxed nor borrowed from the private sector.

They have done so without passing any new laws other than parliamentary/congressional approval of spending bills.

It was, thus, always within the fiscal remit of said govts to do so.

This has not resulted in exploding "borrowing costs" - quite the contrary, and for the same reason. One arm of govt is "buying" back the bonds which another has issued, both in order to comply with govt's own rules, designed as a check against inflation in "normal times" (which haven't been normal for 20 years or more).

The monetary operations by which they have done so are precisely the existing operations described - not prescribed - by MMT, just on a larger scale.

MMT appears to have been vindicated in every particular.
#15168955
wat0n wrote:The Federal Government borrows from the private sector every time,
Then you'll be able to point to the trillion dollar tax rises and/or non-QE bond issuances..?

the fact that bond yields gave been stable doesn't really change that.

Yeah, it doesn't change that. What it does is put the lie to the idea that Federal govt spending is subject to the whims of the bond market.
#15168958
SueDeNîmes wrote:Then you'll be able to point to the trillion dollar tax rises and/or non-QE bond issuances..?


https://www.treasurydirect.gov/instit/a ... result.htm

SueDeNîmes wrote:Yeah, it doesn't change that. What it does is put the lie to the idea that Federal govt spending is subject to the whims of the bond market.


For now, yes, it doesn't seem to care.
#15168964
SueDeNîmes wrote:..and..?


It's the auction schedule for new US government debt. You can lend it money if you want, too.

SueDeNîmes wrote:Or in general, because interest rates are a policy variable - as MMT says - as has become abundantly obvious over 30 years of rising govt debt and bond yields heading negative.


You should tell that to developing countries whose debt is hyper expensive :roll:

I think it's just a market based sign that the US government can spend more, if it wants to. I'd also consider refinancing debt.
#15168977
wat0n wrote:It's the auction schedule for new US government debt. You can lend it money if you want, too.

..and..?

You have adduced the fact of a bond auction as evidence of what?

You should tell that to developing countries whose debt is hyper expensive :roll:

I think you'll find that MMT says that's why developing countries' debt is hyper expensive.

I think it's just a market based sign that the US government can spend more, if it wants to.

So calls for austerity are mistaken or politically motivated.

I'd also consider refinancing debt.

With whom? Mars?
Last edited by SueDeNîmes on 25 Apr 2021 00:34, edited 1 time in total.
#15168989
wat0n wrote:Because buying a government bond means lending it money. That is, it's the very act of borrowing from the private sector.

What I said then.

Most of the covid relief spending - not to mention most since 2008 - has been QE. Central banks repurchase the bonds, usually the next morning, by issuing reserves ex nihilo, which they are authorised by their govts to do. As MMT describes and most central banks have literature confirming.

It's what they do in normal times to reduce interest rates, just on a far larger scale because they want to keep interest rates near zero, and are likely to for a long time.


Refinancing in this case simply looks like issuing low interest debt to pay for the high interest outstanding debt.

With whom? Almost none of the QE since 2008 has been "unwound", i.e bonds resold to the private sector, and no one thinks it ever will be. Never mind the Covid QE spending.

What they'll almost certainly do is keep the bonds on central bank balance sheets and "refinance" them upon maturity with very long term, very low interest rate bonds and just forget about them.
#15168998
Absolutely. The real constraint is always the productive capacity of the real economy. Try spending beyond that and you just bid up the prices of goods and services.

By the same token, a market economy can get stuck in a low wage/low productivity rut for lack of liquidity. Consumers become reluctant to spend so firms are reluctant to invest and employ so banks are reluctant to lend ..in a vicious spiral. Usually precipitated by build up of household debt. Then the govt needs to lower interest rates and/or net spend.

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