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#15184702
We were discussing money earlier. I have been reading Debt, the first 5,000 years. The author points out that debt is about more than money. When a prisoner is released, it is said he paid his debt. In a time of war, your obligation to fight can be seen as paying a debt to society. I'm not doing it justice, this is just for setting the stage.

At the same time, economics tends to see a person as starting life without debt. There is a tension between those two ideas that you can see in writing that goes back over 2,000 years. Long before Christianty the Vedic works talked about debt.

Point is, the tension between those two ideas hasn't gotten much attention. Moreover, the extreme of either side is insane. For example, Russia used to say they paid to raise you and educate you. You had no right to emigrate and deny them a return on that investment.

Anyway, the book is incredible, he just linked Adam Smith, Comte and Nietzsche through the way they wrote about debt. I spent some time doing that sort of thing, and didn't get a tenth as much done as he did.
#15184973
late wrote:We were discussing money earlier. I have been reading Debt, the first 5,000 years. The author points out that debt is about more than money. When a prisoner is released, it is said he paid his debt. In a time of war, your obligation to fight can be seen as paying a debt to society. I'm not doing it justice, this is just for setting the stage.

At the same time, economics tends to see a person as starting life without debt. There is a tension between those two ideas that you can see in writing that goes back over 2,000 years. Long before Christianty the Vedic works talked about debt.

Point is, the tension between those two ideas hasn't gotten much attention. Moreover, the extreme of either side is insane. For example, Russia used to say they paid to raise you and educate you. You had no right to emigrate and deny them a return on that investment.

Anyway, the book is incredible, he just linked Adam Smith, Comte and Nietzsche through the way they wrote about debt. I spent some time doing that sort of thing, and didn't get a tenth as much done as he did.

Sir, the US so-called national debt is the number of dollars the Gov. (since about 1840) has gifted to the American people and not taxed back yet.
This is a good thing, because it is flatly impossible to ever "pay it off" with dollars taxed away during a Gov. surplus.
Trying to do it would cause a vast economic problem.

If experts think it will not cause a problem, I would suggest a wealth tax on the very rich. Most of the current so-called national debt is the result of tax reductions on the rich that started with Reagan. We were promised that it would trickle down to us, but none of it did, because the rich kept it. We could now tax some of the money the rich retained away slowly.
. . . This might not cause the economy to implode and or insurance comps. going broke, while the so-called national dent is paid down some to off-set the recent vast amounts of deficit spending for covid relief.
. . . I'm not saying tax it all away, just $4T or so of it. And do it slowly over maybe 5 years.
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#15185022
Crantag wrote:I don't think I mentioned the word 'deficit spending'.

Can you elaborate on your question?

1] Crantag, you qrote, "The way you present it. It is like you think they suggest, that if everyone around the world (with a sovereign currency), just printed all the money they needed, everything would be great!


2] On a sidenote, it also seems to have a lot of undertones of Milton Freedmen monetarism. Here, I wish to refer to the notion, which has been mainstream policy in the US since the 70s, that 'monetary policy' is a replacement for 'fiscal policy'. 'Fiscal policy' is spending money on tangible things, where as, 'monetary policy' is using financial levers like interest rates, and indeed, money printing, etc.

3] In this way, MMT seems like sort of a push against conventional monetarism, to the extent, they call for more 'fiscal policy', but they seem like bedfellows, in a sense."

This confused me.
In 1] you said something that I have repeatedly rejected. I always said that there is an inflation constraint.

I just don't understand your point in 2].
You wrote. "On a side note. it ..." I'm assuming that 'it' here means MMT. If this is right, then you are saying that MMT has overtones of monetarism. MMTers would reject that totally. So, I don't understand your point. I agree with your definition of 'moneyarism' and I agree the since the 80s US policy has been to use monetarism and nor fiscalism to fine tune the economy. MMTers do want to go back to fiscalism.

So, 3] I don't see how MMT and conventional monetarism are to any extent, bedfellows.
__________________________________.______________________________________________

You also wrote, "The main program seems to be a proposal to print as much money as you want and flood the world with dollars (which is what it is tantamount to, given the dollar status as the world currency); and the world will just keep putting up with it, and it'll all be fine."
. . . You keep saying 'print ... money'. IIRC, you have never defined this. The actual fact is that the GOV. doesn't spend by printing money. It always spends money by crediting bank accounts and sometimes writing checks.
. . . YMMV, but to me deficit spending and then selling a bond is not printing money.
. . . IMHO, deficit spending selling a bond and then the Fed. buys a bond of equal value is like printing money.

MMT doesn't call for the Fed. to buy bonds when the Gov. deficit spends. So, IMHO, MMT does not call for the printing of money. MMT calls for more deficit spending.This is why I talk about deficit spending and not 'printing money'.
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#15185135
I'm not on a nitpicking mission, so I'll quote anything below that I think might be a relevant question.

Genuinely thanks though, for the opportunity to engage again in a little economics analysis.

Steve_American wrote:1] Crantag, you qrote, "The way you present it. It is like you think they suggest, that if everyone around the world (with a sovereign currency), just printed all the money they needed, everything would be great!


2] On a sidenote, it also seems to have a lot of undertones of Milton Freedmen monetarism. Here, I wish to refer to the notion, which has been mainstream policy in the US since the 70s, that 'monetary policy' is a replacement for 'fiscal policy'. 'Fiscal policy' is spending money on tangible things, where as, 'monetary policy' is using financial levers like interest rates, and indeed, money printing, etc.

3] In this way, MMT seems like sort of a push against conventional monetarism, to the extent, they call for more 'fiscal policy', but they seem like bedfellows, in a sense."

This confused me.
In 1] you said something that I have repeatedly rejected. I always said that there is an inflation constraint.

I just don't understand your point in 2].
You wrote. "On a side note. it ..." I'm assuming that 'it' here means MMT. If this is right, then you are saying that MMT has overtones of monetarism. MMTers would reject that totally. So, I don't understand your point. I agree with your definition of 'moneyarism' and I agree the since the 80s US policy has been to use monetarism and nor fiscalism to fine tune the economy. MMTers do want to go back to fiscalism.

So, 3] I don't see how MMT and conventional monetarism are to any extent, bedfellows.
__________________________________.______________________________________________

You also wrote, "The main program seems to be a proposal to print as much money as you want and flood the world with dollars (which is what it is tantamount to, given the dollar status as the world currency); and the world will just keep putting up with it, and it'll all be fine."
. . . You keep saying 'print ... money'. IIRC, you have never defined this. The actual fact is that the GOV. doesn't spend by printing money. It always spends money by crediting bank accounts and sometimes writing checks.
. . . YMMV, but to me deficit spending and then selling a bond is not printing money.
. . . IMHO, deficit spending selling a bond and then the Fed. buys a bond of equal value is like printing money.

MMT doesn't call for the Fed. to buy bonds when the Gov. deficit spends. So, IMHO, MMT does not call for the printing of money. MMT calls for more deficit spending.This is why I talk about deficit spending and not 'printing money'.
.



I don't see anything worth clarifying, except two things.

1. Sorry you didn't understand my last post, but no worries, you are still learning. My advice is to stop staring at the Tree of MMT, and start looking more into the entire forest. (Of opinions, schools of thought, and indeed, any other way you want to stretch that analogy, to include circumstance.)

2. The term 'money printing' is itself an analogy of sorts. Everyone knows that most money is digital nowdays. Moreover, in the Roman Empire, it wasn't excessive money printing, but rather the diluting of gold coins.

Same thing, different era. (As the argument goes.)

'Money printing' is just shorthand for, when you dilute the currency.
#15185146
Crantag wrote:I'm not on a nitpicking mission, so I'll quote anything below that I think might be a relevant question.

Genuinely thanks though, for the opportunity to engage again in a little economics analysis.

... snip...
I don't see anything worth clarifying, except two things.

1. Sorry you didn't understand my last post, but no worries, you are still learning. My advice is to stop staring at the Tree of MMT, and start looking more into the entire forest. (Of opinions, schools of thought, and indeed, any other way you want to stretch that analogy, to include circumstance.)

2. The term 'money printing' is itself an analogy of sorts. Everyone knows that most money is digital nowdays. Moreover, in the Roman Empire, it wasn't excessive money printing, but rather the diluting of gold coins.

Same thing, different era. (As the argument goes.)

'Money printing' is just shorthand for, when you dilute the currency.

OK, I clarified why I change printing money into deficit spending.

In another thread I argued that if a bond is sold to finance deficit spending, then maybe 90% of the dollars are by definition saved and can't be spent. The other 10% is my guess on the amount of borrowing on a bond as a result of that specific deficit spending. So, deficit spending with bond sales does not 'dilute the currency' much.
. . . When the Fed. or central bank buys bonds then, that is like printing money. Do you agree with all this?

Ancient Rome was seeing shortages of food because Egypt was in a separate nation now/then. Also, because of soil erosion. I argue that diluting the gold content had little to do with the inflation, the inflation had much more to do with the shortages.
. . . The Cato Institute did a study a couple of years ago of all examples of hyperinflation since 1850. Every case was after 1900 and every case had more to do with shortages than money printing. IMO, the printing is what let it keep going. That is, if Ger. had not kept printing marcks it could not have gotten that extreme.

Let me try to make another point about the national debt. All national debts are different from corp. or personal debts, because of who holds the debt.
. . . A national debt is rather like this --- a person owes $100K to a bank, but the person ownes the land and building the bank is renting. Does the bank gain anything if the person increases the rent a lot to pay off the debt? I say it doesn't gain anything.
. . . A national debt is owed to the rich of the nation. Foreign debt holders can get dollars at any time by selling their bonds and they hold only 20-30% of the US debt. So, do the rich gain anything if the Gov. imposes a new tax on them to pay off the debt? I think they gain nothing. Can the Gov. tax someone other than the rich to pay off the debt? (I'm sure it can't)

As long as the Gov. doesn't deficit spend too much to trigger inflation over 2 or 3%, MMT claims that the dollars are going into saving or leaving the nation to buy foreign stuff, and so, don't trigget inflation. Inflation only starts when there is a shortage, only with a shortage. There will be shortages if the Gov. increases deficit spending to buy more stuff when all the labor and stuff available is already being bought by someone, and capacity can't be increased for lack of more base resources.

You seem to think that there is a limit somewhere on how large the debt can be. IIRC, since 1981 the debt has grown from $1T until in 2019 it had reached $25T. Don't you think that this 2500% increase would have been over any limit you might have imagined (in 1983) there to be? Where is the limit?
. . . The Chairman of the Fed. has announced that the Fed. would wait for signs of high inflation before it acted to reduce it. He said that acting too soon because the theory says there will be high inflation *is* *hurting* the economy and doesn't ever test the theory. (What if the theory is wrong and we never test it?)

As long as the Gov. and Fed. (of any nation with its own fiat currency and that doesn't have debts in a diferent currency) are willing to have the Fed. buy the bonds when the rich demand a higher yield, so that the yield can never rise that much, MMT claims the debt can keep growing forever. Why is there a limit on how much the Gov. can gift to the people as long as it is being saved and is growing slow enough to avoid high inflation? Besides which, now, there is an ACC crisis that may end civilization, so the threat is worse than the threat in WWII of being occupued by Germany and Japan. [Of course, some still deny that threat. I don't remember your opinion on ACC.]
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#15185639
Steve_American wrote:As long as the Gov. doesn't deficit spend too much to trigger inflation over 2 or 3%, MMT claims that the dollars are going into saving or leaving the nation to buy foreign stuff, and so, don't trigget inflation.

Your argument runs into some logical semantics problems because it depends what exactly you mean by "dollars".
If more "dollars" go into saving, that won't do any good if that's just in proportion to inflation.

The real argument you would have to focus on is why more money doesn't lead to inflation, but as you can see that has suddenly become a logically circular argument, since your argument that inflation is not caused is based on that argument itself.

Such reasoning doesn't constitute any real proof of anything.
#15185640
Steve_American wrote:Inflation only starts when there is a shortage, only with a shortage. There will be shortages if the Gov. increases deficit spending to buy more stuff when all the labor and stuff available is already being bought by someone, and capacity can't be increased for lack of more base resources.

I'm not sure that makes sense. "shortage" is a relative concept. There is scarcity of everything.

Maybe you'd like to elaborate and try to explain this?

I'm trying to think about this but it still doesn't make sense to me.

Why do you think more money won't increase prices in this case?

I'm not sure how adept you are at math but is there any mathematical insight you can offer us into this relationship that could explain how it works?
#15185641
Steve_American wrote:As long as the Gov. and Fed. (of any nation with its own fiat currency and that doesn't have debts in a diferent currency) are willing to have the Fed. buy the bonds when the rich demand a higher yield, so that the yield can never rise that much, MMT claims the debt can keep growing forever.

And you don't think the Fed buying those bonds to keep yields down doesn't cause inflation?

I think you need to look at this from a more mathematical perspective.

Your reasoning here seems like the same type of reasoning in the overbalanced wheel (perpetual motion machine). It can seem to make sense, but it actually doesn't when analyzed mathematically, or taking a look at the bigger picture.
#15185661
Puffer Fish wrote:I'm not sure that makes sense. "shortage" is a relative concept. There is scarcity of everything.

Maybe you'd like to elaborate and try to explain this?

I'm trying to think about this but it still doesn't make sense to me.

Why do you think more money won't increase prices in this case?

I'm not sure how adept you are at math but is there any mathematical insight you can offer us into this relationship that could explain how it works?

As I have said, the conservative think tank, The Cato Institute, did a study of all the hyperinflations in hstory. All occured after 1900. AND, all were caused by a shortage of something. In somecases it was caused by a shortage of foreign currency, like Weimar Germany and Argentina. In Zimbabwe it was caused by poor harvests, i.e. a shortage of food.

So, my claim is not based on deductiions or math. It is based on the historical record as seen by the Cato Institue.
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#15185664
Puffer Fish wrote:Your argument runs into some logical semantics problems because it depends what exactly you mean by "dollars".
If more "dollars" go into saving, that won't do any good if that's just in proportion to inflation.

The real argument you would have to focus on is why more money doesn't lead to inflation, but as you can see that has suddenly become a logically circular argument, since your argument that inflation is not caused is based on that argument itself.

Such reasoning doesn't constitute any real proof of anything.

Let me restate it.
MMTers claim that, as long as the Gov. doesn't deficit spend too much to trigger inflation over 2 or 3%, MMT claims that the dollars are going into saving or leaving the nation to buy foreign stuff, and so, don't trigget inflation. That is some of the dollars are absorbed by the desired inflation of 3% to 3%, and all the rest are going into savings by Americans, Americaan comp., or by foreigners after the dollars leave the US to buy stuff. As a result, there are no excess dollars to add to the desired level of inflation.
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#15185672
Puffer Fish wrote:And you don't think the Fed buying those bonds to keep yields down doesn't cause inflation?

I think you need to look at this from a more mathematical perspective.

Your reasoning here seems like the same type of reasoning in the overbalanced wheel (perpetual motion machine). It can seem to make sense, but it actually doesn't when analyzed mathematically, or taking a look at the bigger picture.

I believe that the Fed. buying US bonds (directly or indirectly) is sort of like the old style printing of dollars.
Therefore, too much of this can be a cause of inflation over 3%.
I believe that the Gov. needs to do enough deficit spending with the Fed. buying some of it to do 3 things.
1] Replace the dollars in America that are going overseas to buy stuff.
2] Replace the dollars that are going into saving by American people and comp.
3] Cause 2% inflation or be sufficient to have this inflation not cause a drop in real incomes.

I believe that Gov. policy should be to avoid recessions. The only way to do this is to prop up the economy with dollars that do not need to be paid back. That is dollars of deficit spending, incl. those in net new bonds.

It is the ongoing failure in doing this that is the cause of recessions. That is, in the boom, banks lend dollars and these dollars add to someone's income, who spends it adding to another's income, etc. Until people slow their borrowing, which reduces someone's income, which reduces their spending, which reduces the incomes of others. The banks see this as a sign of a recession, so they lend less. And this starts the recession.
. . . People need to keep making payments on their debts and this is an ongoing process that destroys the dollars (that were created out of thin air when the bank made the loans). This dollar destruction fuels the on going reduction in incomes in the nation as the recession continues down, down, down.
. . . That is, depending on bank lending to grow the money supply is unstable. It causes recessions.

But again, the Cato Institute study of all examples of hyperinflation said they were ALL caused (in large part) by a shortage of something. There was always a shortage of something necessary (here usually food or oil/gas) to the people or to the Gov. (here usually foreign currency to pay its debts). You can google it and read it for yourself. It should be easy to find.
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Last edited by Steve_American on 16 Aug 2021 13:11, edited 1 time in total.
#15185715
Steve_American wrote:1] Replace the dollars in America that are going overseas to buy stuff.

Sounds like there will eventually be a problem, when those dollars from overseas eventually return.

You see, the problem is not really that countries overseas are hoarding money, but rather what they are eventually going to do with that money. They are eventually going to buy American assets. The overall trade is disposable consumer goods in return for assets, assets that have a rate of investment return, or may be scarce natural resources or land space in prime destination cities.

(We've discussed this in other threads in the Economics section)
#15185735
Puffer Fish wrote:Sounds like there will eventually be a problem, when those dollars from overseas eventually return.

You see, the problem is not really that countries overseas are hoarding money, but rather what they are eventually going to do with that money. They are eventually going to buy American assets. The overall trade is disposable consumer goods in return for assets, assets that have a rate of investment return, or may be scarce natural resources or land space in prime destination cities.

(We've discussed this in other threads in the Economics section)

Well, yes.
I was talking about the currnet situation. I wasn't saying it was good.
I was saying that the dollars are leaving the US and need to be replaced in the economy to keep the economy stable.

Of course contrary to neoliberal economic theory, in reality is is possible for the US to limit the impact of foreigners using dollars to buy assets in the US.

Frankly, I'm opposed to the current large balance of trade deficit. But, it isn't up to me.
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#15185899
Puffer Fish wrote:Here's something you may not have considered. Both savings of money, and debt, have an effect on inflation. It's not just amount of money in circulation.

You do *not* seem to grok just what the Cato Institute's report means.

It means the amount of the currency in circulation hardly matters at all, in and of that one number all by itself.

Mainstream Economists alwats say, "Inflation is caused by too much money chasing too few goods."
Then, they assume that there is always a scarcity, so that they can argue that it is just the "too much money" part that matters. However, The Cato Inst. report shows the "too few goods" part is actually the much more important part for 'hyperinflation'.
. . . [At least, this must be so, because economists never look at the amonnt of goods, they just look at the amount of money. And, MS econ. doesn't look at the amount being saved either. It seems like they decide what to prove, and then find a way to "prove" that (always using false assumptions they have assumed to be true). If this is what they do, then they are in no way scientists. They are conmen playing their students and the napion's leaders & people for fools.]

Because it is hyperinfltion threat that is used by economists to scare a nation's people and leaders into austerity, they are just wrong or lying when they are trying to scare nations.
#15191065
Puffer Fish wrote:Sounds like there will eventually be a problem, when those dollars from overseas eventually return.

You see, the problem is not really that countries overseas are hoarding money, but rather what they are eventually going to do with that money. They are eventually going to buy American assets. The overall trade is disposable consumer goods in return for assets, assets that have a rate of investment return, or may be scarce natural resources or land space in prime destination cities.

(We've discussed this in other threads in the Economics section)

With all due respect, sir, the threat that foreigners will someday use their dollars to hurt Americans in America by returning them to America to buy things or assets; has ZERO to do with the size of the national debt.
Instead, what it relates to is the size of the trade deficit.
As soon as the foreigners get the dollars by selling something to America, they have the dollars.
In fact, letting them earn some interest on US bonds seems like a very benign way for the US to defuse the problem you are seeing coming 'someday'.
#15191066
Puffer Fish wrote:Except it's worth less due to inflation.
Which comes back to the discussion about the link between printing money and inflation.

My claim is the math indicates the gain would exactly match the cost. There would be no net benefit.

Can you explain how moving paper around can create wealth?

This is also aimed at everyone who uses the phrase 'printing money'.

People, when the US Gov. deficit spends and sells bonds to the people of the world, it prints ZERO dollars.

Before the 2 transactions, a person has many dollars.
Then the Gov. deficit spends 'many dollars' and sells a bond to the person above for 'many dollars'.
After the transactions, other people have 'many dollars' and the person above has a bond.
In this case the 3 sets of "many dollars" are exactly the same amount.

What it prints is bonds.

All bonds are by definition 'saved'. To spend them the holder must sell them to another who wants to save the dollars he trades for the bond.

Savings may increase spending, in that the saver may think they have saved enough. However, this effect is really quite small. Do billionaires spend more of their growing wealth each year. No, they spend a smaller percentage of their growing wealth each year. The rest they invest or save. Right now there are *not* a lot a investment opportunities, in the world. Demand is low, so return on investment will be low.

Conclusion => what is printed when the US Gov. deficit spends is bonds.
Only if the Fed. buys bonds in the secondary market are dollars being created and almost never does the Fed. pay with printed paper dollars. It buys bonds with checks or direct deposits.
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