[Potemkin]

MMT is a non-mainstream theory that asserts that we can print unlimited money with no effect on inflation but that as we observe is total and utter nonsense.

Not quite. My understanding is that MMT claims that printing more money will not cause significant inflation if and only if that extra money supply is used to activate idle productive forces and labour power. So long as the extra money expands the economy, there’s no problem. If there are no or few idle productive forces or labour power in the economy, then obviously printing more money will just cause inflation. This means that, in a recession (when, by definition, there are idle productive forces and labour power), printing more money is generally a good idea, but doing so when the economy is booming is extremely inadvisable (not to mention unnecessary). None of this should be controversial; it’s basically just leftover Keynesianism taken out of the fridge and reheated in a pan.

[noemon]

If there are no or few idle productive forces or labour power in the economy, then obviously printing more money will just cause inflation.

Precisely, and if you are already at 100% of debt to gdp ratio which is where we all are roughly, printing further money causes an interest payment crisis as well as an insolvency crisis.

Printing money today in the UK and the US, where employment is full, debt is high and the deficit even higher is a recipe for disaster.

[Potemkin]

Like the debtors of Weimar Republic?

Hyperinflation is good enough reason to go to war for every single class in a country, poor, middle, rich and everything in between.

Germany gambled everything on winning WWI. Their reparations were in effect in their own currency, since that was all they had. They had to print more and more of their own currency to buy foreign currency to pay the reparations, which devalued their own currency, which meant they had to print more and more of their currency to buy the same amount of foreign currency…. Crash, bang, wallop!

Private debtors do not win from inflation because interest rates go up on their debt and the value of their money(both savings and income) drops down at the same time.

I repeat: debtors do not have savings. They might imagine they have savings, but they are merely deluding themselves. Debtors benefit from inflation, because they have no savings and the inflation reduces the real value of their debt.

[noemon]

I repeat: debtors do not have savings. They might imagine they have savings, but they are merely deluding themselves. Debtors benefit from inflation, because they have no savings and the inflation reduces the real value of their debt.

It reduces the real value of their income more than it reduces the real value of their debt.

Private debtors do not have big enough debt to activate drag factors on their side to make the equation profitable to them in real terms, perhaps in nominal terms. And even that is debatable.

[Potemkin]

It reduces the real value of their income more than it reduces the real value of their debt.

Private debtors do not have big enough to debt to activate drag factors on their side to make the equation profitable to them.

It depends how big their debt is. But, in general, they benefit from inflation and they suffer from attempts to combat that inflation (for example, higher interest rates). Those idiots who borrowed money when interest rates were low to buy stocks and shares or even crypto, for example, are stuffed and trussed like turkeys.

[Steve_American]

EU & UK enjoy the exact same energy prices, yet inflation is different for both. UK is at 12%, France at 7%, Germany at 8%.

The difference for the most part is QE and the money supply.

I asserted above that inflation is not the cause of profiteering but profiteering the cause of inflation. The difference matters on whether inflation makes winners and losers. Inflation does not make any winners.

Indeed all these said by me are mainstream and standard economics proven time and time again over the course of centuries.

MMT is a non-mainstream theory that asserts that we can print unlimited money with no effect on inflationbut that as we observe is total and utter nonsense. It used to be applicable to countries that have reserve currency status like the US exporting dollars outside its market, but no longer applicable when dollars are returning back into the country like today, and further propped up by a cheap Chinese manufacturing base and also propped up by cheap shipping costs.

So much star-alignment required to make the theory barely workable.

I already explained why Japan and the US are exceptionally dynamic economies that can absorb shocks and price increases better than all others in the post that you forgot to address.

You can not build theories from the exceptional countries because once you apply your theories to regular countries like Turkey or African countries for example, inflation will shoot up to 100% and 1000% respectively.

@Steve_American I think Potemkin is being ironic but being the commie that he is, he is not being forthright about it.

You wrote: "MMT is a non-mainstream theory that asserts that we can print unlimited money with no effect on inflation "

This is a common assertion by MS economists, but it a lie. No MMTer says any such thing. The fact that you buy this lie and assert it here shows me that you don't understand MMT yet. MMTers assert that inflation will occur when a nation is already using all the resources it has or can get and all of its labor, and still keeps a large deficit going.

I'm not sure if MMT can be used by developing nations. This is made much less likely because all of them are already deep in debt in dollars to the IMF, etc.
MMT is only for nations that have 3 characteristics; 1] They have their own fiat currency. 2] They float this currency. And 3] They have no debts in any other currency, will not borrow any other currency.
1] leaves out all EZ nations of the EU. Non EZ/EU nations less so, because of the EU stupid economic rules. 3] leaves out most all developing nations. 2] includes the UK, NZ, Aust., Canada, Japan, the US, Russia, and China, etc.

Modern MS Econ theories are only 50-60 years old. So, centuries of experience with it/them is not true.

.

[noemon]

Germany gambled everything on winning WWI. Their reparations were in effect in their own currency, since that was all they had. They had to print more and more of their own currency to buy foreign currency to pay the reparations, which devalued their own currency, which meant they had to print more and more of their currency to buy the same amount of foreign currency…. Crash, bang, wallop!

Which is where we almost are today in the west without Versailles but out of our own making.

We have reached weimar levels of debt & QE anyway.

@Steve_American Standard economics are 50-100 years old, controlling inflation through currency manipulation via the money supply is an ancient practice, plenty of centuries old.

[SueDeNîmes]

Changing the goalposts when convenient is a fallacy, get over it please and proceed to arguments with actual value.

What goalposts have been 'changed'?

MMT is a non-mainstream theory that asserts that we can print unlimited money with no effect on inflation but that as we observe is total and utter nonsense.

It asserts nothing of the kind.

We have reached weimar levels of debt & QE anyway.

We are, in fact, at about the historical average:



...about a third of which is currently owed by govt to itself.

Less than most other developed economies, who are doing better than we are.

Less than half post-WW2 (~250% of GDP) when the UK govt created the NHS, expanded the welfare state, built millions of houses and nationalised large swathes of industry. The debt to GDP ratio fell continuously, reaching current levels by the 1960s - by which time the UK was in the middle of the most sustained boom in both productivity and real wage growth ever.

[noemon]

What goalposts have been 'changed'?

This is the last time I will be replying to this spam. Changing the goalpost from high inflation to moderate inflation when you have decisively lost the high inflation argument. And have made no moderate inflation argument either. You just mention that: oh I was talking about a different kind". Cop out, fallacy and bloody obvious.

We are, in fact, at about the historical average:

Britain is no longer a global empire spanning a quarter of the globe and the sterling is no longer a reserve currency.

As usual, only exceptional circumstances allow for these levels of debt, Britain is no longer an exceptional country able to absorb and sustain such high debt-levels. Japan and the US and potentially Germany are the only countries that can do that. Everybody else turns to Weimar republic on steroids.

The person you got this obvious propaganda from is quite cute though.

...about a third of which is currently owed by govt to itself.

About 2/3 of it are not and 1/4 of it are gilts linked to the inflation index. Making things 100 times worse.

Less than half post-WW2 (~250% of GDP) when the UK govt created the NHS, expanded the welfare state, built millions of houses and nationalised large swathes of industry. The debt to GDP ratio fell continuously, reaching current levels by the 1960s - by which time the UK was in the middle of the most sustained boom in both productivity and real wage growth ever.

When the UK was at one of its peaks of its power having emerged victorious out of 2 world wars or during mega global war-time.

As above. I must have said this more than 10 times in this thread alone. You do this to normal countries, you destroy them and today you can not even do that to the exceptional countries either as it has been pushed to its limits.

Whether you like it or not the facts are simple:

There is no magic money tree, no magic bullet, if you want progress and high standards of living you need to work for it and produce high value, spreading money over helicopters or balconies as the Roman Empire used to or via the banks as we have been doing is no longer sustainable during an inflationary crisis. And it never has been sustainable for anyone other than the top Empire which has never applied to the rest 99% of countries.

Inflation makes no winners, which means that we are all in it together. Serious effort and tough decisions are required to grow economic output and not magic fairy dust.

Moreover if we do want to maintain benefits, luxuries and high standards of living we also need to defend our countries global status and the status of the western reserve currencies and not engage in a pathetic woke anti-history seeking to impoverish us all with guilt-tripping.

You cannot beat brutal reality with wishful thinking, virtue-signalling and fairy dust.

[SueDeNîmes]

This is the last time I will be replying to this spam. Changing the goalpost from high inflation to moderate inflation when you have decisively lost the high inflation argument. And have made no moderate inflation argument either. You just mention that: oh I was talking about a different kind". Cop out, fallacy and bloody obvious.

Then I'm none the wiser The distributional effects I described are relatively insignificant for the moderate inflation most rich countries target, and become more significant with higher inflation. There's no inflection point or difference in kind. The relevant difference is in the driver of inflation, i.e. cost-push (e.g supply shock) vs demand-pull or wage-led, which I described in some detail more than once.

Britain is no longer a global empire spanning a quarter of the globe and the sterling is no longer a reserve currency.

As usual, only exceptional circumstances allow for these levels of debt, Britain is no longer an exceptional country able to absorb and sustain such high debt-levels. Japan and the US and potentially Germany are the only countries that can do that. Everybody else turns to Weimar republic on steroids.

The person you got this obvious propaganda from is quite cute though.



About 2/3 of it are not and 1/4 of it are gilts linked to the inflation index. Making things 100 times worse.



When the UK was at one of its peaks of its power having emerged victorious out of 2 world wars or during mega global war-time.

As above. I must have said this more than 10 times in this thread alone. You do this to normal countries, you destroy them and today you can not even do that to the exceptional countries either as it has been pushed to its limits.

Whether you like it or not the facts are simple:

There is no magic money tree, no magic bullet, if you want progress and high standards of living you need to work for it and produce high value, spreading money over helicopters or balconies as the Roman Empire used to or via the banks as we have been doing is no longer sustainable during an inflationary crisis. And it never has been sustainable for anyone other than the top Empire which has never applied to the rest 99% of countries.

Inflation makes no winners, which means that we are all in it together. Serious effort and tough decisions are required to grow economic output and not magic fairy dust.

Moreover if we do want to maintain benefits, luxuries and high standards of living we also need to defend our countries global status and the status of the western reserve currencies and not engage in a pathetic woke anti-history seeking to impoverish us all with guilt-tripping.

You cannot beat brutal reality with wishful thinking, virtue-signalling and fairy dust.

With the exception of the US, none of the other rich countries are superpowers or issue the world's reserve currency either. Yet most of them have higher debt to GDP than the UK and are doing better than the UK. Neither was the UK a superpower with the world's reserve currency during the post war boom, which was OECD-wide i.e. included nations which had not "emerged victorious".

Even if debt sustainability were a matter of geopolitical advanatge, then the ratio to GDP wouldn't necessarily tell you anything about it.

[noemon]

The euro is a reserve currency. Debt sustainability is obviously a matter of geopolitical advantage, bankers have every confidence that Global Empires or very powerful economies like Japan's will pay them back by hook or by crook, no such confidence for average or developing countries.

There are no distributional effects during a high inflationary spiral, this is antisemitic drivel used by the Germans to target the Jews as the ones holding enterprise-level debt(the only type of debt large enough to profit) and thus according to Hitler causing inflation so that the Jews can profit on the backs of the Gentiles.

As if the Jews or the bankers are forcing you, Steve American the entire left and Hitler to openly argue for more debt and more printing during an inflationary spiral.

Other than that there is no winner and trying to find one so you can throw all the blame at for the policies that you are actively pursuing is pure scapegoating.

[Unthinking Majority]

Not quite. My understanding is that MMT claims that printing more money will not cause significant inflation if and only if that extra money supply is used to activate idle productive forces and labour power. So long as the extra money expands the economy, there’s no problem. If there are no or few idle productive forces or labour power in the economy, then obviously printing more money will just cause inflation. This means that, in a recession (when, by definition, there are idle productive forces and labour power), printing more money is generally a good idea, but doing so when the economy is booming is extremely inadvisable (not to mention unnecessary). None of this should be controversial; it’s basically just leftover Keynesianism taken out of the fridge and reheated in a pan.

This is reinterating the mainstream theory that price largely is determined by supply and demand, so if you activate idle productive forces you're increasing supply thus not causing inflation. The problem is isolating the spending of printed money to this new production and prevent it from being spent on goods and services at full employment/production, which is pretty hard if not impossible.

[Potemkin]

This is reinterating the mainstream theory that price largely is determined by supply and demand, so if you activate idle productive forces you're increasing supply thus not causing inflation. The problem is isolating the spending of printed money to this new production and prevent it from being spent on goods and services at full employment/production, which is pretty hard if not impossible.

You don't need to "prevent it from being spent on goods and services at full employment/production", since the extra money is 'absorbed' by the expanded economy, the potential inflation is suppressed by the increased supply. And once the economy has expanded, it's expanded.

[ingliz]

@noemon

How are you losing if you have a fixed-rate mortgage?

Your house is cheaper, No?

[noemon]

@noemon

How are you losing if you have a fixed-rate mortgage?

Your house is cheaper, No?

There is no such thing as a fixed-rate mortgage shielded from base rate increases. And even those pretending to be have all been removed from the market.

You people are extremely tiring trying to hold on to your nonsense over whatever thread you can grab on and when all goes to hell one can always blame "the Jews", right?

[ingliz]

have all been removed from the market.

Why would lenders remove these products from the market if they didn't benefit borrowers and penalise them?

[noemon]

Why would lenders remove these products from the market if they didn't benefit borrowers and penalise them?

Oh you already at "blame the bankers" phase.

You 're blaming the bankers for debt while calling for more debt. As if the bankers are forcing you to get whatever deal they are offering.

Classy

[Patrickov]

Oh you already at "blame the bankers" phase.

You 're blaming the bankers for debt while calling for more debt. As if the bankers are forcing you to get whatever deal they are offering.

Classy

Another perfect example showing those socialists and / or communists are nothing but control freaks.

[ingliz]

@noemon

Are you still saying borrowers who bought fixed-rate mortgages* before they were taken off the market are not benefiting?





* A fixed-rate mortgage is a home loan with a fixed interest rate for the entire term of the loan

[noemon]

@noemon
Are you still saying borrowers who bought fixed-rate mortgages* before they were taken off the market are not benefiting?
* A fixed-rate mortgage is a home loan with a fixed interest rate for the entire term of the loan

You cannot seriously believe that you can beat bankers at their own game. Do you? That you can fool them to offer you rates below inflation making them give you free money.

True fixed rate mortgages with no tracking the base rate aside from being too few, they are at safe interest rates for banks.