A founding MMTer on Taxation is a indispensable anti-inflation policy tool in Modern Monetary Theory - Politics Forum.org | PoFo

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#15234792
Taxation is an indispensable anti-inflation policy tool in Modern Monetary Theory

He says, yes taxes are sometimes necessary.

I say that, the people end up with more money in the short run and in the long run.
In the short run, deficit spending is in the economy so small business owners make more sales, so they hire more people, so wages in general rise, and big corps end up with the money after the effects above have happened.
. . . If there is too much deficit spending, then there will be inflation. [There will be inflation because that was assumed. If deficit spending had been a little less there would not have been inflation.]
. . . OK, now that there is the assumed inflation, what policy does MMT say should happen and then will happen when that policy is applied? MMT may call for more taxes to reduce demand to reduce inflation. And this will reduce the inflatin so that taxes can be reduced as unnecessary any longer.
. . . The result is that in the short run the workers and small business owners earn a lot of additional money; and then for a while some but not all of that extra money is taxed back out of the economy.

MMTers are calling on their being a system to raise and lower taxes in response the the economic situation.
. . . Yes. I know that is unconstitutional in the US.
. . . This is why I have suggested that the system not be raising and lowering taxes.
. . . MMT asserts that the economy requires that the trade deficit and people's savings needs to be replaced every month to keep the economy going. This total can be fed back into the economy each month as a UBI payment to everyone.
. . . So, instead of changing taxes, I have proposed that the UBI system be handled by the Fed. Every citizen would be given an account at the Fed. Each week or month the Fed would deposit the UBI money into every account. The acc. holder would spend the money into the economy. The Fed would raise and lower the UBI payment as necessary to regulate the economy.
. . . My hope is that this can be done like the QE operations that the Fed. has been doing since 2010, and therefore is constitutional.

Of course, every Fed board member would have to be an MMTer to make this work.


Bill Mitchell wrote: There was an unedifying and fairly undignified war on Twitter recently about whether Modern Monetary Theory (MMT) economics advocate using taxes to deal with inflation. Like all these Twitter ‘debates’, the opening proposition was a ‘gotcha’ attempt that was correct from one angle but then missed the point when it was applied to whether MMT is a valid framework or not. The responses from the MMT ‘activists’ were also overly defensive and reflected the fact that they had fallen for the framing trap presented by the antagonist. In this blog post, I want to clarify the MMT position on the use of taxes and inflation policy. What you will learn is that both positions presented in that Twitter war were largely erroneous, and, conflated concepts, either knowingly (probably not) or unknowingly, to leave a muddy mess. As the cloud became thicker, the ‘debate’ descended, as all these Twitter exchanges seem to, into unhelpful accusations of racial insult, claims of ignorance and stupidity, and worse. Not very helpful.


http://bilbo.economicoutlook.net/blog/?p=50005


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#15234806
Would not work. Ever. Will not work. Ever.

UBI will take away the incentive for earning a living. You'll increase the laziness factor for certain. People will seek entertainment and shun work (except maybe artists). Can you eat paintings and music?

You will also print money out of thin air with no productivity to match it. Therefore, you will naturally create inflation and further devalue the dollar. You'll do that quickly in this case because you are promoting subsistence through a lack of work. In other words, a race to the bottom by paying people to do nothing.

You will also be demanding a product where there will be no supply, because no one will work to create the supply. Additionally, you'll be creating more and more jealously and classiscm between groups of people and more strife, because eventually, when your plans for UBI don't work, the government will force one group of people to work and produce for another group based on arbitrary decisions from ivory towers solely for political support (i.e., votes). I'm sorry; I do not want to be a subject or a slave to a state or some overlord. You seem to gravitate towards that ridiculous thought. We are not subjects of the state, but you would like us to be.

Unfortunately, you think you understand and can steer economics from ivory towers. But you do not understand human nature and character, and how humans will react to artificial incentives. As I told you previously, helicopter money doesn't work. It simply devalues the currency, because easy money can actually be felt by the consumer and seller, thus promoting the treadmill of inflation.

See my quote by Reagan in the bottom of every post I make.
#15234827
Lurkers, I did not say how large the UBI payments would be.
Because they are intended to add money into the economy and not to be enough to live on, they can be rather small.
If they go to every citizen, no matter how young, 320 M living citizens time $20/mo is $6.4 B/mo or 76.8 B/yr.

However, I have no idea how large they can be or need to be to do the job.
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#15234828
late wrote:Republicans have been lowering taxes on the rich for 40 years.

It's no way to run a country.


I know.

Repuds are lying about their effect. They talk about short term effects, like expats bringing their dollars back to America. OK, maybe that happened some. But, now is it still happening? No, all that is happening is billionaires are getting richer and we are getting poorer.

No wat to run a country. [Or a household, either. Not that a nation is like a household.]
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#15234833
Then stop creating wealth inequality. Your policies create inequality and have for many decades. The more you tinker, the worse things get.

The evidence is all around you. You just have to open your eyes.
#15234874
BlutoSays wrote:Then stop creating wealth inequality. Your policies create inequality and have for many decades. The more you tinker, the worse things get.

The evidence is all around you. You just have to open your eyes.


Oh my God.

The gaslighting is epic.

I'm not a neo-liberal, and since Reagan neo-liberals have ruled in Washington. Since 2010 Repuds have ruled in most of the states. And you are blaming me and other progressives.
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#15236653
Puffer Fish wrote:Here's my take on why it is "indispensable". Because if you get the money from taxation, you don't have to print the money. If you don't have to print the money, then no inflation.

Your "MMT theory" seems to go way out of its way to try to explain this basic concept.


I'm pretty sure that you don't grok the points that MMT are making about deficit spending or having a Gov. surplus.
1] Middle class people are told to save for their retirement. Saving is not spending. Sending adds to the GDP, not spending doesn't. Saving moves money out of the active economy. Banks don't lend savers' money, they create dollars with every loan. Deficit spending is necessary to allow people to save because it replaces the saved dollars in the active economy.
2] A trade deficit also removes dollars from the economy. Deficit spending is again necessary because it allows a trade deficit to not reduce the GDP. Without deficit spending a trade deficit will slowly suck too much money out of the economy, which will lead to a recession, which will increase the deficit when tax revenue falls and the automatic stabilizers increase spending.
3] Bank lending does also replace the leakages of dollars into savings and out of the nation to foreigners. A huge however here, bank loans come with a repayment plan. When the people have borrowed so much that they can barely make the payments, they must stop borrowing. When they do this, the GDP falls. This almost always is the start of a recession. And again, a recession increases the deficit as revenue falls and expenses increase.
. . . So, bank lending causes recessions and deficits. Therefore, bank lending is only a temporary way to avoid deficits made necessary by people saving and a trade deficit.
4] MMT asserts that it is totally impossible to create an set of rules in an economy to control fiscal policy that is entirely internal to the theory. Like a rule to always balance the Gov. budget. MMT asserts that economists must learn to analyze data about reality. That is to look at and see if there are workers ready to start working to do what the new program will need workers to do, and if there is steel available to be bought to make the things the program needs to be built. So, MMT asserts the need for reality and data based planning and rejects the idea that policy makers can just look at the money issues in an economy to see what needs to be done.

An example of such thinking is my call for a UBI now to help the workers to pay the rising prices that the current inflation is tracking**. I need to and do explain how this increase in the money supply will cause there to be more oil to burn and food to eat. I assert that the corps will be collecting the dollars and then they can use the dollars to bid up the international price of oil and food, which increases the supply of oil and food in the American economy.

** . I can't say the inflation is causing the price increases. It isn't. Other things are causing the prices to rise. So, I went with "tracking".
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#15236661
By your definition, MMT is central planning of the economy. The deciding entity on central planning (gubmint) is very poor at allocating resources and that causes economic dislocations leading to shortages, inflation and other economic nonsense.

That never ends well. See East Germany, the Iron Curtain countries, Cuba, Russia, tin pot dictatorships in Africa and South America, etc.

Helicopter money does not work.

"We pretend to work and they pretend to pay us." - Soviet Union
#15237317
BlutoSays wrote:By your definition, MMT is central planning of the economy. The deciding entity on central planning (gubmint) is very poor at allocating resources and that causes economic dislocations leading to shortages, inflation and other economic nonsense.

That never ends well. See East Germany, the Iron Curtain countries, Cuba, Russia, tin pot dictatorships in Africa and South America, etc.

Helicopter money does not work.

"We pretend to work and they pretend to pay us." - Soviet Union


No, I disagree. The planning that MMT requires is not as detailed as the central planning you are comparing it to. MMT just needs to make sure that there is enough of the resources available to make the things that it new spending will require. How much of everything made in the economy is still up to corps and businesses.
The difference between an economy that is using MMT thinking to increase deficit spending and has a working national JGP is that the workers are paid more, so they can buy more, or bprrow less, and a green new deal can be fully funded.

Lurkers, the problem with this is that we need to massively reform the economy to deal with climate change by reducing the burning of carbon fuels to the absolute minimum, and find a way to be pulling huge amounts of CO2 out of the air. Maybe dumping iron dust into the ocean. Also, using cloud brightening in the arctic ocean in the summer and elsewhere the rest of the year. The above would allow the GDP to increase and that would mean more carbon fuel being burned, without steps to not allow that.

No MMTer that I know of has called for the rationing in the advanced nations that I have called for. I know that rationing worked in WWII. So, it can be made to work now. We don't even need to be as equal in the distribution of "ration coupons". It would be done now with "credit cards".
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#15237323
Steve_American wrote:No, I disagree. The planning that MMT requires is not as detailed as the central planning you are comparing it to. MMT just needs to make sure that there is enough of the resources available to make the things that it new spending will require. How much of everything made in the economy is still up to corps and businesses.
The difference between an economy that is using MMT thinking to increase deficit spending and has a working national JGP is that the workers are paid more, so they can buy more, or bprrow less, and a green new deal can be fully funded.

Lurkers, the problem with this is that we need to massively reform the economy to deal with climate change by reducing the burning of carbon fuels to the absolute minimum, and find a way to be pulling huge amounts of CO2 out of the air. Maybe dumping iron dust into the ocean. Also, using cloud brightening in the arctic ocean in the summer and elsewhere the rest of the year. The above would allow the GDP to increase and that would mean more carbon fuel being burned, without steps to not allow that.

No MMTer that I know of has called for the rationing in the advanced nations that I have called for. I know that rationing worked in WWII. So, it can be made to work now. We don't even need to be as equal in the distribution of "ration coupons". It would be done now with "credit cards".
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Won't work. Your idea of increasing resources is flooding the place with cash. That will mean even more dollars chasing fewer goods and rocketing inflation as currency devalues. The unintended consequences are you'll have bidding wars driving the costs of goods and services higher and higher. You're quite literally calling for an increase in price without and increase in productivity. Workers will NOT be able to buy more because that will cause artificial shortages by everyone having so much money to spend, that they will not be constrained until there are shortages. You must "feel" like you have earned the money to appreciate it, or economic dislocations are created from lack of feedback to the consumer. Longer term, the economy will crater and we'll have black markets as the prices of goods goes to infinity and people are trying to buy everyday just to get rid of their cash (or credit cards), because the medium of exchange will be so worthless. People living on fixed incomes and savers will get killed also.

You're trying to increase the velocity of money because economic numbers suck and we're experiencing stagnation. The "green new deal" is your used car salesman way of doing it. No thanks. There's no natural demand for the GND. Only thru ridiculous subsidies and cajoling and destructive economic policy (like artificially killing coal, petroleum and natural gas) does it FORCE itself on the market by coercion. Even other countries are shying away from the GND when and similar nonsense when they realize what it's going to cost them.

We don't need you "engineering" the economy. Everything is already in the mode of shitting the bed without you pushing it down a hill.

Keep your distance (said in a very serious and low tone as would be spoken to a mental patient). These ideas you come up with are quite literally insane.
#15237338
@BlutoSays,

Oh, my God.

Lurkers, is Bluto so stupid that he can't grasp my saying clearly and directly, that the US would buy more oil and food from overseas?

This is just like Biden buying and airlifting baby food to America from overseas. Slightly different in that my plan would let the corps still make a profit in the process.

Now over 99% of climate scientists and over 75% of all scientists agree with the IPCC reports that =>
1] Humans are causing climate change by dumping CO2 into the air.
2] We must act now to reduce the burning of oil, etc., and dumping CO2 into the air.
3] That if we don't the world's ave. temp will increase by more than 2 deg. C above preindustrial temps by 2080, and likely by 2050.
4] That such an increase would be a disaster for the GDP of every nation on earth. The cost would be measured in worldwide total drop in GDP in the range of $100 trillions of dollars.

Bluto is in denial. The IPCC doesn't care about the "natural economic demand" now for action. It is just telling us what the science proves we must do and, the consequences if we don't listen.

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#15237393
Steve_American wrote:@BlutoSays,

Oh, my God.

Lurkers, is Bluto so stupid that he can't grasp my saying clearly and directly, that the US would buy more oil and food from overseas?

This is just like Biden buying and airlifting baby food to America from overseas. Slightly different in that my plan would let the corps still make a profit in the process.

Now over 99% of climate scientists and over 75% of all scientists agree with the IPCC reports that =>
1] Humans are causing climate change by dumping CO2 into the air.
2] We must act now to reduce the burning of oil, etc., and dumping CO2 into the air.
3] That if we don't the world's ave. temp will increase by more than 2 deg. C above preindustrial temps by 2080, and likely by 2050.
4] That such an increase would be a disaster for the GDP of every nation on earth. The cost would be measured in worldwide total drop in GDP in the range of $100 trillions of dollars.

Bluto is in denial. The IPCC doesn't care about the "natural economic demand" now for action. It is just telling us what the science proves we must do and, the consequences if we don't listen.

.



"99% of climate scientists and over 75% of all scientists agree with the IPCC reports" - cite credible reference and poll.

Who are these "scientists"? The ones who better agree to the party line or lose their grant money from the state?

The IPCC is a scandal ridden organization. ALWAYS FOLLOW THE MONEY.

Aren't we all already supposed to be dead in 2016 because of climate change according to Al Gore, well revered inventor of the internet?


- - - - -

Almost Nothing We've Been Told About the IPCC Is Actually True
Donna Laframboise, May 17, 2015, Fox News

Most people have never heard of the Intergovernmental Panel on Climate Change (IPCC), but it performs one of the most important jobs in the world. It surveys the scientific literature, decides what it all means, and writes a report informally known as the "Climate Bible."

That "Bible" is cited by governments everywhere. It is the reason carbon taxes are being introduced, heating bills are rising, and costly new regulations are being imposed.

According to John Holdren, President Obama's science advisor, the IPCC is the source of the "most important conclusions" about climate change. It's chairman, Rajendra Pachauri, says that "all rational persons" should be persuaded by his organization's findings.

The IPCC has been around for 22 years and has been awarded a Nobel Peace Prize. And yet my newly published book is the first time anyone has taken a close, critical look at this organization. After two years of research, I've discovered that almost nothing we've been told about the IPCC is actually true. Rather than being written by a meticulous, upstanding professional in business attire, it turns out the Climate Bible is being produced by a slapdash, rule-breaking, not-to-be-trusted teenager.

For example, in the grown-up world, whenever important decisions and large amounts of money are involved conflict-of-interest mechanisms are firmly in place. Lawyers, accountants, politicians, and many others are subject to these rules as a matter-of-course. People who expect to be trusted by the public adopted them long ago.

Yet even though the IPCC evaluates matters in which trillions of dollars are at stake, well into the 21st century it saw no need to even discuss conflict-of-interest. This organization is so arrogant, so used to being praised and admired, that its leaders failed to take the most ordinary of precautions.

Alas, this is only one of many troubling signs. In 2009 Pachauri assured a US Senate committee that his organization mobilizes "the best talent available across the world." On other occasions he has insisted that IPCC authors are at the top of their profession and are chosen for their impressive track records.

But as anyone who does a little math can discover for themselves, the IPCC has been relying on the expert judgment of 20-something graduate students for years.

In one instance, a young man who hadn't even acquired his Masters degree was recruited to be a lead author. In another, a woman 16 years away from completing her doctorate (and three years from the publication of her first academic paper) was one of only 21 people in the entire world selected by the IPCC to write about climate change and human health.

But why stop at students when you can recruit brazen activists, as well? Richard Moss has been involved with the IPCC for nearly two decades. During part of that time he was on the World Wildlife Fund's payroll – as a vice president, no less.

Richard Hare is considered a Greenpeace "legend." He has been one of its spokespeople since 1992 and was its chief climate negotiator in 2007. None of this prevented him from being admitted to the IPCC's inner circle. In 2007, Hare was one of only 40 people on the "core writing team" for the overall, big-picture IPCC summary known as the Synthesis Report.

Chairman Pachauri has further insisted that the IPCC bases its reports solely, only, and exclusively on research that has been published in peer-reviewed academic journals. In testimony before U.S. lawmakers he has said that the IPCC doesn't "settle for anything less." He has further declared that non-peer-reviewed material should be tossed "into the dustbin."

Yet it turns out that one in three sources relied on by the IPCC's landmark 2007 report didn't come within a mile of a peer-reviewed journal. Or, to rephrase that: one third of the sources referenced by the Climate Bible are to material the IPCC's own chairman has said belongs in the trashcan.

How could he have been so mistaken? How could he have repeatedly made the 100% peer-reviewed claim before he'd personally taken steps to ensure it had actually happened that way?

We're told we should trust the judgment of the scientists who write IPCC reports. Yet in an organization in which hundreds of people knew the chairman was traveling the world uttering balderdash, no one apparently took him aside and corrected him.

I've done my share of investigative reporting. But I've never seen a story like this one. -- No matter what IPCC rock I turn over, I find something scandalous.

https://www.foxnews.com/opinion/almost- ... ually-true



#15237524
Steve_American wrote: Saving moves money out of the active economy.

That's not necessarily true, or not necessarily a bad thing. Saving does contribute to the economy if that money is productively invested, which could include bank lending money to a factory to buy equipment, for example. This hinges on the exact definition of "productive" in the economy, because there are also many parasitic forms of investment that do not benefit the economy as a whole.

And even if money is moved out of the active economy, that is not necessarily a bad thing. If people are saving, that also pushes prices down. More demand for money to be able to save it. (So long as this money is actually being held by people within your economy and not foreigners)
#15237576
Puffer Fish wrote:That's not necessarily true, or not necessarily a bad thing. Saving does contribute to the economy if that money is productively invested, which could include bank lending money to a factory to buy equipment, for example. This hinges on the exact definition of "productive" in the economy, because there are also many parasitic forms of investment that do not benefit the economy as a whole.

And even if money is moved out of the active economy, that is not necessarily a bad thing. If people are saving, that also pushes prices down. More demand for money to be able to save it. (So long as this money is actually being held by people within your economy and not foreigners)


Puffer Fish,
You and I really need to figure out who is right.
You just asserted that the money saved by a saver can be loaned out by the bank.
I assert that banks create money with every loan, and can't by law loan out their depositors' money. I have posted links at least 3 times to 2 articles about the experiment in Germany in 2014 where a bank loan 200K euros to a Prof. while his students observed every employee of the bank. The conclusion was the bank created the 200K euros. The 2nd link was to an article soon after the above by the Bank of England that reported on the experiment and agreed that it had proved that banks create money with every loan.

AFAIK, you have no such evidence. You just make the assertion over and over.

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#15237786
Steve_American wrote:Puffer Fish,
You and I really need to figure out who is right.

I assert that banks create money with every loan, and can't by law loan out their depositors' money.

I think we are actually arguing over semantics.

The reality is that we're both right, but it depends exactly what we're talking about.

We run into these semantic troubles all the time when trying to discuss economics, because a lot of these economic concepts are difficult to fully accurately describe with the simple words available to us. We are each using words, assuming the other will easily know the meaning of what we are referring to, when that is sometimes a mistaken assumption.

Since the word "money" can have an unclear meaning in the discussion we are talking about, why don't we try using some other description that is more precise and accurate? Even though it might be more cumbersome to talk about.

It's a little bit complicated to try to talk about, isn't it?
#15237787
Steve_American wrote:You just asserted that the money saved by a saver can be loaned out by the bank.

This is how banks work.

A bank needs to have money saved by a saver to be able (or maybe permitted is a better word) to loan out money.

If a bank tries loaning out money (that is not real money, government currency) that is not backed by something, the people who run the bank will be prosecuted for fraud.


(The Central Bank plays by slightly different rules though, which is how you get inflation)
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