Modern Monetary Theory

[dada]

See, this is what turns me off to the mmt. The language seems to dance around the real issue of the exploitation of labor at the heart of finance. Like there's a big empty hole in the middle of it where something essential should be but is significantly missing.

[drstrangelove]

We've been adding to it for 230 years and for the last 30 years inflation has been remarkably low.

The point of contention is Inflation. You think The Fed has it under control, I do not. We could argue this point, whether productivity increases have been compensating for the expansion of the money supply, or if they have merely hidden it because they've been artificial. But we'll soon find out.

When the current stock bubble pops, the historic levels of cheap credit which blew it up while no one was working will pour out and the commodities will either be there to soak it up or they won't be. So we will see hyperinflation or we won't. Even if we saw inflation way beyond what was expected I'd still have some serious reflection to do.

There's already serious inflation right now so it's not as if this is theory, only the extent of the damage is. House prices are actually hyperinflated. Raw materials are very inflated. Food costs are going up. All this being explained away as supply issues. We'll see. We'll find out when the credit eventually crunches.

[dada]

I mean, now we go back to early coinage, what we're saying is that the money starts in the origins of the feudal state in classical antiquity. So it was an imposition on the subjects, a way for tribal chieftans to solidify control. Take over the marketplace. Also advertise the state brand. Symbol of power and wealth. Display of industrial might even, in the early mass minting process.

Just saying that a theory of money really needs to start at the basic fact of the coercive, manipulative, explotative and imperialist drives underpinning the subject, otherwise we end up with a theory of money as fetish object.

[Agent Orange Cooper]

The perception of money as a private creation. It's not.

I don't know how you can possibly make that claim as absolutely as you do.

https://unenumerated.blogspot.com/2018/ ... ental.html

The many traditions of non-governmental money (part i)

The central bank of the United States, the Federal Reserve, has put out “educational material” on Bitcoin for teachers and students (including a quiz!). The Bitcoin parts are odd enough, but this and a subsequent blog post will focus on the following statement: “traditionally, currency is produced by a nation's government.“ Is that a fair representation of monetary traditions? At the very least it is quite incomplete. This two-part series will proceed back in time, showing some of the many examples non-governmental money, in order to fill in some of the gaps.

[dada]

I guess that when I heard about this modern monetary theory, and how it is supposed to be a challenge to the status quo, I thought the idea had potential. Even though it was coming on as "modern" right from the start, I thought maybe modern doesn't have the same connotation here as it does for me. Like, maybe they only mean to signify "new."

So the problem is I bought into the advertising, and when it didn't meet the expectations it built up, I was let down. Because I was thinking this mmt was going to be like a serious post-marxist critique of money. Figuring where money theories have gone and all that they've been through, and with the promise of status quo challenge, this is what I pictured. Not "modern vs classical," like a musical debate for stiff composers, arguing over differences that are purely academic. More like dangerous ideas wrapped in a language with momentum, for getting down and dirty in the mud with the Chicago style. But no, it's like whitewashed ideas wrapped in milquetoast language. Just another theory.

Sorry my critique is coming out sounding so harsh. Like I said, I think it's because of the feeling of disappointment, like I got sucked in by false advertising.

Like Mr. Do's Wild Ride. It isn't wild, and you don't ride anything, just dodge roller coaster cars. It's false advertising. I think I wouldn't mind the game so much, if I hadn't been let down by the failure of the game to live up the hype.

[Elvis]

See, this is what turns me off to the mmt. The language seems to dance around the real issue of the exploitation of labor at the heart of finance.

The exploitation of labor is chiefly a problem with capitalism. MMT absolutely addresses the exploitation of labor.

What's the first means of exploitation? The threat of job loss. Kiss the bosses' ass and suffer all manner of indignity—or you're on the street. This brickbat on labor's head works especially well when unemployment is high.

MMT proposes to end involuntary unemployment and low-wage poverty. That's a singular great leap in reducing exploitation. Now gosh, who would oppose true full employment with good pay? Could it be the exploiters? Could it be the lenders who love it when people are forced to borrow money? Why yes, yes it could be!

It's a business plan.

chomsky greenspan insecurity.jpg

A federal job guarantee—a very old idea reinvigorated by MMT economists—puts an end to this bullshit. Details are in this thread but one can start here: Job Guarantee FAQ

Here is MMT heavyweight Pavlina Tcherneva, who has researched the job guarantee for 25 years:


https://www.youtube.com/watch?v=3YnHT2A3a6Y

P.S. — unemployment is a virus.

The Federal Job Guarantee is one of MMT's very few prescriptive measures, because it's such a blindingly fucking obvious remedy to the central problem of the US economy: millions of people regularly thrown out jobs. The status quo asks, "What is the optimal level of human suffering to assure corporate profits and control?" The status quo never even considers the possibility of guaranteed employment, it's an alien concept, taboo.

MMT knowledge is revolutionary kit. Use it.


P.S. — dada, I hadn't seen your post about the "status quo" when I mentioned it—but there you have it.

[dada]

"The many traditions of non-governmental money"

See, now that gets me thinking. How for a small group, say a pirate colony, taking advantage of circumstances and taking advantage of people takes on a whole different meaning than exploitation. Here capitalizing is the colony making best use of what is at hand and the skills the people brought with them. The extraction of wealth is not exploitative but adequate, and the money produced isn't a token of imperial designs.

[Elvis]

The point of contention is Inflation. You think The Fed has it under control, I do not.

The Fed has no idea why inflation has been so low! They feel supremely lucky, but they don't have much of a clue.

Central banking is an ongoing engineering project, we have learned a lot and it's not a huge surprise that inflation management has overall improved.

[Elvis]

All this being explained away as supply issues.

The supply issues are measurable, obvious, in-your-face.

The US economy is about to get an injection of around $5 trillion; there may well be some inflation at first*, just as the brief post-WWII inflation spiked then settled to the 20 year period of low inflation, high employment and general prosperity. In both instances, consumers had some pent-up savings and demand went up. So production went up. Employment went up, incomes went up.

Mind you, those 20 Good Years 1948-1967 directly followed the years of still-unprecedented deficit spending by the federal government. The government budget deficit is the private sector's financial surplus.


* and the Art Laffers and Peter Schiffs will holler, "the sky is falling!!!" They always do.

[dada]

"What's the first means of exploitation? The threat of job loss. Kiss the bosses' ass and suffer all manner of indignity—or you're on the street. This brickbat on labor's head works especially well when unemployment is high.

MMT proposes to end involuntary unemployment and low-wage poverty."

I don't agree with this at all. The first means of exploitation is slavery. Also coerced labor, the sweatshop. All the things the economy runs on right now, that we don't like to talk about in polite company.

And I choose low-wage poverty, for the peace of my soul, as I said earlier today on another thread. But I know many others are worse off, involuntarily. So maybe trying to end involuntary poverty might be a goal I can work with.

Same with the employment part of the platform. If it was ending low-wage employment, I think that makes more sense. Ending involuntary unemployment sounds too much like ending voluntary unemployment. And we know where that ends up. Work, freeing us all.

edited to correct. Changed an employment to an unemployment. Employment, unemployment. Reminds me of the king of hearts in wonderland.

[Agent Orange Cooper]

The point of contention is Inflation. You think The Fed has it under control, I do not.

The Fed has no idea why inflation has been so low! They feel supremely lucky, but they don't have much of a clue.

Central banking is an ongoing engineering project, we have learned a lot and it's not a huge surprise that inflation management has overall improved.

I'd rather argue with a flat earther than an MMT cultist.

[Elvis]

I mean, now we go back to early coinage, what we're saying is that the money starts in the origins of the feudal state in classical antiquity. So it was an imposition on the subjects, a way for tribal chieftans to solidify control. Take over the marketplace. Also advertise the state brand. Symbol of power and wealth. Display of industrial might even, in the early mass minting process.

For the Greeks, adoption of coinage was the driver of democracy. It ended the reign of kings; anyone who had enough coins could raise an army and go after the guy on the throne. Some bright soul figured out that no good could come of that, and a more equitable system was worked out (by & for Greek male citizens, but...).

Edit: With regards to the marketplace, there was no marketplace before coins were adopted; that is, there was no retail agora where sundry produce & goods were sold until fungible money was invented and made it possible. (Money did not arise out of private retail markets; money created private retail markets.)

Just saying that a theory of money really needs to start at the basic fact of the coercive, manipulative, explotative and imperialist drives underpinning the subject, otherwise we end up with a theory of money as fetish object.

It does. It absolutely does start with those drives. Warren Mosler, the "godfather of MMT," routinely outlines "the money story" and the coercive nature of its beginnings. David Graeber also described "the money story," independently and in almost exactly the same terms. This doesn't mean that Mosler likes coercion—he doesn't, and has ideas to take coercion out of money.

Both Mosler and Graeber realize that public money can be used for good or for evil. Britain, France, Belgium and others have used it brutally to extract wealth in Africa—sickening. Pericles used it to build the Parthenon—still the most beautiful building in the world.

Here is just one instance (you can find many) of Mosler addressing exactly that which you offhandedly say MMT ignores—jump to the 6:20 mark:


https://www.youtube.com/watch?v=k2zN1a9FrXQ


In the US, it's still up to voters to decide how we want to marshall our resources—using whatever shreds of representative government we have remaining.

Or we can let big bankers and private equity billionaires allocate our resources; I guarantee you won't like it.

[Elvis]

The perception of money as a private creation. It's not.

I don't know how you can possibly make that claim as absolutely as you do.

https://unenumerated.blogspot.com/2018/ ... ental.html

Yes of course private bank notes appear many times—in the past. None of those are money today. In the United States, the US dollar is money. Everything else is some other kind of asset. All these innovative instruments are riding on the back of government fiat money.

I notice that to avert incoming regulations, Bitcoin exchange peeps are now proclaiming that "Bitcoin is NOT a currency!!"

Dudes, we told you!

[Elvis]

Even though it was coming on as "modern" right from the start, I thought maybe modern doesn't have the same connotation here as it does for me. Like, maybe they only mean to signify "new."

"Modern" refers to MMT's unique study of modern changes to the money system—chiefly the ending of the Bretton Woods agreement and especially the 1971 shift from the gold standard to fiat currency. Students of economics are rewarded for learning outdated models and bad assumptions.

Because MMT economists were the only ones who bothered to really look into the implications of the profound legal changes, they were able to predict the 2000 and 2008 recessions with some precision.

Here's how Bill Mitchell describes MMT:

MMT integrates past knowledge and history with the modern fiat system into a comprehensive and coherent analysis.

No other school of economic thought does this. Knowledge is good.

[Elvis]

Same with the employment part of the platform. If it was ending low-wage employment, I think that makes more sense. Ending involuntary employment sounds too much like ending voluntary unemployment. And we know where that ends up. Work, freeing us all.

I posted a link to FAQ and a video lecture on the job guarantee. If you're curious, you should read the FAQ and watch the lecture (there are slides and animations). If you're not curious, then move on.