Modern Monetary Theory

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Modern Monetary Theory

Postby KeithE » Wed Aug 12, 2020 12:06 pm

Been reading a lot lately on US macroeconomics and I have found Modern Monetary Theory (MMT) very persuasive. It basically says we can print/e-distribute as much money as we want as long as we control inflation (which we have since 1990)

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Read about MMT here and then discuss.

Truth is we have been practicing MMT for 30 years now (usually with annual deficits) without inflation.

The current Covid stimulus bills has now made our annual deficit more than $3.8T/yr (and counting). That is well and good for MMTers as long as inflation does not occurred and they expouse several ways of monitoring/controlling inflation. Note the previous high annual deficit was $1.5T in 2009.

If any of you care to educate yourself on these matters the best simple book on the subject is The Deficit Myth by Stephanie Kelton.

I see MMT as our only way out of our current economic recession/depression/expansion of inequality. Spend money on infrastructure/care for poor/school safety, not on tax breaks for the rich or bailouts for large corporations (too much of already distributed Covid stimulus have gone there!).
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Re: Modern Monetary Theory

Postby William Thornton » Wed Aug 12, 2020 2:41 pm

Would like to read it. Hard to grasp that gummit flooding the economy with paper is of no consequence.

I Do have some Weimar Republic Deutschmarks in my currency collection. Maybe they will make a comeback.
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Re: Modern Monetary Theory

Postby KeithE » Wed Aug 12, 2020 8:46 pm

William Thornton wrote:Would like to read it. Hard to grasp that gummit flooding the economy with paper is of no consequence.


The imagined consequence of the deficit hawks is large amounts of inflation. Not true. Here is the growth in the national deficit.

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and here is the inflation over time (repeated from above)

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That is the chief finding of the MMTers.

The biggest consequences have been:

1) CEO pay increased by 940% while typical worker has seen a 12% increase

2) And corporate profits has risen dramatically

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Yet top individual tax rates have declined

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and corporate taxes are 1/6th what they were in 1955 (expressed as a portion of the GDP).

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Seems like old times.
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