Thank you for this excellent explanation designed to introduce novices to the big ideas of MMT. The point that MMT starts from an accurate description of government spending, money creation and accounting reality is key, and helps to anchor the discussion. The details will be offputting to beginners but are necessary later to further the discussion. Christopher Hitchens would sometimes use this strategy to keep his adversaries honest ie start with descriptions of reality that most people would agree with, and build from there. Opponents of MMT rarely focus on its descriptions of reality, preferring to criticise the logical consequences of these descriptions (which can be scary!) and so create the wrong impression that MMT has no basis in reality. This is dishonest but also makes MMT an easy target. MMT disrupted my worldview when i discovered its ideas about 15 years ago, and this can be severely disconcerting for many, so i appreciate this softer introduction. Thank you!
One of the main barriers between MMT and mainstream economic acceptance has been MMT scolds telling you off for ‘not getting’ MMT. Nice to see it gaining traction and acceptance - thanks for covering it
For sure. That said, you can understand that MMT theorists get emotional and defensive when faced by the incredible volume of bad-faith straw-man attacks that get levelled at them
Exactly. Especially the tone police who presume to push back against MMTers while engaging in pure unadulterated idiocy without even a pause for consideration.
You're wrong that (Gov) Bonds 'neutralise' money in some similar way to tax (deletion).
1. the Bond market is highly liquid
2. Bonds are purchased with bank deposits/reserves that were already not intended to purchase real goods
3. the main reason Bonds are purchased is that they are risk-free (at par value), unlike bank deposits for large sums
Rather surprised you make this error, Brett?
Also, your inflation story is very muddled. The money supply moves up & down all the time, with banks supplying & reclaiming credit. It's not possible to use taxation as some kind of 'inflation' control in any useful timescale. The only real inflation control needs doing in 2 ways -
1. By Gov doing the macro 'real resources' planning, taking account of growth potential & estimating the new fiscal balance likely needed.
2. If *price increases* occur, that may lead to general inflation, Gov needs to intervene directly to deal with the supply bottleneck or monopolist price gouging that created the particular price increases. Tax is unlikely to be adequately precise, predictable or useful in either case as an *indirect* or 'market' mechanism by defn. ('Market' mechanisms *require* a 'competitive' market which sudden price hikes are showing doesn't exist.)
Can we stop dog whistling the 'inflation everywhere & always a monetary phenomenon' nonsense? It's actually *not*, ever. Full stop. The 'money' side lags, never leads.
Hey Mike, as it says in the title, it's a Beginner's Guide. If I start geeking out on the minutia of the nuances, I'd only have geeks engaging with my work. If you want people to actually get involved in MMT, you have to drop the insistence on purity of message
Whether Bonds 'neutralise' isn't minutiae, Brett. Or 'nuance'. It's just wrong, and anyone with half a brain will be wondering if QE can cause inflation... (It doesn't because 'neutralise' is drivel - even at 'beginner' level.)
I guess the political question is whether you care or not about dispelling far larger and far more damaging myths, like the idea that bonds are for the government to raise money to spend, which is like what 99.99% of people believe
While you wade into the comments section here to display to me my apparent ignorance, the vast majority of economists with far larger audiences than you or I have no interest whatsoever in showcasing your theories, whereas I do. It's better for you to treat me as an ally
So, far example, rather than sayings something like 'your inflation story is very muddled', display to me how you would approach the non-expert public to explain the role of taxation, and - bear in mind the reality of media, which is that you cannot expect a person to stand there and listen to you while you recite every detail about the banking sector and bond markets etc - you have a person's attention for like 2 minutes maybe...
I'm not sure that's specific to MMT - for example, traditional non-MMT left wing movements are far more likely to treat taxation as a non-negotiable thing
Would MMT exist if the US Constitution was changed to a Sustainability Constitution that replaced the farcical rights of financial interest with rights for all incarnate Spirit including children, childbearers, mothers, families, communities and most of all mother nature? No, it would become irrelevant as anything more than a description of the past.
All the real assets are divinely endowed and withheld from those whose rights are not recognized by the current legal system.
In Agrarian Justice, Thomas Paine wrote of “natural inheritance” and went so far as to say that those who were unable to settle free land should receive compensation.
Modern-day ecophilosopher, Derrick Jensen, explains why access to land is “everything.” If land (a real asset) is plentiful people have the ability to create their own wealth. He also explained why capitalism is just a more refined slave system.
We have to move beyond economies of slavery and disposable mothers. Capitalism is patriarchy and patriarchy has to go. Mother earth will not sustain it.
I am learning about the economy as an eco-feminist who recently wrote on jurisprudence after a rogue court attempted to abduct my daughter without cause or jurisdiction for profit.
To gloss over the violence of this economy will not go unrecognized as seriously offensive. That said, I appreciate your video.
I understand your impulse, but it's important to note that MMT doesn't claim to end capitalism. It's just a pragmatic framework that says 'we live in capitalism, so if you want to have a less bad version of it that has more potential to do stuff like support the unemployed, then understand the monetary mechanics'
Thank you for this excellent explanation designed to introduce novices to the big ideas of MMT. The point that MMT starts from an accurate description of government spending, money creation and accounting reality is key, and helps to anchor the discussion. The details will be offputting to beginners but are necessary later to further the discussion. Christopher Hitchens would sometimes use this strategy to keep his adversaries honest ie start with descriptions of reality that most people would agree with, and build from there. Opponents of MMT rarely focus on its descriptions of reality, preferring to criticise the logical consequences of these descriptions (which can be scary!) and so create the wrong impression that MMT has no basis in reality. This is dishonest but also makes MMT an easy target. MMT disrupted my worldview when i discovered its ideas about 15 years ago, and this can be severely disconcerting for many, so i appreciate this softer introduction. Thank you!
Thanks for the support Arnold!
Nice!
Thanks for this very clear explanation of how one could, should, look at the economy and the role of the state in it.
Thanks Eduard! Really glad you like it
One of the main barriers between MMT and mainstream economic acceptance has been MMT scolds telling you off for ‘not getting’ MMT. Nice to see it gaining traction and acceptance - thanks for covering it
For sure. That said, you can understand that MMT theorists get emotional and defensive when faced by the incredible volume of bad-faith straw-man attacks that get levelled at them
Exactly. Especially the tone police who presume to push back against MMTers while engaging in pure unadulterated idiocy without even a pause for consideration.
I do. I’ve been on the receiving end of it myself. If that’s the worst PR problem its better than most economic schools I guess haha
You're wrong that (Gov) Bonds 'neutralise' money in some similar way to tax (deletion).
1. the Bond market is highly liquid
2. Bonds are purchased with bank deposits/reserves that were already not intended to purchase real goods
3. the main reason Bonds are purchased is that they are risk-free (at par value), unlike bank deposits for large sums
Rather surprised you make this error, Brett?
Also, your inflation story is very muddled. The money supply moves up & down all the time, with banks supplying & reclaiming credit. It's not possible to use taxation as some kind of 'inflation' control in any useful timescale. The only real inflation control needs doing in 2 ways -
1. By Gov doing the macro 'real resources' planning, taking account of growth potential & estimating the new fiscal balance likely needed.
2. If *price increases* occur, that may lead to general inflation, Gov needs to intervene directly to deal with the supply bottleneck or monopolist price gouging that created the particular price increases. Tax is unlikely to be adequately precise, predictable or useful in either case as an *indirect* or 'market' mechanism by defn. ('Market' mechanisms *require* a 'competitive' market which sudden price hikes are showing doesn't exist.)
Can we stop dog whistling the 'inflation everywhere & always a monetary phenomenon' nonsense? It's actually *not*, ever. Full stop. The 'money' side lags, never leads.
Hey Mike, as it says in the title, it's a Beginner's Guide. If I start geeking out on the minutia of the nuances, I'd only have geeks engaging with my work. If you want people to actually get involved in MMT, you have to drop the insistence on purity of message
Whether Bonds 'neutralise' isn't minutiae, Brett. Or 'nuance'. It's just wrong, and anyone with half a brain will be wondering if QE can cause inflation... (It doesn't because 'neutralise' is drivel - even at 'beginner' level.)
I guess the political question is whether you care or not about dispelling far larger and far more damaging myths, like the idea that bonds are for the government to raise money to spend, which is like what 99.99% of people believe
While you wade into the comments section here to display to me my apparent ignorance, the vast majority of economists with far larger audiences than you or I have no interest whatsoever in showcasing your theories, whereas I do. It's better for you to treat me as an ally
So, far example, rather than sayings something like 'your inflation story is very muddled', display to me how you would approach the non-expert public to explain the role of taxation, and - bear in mind the reality of media, which is that you cannot expect a person to stand there and listen to you while you recite every detail about the banking sector and bond markets etc - you have a person's attention for like 2 minutes maybe...
I don't understand your point, even a cent kept in a cave is a mini "neutralization" of inflation no?
If we stop the money circulation we are braking the inflation growth, or not?
What do the state do with the bond's money?
MMT treats taxation like it's easy peasy when politically speaking it's one of the most toxic things a politician can commit to.
I'm not sure that's specific to MMT - for example, traditional non-MMT left wing movements are far more likely to treat taxation as a non-negotiable thing
Would MMT exist if the US Constitution was changed to a Sustainability Constitution that replaced the farcical rights of financial interest with rights for all incarnate Spirit including children, childbearers, mothers, families, communities and most of all mother nature? No, it would become irrelevant as anything more than a description of the past.
All the real assets are divinely endowed and withheld from those whose rights are not recognized by the current legal system.
In Agrarian Justice, Thomas Paine wrote of “natural inheritance” and went so far as to say that those who were unable to settle free land should receive compensation.
Modern-day ecophilosopher, Derrick Jensen, explains why access to land is “everything.” If land (a real asset) is plentiful people have the ability to create their own wealth. He also explained why capitalism is just a more refined slave system.
We have to move beyond economies of slavery and disposable mothers. Capitalism is patriarchy and patriarchy has to go. Mother earth will not sustain it.
I am learning about the economy as an eco-feminist who recently wrote on jurisprudence after a rogue court attempted to abduct my daughter without cause or jurisdiction for profit.
To gloss over the violence of this economy will not go unrecognized as seriously offensive. That said, I appreciate your video.
I understand your impulse, but it's important to note that MMT doesn't claim to end capitalism. It's just a pragmatic framework that says 'we live in capitalism, so if you want to have a less bad version of it that has more potential to do stuff like support the unemployed, then understand the monetary mechanics'
Fantastic explanation Brett. I’ll be sharing this.
Brett: If possible, allow subtitles. They are useful for some foreign listeners (like me). Thank you.