Bi_3 wrote:Ah. This is what I was missing. Thank you.
Still seems like the existence of global trade would wreck the concept, but I’m sure the krugmans of the world have explained that as well.
I know you might not have meant literally Paul Krugman, but he's written pieces against it. This is a very heterodox position and doesn't have much, if any traction, in mainstream economics from what I can tell. It strikes me as much more political than economic, kinda like Reaganomics.
Krugman on MMT:
“When people expect inflation, they become reluctant to hold cash, which drive prices up and means that the government has to print more money to extract a given amount of real resources, which means higher inflation, etc... Do the math, and it becomes clear that any attempt to extract too much from seigniorage — more than a few percent of GDP, probably — leads to an infinite upward spiral in inflation. In effect, the currency is destroyed.”
"I want to see the whole picture--as nearly as I can. I don't want to put on the blinders of 'good and bad,' and limit my vision."-- In Dubious Battle
BurtReynolds wrote:Isn't MMT just an explanation for how government works today?
Yeah, for all the controversy that's slung at MMT, I'm come to see it as just a really boring explanation as to how governments with fiat currency operate: add money via the printing press when its supply is too low in recessions, and then subtract it via taxes when its supply is too high via inflation. It's a very powerful arrangement, yet one that's also delicate, as going too far either way can ruin a country's economy (and there have been plenty of examples in history), but when run properly it just seems like boring modus operandi.
I think that minimizes the differences and potential for catastrophic outcomes inherent in MMT. What you described is Keynesianism which has been politically dominant for a long time. I think MMT obviously has similarities in advocating for an active government role but I think it goes well beyond the above.
Keyensians suggest what you mentioned: stimulating or contracting the economy when it experiences a recessionary or inflationary gap. MMT argues that the reason that an economy experiences a recession in the first place is specifically because the government isn't spending enough as opposed to Keynesians who argue that when there is a recession the government should increase spending/cut taxes to increase output. I admit that those two perspectives are similar, but I think MMT makes a very important shift from government having a role to support or fix to having the main role in driving an economy. MMT is attempting to provide intellectual cover for a dramatically more expansive government role in the economy than Keynesianism.
I guess I just see this as more of a difference in degree than substance. *shrugs*
