evilgenius wrote:Modern Money Theory is the idea that fiat currencies are not subject to local constraints. Governments are not domestic households that need to balance their budgets. They can deficit spend as much as they need. They will never run out of money.
The post-Keynesian economist Thomas Palley argues that MMT is largely a restatement of elementary Keynesian economics, but prone to "over-simplistic analysis" and understating the risks of its policy implications.[25] Palley denies the MMT claim that standard Keynesian analysis doesn't fully capture the accounting identities and financial restraints on a government that can issue its own money. He argues that these insights are well captured by standard Keynesian stock-flow consistent IS-LM models, and have been well understood by Keynesian economists for decades. He also criticizes MMT for essentially assuming away the problem of fiscal - monetary conflict. In Palley's view the policies proposed by MMT proponents would cause serious financial instability in an open economy with flexible exchange rates, while using fixed exchange rates would restore hard financial constraints on the government and "undermines MMT’s main claim about sovereign money freeing governments from standard market disciplines and financial constraints". He also argues that MMT lacks a plausible theory of inflation, particularly in the context of full employment in the 'Employer of last resort' policy first proposed by Minsky and advocated by Bill Mitchell and other MMT theorists ...
radon1 wrote:Currencies are not the money, they are derivatives from the money. There is always single type of money in the world as long as no totally isolated groups of people exist anywhere. Currently, the US dollar is the money.
Newfie wrote:Once you start making these loans when do you stop? A guy wants to drive Uber, so you lend him the money for a nice car, but he doesn’t really work at it and can’t repay the loan. Now 10 of his buddies want the same loan, and they can’t repay it either. They demand it if the government to make things “fair.” Pretty soon it becomes a “free car” program.
Then there are so many Toyota Camrays they have no resale value so no poInt repossessing. Isn’t that sort of what happened to the housing market?
Newfie wrote:Then there are so many Toyota Camrays they have no resale value so no poInt repossessing.
Outcast_Searcher wrote: any basket of liquid currencies they want,
radon1 wrote:Outcast_Searcher wrote: any basket of liquid currencies they want,
These currencies hold value solely by virtue of reference to the USD. If they drop this reference, people will abandon them and will not see them as value or as money. Same with commodities.
Outcast_Searcher wrote:
If the US disappeared tomorrow, do you imagine that the rest of the world would magically stop all economic activity?
radon1 wrote:For example, under this theory, people have no incentive to engage into trades, since the result of a trade would be net negative for them. Also, this theory cannot explain where profits come from.
I
Outcast_Searcher wrote:radon1 wrote:For example, under this theory, people have no incentive to engage into trades, since the result of a trade would be net negative for them. Also, this theory cannot explain where profits come from.
I
No, absolutely wrong.
radon1 wrote:Outcast_Searcher wrote:radon1 wrote:For example, under this theory, people have no incentive to engage into trades, since the result of a trade would be net negative for them. Also, this theory cannot explain where profits come from.
I
No, absolutely wrong.
Take a pen or pencil and show how this is wrong. IOW, demonstrate mathematically, how individuals in a closed system in a state of equilibrium can pick an item as money and generate profit engaging in trades that are Pareto improvements. Or find an economist who demonstrates it in terms of mathematical logic rather than general non-binding non-conditioned deliberations. This demonstration could serve as an illustration of the traditional money theory and your own "value storage" mantra.
Your own examples have nothing to do with a closed system, with the state of equilibrium, and money are already available in them, like deus ex machina.
The actions of some barbaric middle eastern warlords a few thousands years ago is the principal thing that distinguishes us from the Amazonian tribesmen.
Economics does have significant achievements in a number of individual areas, but in terms of explaining the overall picture it is sort of an etp-like trash.
Outcast_Searcher wrote:So you're not talking about the real world?
dissident wrote:
You are basically claiming that the global GDP exists only because of the US.
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