MMT coming soon to an economy near you?

[MarieIG]

Not a fan.

Lots of fancy talk to justify a bunch of politicians spending a ridiculous amount of money and amping up the fiscal mess for the next generation.

No government is bullet-proof.

Spending without accountability never ends well.

[Markola]

Quote:

Originally Posted by MarieIG Not a fan. Lots of fancy talk to justify a bunch of politicians spending a ridiculous amount of money and amping up the fiscal mess for the next generation. No government is bullet-proof. Spending without accountability never ends well.

+1 and as does cutting taxes and exploding the deficit and debt based on the myth that tax cuts pay for themselves. Supply Side Economics, with its aptly-named Laffer Curve, is just the opposite fanciful ideological twin of MMT. Politicians now have two schools of voodoo economics from which to choose to further their careers while avoiding accountability from their voters and donors who do not wish to pay for the government and military services they demand.

[Independent]

Quote:

Originally Posted by Markola as does cutting taxes and exploding the deficit and debt based on the myth that tax cuts pay for themselves. Supply Side Economics, with its aptly-named Laffer Curve, is just the opposite fanciful ideological twin of MMT. Politicians now have two schools of voodoo economics from which to choose to further their careers while avoiding accountability from their voters and donors who do not wish to pay for the government and military services they demand.

+1

[DougJohnson]

Quote:

Originally Posted by JAGOTI The US Dollar is backed by the "full faith and credit" of the United States. Essentially, the Dollar is backed by Treasury bonds. What is backing Treasury Bonds? the "full faith and credit" of the United States. What could possibly go wrong?

Not exactly. Both the US Dollar and Treasury bonds are backed by the taxing power of the Federal government. A dollar bill is the same as a treasury bond in that both show the government owes you money. The dollar bill does not pay interest and is redeemable on demand. The bond pays interest and is redeemable at some date in the future.

The dollar bill has guaranteed value because you can pay your taxes with it. The bond has guaranteed value because you can get dollar bills with it (eventually).

-- Doug

[ownyourfuture]

Quote:

Originally Posted by MarieIG Not a fan. Lots of fancy talk to justify a bunch of politicians spending a ridiculous amount of money and amping up the fiscal mess for the next generation. No government is bullet-proof. Spending without accountability never ends well.

Most logical post I've seen to this point.

[nvestysly]

I had noticed the phrase Modern Monetary Theory (MMT) but hadn't taken time to give it much thought until I saw an episode of Consuelo Mack's Wealthtrack today. In the episode, Paul McCulley, former economist at PIMCO, and now a professor at Georgetown University, discussed the pros and cons of Helicopter Money. McCulley indicates he is not necessarily a proponent of full-on MMT but he seems to say there is a place and time where components of MMT are useful.

At a minimum I need to learn more about the subject. In some ways it seems like the U.S. and many countries are already implementing MMT but there may be some nuances that I don't fully appreciate at this point.

https://wealthtrack.com/financial-th...are-essential/

[Theo]

If you live in a country that issues it's own currency, only issues debt in that currency and allows the currency to freely float in the currency exchange market, your country has implemented MMT.

[pb4uski]

I think that a big thing that people have trouble getting their heads around to is that government finances are not at all analogous to family or company finances.

For the family or company finances during the good times you spend and invest and during the bad times you conserve and tighten your belt.

Government finance is the exact opposite... during the good times one should conserve... the economy deosn't need government spending so much because families and companies are spending. And conserving during the good times allow government to spend during the bad times and at least partially offset that families and companies are in conservation mode.

While spending more than your means and debt can be dangerous for families and companies, that isn't necessarily the case for govenment... especially governments that are a reserve currency.

[RobbieB]

The stock market has operated this way for decades. They (market makers) are expected to buy when people are selling and sell when people are buying.

Maintain a stable market.

[Masquernom]

Here's some things to think about. Money can be poured into the US economy at a high level, but what does that money do? It ends up at banks for loans, it helps inflate the stock market maybe, but it doesn't really end up in the consumers hands. That's the sort of thing that's been going on with the QE and high level stimulus of the past several years. It's done it's job, kept the banks open, kept interest rates low, etc.. But it hasn't done much to increase inflation, except perhaps keeping interest rates low does help with some types of spending. Look at US wage growth. I don't think you'll see real inflation concerns until you see the wage growth pick up. That's where you put cash in the consumer's hands. As long as most big employers say every year "here's your standard 2.5% raise, good job" I can't really see inflation blowing up.
I think with the Corona Virus, and the government reaction to it, you'll see some temporary upticks. The stimulus payments go directly to consumers, unemployment increases go directly to consumers, low interest rates are still in effect. There are supply chain problems in many industries that will reduce supply, driving prices up. I'm assuming these are all temporary, and things will cool down again after these end/clear up.