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No peer review? Dude, do a Google Scholar search for L. Randall Wray. MMT has published literally hundreds of peer reviewed articles. Easily in the double digits just last year alone.
New groundbreaking theories are always met with heavy skepticism and outright denial. It took over 100 years for the world to finally admit that Copernicus was right, that the Earth is not the center of the solar system. (That's not to say MMT is right, only that it explains the early resistance to even consider the theory as being a legitimate school of thought).
As long as you print money to finance deficits to provide jobs and basic income support for those unable to work, you are replicating MMT. The discretionary budget in the US, of which the military budget is a third, has to be financed by borrowing about 1.2 trillion dollars. Nobody wants to pay for the bloated budgets, not even the corporations who profit from it.
That's not MMT and to be blunt the people running the MMT sales campaign would tell you as much. Why not email Dr. Harvey at TCU and see if responds. He might.
New groundbreaking theories are always met with heavy skepticism and outright denial. It took over 100 years for the world to finally admit that Copernicus was right, that the Earth is not the center of the solar system. (That's not to say MMT is right, only that it explains the early resistance to even consider the theory as being a legitimate school of thought).
MMT has been around for a long time. And if it was groundbreaking and its pushers had any confidence they'd've generated and disbursed full or at least substantial models for review decades ago.
The Copernicus analogy is awful as there is no all powerful church waiting to torture people disagreeing with the Pope and entrenched doctrine. Copernicus died around 1550 IIRC. Further, I'm pretty sure Copernicus' great work wasn't significantly distributed until after his death and the church banned it sometime later.
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Legitimate peer review moves much faster than the medieval church.
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MMT, so far isn't a top to bottom theory, it's at best an over-simple three headed argument using many re-named and re-imagined Keynesian terms/ideas - so peer review isn't possible. Worst of all in my view MMT includes an inflation control device (tax increases.....to be fair some MMT pushers claim tax increases wouldn't be needed, others claim would be needed)..........no matter it wouldn't work, the same has been tried recently in England and did not work at all. The clowns claiming there would be no need for inflation control should not be listened to at all IMO.
That's not MMT and to be blunt the people running the MMT sales campaign would tell you as much. Why not email Dr. Harvey at TCU and see if responds. He might.
You're going for full-blown MMT by the book. There are a lot of income support programs and job creation program, and there are ways to print money without doing it directly.
Also, using the stock market as the conduit for income support, one sees it being used as a major part of compensation programs.
It helps to not be stuck to the textbook definition all the time. The people who implement it are going to be smarter than that.
I don't think there'll be one single program. There are a lot of programs already out there that would qualify as full or partial support. I just don't think there's any support for taxes or for program cuts. Their big hope is to print their way out. With fiscal deficits for 2019-2021 approaching 30 percent of GDP, I don't see a way out. And we have a bigger bubble to boot and that will drive up deficits sharply when it bursts.
I think the MMT crowd has learned marketing tips and tricks from the Austrian school luddites. It's interesting that legit economists don't really listen to either group much but each has traction with people on either fringe end of the political continuum. Both hate Friedman. Both misuse Keynesian ideas and terms serially. Both seem to fear broad peer review.
The most important commonality is pretty obvious to anyone willing to look........both use the guise of, "economics" pushing what are really extreme political ideologies.
You're going for full-blown MMT by the book. There are a lot of income support programs and job creation program, and there are ways to print money without doing it directly.
Also, using the stock market as the conduit for income support, one sees it being used as a major part of compensation programs.
It helps to not be stuck to the textbook definition all the time. The people who implement it are going to be smarter than that.
There is no partial MMT according to Mitchell himself.
Having income supports, job creation programs and the ability to generate new money is not MMT, not even close.
The melange we have now is, I'd call it anyway, 85% Keynesianism, 15% Monetarism, 0% MMT.
What does 2009-10 liberal thought have to do with proving spending in 2020 supports MMT? You seem to be trying to use a pandemic to prove MMT is true.
What I'm saying is maybe 50% of MMT is true. I don't know if we can print money indefinitely, but based on the history of the 21st century so far, we can clearly print a lot more than we thought.
Because according to conventional economic theory, inflation should have been a problem before covid. Conventional theory of inflation is that printing money causes inflation or hyper-inflation. Well where the hell is it? Now the globe has printed an extra 25-30% of normal GDP in a year and the inflation is zip. The price of milk, for example, has been around $3.00 for about 5 years. To the extent there's any inflation in goods, it's cost-push inflation because of supply chain issues, or plain supply-demand (ie: U.S. dairy industry produced too much milk in 2018).
Conventional thinking tells us more money in circulation equals inflation. But all we are seeing is asset prices go up, and not even all assets. Housing is also a cost-push issue because the pandemic slowed down building. There's still nothing in the price of goods that can't be explained by supply chains or tariffs.
Causes of demand-pull inflation
Lower interest rates. A cut in interest rates causes a rise in consumer spending and higher investment. This boost to demand causes a rise in AD and inflationary pressures.
We have this in spades. Rates are ZERO and have not been above 2.5% for 13 YEARS.
Quote:
The rise in house prices. Rising house prices create a positive wealth effect and boost consumer spending. This leads to a rise in economic growth.
We have this.
Quote:
Rising real wages. For example, unions bargaining for higher wage rates.
We have this starting about 2015.
Quote:
Devaluation. Devaluation in the exchange rate increases domestic demand (exports cheaper, imports more expensive). Devaluation will also cause cost-push inflation (imports more expensive)
We have this a little.
Quote:
During the late 1980s, the rate of economic growth in the UK rose to over 4%. The high rate of economic growth was caused by demand-side factors, such as:
Rising house prices
Cut in real interest rates
Cut in income tax rates.
Rise in consumer confidence
We have ALL of that.
So we have about 4.5/5 causes of demand pull inflation. Where the heck is the inflation?
The article notes that demand pull inflation seemed to disappear as a phenomenon circa the year 2000 and the explanation is, "muh technology, globalization, and central banks." Okay computers do not make milk cheaper to produce and we couldn't outsource cows. So wtf? At some point, if the economics is not doing what we said it should for a third of a century, we need to revisit the conventional wisdom.
What I'm saying here is not MMT per se, but it's a kind of supercharged neo-Keynesianism that is MMT influenced. Keynes said gov't spends in the bad times to cover drops in GDP but had to pull back spending in good times. It appears that pulling back may not be necessary at all, at any time. You just print more. This is actually somewhat like the silver monetarists of the turn of the 20th century period who we used to think were kooks, and they also had some MMT-like thinking.
Last edited by redguard57; 01-23-2021 at 06:25 PM..
What I'm saying is maybe 50% of MMT is true. I don't know if we can print money indefinitely, but based on the history of the 21st century so far, we can clearly print a lot more than we thought.
Because according to conventional economic theory, inflation should have been a problem before covid. Conventional theory of inflation is that printing money causes inflation or hyper-inflation. Well where the hell is it?
But now the globe has printed an extra 25-30% of normal GDP and the inflation is zip. The price of milk, for example, has been around $3.00 for about 5 years. To the extent there's any inflation in goods, it's cost-push inflation because of supply chain issues.
Conventional thinking tells us more money in circulation equals inflation. But all we are seeing is asset prices go up, and not even all assets. Housing is also a cost-push issue because the pandemic slowed down building. There's still nothing in the price of goods that can't be explained by supply chains or tariffs.
We have this in spades. Rates are ZERO and have not been above 2.5% for 13 YEARS.
So we have about 4.5/5 causes of demand pull inflation. Where the heck is the inflation?
The article notes that demand pull inflation seemed to disappear as a phenomenon circa the year 2000 and the explanation is, "muh technology, globalization, and central banks." Okay computers do not make milk cheaper to produce, so wtf? At some point, if the economics is not doing what we said it should for a third of a century, we need to revisit the conventional wisdom.
You did not answer the question - "What does 2009-10 liberal thought have to do with proving spending in 2020 supports MMT? You seem to be trying to use a pandemic to prove MMT is true."
You are really trying to sell this without understanding what is happening - You apparently didn't read most of the Blog you linked - Let me help you out.
Quote:
Demand-pull inflation means:
Excess demand and ‘too much money chasing too few goods.’
Don't think we have excess demand - part of the reason for the stimulus.
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The economy is at (or very close to) full employment/full capacity.
Don't think we are at full employment right now - COVID caused kind of the reverse.
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The economy will be growing at a rate faster than the long-run trend rate.
Nope - not this either.
Quote:
A falling unemployment rate.
Not really this either.
Finally the summary
Quote:
In recent years, demand-pull inflation has become quite rare. The small rises in inflation (2008/2001) were primarily due to cost-push factors. In recent decades, we have not witnessed any significant demand-pull inflation. this is due to several factors
Independent Central Banks responsible for monetary policy and keeping inflation to a target of 2%
Secular stagnation. Lower rates of economic growth
Downward pressure on prices from the global economy. Deflation of manufactured goods in Asia.
New technology leading to lower prices.
See also: fall in global inflation
You would not expect the Pandemic to cause inflation and the fact that the stimulus did not certainly does not prove MMT.
You did not answer the question - "What does 2009-10 liberal thought have to do with proving spending in 2020 supports MMT? You seem to be trying to use a pandemic to prove MMT is true."
You are really trying to sell this without understanding what is happening - You apparently didn't read most of the Blog you linked - Let me help you out.
Don't think we have excess demand - part of the reason for the stimulus.
Don't think we are at full employment right now - COVID caused kind of the reverse.
Nope - not this either.
Not really this either.
Finally the summary
You would not expect the Pandemic to cause inflation and the fact that the stimulus did not certainly does not prove MMT.
Here's the thing - based on the criteria listed, we should have had high inflation BEFORE the pandemic. Where was it? We still don't have it, despite spending $7 Trillion with $2 Trillion more soon to come. These amounts are quite literally quadruple the stimuli spent in response to the 2008 financial crisis. It was triple 7 months ago. https://www.mckinsey.com/featured-in...8-09-recession
Unemployment is only high in the pandemic because we have shut whole sectors of the economy down and they are not allowed to run. Can't have full employment when we cancelled both school and jobs. But in fact more than half of Americans say they are better off financially then before the pandemic.
In the 2009-2013 period, austerity was the rage all across the world, and the justification was too much debt. If we spent money to employ people, pay their health care, or pay pensions it would cause hyper-inflation and sovereign debt crises. Had to cut it. Just had to, we are broke, so said the Ted Cruzes and Scott Walkers of the world. Cut the health care, cut the pensions, or else it's all over. Look at Greece, they said. I remember how popular the Greece comparison was. Can't have that terrible 150% debt to gdp ratio, or else the whole country falls apart. They never acknowledged that Greece is not monetarily sovereign and also among the most corrupt of the EU.
That's clearly b.s. We can have as much social spending as we feel like and print the money to do it.
Last edited by redguard57; 01-23-2021 at 07:13 PM..
Unemployment is only high in the pandemic because we have shut whole sectors of the economy down and they are not allowed to run. Can't have full employment when we cancelled both school and jobs. But in fact more than half of Americans say they are better off financially then before the pandemic.
In the 2009-2013 period, austerity was the rage all across the world, and the justification was too much debt. If we spent money to employ people, pay their health care, or pay pensions it would cause hyper-inflation and sovereign debt crises. Had to cut it. Just had to, we are broke, so said the Ted Cruzes and Scott Walkers of the world. Cut the health care, cut the pensions, or we will be ike Greece. I remember how popular the Greece comparison was. They never acknowledged that Greece is not monetarily sovereign and also among the most corrupt of the EU.
That's clearly b.s. We can have as much social spending as we feel like and print the money to do it.
So, sounds like you agree that we should not be experiencing demand pull inflation and what is happening does not support MMT. Also causes is NOT criteria, learn the difference.
BTW - What you are describing is something different - a K shaped recovery - explanation here
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What makes a K-shaped recovery different is that while some parts of the economy may enjoy a booming recovery immediately following the recession, others may remain mired in sluggish growth or even continue to decline.
It can mean that some industries quickly return to strong growth in output while others see declining activity, or that some types of asset values rise while others continue to fall, or that some segments of society see increasing wealth and income while others lose wealth and income.
Having half the economy improve is not going to cause inflation - the pressure is not there. You also are ignoring the summary about why we have not seen inflation recently in the blog YOU linked.
Now the really silly part, when you are talking about politicians words and not doing things during 2009-2013 because of worries about inflation. Maybe they didn't believe MMT meant could spend excessively on social programs - not doing something does nothing to prove a theory.
All of this in no way shows that "We can have as much social spending as we feel like and print the money to do it."
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