I freely admit that my expensive ass liberal arts education did not involve any economics at all.
This woman was on some of the recent late night talk shows talking about her theories. I kept asking myself, wtf? I just found this talk on YouTube which explains her Theory a little more in depth but in less time and with less interruption.
Is this really what economists are saying these days? Government deficit is really just actually giving the money back to us?
MMT is just rebranded Keynesianism. Two options:
1) She's just a typical dishonest leftist who just wants government to get bigger and hopes other people are dumb enough to think that there's a free lunch.
2) She's an idiot.
Those are not mutually exclusive.Originally Posted by CleverNickname
A true free market is ridiculously efficient.
MMT says otherwise. Or rather, admits that in an ostensibly free market there are winners and losers. How do you avoid having too many losers? By the government butting in and making everyone a winner.
That’s the gist of it. “Rebranded Keynesianism”, I like that.
To me, she is a well polished snake oil salesman. Some quick internet searches show that MMT, which she is selling, still isn't accepted among mainstream economists and is a poor policy making tool. I don't know how to link an article from my iPhone, but there is a New Yorker article that discusses this lady and her economic theory if you want more detail. I don't think she will be winning the Nobel equivalent in Economic Sciences any time soon.
I have no desire to get into a political debate and will not do so. With that said, if you delve into this I think you will find that MMT is associated with left leaning folks. Very briefly, an MMT proponent would be for deficit spending for social programs, with no thought given to ever paying that money back, for as long as inflation could reasonably be managed. One problem with that is that inflation erodes the spending power of those who have saved. However, for those who have no savings, and may not have worked much for that matter, deficit spending by a federal government to fund social programs can look awfully good.
"Rich," the Old Man said dreamily, "is a little whiskey to drink and some food to eat and a roof over your head and a fish pole and a boat and a gun and a dollar for a box of shells." Robert Ruark
Every now and then you meet a smart, thoughtful person who got their PhD from The New School of Social Research. Stephanie Kelton is not such a person.
Keep in mind that she was an economic advisor to Bernie Sanders on 2016.
So, here is the truth about this lady. She is not a doctor or professor or economist. Her PhD came from a worthless institution much like “Dr Jill.” She might as well have a doctorate in phrenology. Starring at navel lent has more to do with economics that her ideas. She taught at shithole “universities” before advising the likes of Bernie Sanders for a living.
Now that we got the credentials aspect of the speaker out of the way, let’s dissect the idea. This core of MMT is that governments with central banks can spend money regardless of deficits to stimulate economic growth until limited by inflation. Well, this TED talk occurred 2 years ago when inflation was less than 2%. Does she now follow her own advice from 2 years ago and advocate for less spending now that inflation has sharply increased? I didn’t think so.
I like my rifles like my women - short, light, fast, brown, and suppressed.
Somewhere around the 9:30 mark she talked about this. Government deficits are spent somewhere which means someone has to benefit from it - the question is who.
During "Reaganomics" (and again under Trump) the US cut taxes on the wealthy while running large budget deficits. The theory was that wealthy people became wealthy by using money wisely so by giving wealthy people some of their money back, they would go out and make sensible investments which would spur economic growth, creating more jobs which would then pay taxes to cover the deficit. This was the "trickle down" theory - money would start with the rich but trickle down to everyone. Critics of the Reaganomics say money doesn't fully trickle down and that it only widens wealth disparities.
Liberal MMT folks want the money to be spent at the bottom instead of the top. George W Bush's tax rebates and Biden's stimulus cheques were in this vein. Adherents also argue that providing things like free college using deficit spending will create a new generation of much more productive workers who will earn more money to then pay for the next generation's deficit spending.
My problem with deficit spending is that the policymakers making these decision - on both sides of the isle - never actually attempt to quantify whether their preferred investment will actually turn a profit. It tends to be wild ass guesses that generally end up not being worth the price paid.
The US has been extremely fortunate in the past to
1) be the world's perferred currency
2) have consistent population growth (so more people are able to pay for prior debts)
3) have consistent productivity growth (so each person is able to do more and earn more)
As long as that happens our politicians can run deficits without suffering from crippling inflation. If those things turn out not to be true in the future, it might be like a pyramid scheme collapsing (albeit one where we can oay our debts with printed money - the money just won't be worth anything anymore).
Last edited by 0ddl0t; 05-19-2024 at 12:02 AM.
Nope.
The late night show(s) I heard her on initially have been within the last month or so. It's still Spend Spend Spend!
Thanks for the pedigree, that explains a lot.
The over simplistic portion of my brain says: If we can just have the govt spend and spend without worrying about balancing the ledger, why can't we just forget about the other side of it too? We can cut taxes!
In a nutshell, MMT says that the US can spend as much as it wants because, as a global reserve currency, it can just print more US dollars. If inflation becomes a problem, Congress is supposed to raise taxes to cool the economy. If the economy cools too much, Congress is supposed to lower taxes.
IMO, MMT is complete bull. Relying on Congress to raise and lower taxes at just the right time is ludicrous and defies human nature.
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