MMT: an alternative to austerity - Michael Hudson

[vinoveri]

Re: MMT: an alternative to austerity - Michael Hudson

[emphasis added]

you have said that the trigger for kapoom will be pool of foreign creditors drying up. but you have not [yet] addressed the question of what will stop the fed from purchasing whatever supply of bonds are created. yes, that will cause inflation. yes, that will make the dollar drop. but isn't that the sure way to avoid deflation, which - after all- is the alternative?

what stops that is when foreign commodity suppliers stop accepting dollars as payment. [this reminds me of when the carter admin was forced to issue bonds in foreign currencies, "samurai bonds" iirc]

Fed monetizing the fiscal deficit coupled with maintaining $ as reserve (or quasi-reserve) currency is a recipe for slow-decline (multi-generational) of the exercise of the "exorbitant privilege" mentioned above. The latter element is a if not the prime focus of our foreign policy and military build up and enforcement actions. Seems better to fade away than to be around at the moment of burn-out, which may not come for ...?.

Have you seen the latest NAVY recruitment slogan, www.navy.com "A Global force for good" - no need to pretend anymore, the meme is in full bloom.

[aaron]

Re: MMT: an alternative to austerity - Michael Hudson

So, what happens if the dominant meme becomes MMT= GOOD?

It may not be an accurate theory, but it is a very seductive one.

[mesyn191]

Re: MMT: an alternative to austerity - Michael Hudson

I can debunk it in one sentence: MMT is a recasting of de Gaulle's Exorbitant Privilege, taking the advantage of the nation at the center of a global monetary system based on that nation's fiat currency -- that it can "get into debt for free" -- and cast it into a permanent and positive feature of a modern monetary system rather than, as Robert Triffin viewed it, a formula for disaster albeit one that puts the day of reckoning decades off into the future from its inception.

Thanks for this and the longer answer too. Personally I would like to see you write such an article myself.

[mesyn191]

Re: MMT: an alternative to austerity - Michael Hudson

on the need to write down debt, doing so via money printing/MMT is an alternative to a much less politically feasible outright or partial debt jubilee.

I'd agree with you that the method of choice (printing/MMT) is certainly more politically feasible than the alternative (partial controlled default/jubilee) but I have to wonder if that method is a good one. No solution would be totally "clean" IMO, the problem has gotten to be too big to go away nicely, but I do believe a partial controlled default would've been the better choice over all. If nothing else that probably would've had a good chance to short circuit the crony-capitalist FIRE system we've got now, which is still unfortunately fully intact and probably more powerful than ever.

[Fiat Currency]

Re: MMT: an alternative to austerity - Michael Hudson

So, what happens if the dominant meme becomes MMT= GOOD?

It may not be an accurate theory, but it is a very seductive one.

Personally I think it's pretty easy to argue that we are living "MMT-lite" now. What does one call the current practice of global wanton printing, malfeasance, fraud, obfuscation, debts and deficits ?

I still think the monetary system can be reformed ... but that would require adults to sit down and admit we're staring a freight-train-class problem in the face. I assign that a low probability of success.

[bill]

Re: MMT: an alternative to austerity - Michael Hudson


Thanks for the article.
Speculators, Speculators, Speculators, blame the speculators. Dollar devaluation high oil prices,,,blame the speculators. I had that question here, when? http://www.itulip.com/forums/showthr...615#post223615

MH (31:38)
“And this is a vast new bank loans. Most of the infrastructure that is being purchased—the water and sewer systems, real estate—is all being bought with borrowed money from the banks. So, that, first of all, the commercial bank political strategy is to block the central bank from creating money. And then saying the governments need to borrow from the commercial banks and need to pay interest to the commercial banks, instead of issuing interest-free debt. And then, to pay the commercial interest, they have to sell off the infrastructure. And the result is that bankers today are able to seize the property that in the past it took a military invasion to seize.

What happens to US States when they have no access to FED bail outs? Commercial banks will be the only lenders?
Same question I had here. http://www.itulip.com/forums/showthr...087#post213087

[yernamehear]

Re: MMT: an alternative to austerity - Michael Hudson

Thanks for the succinct response. You nailed it exactly. The pols have identified the fundamental human behavioral feature to this theory: delayed consequences. This is a very dangerous feature.

After reading a few articles by Hudson and Galbraith, whose conclusions amounted to "debt is the source of productivity", I dismissed the basic theory. I do, however, like their analytical work, I just disagree with their conclusions.

Thanks again.
================================================== ==


[QUOTE=EJ;223947]I can debunk it in one sentence: MMT is a recasting of de Gaulle's Exorbitant Privilege, taking the advantage of the nation at the center of a global monetary system based on that nation's fiat currency -- that it can "get into debt for free" -- and cast it into a permanent and positive feature of a modern monetary system rather than, as Robert Triffin viewed it, a formula for disaster albeit one that puts the day of reckoning decades off into the future from its inception.

It's a play now pay later monetary system -- decades later. A politician's dream.

The motivation of MMT proponents can be gleaned from the ideological heritage of its formerly socialist advocates. Socialism died as a branch of legitimate economic theory over the past 30 years. Marxists have yearned ever since for a legitimate platform for statist money policy and have found it in MMT.

The day of reckoning approaches but has been held off for longer than anyone imagined, and no one has been able to adequately explain how the self-limiting system keeps going and going. To fill a gap of confusion and uncertainty, to explain how the insane machine of $US Treasury-based monetary system keep running, is MMT.

The theory in parts conforms to ideas we have embraced here since 1998. For example that all money, including gold, is only money because the state has deemed it aceptable for the purpose of tax payment. My arguments with deflationists over the years have been based on the aspect of MMT that explains that fiat-based monetary systems allow government to create money at will. But MMT as a whole, to justify the global imbalances that have built up in the world economy since the fiat dollar became the world's medium of exchange, share much in common with the workings of a perpetual motion machine. And like a perpetual motion machine if you look closely enough at the inputs and outputs you can always find the trick.

[QUOTE]

[c1ue]

Re: MMT: an alternative to austerity - Michael Hudson

what stops that is when foreign commodity suppliers stop accepting dollars as payment.

It isn't necessarily just foreign commodity suppliers. There may also at some point going be a political backlash from the domestic population getting its savings, earnings, and livelihoods continually yo-yo'ing due to money printing gyrations.

In Zimbabwe, there was none. In Argentina, there was.

The motivation of MMT proponents can be gleaned from the ideological heritage of its formerly socialist advocates. Socialism died as a branch of legitimate economic theory over the past 30 years. Marxists have yearned ever since for a legitimate platform for statist money policy and have found it in MMT.

This is completely ridiculous.

If socialism has died, perhaps then you can explain what principles the governments in Europe - particularly the Scandinavian nations - are based on.

Secondly to associate Socialists/Marxists with state based monetary policy is equally goofy. Are you seriously trying to tell me that the capitalists don't also have a state based monetary policy? What do you call the United States' legally enshrined monopoly on the creation of money?

Lastly to conflate monetary policy with Marxism is utterly inane. In the Soviet Union, there were no interest rates. People didn't get loans. The state printed money for everyday use, but prices were diktat thus there was no such thing as 'easy' or 'hard' credit.

[EJ]

Re: MMT: an alternative to austerity - Michael Hudson

It isn't necessarily just foreign commodity suppliers. There may also at some point going be a political backlash from the domestic population getting its savings, earnings, and livelihoods continually yo-yo'ing due to money printing gyrations.

In Zimbabwe, there was none. In Argentina, there was.



This is completely ridiculous.

If socialism has died, perhaps then you can explain what principles the governments in Europe - particularly the Scandinavian nations - are based on.

Secondly to associate Socialists/Marxists with state based monetary policy is equally goofy. Are you seriously trying to tell me that the capitalists don't also have a state based monetary policy? What do you call the United States' legally enshrined monopoly on the creation of money?

Lastly to conflate monetary policy with Marxism is utterly inane. In the Soviet Union, there were no interest rates. People didn't get loans. The state printed money for everyday use, but prices were diktat thus there was no such thing as 'easy' or 'hard' credit.

Talk to them yourself for five or six years then report back to us.

Also, you need to improve your tone and style of communication. I have noticed disrespectful communications with other members and we have received complaints. We don't like complaints.

[FRED]

Re: MMT: an alternative to austerity - Michael Hudson

Talk to them yourself for five or six years then report back to us.

Also, you need to improve your tone and style of communication. I have noticed disrespectful communications with other members and we have received complaints. We don't like complaints.

EJ's posts have been deleted from this thread. A copy of this thread was made at 5PM ET on Saturday, March 17, 2012 that includes EJ's posts is available here for subscribers who want to continue the discussion.

[vinoveri]

Re: MMT: an alternative to austerity - Michael Hudson

EJ's posts have been deleted from this thread. A copy of this thread was made at 5PM ET on Saturday, March 17, 2012 that includes EJ's posts is available here for subscribers who want to continue the discussion.

I regret the circumstances that have caused you to remove such helpful insights from EJ in the current thread, and respectfully request you to reconsider.

One expensive jelly donut
http://www.youtube.com/watch?v=XUSDg7NSODw

[jiimbergin]

Re: MMT: an alternative to austerity - Michael Hudson

I regret the circumstances that have caused you to remove such helpful insights from EJ in the current thread, and respectfully request you to reconsider.

One expensive jelly donut
http://www.youtube.com/watch?v=XUSDg7NSODw

The kind of info that EJ was providing is what select members pay for. It is not what EJ would normally share on the public forums.

[Thailandnotes]

Re: MMT: an alternative to austerity - Michael Hudson

The decision to end the thread or take it behind the paywall is disheartening. Although Clue's tone may be slightly discourteous at times, he is a key contributor who makes this website worth a daily visit.

Events in Europe have led to constant crowing in the media along the lines of Thatcher's, "The problem with socialism is that eventually you run out of other people's money." The “technocrats” love that the debate is being framed as a referendum on socialism, because it distracts attention from the transfer of wealth.

When Bagginz initiated this thread, I figured the discussion would follow along the lines of Yalman Onaran's recent column covering the replacement of private with public debt.

http://www.businessweek.com/news/201...as-risks-shift

[FRED]

Re: MMT: an alternative to austerity - Michael Hudson

The decision to end the thread or take it behind the paywall is disheartening. Although Clue's tone may be slightly discourteous at times, he is a key contributor who makes this website worth a daily visit.

Events in Europe have led to constant crowing in the media along the lines of Thatcher's, "The problem with socialism is that eventually you run out of other people's money." The “technocrats” love that the debate is being framed as a referendum on socialism, because it distracts attention from the transfer of wealth.

When Bagginz initiated this thread, I figured the discussion would follow along the lines of Yalman Onaran's recent column covering the replacement of private with public debt.

http://www.businessweek.com/news/201...as-risks-shift

The new version of the forums software allows us to clone a thread and continue a new "branch" in the subscription area while registered members who are not subscribers can carry on the discussion on the original thread. What can be more fair than that?

[Thailandnotes]

Re: MMT: an alternative to austerity - Michael Hudson

The new version of the forums software allows us to clone a thread and continue a new "branch" in the subscription area while registered members who are not subscribers can carry on the discussion on the original thread. What can be more fair than that?

I don't know. It's kind of like watching a good movie and getting near the end and the power goes out.