Modern Monetary Theory: Explained via Jon Stewart

[Dans La Lune]

I'm hooked on this show. This is (again) a brilliant discussion on Modern Monetary Theory, sparked by a Twitter discussion.

"But how do you pay for it?" (the phrase Jake Tapper employs against every progressive policy agenda)



He's an article if you don't want to watch the clip: https://www.businessinsider.com/modern-monetary-theory

Main tenets of Modern Monetary Theory​

The main tenets of Modern Monetary Theory are:

• Government deficits aren't inherently bad. According to the MMT theory, deficits don't matter as much as we think they do and aren't necessarily a signal of a shaky economy. If the government can simply create more money, then the government deficits can be easily fixed. This concept is a hallmark of MMT and one of the most controversial aspects of the theory.
  
  
• Governments can create more money without threat of economic collapse. Given the fact that money is no longer backed by gold and is more theoretical in the sense it can be created at any time, many MMT supporters believe that money can be created without tanking the economy. In 2005, former Federal Reserve Chairman, Alan Greenspan, followed that line of thought: "There's nothing to prevent the federal government creating as much money as it wants."
  
  
• Because the government is the creator of the currency, it doesn't need to adhere to the same individual budgeting principles. As individuals we know that our expenses shouldn't exceed our income or it'll lead to debt. Proponents of MMT say that the government doesn't need to abide by such standards since it's also the creator of the money and theoretically can create more.
  
  
• A federal jobs guarantee program is possible. Again, given the core tenet that the government can create more money, MMT theorists support the idea of a federal job guarantee as a way to stabilize the economy and put money toward human capital.
  
  
• The Federal Interest rate should be at 0%. Many MMT supporters believe that the "natural rate of interest is zero" and there should be no bond sales. On top of that, MMT supporters want to do away with the increasing and lowering of interest rates as they're ultimately not that relevant when it comes to growth and long-term business decisions.

 

[Bullseye]

I'm hooked on this show. This is (again) a brilliant discussion on Modern Monetary Theory, sparked by a Twitter discussion.

"But how do you pay for it?" (the phrase Jake Tapper employs against every progressive policy agenda)



He's an article if you don't want to watch the clip: https://www.businessinsider.com/modern-monetary-theory

Main tenets of Modern Monetary Theory​

The main tenets of Modern Monetary Theory are:

• Government deficits aren't inherently bad. According to the MMT theory, deficits don't matter as much as we think they do and aren't necessarily a signal of a shaky economy. If the government can simply create more money, then the government deficits can be easily fixed. This concept is a hallmark of MMT and one of the most controversial aspects of the theory.
  
  
• Governments can create more money without threat of economic collapse. Given the fact that money is no longer backed by gold and is more theoretical in the sense it can be created at any time, many MMT supporters believe that money can be created without tanking the economy. In 2005, former Federal Reserve Chairman, Alan Greenspan, followed that line of thought: "There's nothing to prevent the federal government creating as much money as it wants."
  
  
• Because the government is the creator of the currency, it doesn't need to adhere to the same individual budgeting principles. As individuals we know that our expenses shouldn't exceed our income or it'll lead to debt. Proponents of MMT say that the government doesn't need to abide by such standards since it's also the creator of the money and theoretically can create more.
  
  
• A federal jobs guarantee program is possible. Again, given the core tenet that the government can create more money, MMT theorists support the idea of a federal job guarantee as a way to stabilize the economy and put money toward human capital.
  
  
• The Federal Interest rate should be at 0%. Many MMT supporters believe that the "natural rate of interest is zero" and there should be no bond sales. On top of that, MMT supporters want to do away with the increasing and lowering of interest rates as they're ultimately not that relevant when it comes to growth and long-term business decisions.

A big spenders wet dream. Scarlet O'hara: "I won't worried about massive deficits today, I'll worry about them tomorrow". "Running low on cash? Don't worry we'll print more".

 

[Antiwar]

A big spenders wet dream. Scarlet O'hara: "I won't worried about massive deficits today, I'll worry about them tomorrow". "Running low on cash? Don't worry we'll print more".

Have you ever considered that government spending (on some things, not on others) is an investment?

 

[Bullseye]

Have you ever considered that government spending (on some things, not on others) is an investment?

I've heard that slogan for decades. Investments pay returns and yet debt just keeps piling up and very little gets better. And politician keep talking more "investments". Even some spending that might be considered "investments" is usually bastardized for political gain. Example, the billions Biden wants to spend to correct "racist" bridges and roads.

 

[ttwtt78640]

Have you ever considered that government spending (on some things, not on others) is an investment?

That is a very important point. Borrowing (or printing) to fund investment (infrastructure creation or improvement to increase US production) is not apt to be as problematic as borrowing simply to support (or increase) current consumption - especially of imports.

 

[Antiwar]

I've heard that slogan for decades. Investments pay returns and yet debt just keeps piling up and very little gets better. And politician keep talking more "investments".

Investments return something of benefit; not just more money.

Austerity can end up costing more than investing in good things (like people and planet Earth).

 

[aociswundumho]

• Because the government is the creator of the currency, it doesn't need to adhere to the same individual budgeting principles. As individuals we know that our expenses shouldn't exceed our income or it'll lead to debt. Proponents of MMT say that the government doesn't need to abide by such standards since it's also the creator of the money and theoretically can create more.

Not "theoretically". The state can create as many dollars as it wants, but every dollar created devalues every existing dollar. There are no free lunches.

• A federal jobs guarantee program is possible.

Of course it's possible, the question is whether it is desirable, and the answer is no. Is it really so hard to understand why make-work jobs make society worse off?

 

[Bullseye]

Sounds like a teenager's concept of money management.

I don't have to keep track of what I spend - when I run out I'll get more.
Mom and Dad always have more if I ask night

 

[Antiwar]

Not "theoretically". The state can create as many dollars as it wants, but every dollar created devalues every existing dollar. There are no free lunches.

Do you know how most money comes into existence?

Have you ever heard that capitalism needs to expand?

How does a fixed money supply expand?

 

[Individual]

I'm hooked on this show. This is (again) a brilliant discussion on Modern Monetary Theory, sparked by a Twitter discussion.

"But how do you pay for it?" (the phrase Jake Tapper employs against every progressive policy agenda)



He's an article if you don't want to watch the clip: https://www.businessinsider.com/modern-monetary-theory

Main tenets of Modern Monetary Theory​

The main tenets of Modern Monetary Theory are:

• Government deficits aren't inherently bad. According to the MMT theory, deficits don't matter as much as we think they do and aren't necessarily a signal of a shaky economy. If the government can simply create more money, then the government deficits can be easily fixed. This concept is a hallmark of MMT and one of the most controversial aspects of the theory.
  
  
• Governments can create more money without threat of economic collapse. Given the fact that money is no longer backed by gold and is more theoretical in the sense it can be created at any time, many MMT supporters believe that money can be created without tanking the economy. In 2005, former Federal Reserve Chairman, Alan Greenspan, followed that line of thought: "There's nothing to prevent the federal government creating as much money as it wants."
  
  
• Because the government is the creator of the currency, it doesn't need to adhere to the same individual budgeting principles. As individuals we know that our expenses shouldn't exceed our income or it'll lead to debt. Proponents of MMT say that the government doesn't need to abide by such standards since it's also the creator of the money and theoretically can create more.
  
  
• A federal jobs guarantee program is possible. Again, given the core tenet that the government can create more money, MMT theorists support the idea of a federal job guarantee as a way to stabilize the economy and put money toward human capital.
  
  
• The Federal Interest rate should be at 0%. Many MMT supporters believe that the "natural rate of interest is zero" and there should be no bond sales. On top of that, MMT supporters want to do away with the increasing and lowering of interest rates as they're ultimately not that relevant when it comes to growth and long-term business decisions.

"But how do you pay for it?"
Simple, You don't.

The problem is that perishables increase in price while making things which have intrinsic value less attainable, as they also increase in cost, by a growing number of the population.

 

[PoS]

Crypto absolutely destroys MMT as a viable alternative.

 

[aociswundumho]

Have you ever heard that capitalism needs to expand?

I've heard people claim that capitalism needs to expand, but I don't see how it's true.

 

[OrphanSlug]

I'm hooked on this show. This is (again) a brilliant discussion on Modern Monetary Theory, sparked by a Twitter discussion.

"But how do you pay for it?" (the phrase Jake Tapper employs against every progressive policy agenda)



He's an article if you don't want to watch the clip: https://www.businessinsider.com/modern-monetary-theory

Main tenets of Modern Monetary Theory​

The main tenets of Modern Monetary Theory are:

• Government deficits aren't inherently bad. According to the MMT theory, deficits don't matter as much as we think they do and aren't necessarily a signal of a shaky economy. If the government can simply create more money, then the government deficits can be easily fixed. This concept is a hallmark of MMT and one of the most controversial aspects of the theory.
  
  
• Governments can create more money without threat of economic collapse. Given the fact that money is no longer backed by gold and is more theoretical in the sense it can be created at any time, many MMT supporters believe that money can be created without tanking the economy. In 2005, former Federal Reserve Chairman, Alan Greenspan, followed that line of thought: "There's nothing to prevent the federal government creating as much money as it wants."
  
  
• Because the government is the creator of the currency, it doesn't need to adhere to the same individual budgeting principles. As individuals we know that our expenses shouldn't exceed our income or it'll lead to debt. Proponents of MMT say that the government doesn't need to abide by such standards since it's also the creator of the money and theoretically can create more.
  
  
• A federal jobs guarantee program is possible. Again, given the core tenet that the government can create more money, MMT theorists support the idea of a federal job guarantee as a way to stabilize the economy and put money toward human capital.
  
  
• The Federal Interest rate should be at 0%. Many MMT supporters believe that the "natural rate of interest is zero" and there should be no bond sales. On top of that, MMT supporters want to do away with the increasing and lowering of interest rates as they're ultimately not that relevant when it comes to growth and long-term business decisions.

None of those "main tenets" of MMT are accurate, some are closer than others but whoever came up with that list missed the point by miles.

 

[OrphanSlug]

I've heard people claim that capitalism needs to expand, but I don't see how it's true.

More that is the economy needs to expand as our participants number and means of participation expands.

It would be unwise to assume the economy, using simple numbers to make a point, can go from $100 for 100 people to $100 for 105 people.

 

[Antiwar]

I've heard people claim that capitalism needs to expand, but I don't see how it's true.

I'm pretty sure I've seen you give one reason why capitalism expanding is a good thing: Capitalism (supposedly) lifts people out of poverty.

 

[aociswundumho]

I'm pretty sure I've seen you give one reason why capitalism expanding is a good thing: Capitalism (supposedly) lifts people out of poverty.

Capitalism expanding is a good thing, but you claimed it needs to expand, as if that were a negative characteristic of capitalism. My apologies if that's not what you meant.

 

[Dans La Lune]

Have you ever considered that government spending (on some things, not on others) is an investment?

He is ideologically opposed to government, except as a means to facilitate a transfer of wealth to the super-rich.

 

[Dans La Lune]

Crypto absolutely destroys MMT as a viable alternative.

Crypto is generally a scam.

 

[Dans La Lune]

Do you know how most money comes into existence?

Have you ever heard that capitalism needs to expand?

How does a fixed money supply expand?

He's also forgetting that money itself is a function of the government. Without it capitalism consists of exchanging sheep skins and bundles of hemp.

 

[Vadinho]

He's also forgetting that money itself is a function of the government. Without it capitalism consists of exchanging sheep skins and bundles of hemp.

Money is actually a form of debt, its origins lie in issuing debts. Think about how money is created today. It is issued as a form of debt whether its a loan from a bank or a tbill, it's debt compounded by interest. MMT merely describes the reality of a FIAT currency for a nation that owes debts in its own currency. That is all it really is folks, it reveals what is actually happening rather than perpetuate artifacts from the gold era.

 

[Antiwar]

He is ideologically opposed to government, except as a means to facilitate a transfer of wealth to the super-rich.

He claims to be anti-war, so there's hope.

 

[Dans La Lune]

Money is actually a form of debt, its origins lie in issuing debts. Think about how money is created today. It is issued as a form of debt whether its a loan from a bank or a tbill, it's debt compounded by interest. MMT merely describes the reality of a FIAT currency for a nation that owes debts in its own currency. That is all it really is folks, it reveals what is actually happening rather than perpetuate artifacts from the gold era.

Money itself is, at its core, an illusion -- sustained by the power of the government. Just as property is. Libertarians will insist that property and money have an intrinsic value beyond government, beyond time and space. To which I laugh in their face, and generally force them off the forum for a few weeks out of sheer humiliation. Capitalism is an exercise in government power, and the notion that a capitalist system can exist outside of government (and therefore replace government) is the mindset of a BABY.

 

[Antiwar]

He's also forgetting that money itself is a function of the government. Without it capitalism consists of exchanging sheep skins and bundles of hemp.

We know that the right-libertarian solution for everything is privatization.

 

[Vadinho]

Money itself is, at its core, an illusion -- sustained by the power of the government. Just as property is. Libertarians will insist that property and money have an intrinsic value beyond government, beyond time and space. To which I laugh in their face, and generally force them off the forum for a few weeks out of sheer humiliation. Capitalism is an exercise in government power, and the notion that a capitalist system can exist outside of government (and therefore replace government) is the mindset of a BABY.

I find libertarians to be a mix of nihilists and utopians, it really makes no sense except as an exercise in heckling. Remember the two old men in the balcony on Sesame Street? They were libertarians.

 

[Dans La Lune]

We know that the right-libertarian solution for everything is privatization.

I'm sure on some level they realize that they are advocating for the elite few to control the resources of the many. I'm also sure that these people believe that the elite few will be white conservatives. Replace the elites of "free market" capitalism with black and brown people, or frankly Jews, and you'd see a whole new wave of socialist acolytes. A lot of the anti-government ideology is based on the notion that Jews are the global puppet masters. Most have not yet made the connection between capitalism and government control, so they believe that a capitalist system could replace the government and unshackle this control.

Both notions are steeped white supremacy, which unfortunately underpins a LOT of conservative economic theory. The notion that whites will always been in control of capitalism is fundamental and foundational to much of these theories. Hence why you see the poorest, least educated, podunk red necks supporting tax cuts for the super-rich and protesting benefits to the poor (historically code for black people).