Economic Update: Government Deficits; Why They Happen, Who Benefits From Them, and MMT
Richard Wolff mentions the printing of money occasionally, but he never squares that with the government supposedly needing to tax and/or borrow first before it can spend.
He spends the last two minutes talking about MMT, but not as a theory of fiat money; instead as a novel monetary policy proposed by “progressive-minded economists.”
Somewhere in there he also repeats the common fallacy that what banks lend is other people’s savings. They don’t. The money they lend is created out of thin air, and the “money multiplier” is a myth.
I’m just a technerd who’s never taken an economics course, and I grind my teeth every time this expert botches these fundamentals. Why Michael Hudson and Radhika Desai never push back on him when they do talks together is a mystery to me.
Good questions. IMHO China does use MMT. It creates money via its central bank loaning it to its own local governments.
This is called debt because more money is flowing out of the government into the hands of consumers than is taken in via taxes.
The idea of balancing your budget like you’re a person doesn’t make sense. If you taxed the shit out of everyone then they won’t have any currency to spend on goods and you kill your economy. You can’t apply micro economic principles to the macro economic system.
They don’t tax and borrow to spend in MMT. By creating money, the government pay salaries etc. to people who build infrastructure. That money then circulates through the economy.
Under imperialism, the money goes to rich motherfuckers who waste it on shit that doesn’t improve productive things. E.G. share buybacks, trading houses with each other. Then you just get inflation. No extra goods are produced, just extra cash to buy the same amount of goods (therefore inflation).
We see the opposite in China with prices coming down. Because they spent their money improving the production of goods.
Thanks for taking the time to respond.
I feel MMT is not adding anything that is not already covered by Marx, and therefore seeming similarities in socialist economies is a reflection of the respective governments more skilled use of fiscal policy compared to capitalist countries.
I think concepts such as taxing and borrowing in these contexts better reflect the class dynamics of what is occuring and the impression that MMT gives is that it can wish this away without a dictatorship against capital.
https://lemmygrad.ml/post/8936640/6898181
I agree. The amount of MMT capitalists is growing because they are struggling for a monetary fix to a shitty economy. The actual fix is to take the money away from the capitalists because they are wasting resources on shit.