Economic Update: Government Deficits; Why They Happen, Who Benefits From Them, and MMT
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[EU S15 E34] Government Deficits; Why They Happen, Who Benefits From Them, and MMTEconomic Update returns next week to its regular schedule! This week's epis...

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.

  • davel@lemmygrad.mlOPEnglish
    8·
    2 months ago

    I’ll quote myself from last year:

    MMT isn’t a politics and isn’t prescriptive. It’s simply descriptive of fiat monetary sovereignty. Many liberal proponents and detractors alike seem to want to load up MMT with all sorts of things that it isn’t. It certainly isn’t going to solve all of capitalism’s internal contradictions under a dictatorship of the bourgeoisie. But China seems to be showcasing its veracity.

    And also:

    MMT is just a description of how fiat monetary sovereignty works. It’s not prescriptive, and it’s not comprehensive. For instance, it says nothing about international trade / international balance of payments / currency exchange.

    What happens to MMT if you take away imperialism?

    The core of MMT alone can’t speak comprehensively to imperialism, because it doesn’t speak to international trade. Under neocolonialism the peripheral states’ monetary policies are usually captured by empire, often involving the IMF and/or World Bank. Once that goes away, the indigenous bourgeoisie make the policies, and once it becomes a DotP, the state does. That’s where China is now.

    • darkernations@lemmygrad.ml
      3·
      2 months ago

      Are we talking about the MMT of Randall Wray and Bill Mitchell? What do they cover of significance that Marx does not? Does not a monetary theory lacking consideration for say international trade then deficient? Does a theory of money not reflecting class struggle leave wanting for a more comprehensive theory?

      • davel@lemmygrad.mlOPEnglish
        6·
        2 months ago

        Are we talking about the MMT of Randall Wray and Bill Mitchell?

        I’m only talking about the core of MMT, not the liberal nonsense liberals pile on top of it.

        Does not a monetary theory lacking consideration for say international trade then deficient?

        Yes, as I’ve been saying for the last year, it’s not a comprehensive framework. All it does is explain that the state creates fiat money out of thin air, and that state destroys money through taxes.

    • pcalau12i@lemmygrad.mlEnglish
      2·
      2 months ago

      For instance, it says nothing about international trade / international balance of payments / currency exchange.

      …? How on earth can you have an economic theory that centers around how fiat money works without a comprehensive accounting of international conditions?

      • davel@lemmygrad.mlOPEnglish
        3·
        2 months ago

        …? How on earth can you have an economic theory that centers around how fiat money works without a comprehensive accounting of international conditions?

        Obviously you can’t, which is what I just said. I literally said several times in the comments of this post that it isn’t a comprehensive economic theory. Why so many people seem to think it claims to be one, I have no idea.

        • pcalau12i@lemmygrad.mlEnglish
          1·
          2 months ago

          Because promoters of it always treat it like one and suggest that countries should adopt it to guide their policy. If it’s not a comprehensive economic theory then it should not be used to guide policy because it can’t actually made adequate predictions. We couldn’t actually have any confidence at all that any of its claims are correct. If it does not even claim to take into account basic stuff then it should not be taken seriously as an actual economic theory. At best we can say it’s a tentative economic theory that might be interesting to develop further as an intellectual program, but should have no role in actually influencing policy decisions.