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.
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.
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.