Richard Murphy, The Bank of England, And MMT Confusion \ stacker news ~econ

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Richard Murphy, The Bank of England, And MMT Confusion mises.org/mises-wire/richard-murphy-bank-england-and-mmt-confusion

30 sats \ 3 comments \ @Undisciplined 17 Mar econ

By Jack Watt

Belief in the fairy tale known as modern monetary theory not only is endemic in US academic and government circles, but is also making headway in Great Britain.

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25 sats \ 2 replies \ @SimpleStacker 17 Mar

Murphy gives an example when he ridicules the idea that the government should need to “balance the books.” ... Murphy’s primary concern is that the government cannot spend as much as he wants it to because it goes along with the “myth” that it must raise money prior to spending it.

From everything I've heard, the MMTers are primarily reacting against the loose, but popular notion that governments need to "balance the books". They argue that governments are not constrained in their deficit spending the same way that households are constrained.

But this seems like such a dumb position to take, because it's like they're picking fights with the average Joe's barroom talk, rather than entertaining any serious economic arguments.

Everyone already knows that governments don't need to balance their budgets in the same way households do. That's just popular shorthand to illustrate a broader point, which is that too much spending leads to inflation, and that most of government spending is wasteful.

I wrote about it more here: #897063

30 sats \ 1 reply \ @Undisciplined OP 17 Mar

They do have a different model of what money is, which motivates their view that there's no reason to have to raise money in order to spend it.

My understanding is that they basically see money as analogous to tickets to an event. Venues don't have to raise the tickets before selling them. They just sell them and then the tickets disappear after the event happens. In this case, money is a ticket to not be thrown in prison for not paying your taxes.

But, yeah, they often say things like "and the government can just pay for things with newly created money, until inflation becomes a problem." and most of us respond with something like "No shit, but inflation is already a problem."

29 sats \ 0 replies \ @SimpleStacker 17 Mar

I understand that point of view, but if you print more tickets than there are seats, people will start to need multiple tickets to get one seat.

The constraint on deficit spending is the same in both models!