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25 sats \ 2 replies \ @SimpleStacker 17 Mar \ on: Richard Murphy, The Bank of England, And MMT Confusion econ
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
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."
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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!
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