LateMechanic
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User ID: 1841
LateMechanic
20d ago
My second thought is to reply, 'Say it louder, and into the microphone, please.' Seriously. Go hop on Fox News and give an interview about how you want to shoot protestors and cruelty is the point and God praise Donald Trump. Write your angry, impotent screeds and spread them as widely as possible - under your real name if you can. There's really nothing better for democratic electoral odds than platforming people like you.
I think he might just get accused of trying to copy Asmongold, who appears to have become one of the most popular streamers & youtubers right now with pretty similar commentary (maybe not quite as violent of fantasy, but in that similar direction). And rather than the democrats wanting to smugly signal boost it, they are in a panic over how to counter that popularity.
LateMechanic
21d ago
At work I use C++ Builder / RAD Studio which makes for ridiculously quick & easy creation of native Windows apps for most any level of UI sophistication, using the VCL windows-wrapper library. Or they have a different library which supports cross-platform native from one codebase. And other than c++, their other language for the same product is Delphi, which I think may be more popular particularly among hobbyists. I'm not a fan of software getting more bloated and laggy in general, so I definitely appreciate the native snappiness.
Most people don't even know these still exist from back in the 90s, when they were Borland turbo pascal & c++ builder, after microsoft poached all those borland engineers to go on to make c# and .net. So it's not exactly the best career choice, if that's your angle. But they are still keeping up with the times, and made a free community version of the otherwise expensive IDE.
LateMechanic
27d ago
Im not entirely on board with treating a simple dollar bill as an IOU. [...] is not a financial instrument
It's a bit strange to think about, without being redeemable for gold or anything, but that is what it is. Cash notes are financial liabilities of the central bank on their balance sheet: https://www.federalreserve.gov/monetarypolicy/bst_frliabilities.htm
The UK pound paper notes even still literally say they are promissory IOUs on them, with the queen or king announcing "I promise to pay the bearer on demand the sum of five pounds". You can't redeem that value in the form of anything other than another one, but yeah it's still an IOU which exists simultaneously on the issuer's balance sheet as a liability and on the holder's balance sheet as an asset. You're holding paper evidence of the government's debt relationship to you.
Other question: If the government borrowed in a foreign currency or gold rather than dollars, would that be inflationary?
If by borrowing in a foreign currency you mean they create an IOU promising to pay (for example) a billion yen in the future, and swapped that with some bank like the IMF for actual yen notes or credit which they then spend: I guess it would be potentially inflationary to that other currency. What adds inflationary pressure is any actual spending. I can't think of what borrowing in gold would mean.
I also notice that you never say whether somethings is in nominal or real terms, whats up with that?
Well everything is just nominal in reality and in accounting. Anyone can always inflation-adjust or gdp-adjust any particular numbers when they feel it's relevant to some particular analysis, like doing comparisons over time or across countries, etc.
First, I dont think this leads to full employment necessarily.
Yeah I mean just increasing the deficit on any random spending or tax cuts will probably juice the economy up to a certain point like 1-3% unemployment, but it would take something more targeted to try to even go beyond that, somehow minimizing transitory/frictional unemployment, without generating inflation. Can depend on how strict you want to be about the term full employment.
Second, even if savings increase over the long term, there will be fluctuations. If a lot of people suddenly want to spend money that youve already spent for them, what happens?
Definitely, it fluctuates even daily. By the nature of having decent "automatic stabilizer" fiscal policies, people suddenly choosing to spend down their savings would result in tax payments going up, safety net spending going down, and thus automatically shrinking the government deficit (maybe even driving it into surplus).
Last, people want savings, but why would they want dollar denominated savings over non-monetary assets? If people just buy index instead of sitting on money, does that already do what you want to do?
Yeah personally I have almost no appetite for monetary savings, I dump it all into non-bond index funds. I'm not sure what you mean about what I want, but yeah the analysis would be that incentivizing saving in other assets like stocks & real estate surely ends up meaning the government won't end up running as large of a deficit (no need to counter savings leakages). Again that's mostly value-free, so I don't call it good or bad.
Some people have complaints about asset price inflation, where it's not that the value of money is falling compared to goods & services, but where we're all plowing endlessly into the stock market like a clown car, bidding it up constantly. But I'm not sure about that.
LateMechanic
26d ago
If thats why currency is debt
I'm just showing that you can google 'why is cash a liability of the central bank' and get people offering different ways of trying to explain it, if you're confused to the point of asking 'what's stopping them from saying all yuan are their liabilities'.
In my view as I've written, it's just following just the normal IOU/credit/banking logic, but the only thing special here at the 'top' of the money hierarchy is that it's not promising to pay/convert into anything else -- it's just abstract credit. And the reason why anyone treats that credit as valuable is because we're also simultaneously in debt to the issuer (we owe abstract value to the government in tax payments in this case).
It sounds like youre now suggesting something about inflation as the criterion.
That's what I think I've been saying from the start, so I'm sorry if I didn't make it more clear in this chain of replies. Inflation is the constraint on making the deficit too large, providing more savings than people want in aggregate, the excess value of which gets burned off. So that is a discussion about 'real' desired monetary wealth and inflation being self-correction mechanism, which I'm sure we hit at the top of this chain. The evidence of pushing against this constraint is seeing it happen.
Is accelerating inflation the right criterion and old economists where just too worried about going over, or do you object to that criterion as well?
The old orthodox approach was to think you mainly use monetary policy and the interest rate to deal with everything. So they are trying to be vigilant about when inflation is around the corner, and think (thought? maybe it's more up in the air in the last year with countries starting to question this and try the other way around) that raising the interest rate causes unemployment, which is used to curb inflation.
In terms of accelerating inflation, that could just mean the inflation rate going up slightly, which is probably all you'd see from real demand-pull inflation. The real worry that panics people is a spiral where somehow it just keeps accelerating. But you could really only get this if you keep pushing hard with ever-increasing amounts of spending in the face of higher prices, such as having too much government spending indexed to CPI. Or indeed, raising the interest rate, which pays people money just for already having money, which is likely why raising the interest rate is actually not a good tool for fighting inflation in reality. They are probably mostly scarred from the experience in the 70s, without distinguishing between demand-pull and cost-push inflation (unemployment won't stop inflation if it's caused by an oil shortage, etc.).
What do you think of NGDP targeting?
It always seemed goofy, still based on the same assumption the central bankers are wizards that can dial inflation up or down at will. Monetary policy just isn't that powerful, which people would understand if they actually learned the balance sheet assets/liabilities accounting and the plumbing of various operations, instead of thinking there's one special thing called "money" like the textbook said, which can slot into hand-drawn supply & demand toy model charts. That stuff just appears to be brain-breaking.
People rightly want a plausible model for "observations in the real world" before making them loadbearing.
This is all an explanation of how it all already works. It's already loadbearing. Did anyone think the US made it hundreds of years with the debt climbing into the millions, then billions, then tens of trillions by listening to people suggesting that in the long run, 'rational' actors know that the budget will have to be balanced, and thus save all their money for paying judgement day taxes when the long run finally ends?
Occasionally the people freaking out about large numbers actually got their way and reduced the debt significantly, causing our country's only depressions every single time they did it (which also ends up re-exploding the deficit & debt anyway to recover).
precisely what keeps critics of mainstream economics outside the mainstream
Luckily for us all, they usually bring in bankers to run things in government. When they do tap academic economists like bernanke, they have to learn everything on the job, and end up later on trying to get the word out about how things really work.
So the MMTers are often quoting and collaborating with past fed chairs and treasury secretaries, and communicate very easily with the various hedge funders like McCulley & Dalio, and just anyone in finance. They only feud with and can't break through to economists, who have a turf to defend unrelated to accuracy of thought.
The fact that they historically descend from IOUs and there are some conventions left over from that time does not tell us "what it is".
Here's a chicago fed piece that tries to describe it one way, if you like this "But currency is a liability to the central bank that issues it—a promise to stand behind the currency’s value in the future.".
It's just easiest for all the accounting and understanding, to see it as a bearer physical receipt version of the general electronic account credit (rather than the other way around, seeing the electronic reserve balances as promises to pay the physical version). Just all as types of credit from the central bank, which no longer promise redemption into anything, other than abstract value that is accepted by the government for relief from taxes/fees/fines/tariffs/etc.
I agree it's possible that you could do the accounting in other ways, and in fact I think maybe coinage in the US is in a weird spot like that, technically (like they are a liability of the treasury instead of the fed, or even that the treasury doesn't recognize them as a balance sheet liability maybe).
Again, what actual reality stops the fed from listing all yuan as its liabilities?
I'm not really sure what that would mean. Without it actually being a real liability, you could just say it is and that their balance sheet is in a massive capital loss in a fake way?
Technically, what actually stops that in the real world is that what the Fed can do is precisely limited by what congress has allowed in the Federal Reserve Act. But yeah congress amends that plenty throughout history.
Someone gives me 100 gold, and I commit to giving him back 104 gold in a year.
OK yeah I guess that's a gold bond or practically commodity-futures trading. If writing that "IOU 104 gold at x date" note enables any extra normal spending that you wouldn't have otherwise done, that spending would have some inflationary pressure on prices of things you buy. Because again it's the spending which is the relevant thing.
I asked about this because before you suggested employment as an indicator for the right deficit. Do you have any suggestion for something that directly tells me when the appetite for monetary saving is satiated?
It's something you observe after the fact. I think in the original transcript post I made at the top of this chain, mosler called it 'you count the heads of the people in the unemployment line', and you also see what is happening with the price level week by week, month by month, seeing if it starts ticking up.
The mainstream econ version of this, at least 20+ years ago, was called NAIRU: the non-accelerating inflation rate of unemployment. The level of unemployment below which any extra pushing just gives inflation. But they were treating it in a very strange way, trying to assume and make predictions about it ahead of time "maybe the nairu is now 5 or 6 instead of 7, can we allow unemployment to keep getting lower before we jump in and cool things off?". That posture is only explained if you think you're going to accidentally tip into a spiral which is hard to escape from (which was never borne out).
There's multiple ways to count unemployment, but the basic headline unemployment rate can definitely get down to 2-3% with no inflation, it seems from maybe the last 50-100 years. It's a bit hard to say because policymakers have usually been so cautious that we barely have any experience with demand-pull inflation (usually there's some type of cost-push supply side explanation for inflation). Probably the best evidence would be re-examining the '60s and what mainstream keynesians found trying to push for full employment.
Im very curious what an economics looks like where you avoid these indefinite future end arguments generally, rather than just in this one context.
I suppose it just looks more like just looking at the real world. As they say, the long run never really gets here, we are always in a series of short runs. The actual concrete accounting, logic, and plumbing seems much more useful to nail down and understand first, before starting to build more & more elaborate models on various assumptions. I bet it would probably be a fun job to make DSGE models and papers about theoretical risk-adjustments if you can find someone to pay for them, coming up with new tricks and techniques and assumptions. But I'm not too impressed with the real-world understandings & predictions of most equilibrium thinking, whether in econ or finance. I liked this Keynes quote, compared to Barro-style ricardian equivalence type stuff:
In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
LateMechanic
27d ago
Yeah I think that's a basic different political difference among people who basically know how things work.
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Some people have a fear that if you tell policymakers the truth about how money and government finance work, they will spend without limit, on dumber & dumber things, until we reach ruination. As Paul Samuelson put it, the 'superstition that the budget must be balanced' may be a useful bulwark, just like old-fashioned religion used myths to scare people into behaving civilized.
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Others have a fear that if you don't tell policymakers the truth about how money and government finance work, you will get increasing amounts of those who start panicking and despairing about things that aren't actually problems (like: "well, it is a big number", or thinking we're on the hook to china or stealing from our grandchildren), and that they will eventually start blowing up the system and destroying the country's economic prosperity for no reason in the worst own-goal ever.
I can appreciate the worry in the first impulse to some extent. Certainly during the uncovering of the USAID stuff, that feels like vindication for people with this worry. So I definitely agree that some smart self-imposed constraints are warranted, like the fact that congress has to make and agree to a formal budget (rather than just running the whole government as a USAID style slush fund).
But I think our experience is that most people really hate inflation. So telling policymakers that the true constraint on overspending is just inflation does not likely end up with them overspending with inflation-indexed UBI of $100k, or removing taxes entirely, or whatever.
So on balance I'm more worried about people despairing about the deficit & debt out of ignorance and thinking 'those sound like negative things, I know how my own personal finances work'. It leads to all kinds of pointless stress, doomerism, making goofy political moves, and maybe eventually serious economic limitations that run counter to building the most prosperous society we can.
I believe that MMT provides the perfect framework to justify irresponsible fiscal policy.
The view is that irresponsible fiscal policy is running too small of a deficit and causing part of the population to languish in unemployment, or too large of a deficit and pointlessly inflating away the value of a dollar. And that other common definitions of fiscal responsibility are based on either misunderstanding the system, or intentional deception to tie the hands of untrusted officials.
MMT was ultimately a project to bring back some knowledge that was practically lost over the generations, which helps solve the cognitive dissonance of 'why does the system keep running seemingly fine, isn't it all going wrong and about to collapse?'
So I'm basically of the opinion that people mostly got macroeconomic management down through the 20th century, flawed people as they might be. And in this quarter-century, the US has done the best by far. So I'm signing up on the side of trying to calm down the doomsayers and suggest a reminder that those fears of impending doom were even stronger before, constantly throughout each generation, but maybe stick with 'nothing ever happens' for your own wellbeing until you're sure you're not solving your cognitive dissonance the wrong way.
LateMechanic
27d ago
You should be more charitable than this. How do you think the level of reserves changes over time, simply from the payment of interest on reserves? How do they go down then? You can check the NY Fed for this; there is also data.
The level of reserves definitely changes over time, and they can buy & sell at will. But that's irrelevant to the interest rate maintenance after 2008, because the system is absolutely flooded with excess reserves. You just linked to the OMO page where they said it:
Before the global financial crisis, the Federal Reserve used OMOs to adjust the supply of reserve balances so as to keep the federal funds rate--the interest rate at which depository institutions lend reserve balances to other depository institutions overnight--around the target established by the FOMC.
The Federal Reserve's approach to the implementation of monetary policy has evolved considerably since the financial crisis, and particularly so since late 2008
The old system was that they had to mop up any excess reserves to keep them at 0, using OMOs, or else commercial banks would have a race to the bottom of trying to lend them to each other accepting lower & lower rates, and the central bank wouldn't maintain their target rate.
The new system is that they swapped billions/trillions of treasury securities into excess reserves, and then just directly pay the policy interest rate on those reserve balances. As of 2006, they were already planning on making this change to the interest rate maintenance regime in 2011 (because it's a much better system and makes everything easier), but moved it up to 2008 during the crisis to have the better tools at that time.
The currency is infinitely elastic: always more available to be created at a given price (at commercial banks and up at the central bank). These are simply expanding balance sheets of credit-debt relationships, rather than a relatively fixed quantity of things. When people still have the 'money as a thing' mindset, they get hopelessly confused in the modern financial reality, trying to track nominal & real stocks of money and switching between a dozen different monetary aggregates, trying to make any sense of it in the face of QE & such. Chosen nominal rates, floating quantity stock, dynamic real price level not in anyone's direct control.
The point is that the amount of money in nominal terms is not economically relevant. (If you search for the "most valuable currencies," you will encounter articles like this one in Forbes that are completely useless). The economically relevant quantity is the "real value" of the stock of money or the market(!) value of money in terms of other goods and services.
OK yeah the concept of inflation being "what one dollar buys", whereas a different concept is "what all the dollars buy". But this isn't like some kind of main policy concern where everyone is trying to rank highly on that kind of list, with Kuwait currently winning. Countries are trying to run their economies well, aiming for a balance between low unemployment and low inflation. The currency is merely a tool, and outside of any exchange pegs or various temporary gold standards, they aren't backed by anything. They're valuable because each country taxes its citizens and only accepts their own currency in payment.
As a follow-up point, I mentioned that if you want to increase the real value of the total stock of money, you need more backing.
That might be a "sufficient but not necessary" kind of point. The price level is totally dynamic so you could get deflation out of nowhere just from the "animal spirits" changing and everyone trying to save monetarily, increasing the real value of money. Or you can keep the economy running and extremely productive and end up with the money stock more valuable even with some inflation, being nominally larger. You can implement policies that incentivize saving for retirement in regular bank account balances and move the needle quite a bit.
Now maybe we could announce that we were foolish not to "back" the currency with anything of value in the central bank, and that we're reimplementing a gold standard, going back to the wisdom of the 19th century. And it could be sufficient to get people to immediately value money slightly more in comparison to stocks or something. But certainly not necessary.
So money is just a security, a very special one for sure, so the same ideas of 'backing' for stocks and bonds apply to it.
I don't know, looking up convience yield briefly, it doesn't appear to have anything to do with currency. It kind of seems like getting tied in knots without realizing the basic chartalist logic about taxes being the driver. Meanwhile none of that suggested anything about the subject of backing.
I was referring to episodes like the ones explored in The Monetary and Fiscal History of Latin America. I might be able to understand your argument better if you tell me how it is consistent with these episodes.
Wow yeah that is a pretty big set of examples. The entire late 20th century history of a ton of different developing nations with all kinds of various macroeconomic paths pursued. I mean, multiple countries have literally switched on & off of simply using USD as their currency. I have no expertise to weigh in very deeply, but these aren't exactly examples of well-run macroeconomies just getting tripped up.
I think the original point of contention was about "the ability to repay" government debt. Where the relevant context was the US, but generally countries that have their own floating currency. In this context, government debt is just money & currency in a different form, and it just rolls over indefinitely, so there's no "repayment" really. As for the 'inflation = default basically' angle, the US offers some limited inflation-indexed securities as a nice thing for people who want it, but otherwise makes absolutely no promise of bonds/reserves/notes/coins holding their value.
LateMechanic
28d ago
conventional theory is that borrowing is less inflationary than money printing. Do you disagree?
Definitely, primarily because the separation is just incoherent.
In the conventional view, you call central bank reserve account balances "money" which is evidence of "printing", while you call treasury t-bills "debt" which are evidence of "borrowing". But they are both are just government liabilities which promise to pay nothing in redemption other than other government liabilities, and which pay the policy rate of interest. To make it funnier, these are literally both types of accounts that the central bank runs on their books, because the Fed does the banking on behalf of the Treasury. You can call them checking & savings accounts at the government bank, although they pay the same interest, and you can freely swap between these accounts (you're never 'stuck' holding them). To call only one of these accounts "money" takes a special kind of incoherence.
Physical paper/coin money cash is just a bearer receipt version of the electronic reserves. That's the only government money that doesn't pay interest now, as a tiny fraction of the money supply, held for some types of convenience.
The MMT people often try to be more precise and avoid the word 'money' because it can lead to confusion sometimes, but I just plow ahead and risk it. The clear definition of money from what we use now and even throughout history is "transferable credit". So we can just talk about money as IOUs. Someone issued a financial liability, which someone else gets to hold as their financial asset. A bank balance is your valuable asset because it's the bank's debt. A reserve account balance is the bank's valuable asset because it's the central bank's debt. A $5 bill is your asset because it's the central bank's liability. Always credit-debt relationships, the issuer owing the holder.
So I'm perfectly happy to call the outstanding reserve balances part of the "government debt", just like I call treasury bonds/bills/securities "money". These are all both money and debt.
So issuing/printing new reserves or issuing/printing new t-bills, which are nearly perfect equivalents, no, they would not have different inflationary impacts. The size of the government deficit is the size of the amount of money being printed, and it always has been.
Many mainstream economists like Summers & Krugman got to this a bit late, in the 2010's, when they reconsidered that 0% government debt instruments were essentially 'money'. So they started reconsidering what they thought they knew about 'monetizing the government debt' and QE, etc. I'm not sure if they ever caught up to the fact that in 2008, central banks switched to paying interest on reserves directly, making 'money' look just like securities even when we're not in a 0% interest environment.
So far, youve shown that just printing the deficit gets you the same effect as cutting expenditures to balance the budget, with some inflation along the way.
But in the previous model, there is no ongoing deficit in the equilibrium youre inflating towards.
I'm sorry I couldn't really parse what you were saying in these 2 paragraphs. That balancing the budget was the same as running a deficit, or somehow it had the same outcome in a particular way?
And in what way is the equilibrium of your strategy better than just spending enough for full employment, and raising taxes to balance the budget?
Well if anyone is ever saving money, then by identity someone else must be dis-saving an equivalent amount (running down prior savings, or just issuing debt). Because it's all zero sum. In aggregate, what we find is that people like to accumulate monetary savings over time (even with populations that aren't growing I think). So unless your hypothetical has some way to stop that, that saving is a leakage in aggregate demand which will not let you get to full employment without the government being in deficit to supply the desired savings. A government balanced budget means they are draining out exactly as much money as they're injecting in to the economy.
LateMechanic
29d ago
when weighed against "prosperity beyond what anyone can imagine" they dont weigh especially strongly. Could you at least link it? MMT has lots of cranks that will be dismissed as not representative.
OK so you were asking "why inflation is bad" from an MMT perspective? I don't know that there is any unique take, it's not part of it. MMT is a description of how money, banking, and government finance actually works.
If you wanted a pitch about how inflation 'isn't really bad', then sorry, that's not part of it. I added my own spin about how inflation is obviously a dynamic self-correcting mechanism for too much savings, and that the only way you get accidental persistent or accelerating inflation rather than it being a relief valve is when too much spending is indexed to the price level (maybe some part of the problem they had in the '60s).
Mosler's "prosperity beyond what anyone can imagine" is referring to perpetual full employment in a productive capitalist system. That was in 2012 where they were looking at the massive "output gap" of where GDP was going before the recession and how far it got knocked off trend by heavy unemployment -- just a complete waste of human potential.
I also have 'some' income outside taking on debt. I can commit to spending part of it on buying back my own IOUs/debt service in the future. Indeed, my nominal income increases with inflation and economic growth, so this is in many ways like a relative tax. Also assume I live forever.
The tax isn't just an income flow. It's forcing everyone into a debt relationship with you, where if they don't pay, you will put them in jail using force. In the past, authorities may have used fees, fines, tithes, sanctions, whatever. If in your hypothetical, you could live forever, and you could force people into paying some amount of your own IOUs back to you or else you will credibly use some level of violence against them, then certainly they will find out what they have to do to get enough of your IOUs, and maybe even some extra if they want to save some or trade them with others.
Now can I blow up my debt to infinity? Propably not; propably there is some mechanism tieing the debt amount to the size of the tax base/income, but what?
It's just the amount that people are willing to have as savings. The government's debt is the non-government's net money supply ('net', because the private sector can also expand the money supply with their own debt & credit, but that all nets to 0 as a whole).
If you incentivize savings, like with pension funds or whatever, maybe your country will have a higher aggregate savings desire, and your government debt will have to be larger in order to maintain full employment. If you instead have a culture and policy where people live comfortable retirements without requiring any personal savings somehow, then maybe there would be extremely low government debt. If you're Japan, and the population has a very low participation in the stock market after the '90s, then the government debt & deficit are likely going to be huge to satisfy the desire to save money. New money being pumped in will quickly fall out of circulation and end up inert in someone's retirement savings account.
The government doesn't need to care about the size or whether it's growing or falling. That's all value-free, neither good nor bad. It's not like the desire is to see how large the debt can grow. Private savings are a 'leakage' from the economy, like net imports. The government has to step in to make up for that if you want to stop the paradox of thrift and keep the productive economy running at full effectiveness.
Then unlimited real growth of debt would mean unlimited real growth of GDP, or an unlimited willingness of people to sit on cash and never spend it. Neither is realistic.
Yep. That's why once you understand how it works, the basic outlook changes from thinking about "sound finance" (thinking there's a budget constraint that has to be balanced either short term or over some longer cycle, and thinking that monetary policy of tweaking the interest rate and composition of savings is the main policy tool) to "functional finance" (seeing unemployment as evidence of too small of a deficit, and demand-pull inflation as evidence of too large of a deficit, where fiscal policy of taxing and spending is the main policy tool and monetary policy not mattering much).
LateMechanic
25d ago
but there is a well-defined understanding of what normally happens to debt that there isnt so much with money
What people thought was their well-defined understanding of government money & debt led to stuff like completely being blindsided by QE not affecting inflation. Monetization, printing the obligations! Or to the japanese bonds widowmaker trades, where people just couldn't believe the interest rate could go down with that much debt. Or indeed, the '90s Italian bonds case where Mosler made his first hedge fund hundreds of millions, taking a free 2% spread by betting against people who thought Italy had default risks for their own currency debt.
How it works so far may be consistent with your theory, but also others where there is still cause to worry.
Hence the content of my very first post to fcfromssc. If anyone feels like the way the system has been run for over a century is irresponsible and must be leading to unavoidable disaster, let them try to prove that case that we have cause to worry! Let's see the hard-nosed analysis about this supposed disaster, from people who understand the zero-sum nature of financial accounting and who can also properly explain everything else going on now and in history in whatever framework they find illuminating.
Don't sign up politically for a sucker play based on feelings & fear, and don't expect your opponents to do so either. All the evidence shows that economic disaster follows shrinking the debt, while good times follow growing the debt. For those who don't want to learn the plumbing, at least consider going with 'nothing ever happens' and take up the grill pill, for your own sanity. Elon wouldn't have crashed out if he realized the deficit is a tool which would be useful to his own goals of becoming multi-planetary, instead of assuming it's an existential threat because we're 'broke' or something.
LateMechanic
29d ago
You'll have to forgive me that I'm frustrated that every single time I try to discuss this topic with MMT advocates they do this same exact thing of just trying to discuss the accounting instead of what the policy actually results it empirically. It's about as enjoyable as trying to get Austrians who rant about praxeology to acknowledge empirical evidence.
The point is specifically about how the real-world accounting works for banking and government finance. MMT isn't a policy, it's describing the system as it already works today and how it's worked throughout history. And monetary policy is barely relevant to it. If assets and liabilities and balance sheets are not your interest, but you feel obligated to engage for ideological reasons with your own hypotheticals about radically changing the macroeconomic management from what's been working because you have your own prediction of impending disaster, I can indeed imagine that's frustrating.
MMT "advocates" are trying to explain how it works and why it has continued working despite people having your same fears for centuries, so that you can join us in sleeping soundly at night instead of despairing. FCFromSSC is not my 'opponent' in the slightest.
Who said anything about involuntary?
Well anyone can voluntarily do anything stupid. There can be a wide range of competence in macroeconomic management. The unsustainable argument is only strong if you think the system is headed toward involuntary crisis.
What leads you to that choice?
Voluntarily choosing to default on your own currency debt? Incompetence, not understanding the accounting, malice or kingly inconsideration maybe. In the US, the existence of the debt ceiling law for example is partially incompetence/misunderstanding, but mostly kept around as a political weapon to use against the opposing party in power.
Since both of these create massive political instability, good government requires avoiding the circumstances that create this dilemma, and thus a limit on non-productive spending.
OK solid. That's what I opened with in the very first post: good macroeconomic governance entails not causing runaway accelerating inflation by making the deficit too large. And we judge by outcomes, we don't get sidetracked counting the number of digits or commas.
Hence the panic, because deplatforming just looks desperate and villainous. So it comes down to a bet about what is truly more popular/populist, for whether you'd want to signal boost it or not. And I'd suppose that it's actually pretty likely that a majority of people watching minneapolis and LA protestors trying to impede ICE/FBI/DHS might be fantasizing about an even more aggressive response by the cops like OP. It's at least pretty popular among young normie dudes.
If you're saying that @Hadad's confessed opinion in detailed written motte-form is probably so extreme that it would turn people off, I still wouldn't bet on that.
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