
The Radical Left-Wing Theory That the Government Has Unlimited Money - Kluny
https://www.vice.com/en_ca/article/a34n54/modern-monetary-theory-explained
======
jdreaver
It's a bit sickening how dismissive the author is to brush aside the impact of
inflation on this plan. Inflation is a direct tax on the poor who are trying
to save money. Great, let's give them jobs that are dependent on inflation and
then remove their ability to gain capital. Runaway inflation is a real
contributor to poverty traps, but I must be crazy because according to the
article "panic over government budget deficits is delusional, a misguided and
atavistic remnant of the gold standard."

Modern macroeconomics comes off as such a tribal, groupthink discipline to me.
Far too many policy suggestions stem from tortured analogies like "we need to
prime the pump and increase spending to increase aggregate demand!", or
"Capitalism runs on sales, ... you have to increase spending to increase
sales!" Where is the analysis of the real cost of programs like this? Why are
we so focused on short-term results without considering the long-term effects?

Economics is not physics. You can't run controlled experiments and discover
mathematical relations that succinctly describe entire economies. I wish we
would stop taking the poor excuse of what is currently macroeconomics
research, which is basically terrible curve fitting on small sample sizes over
a brief historical period sprinkled with whatever ideology the economist
subscribes to, and jumping to terrible policy decisions that affect real
people.

~~~
stcredzero
_It 's a bit sickening how dismissive the author is to brush aside the impact
of inflation on this plan. Inflation is a direct tax on the poor who are
trying to save money._

Not just the poor. My current salary would've put me into the Upper Middle
class, verging on upper classes in my youth. Now, it's squarely middle class.

 _I must be crazy because according to the article "panic over government
budget deficits is delusional, a misguided and atavistic remnant of the gold
standard_

There is a big contingent at Vice and Vox that also want us to think that
Antifa are a bunch of good, heroic people.

------
tvanantwerp
> Modern Monetary Theory’s basic principle seems blindingly obvious: Under a
> fiat currency system, a government can print as much money as it likes.

Yes, it can. But that doesn't make it a good idea. Just look at the Weimar
Republic, or more recently, Zimbabwe and Venezuela.

Money--like the things you buy with it--has a value. And when there are more
and more and more units available, the marginal value of each unit it less. So
sure, the government can always print more money. But each dollar printed can
buy just a bit less than the one before it. Do it enough, and your currency
becomes practically worthless.

~~~
explorigin
Consider that USD has, for decades, been the world trade currency (the reality
is a little more complicated today with the IMF). Basically inflation of USD
is diluted across the world because other countries (until recently) needed
USD to trade with many other countries.

We can get into conspiracy theory here a bit by noticing that Qaddafi wanted
to create a common trade currency for Africa. Saddam Hussein quit trading in
USD in favor of EUR. Russian and China agreed to exclude USD from their direct
trade in 2014. Notice a pattern? Countries are recognizing that the USD is
inflated and trying to move away from it. Those that are small, get invaded.
Those that are large get vilified.

All that to say that the US does have a blank check as long as it can dilute
the inflation wide enough. Such a situation is uniquely different from the
individual countries that only inflate internally.

~~~
bbatha
> We can get into conspiracy theory here a bit by noticing that Qaddafi wanted
> to create a common trade currency for Africa. Saddam Hussein quit trading in
> USD in favor of EUR. Russian and China agreed to exclude USD from their
> direct trade in 2014.

Aside from China, which has a currency large enough to become a trade
concurrency, these countries were all strategic enemies well before these
moves. The decoupling of the USD seems more of geopolitical strategy than
economic risk for these countries.

------
enkiv2
I kind of hate the way this article is titled, considering that literally all
the quotes from professional economists involve them saying "oh, this isn't
very radical -- we've been saying this for 50 years and nobody has listened".

~~~
wahern
That and it has been Republicans who really buy into the theory.

Dick Cheney famously argued that "deficits don't matter". Donald Trump said
"you never have to default because you print the money".

This has been their M.O. since the 1980s:

    
    
      Republicans have long recognized how to use the deficit as a
      political tool. In the 1980s, Ronald Reagan ran up historic
      deficits, mostly through an unprecedented military buildup
      and tax cuts for the wealthy. The Clinton administration,
      egged on by the Gingrich-led Congress, ushered in fiscal
      responsibility, but George W. Bush again obliterated that,
      with another helping of a tax cut-and-military agenda that
      Republicans willingly supported.
    
      When the Obama administration came in, the narrative
      switched again, with Republicans demanding fiscal probity,
      even amid a time of financial crisis and recession. 
    
      -- http://www.thefiscaltimes.com/Columns/2015/12/04/Slick-Game-Republicans-Play-Your-Money
    

If you read the political commentary--on both the right and left--it's the
left-wing Democrats left consistently preaching fiscal responsibility and
paygo budgeting. But most people still perceive Republicans as deficit hawks
and Democrats as profligate spenders.

------
montrose
I suspect the validity of this theory could be tested by imagining what would
happen in a society of 10 people.

The size of national governments makes them seem capable of anything. But
unless this theory includes a rule that it only applies in societies beyond a
certain size (and I didn't see one), it has to work in a society of 10 too,
and that scenario we can imagine fairly easily.

~~~
bittercynic
If your society of 10 people has one person controlling the majority of the
wealth, things might go poorly for that one person.

~~~
montrose
Yes, probably, but the question is whether things would also go badly for the
other 9.

------
jpollock
Doesn't all this presuppose the population continues to trust the currency to
be accepted for anything _other_ than debts to government?

You know, like foreign interest and imports?

I would expect Brazil, Zimbabwe, Venezuela and pre-WWII Germany would all be
great examples of the government printing a lot of cash to spend and not
having it turn out well.

~~~
Finnucane
Countries with large foreign debts in currencies they couldn’t print lots of.

