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I think MMT is an interesting school of thought because the economy has been reacting in a way contrary to what the data suggests. We're in the tenth year of an economic expansion and wages are only just starting to increase -- and at a modest pace at that. The amount of inequality in our economy is not accurately represented in GDP or unemployment. You would think inflation would perk up this long into an expansion but since most of the gains have gone to the wealthy (who don't spend as much as their income as normal folk) the economy is not as dynamic as we thought it would be. Even with the recent tax cut the economy is only growing at 3%.

Combine these factors with the fact that there are at least three huge areas for government investment: health care, renewable energy, infrastructure. If you believe climate change is an existential threat to our society -- does it matter that we have a balanced budget while we try to tackle it? Especially if recent trends suggest that massive deficit spending WILL NOT cause an inflation catastrophe?




> You would think inflation would perk up this long into an expansion but since most of the gains have gone to the wealthy (who don't spend as much as their income as normal folk) the economy is not as dynamic as we thought it would be

This is exactly what happens when new money in injected at exclusive points. The upper class accumulates ever more financial power, while the lower class is kept fighting over the scraps. An amount that could be a major life changing expense for most of the country is presently a throwaway gadget purchase for someone working for the banksters in NYC or the surveillance industry in SF.

Financially, MMT is analogous to a kid not being stopped for taking money from their parents' wallets to buy candy, so they move on to taking larger sums - whether this is actually a problem entirely depends on how much their parents make. Financial deficits only work as long as they do not undermine faith in the issuer. For the US, this effectively based on energy (historically including Saudi Arabia) and military might. "Withdraw" at a rate faster than "depositors" will tolerate, and faith in greenbacks will collapse.

MMT is especially ironic because it's gaining political support in the name of "going green". But it's actually the same vein of consumerist greenwashing as that "third R" - recycling. Heating up the economy fundamentally causes more crap to be produced ("full employment" !). If you want to conserve earth's natural resources and leave that carbon in the ground, support simply letting natural deflation actually occur.

I will say however, that if MMT can end up justifying an alternative to just dumping most of the consumer-bound printed money into the housing sector, that alone could be a great thing.


Isn't Canada experience in the 90s an example of exactly that. Gov deficits ran out of control and the current collapse and finally the government had to cut services (raided the unemployment fund).




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