Modern Monetary Theory (MMT)

Discussion in 'Property Market Economics' started by Waterboy, 19th Mar, 2019.

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  1. Waterboy

    Waterboy Well-Known Member

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    Denial is Not a River in Egypt
    Substitute USA with Australia = Endless Money Train
    A nation’s currency is a wonderful, powerful thing. Learn how countries like the US [and Australia]—which issue their own sovereign currency—can afford to use that currency to serve their citizens. Get inspired about our untapped potential, and learn to be less worried about the so-called "national debt"!

     
  2. Deck

    Deck Well-Known Member

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    I remember my economy professor saying there are less than 10 people worldwide who really understand how money is created
     
  3. Big A

    Big A Well-Known Member

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    Where do I sign up?

    I have always thought why would such a theory not solve many of the worlds issues. I believe done properly it could.

    This is assuming it’s managed carefully and politicians don’t decide to use this theory as an open cheque book to spend on everything and anything they think will keep them in power.

    Once you have opened Pandora’s box there’s no going back. Can we trust our politicians not to make a mess of such a policy?
     
  4. Waterboy

    Waterboy Well-Known Member

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    Zimbabwe and the Weimar Republic abused the potentials of MMT, but it resulted in hyperinflation.

    US Feds meanwhile unleashed the Trillion $s of QE and inflation is still anaemic.
     
  5. Big A

    Big A Well-Known Member

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    Things that make you go mmmmm.
     
  6. Big A

    Big A Well-Known Member

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    I am surprised that we haven't had much thoughts come through on this topic. Definitely an interesting topic of discussion. I think it might be in the wrong section
     
  7. dunno

    dunno Well-Known Member

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    If you are interested in MMT, Bill Mitchells blog is the go.

    Bill Mitchell - Modern Monetary Theory

    I find his/MMT posts on capital/wage split very interesting and discrpitive of current situation.

    Interesting topic to stay abreast of, but I have no interest in discussing.

    Economics has way too many people arguing “my theory of the future is better than your theory of the future”. The future however, seems to like to **** on all theories at certain points in time.
     
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  8. Big A

    Big A Well-Known Member

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    Thank you Sir.

    I can see why you would want to stay clear of this one. One of those topics that invokes very passionate views and many arguments.
     
  9. Fabs

    Fabs Active Member

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    Add to the list the whole Latin America during the 80s and 90s, and today's Venezuela
     
  10. Fabs

    Fabs Active Member

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    Isn't this the No.1 priority for most politicians?
     
  11. Fabs

    Fabs Active Member

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    This MMT theory conveniently ignores the fact that 90% of the money is created by banks through loans. When governments print money they simply rebalance the power to allocate resources from the market (individuals & private businesses) to the government. In other words: SOCIALISM.
     
  12. Waterboy

    Waterboy Well-Known Member

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    Surprise Surprise -- Welcome to Massive MMT, American Edition

    Pandemic moves Modern Monetary Theory from the fringes to actual US policy

    - The total amount of US government economic aid in response to the coronavirus downturn is expected to exceed US$10 trillion.

    - Actions today resemble Modern Monetary Theory, a belief that sovereign governments with sovereign currencies can “print” or “coin” money to support full employment or essentially any government program.



    Warren Mosler was one of the founders of MMT, and what is known as `Mosler’s law’ states: “No financial crisis is so deep that a sufficiently large increase in public spending cannot deal with it.” These words fundamentally represent the actions our policy makers have taken in response to the virus. This pandemic has moved MMT from the fringes to the dead center as the actual monetary policy of the United States.

    Post-pandemic, our national debt will approach $30 trillion, and talk of the burden we are leaving our grandchildren will inevitably return. I assume MMT’ers care about their grandchildren as much as anybody, but they do not see debts and deficits as bills to be paid. Deficit spending represents a transfer of wealth to the private sector. Deficit spending in MMT only decreases as a consequence of raising taxes to control inflation. It is never seen as a problem. Rather, the primary use of the deficit as a tool is to ensure full employment.
     
    Last edited: 29th Apr, 2020
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  13. Big A

    Big A Well-Known Member

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    only problem that I see with all this extra money is that it will end up in assets and we will continue to see asset inflation. Overpriced equity markets, over priced property e.t.c . And before the “ who dictates what’s overpriced “ band comes marching out, overpriced compared to historical prices / yields.
     
  14. Waterboy

    Waterboy Well-Known Member

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    Rock and Hard Place

    What would you rather have:

    (A) Mass poverty, human suffering, hunger, public disorder, high criminality, long-term stagnation

    or

    (B) Asset inflation

    ?
     
    Last edited: 29th Apr, 2020
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  15. Big A

    Big A Well-Known Member

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    Is that a trick question? :p
    Ok I’ll go with asset inflation. Thing is governments can do things to pull back some of that excess money that always rises to the top, with targeted taxes. But they won’t. The ones that benefit most from all that excess money won’t allow it.
    And I say this as an investor myself who also benefits to some degree from increasing asset prices. But I will also have to put up with accumulating those overpriced assets and lower returns that comes with that.
     
  16. Waterboy

    Waterboy Well-Known Member

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    Many people are stuck in the Old World Traditional Economics and resist financial innovation, because of their long-held view that governments are like households who should "live within their means". They are closed-minded to modern 21st Century reality.
     
    Last edited: 29th Apr, 2020
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  17. Redwing

    Redwing Well-Known Member

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    I like the quote

    "Economics is the only field in which two people can get a Nobel Prize for saying the opposite thing"

    Will this course of action be different to Quantitative Easing used because of the GFC?
     
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  18. Waterboy

    Waterboy Well-Known Member

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    It's kinda same.
    But this time, the Fed has committed to do 'whatever it takes'.
    During the GFC they have set amounts of money to 'print'.
    This time, they wrote a blank cheque - i.e. unlimited money printing.

    Plus: the usual government stimulus worth $2 trillion+ passed by Congress similar to our JobKeeper and JobSeeker.
     
  19. Erica

    Erica Well-Known Member

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    I found this interview very insiteful, so just popping this here in case anyone else might be interested.

    Alan Kohler having Modern Monetary Theory explained to him by the founder of MMT Prof William Mitchell:
     
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