How MMT Advocates View Money and the State \ stacker news ~econ

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How MMT Advocates View Money and the State mises.org/mises-wire/how-mmt-advocates-view-money-and-state

481 sats \ 4 comments \ @Rothbardian_fanatic 10h econ

According to the Modern Monetary Theory (MMT), money is something decided by the state. The MMT regards money as a token. For instance, when an individual places a coat in the cloakroom of a theater, he receives a tin disc or a paper receipt. This receipt or a disc is a proof that the individual is entitled to demand the return of his coat.

According to the MMT, the material used to manufacture the tokens is irrelevant—it can be gold, silver, or any other metal or it can even be paper. Hence, the definition of money, according to the MMT, is what the state decides it is going to be. MMT posits that the value of money is the outcome of the state that forces people to pay taxes with the money tokens that the state has decided upon. The state taxes have to be paid with the money tokens issued by it. The state also has the ability to control the value of money through its declaration of how much it is willing to pay for a certain commodity produced by the private sector.

In the MMT framework, the token money is seen as a receipt on the economy’s resources. A token money held by an individual is regarded as his claim on a portion of resources. Individuals have exchanged goods and services for a receipt given to them by the government. Individuals who have generated goods and services are acknowledged for this by the tokens issued to them by the government……

Money is the thing that all other goods and services are traded for. This fundamental characteristic of money must be contrasted with other goods. For instance, food’s characteristic is that it supplies the necessary sustenance to human beings and people may like the taste. Capital goods’ characteristics is that it permits the expansion of the infrastructure that, in turn, permits the production of a larger quantity of goods and services. Contrary to the MMT, the essence of money has nothing to do with tax payments to the government.

Money functions as a general means of exchange. People pay with goods and services for other goods and services with the help of money. Money facilitates the payments of one good for another good. Also, contrary to the MMT, money is not a claim on resources, but the general medium of the exchange. In his writings Carl Menger raised doubts about the soundness of the view that the origin of money is government proclamation.

Naah, it don’t work that way MMT!! That isht only manufactures whole wads of misery for great swaths of the people of that foolish MMT using state! Money is a commodity, it started that way and it still is just a commodity, no matter what loony-toons, mad economic scientists say or do. Any state listening to this Modern Monetary Theory is asking to blow itself up very quickly, IMHO.

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57 sats \ 1 reply \ @SimpleStacker 9h

You can learn a lot about a group by listening to the introductions to their speeches. And in one speech by Stephanie Kelton, she started with the idea that governments don't need to "balance their budgets the way households do," because households can't simply print money to fulfill their obligations, but governments can. THerefore, the political analogies that debt hawks use about balancing budgets doesn't need to be listened to.

She said this as if it were some deep insight. Then, she went on to admit that the main constraint against money printing is inflation. She just so happens to think that we aren't at excess capacity and so more printing won't lead to inflation.

Based on this, I realized that my main disagreements with MMT are:

Whether government spending even leads to any good in the first case (which she implicitly assumes... and I would disagree for the most part)
How close we are to the inflationary constraint

30 sats \ 0 replies \ @Rothbardian_fanatic OP 9h

Yes, the politicians are nothing more than clowns making jokes! They haven’t even gotten around to admitting that everything the state spends is a net negative to the economy because they have to take the money out of the economy before they can spend it. If we used a true measure of the economy, how many bombs and missiles would consumers prefer to buy? How many new F35 fighters that are built to fall out of the sky would they want?

I think we are getting closer to the point where hyperinflation takes off. You know, Milton Friedman once said that the true measure of inflation was how much the state was spending and nothing else. Unless Trump can do what Milei has done in Argentina, I don’t think inflation will be abated.

20 sats \ 1 reply \ @Undisciplined 10h

It is true that being forced to pay taxes in dollars provides a non-zero floor on the dollar's value. The problem is that it doesn't do any better than that: i.e. the dollar can depreciate to any fraction of its current value and still serve that tax paying function.

32 sats \ 0 replies \ @Rothbardian_fanatic OP 9h

That is good only for the tax paying function! I don’t quite understand people using other money for their other transactions. I know using the FRN is the easiest way to work because it is legal tender, whereas everything else shows all the functions of a commodity money, even the settling on the price of money in terms of the goods. If we all started doing this, everyone would quickly realize the faults of the FRN.