Comment by ThirdFoundation | Hacker News Reader

Comment by ThirdFoundation | Hacker News Reader

ThirdFoundation

A fear of mine is that MMT gains enough traction to be implemented, but only partially. Similar to what has happened with the ACA. For argument's sake, let's just assume MMT is a sound theory. Regardless, if it's only half-implemented -- without all components for regulating taxes, inflation, and spending -- it could be an absolute disaster.

Additionally, there are concerns about having the government itself involved with regulating inflation and business cycles. An independent Fed, at least in theory, allows for the fed to take a longer view of the economy even if politicians have incentives to care only about the next election cycle. All it would take is one conservative majority congress to semi-dismantle any MMT mechanism and completely mess up any "controls" put in place by MMT proponents.

That being said, it is refreshing to have different ideas being taken seriously enough to enough mainstream conversation. I don't think the field of economics is "solved" (probably far from it) so I think good ideas that challenge the status quo are generally good.

> All it would take is one conservative majority congress to semi-dismantle any MMT mechanism and completely mess up any "controls" put in place by MMT proponents.

One liberal majority Congress could do the same. They might dismantle in a different direction, but it could be just as disastrous.

Fair point.

I see this problem with a lot of big policy. It's sold as a rewrite when in practice it has to be implemented as an incremental refactor. The two have different implications and trade offs. A partial rewrite is often the worst place to end up.

We've already started MMT since 2008. The scary thing: it's been working well.

MMT without job guarantee is not quite MMT.

As far as I understand, MMT wants to optimize for full employment. Job guarantee is a possible implementation. We're at 4% unemployment rate. You can say we have full employment per the current standard.

Do you mean in terms of spending?

For what it's worth, the ACA was pretty successful before it was slowly gutted by the current administration. Around 12M people signed up at its peak. Generally, incremental changes are better than a "perfect" solution that comes in a lot later.

I agree in regards to health care that incremental changes may be the only to achieve universal coverage.

However, the gutting of the policies by another administration is what scares me in regards to MMT. I'm not sure that incremental changes work with monetary policy. MMT in particular seems like it needs some big, systematic levers in order to actually function properly.

That being said, I'm happy to be wrong about this. MMT being viable would open a more clear path to something like universal health care.

I'm not sure if you need all of the parts in place to see if / how it works. The fed could start offsetting deficits to the tune of $100B to the treasury and see how the USD, bond markets react. If inflation goes up, it could in theory, be offset with a tax scheme inline with MMT. I'm not saying this would be terribly smooth, but I do think it is possible to test parts MMT in relative isolation.

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