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Comment by reallymental | Hacker News Reader

I think the comparison to 1928, and 2021 may be incorrect.

If we were to assume they're both very similar, there would have been a bailout of banks around 1916 leading to QE and the rise in tide after. There was even a pandemic + war around 1918, so a crash should have occurred around then. And the "fundamental" drivers seemed to have been people buying stocks on credit (now margin) and the easy availability of credit. I don't really see the easy availability of credit now, except for the stimulus checks, and they're a write-off, not a liability for the gov.

If anything, we're in for another roaring 20's. But we must all buy raincoats in these 20's as we know what came after.

I'm not a historian, nor am I right about many things, so please correct me if I'm wrong.

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You think QE and MMT isn't going to end soon in disaster? I do.

There we go. I will repeat again what has been said many times before: MMT is not a policy, it's a (better) description of how the system works already.

Also, MMT predicted that QE would not be inflationary but it also predict that it's not a proper way of stimulate the economy.

Yeah, I've listened to the arguments from Kelton and others. Snarky responses do the theory no favors. Economic Theory is not some clearcut thing that anyone's nailed with any sort of comprehensive frame work in the past several hundred years so my apologies if I remain skeptical of the latest one to come down the pipeline and into vogue. MMT may even be right in theory but in practice may be entirely unrealistic. QE remains a possible systemic risk, and the jury is very much still out, because although those dollars haven't entered the broader marketplace and just sit on bank balance sheets, they may find their way trickling in at some point. QE in USD is also partly propped up the US's reserve currency status, which causes deflationary pressure that many countries don't benefit from. And how does MMT solve for the various asset bubbles ongoing including the real estate bubble in Australia or perhaps the stock bubble in the U.S.

>>" MMT may even be right in theory but in practice may be entirely unrealistic. "

I don't know what that mean. Or a theory is better than the current one explaining facts or it's not. That's the scientific method.

>>"[..] US's reserve currency status [..]"

We know what the neo-keynesian predicted for Japan monetary policy of the last 25 years (high inflation, high interest rates), and we know that it's not what happened.

>>"And how does MMT solve for the various asset bubbles ongoing including the real estate bubble in Australia or perhaps the stock bubble in the U.S."

It totally does. Because the central banks are buying financial assets, they are crowding out institutional investors to other kind of assets up the chain and pushing prices up. Note, that MMT doesn't support QE. They just predicted what would happen.

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