Read the article and still have no idea what MMT means. Something economics related I gather.
This differs from traditional theory wherein the banking sector, specifically central banks, play the primary role in managing the money supply.
Proponents of MMT also advocate spending to maintain full employment, to the point when inflation occurs, at which point it becomes necessary to cut deficits.
Note that this policy prescription is only the case when a country actually controls their own currency.
Also, anyone who says things like “it means money printer go brrr” likely has spent close to zero time actually attempting to understand even basic facts about MMT, and likely gained anything they know about MMT from memes or shallow criticism.
So do Keynesians, relying on the Phillips Curve, which has to be one of the most embarrassing, historically invalidated concepts of all time.
> Also, anyone who says things like “it means money printer go brrr” likely has spent close to zero time actually attempting to understand even basic facts about MMT, and likely gained anything they know about MMT from memes or shallow criticism.
Waves macro finance degree here. MMT, magic monetary theory, is very much "money printer go brrrr" in practice. They rely on a qualitative understanding of inflation like the Austrians as opposed to a CPI quantitative understanding. Where Austrians see nominal credit expansion as money creation, MMT proponents see credit expansion as being able to be cancelled out via taxation at the aggregate level. It's argumentation via definition.
MMT also is of the "heads I win tails you lose" style of argumentation, because it pretends that state extraction of resources via taxes nets out the impact of state extraction of resources via inflation. Implicit in the (false) argument of no net impact on inflation is that those taxes will be transferred to deserving members of society via fiscal transfer payments, and therefore CPI-style inflation is mitigated. It's monetary communism and a philosophy promoted by charlatans.
Perhaps I’ve missed this, but what the hell is a “qualitative” understanding of inflation, and where have MMTer argued this?
Edit: after doing some basic searching, it seems that MMT’s primary critique is that CPI is a poor measure of overall inflation, and that it shouldn’t be a primary target of fed policy, because monetary policy mechanisms don’t have a very direct impact on moving the index.
That’s the best I can gather at the moment.
In their theory, what does fractional reserve banking do?
Unfortunately I haven’t gotten all that deep into the theory, so I can’t go much further on how they view fractional reserve banking.
This is basically the same conclusion as Keynesianism or even Fiscal Theory. The difference is these other theories actually care about when inflation will occur. Meanwhile MMT kind of handwaves it away with "we'll know when we get there". And it only took about 5 feet out the driveway to find it.
> Also, anyone who says things like “it means money printer go brrr” likely has spent close to zero time actually attempting to understand even basic facts about MMT, and likely gained anything they know about MMT from memes or shallow criticism.
It doesn't help that most vocal proponents of MMT to tend to treat it like an infinite money glitch hack of the economy. And to be fair, the only insight MMT provides over more mainstream economic models is that deficit spending could be much higher than it is.
In fact, they specifically says that you have to manage inflation with fiscal policy, by “taxing money out of the economy” or cut spending.
Neither of which are even close to occurring in the United States.
Politicians are going to politician. Just look at the “dynamic scoring” models republicans apply to tax cuts. It isn’t the job of economic theory to ideologically reign in politicians, it’s job is to model to world accurately. I haven’t read enough into MMT to actually assess that for myself, but it’s ridiculous to assert that it’s flat out wrong because politicians run deficits (which they have done for decades before MMT even came into existence)
In fact, as long as we are at full employment deficits should be stabilized or cut.
In the end, it’s advocating utilizing the economic resources you ah e at your disposal, rather than letting them languish.
Also, note that the us is hovering at around 120% debt/gdp, a number that has declined since Q2 of 2020.
This is actually an accurate description of the whole of economics, irrespective of MMT.
At the end of the day they seem very much rooted in the question of wether there are productive economic assets that can be utilized. Yes => the government should spend money to use them, don’t worry about deficits, No => either spend less (create less demand for resources) or tax more (remove demand from somewhere else). In the end, there’s no reason assets should be left to no productive use, by their estimation.
“MMT is not a theory of how the economy works, but rather a set of political memes to push for more deficit spending.”
Put another way, MMT is the fallback defense for why a “modern government” like the USA can make the money printer go brrrrr.