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Comment by boringg | Hacker News Reader

MMT - it was a flash in the pan pre-COVID during the "capital is infinite / ZIRP" era. It was used as a political tool to justify increasing deficits/debt.

The challenge with this problem set is the timeline is tricky. At some point the bridge can only handle so much weight before it buckles and collapses but we don't know how strong the bridge is and we have no way of measuring it.

MMT is the equivalent of saying the bridge doesn't have to worry about physics because (a) we said so and that the (b) bridge hasn't broken yet so its fine. It is a bad economic philosophy.

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I’m not economist but my impression when I learned about MMT is that it’s predicated on the idea that money isn’t like bridges at all. And is actually at this point of history a purely abstract model where “we said so” works. Meanwhile lots of people really believe a country can “run out of money” or whatever. You run out of trees, teachers and nurses, not money. Anyway what’s clear to me is that the metrics we picked like gdp or debt ratio or whatever aren’t helping us make good choices.

It is the epitome of hand wavy economic philosophy. If you think about the uber simplistic version of a credit card payment - now extrapolate to nation states where you have a myriad of debt types, debtors, swaps, much larger payments, longer timelines you can keep running your debt/deficit for a long time. However if you grossly outstrip your ability to pay at some point those incredibly complicated structures do buckle and trip the system. That the timeline is further than we thought doesn't mean it won't happen. MMT essentially says don't worry about it because it hasn't happened yet. We can spend our way out while trying to say our obligations are of little weight.

It's a garbage economic theory - strictly to justify greater spending from our politicians. In time it will be proven out to be a failure of human thinking - it is a siren call.

The epitome of hand wavy economic philosphy is thinking about the debt like a credit card.

The comment made it clear credit card was a reductive example and that the diversity of debt makes the overall situation unfathomably complex.

Your comment is likely in bad faith.

That comment also set up a clear straw man, I don't think the parent comment was in good faith either.

Thinking about debt like a credit card isn't reductive, it's just plain wrong.

The math that underpins a credit card, mortgage, bond, etc, etc, is all the same. The values are different. The terms are different. Some of them have complex add on functions, etc.

But at the end of the day it's all compounding interest. And there's so much of it in both volume and diversity and inter-connected requirements that nobody can accurately predict the behavior of the system in response to large changes or over large timelines. And then of course the government controls the currency (but what it can do is limited to some degree) so that adds even further complexity.

A credit card or any other "normal" debt is a fine starting point for understanding.

I greatly look forward to your explanation of how it's "just plain wrong"

You already acknowledged a key part of one of the reasons in your own comment. "Government controls the currency".

Another part is to think about how money is created.

Another component would be to study what happened the only time the US paid off its debt.

Other individual already nailed the response in this thread - so it's not worth repeating. They made the astute observation that the credit card was a grossly simplified example pointing that debt compounds even if the system is opaque, messy and main varied timelines.

I will add to your comment that printing more money by the government makes the people less wealthy in terms of true wealth. It is not a solution to get you out of the woes of heavy debt load as you pitched.

That said it sounds like you are a proponent of MMT - instead of one off pithy remarks, can you put forward a defensible position?

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