And, Michael Hudson, Yves Smith and others? File 13 your love for Modern Monetary Theory.
First, the Maoism part.
Doug's piece is actually very interesting. I didn't know that Hudson is NOT the No. 1 touter of MMT at Missouri-Kansas City, which Henwood calls the Vatican of MMT. I also didn't know that Yves Smith of Naked Capitalism is a fangirl.
In usual Henwood style, Doug can be scathing. (He can be when he's wrong, as well.):
MMTers extend this hubris about the precision and power of policymaking to the realm of interest rates, which they think the central bank is completely in control of and should be kept as close to zero as possible.That right there is silly. I don't need Doug to tell me that:
Without higher interest rates to compensate for greater default risk or longer maturities, there will simply be no one willing to buy the bonds or issue the loans.And, one Twitterer, after first mentioning bonds, then switched to securities. That's a bait-and-switch, as securities can include stocks and other private-sector offerings.
The MMTers answer is for the Fed to be the purchaser of last resort.
Gee, isn't that something quite similar to Quantitative Easing? And we've seen the bitching that's caused with even a partial and time-limited enactment of it.
Otherwise, Doug's even better further in, when he criticizes the MMTers for being lackadaisical about inflation.
Then, tying this back to Hudson's thoughts on reserve currencies, Henwood notes other nations don't have the same degree of currency-printing freedom as does the US. There, he's spot on. If, say, South Korea or Thailand tried to actually enact MMT, George Soros would squish them like a bug, just like in 1998.
Henwood then notes that a jobs guarantee program is in no way dependent on MMT. Nor is the somewhat related basic income. In fact, I have yet to see a top basic income touter link it to MMT, though I could be wrong. Indeed, Scott Santens says that a universal jobs guarantee as framed by most MMTers is antithetical to BI.
One last thought, per Henwood: If Stephanie Kelton truly believes that just following MMT will solve climate change, she's either a tremendous idiot or an incredible liar.
See more MMT refudiation here.
And, stuff like this on Twitter is laughable.
MMT is first and foremost just a description of how our monetary system works. So, in order to rein in FIRE it’s good to know how our monetary system works— Kathryn Cannon (@katiecannon2) February 27, 2019
Geez. Back at you.
No #MMT is not "first and foremost just a description of how our monetary system works." It is not even second or third "just a description of how our monetary system works." We are getting into #Maoist Little Red Book territory, I do think. Bye!— ATrealDonaldTrump 🚩🌻 (@AFCC_Esq) February 27, 2019
And, that's that.
And now, the New Ageism part.
MMT is basically like the New Age idea of "manifesting," as best as I can tell it. Maybe, it's actually negative manifestation in this case. MMTers seem to believe you can make inflation disappear simply by strong enough mental focus.
This is a hugely dangerous idea, of course. Beyond the dangers within MMT, such ideation is part and parcel of American history.
American exceptionalism? We believe it and proclaim it enough. We're manifesting it and therefore it must be so.
We're not an empire? We believe it, proclaim it and redefine "empire." We're manifesting it and therefore it must be so.
Etc., etc.
Because of that, that's probably EXACTLY why MMT has such an appeal at times.
And, appeal it does. Hudson was recently preaching the New Age Success Gospel of MMT to Jimmy Dore and listeners. Or read Howie at Down with Tyranny drink Kelton's Kool-Aid.
And now, the New Ageism part.
MMT is basically like the New Age idea of "manifesting," as best as I can tell it. Maybe, it's actually negative manifestation in this case. MMTers seem to believe you can make inflation disappear simply by strong enough mental focus.
This is a hugely dangerous idea, of course. Beyond the dangers within MMT, such ideation is part and parcel of American history.
American exceptionalism? We believe it and proclaim it enough. We're manifesting it and therefore it must be so.
We're not an empire? We believe it, proclaim it and redefine "empire." We're manifesting it and therefore it must be so.
Etc., etc.
Because of that, that's probably EXACTLY why MMT has such an appeal at times.
And, appeal it does. Hudson was recently preaching the New Age Success Gospel of MMT to Jimmy Dore and listeners. Or read Howie at Down with Tyranny drink Kelton's Kool-Aid.
MMT is bait-and-switch. It's motte and bailey.
ReplyDeleteIt includes a description of how the Fed works to manage interest rates, the money supply, and all that. And a description how that interacts with the Treasury and the legislature's spending.
You can argue with abstract parts of the theory, but their descriptions of what happens are basicly right.
Then when they advocate things that people disagree with, they say "But there's no advocacy here, MMT is only a description of how the system already works!" This is dishonest, but it's politics. If that strategy actually works for them then I can't fault them for using it in politics. I just haven't seen it working.
They argue that this is how the big tax cuts and increases to military spending work. They want to use the same methods to fund social programs. People tell them it won't work. I think people are right that it won't work. People don't go on to say that it doesn't work for tax cuts and military spending.
But doesn't it work for tax cuts and military spending? Isn't the economy doing just fine in spite of the MMT that's being used? There's hardly any unemployment. Workers are getting big raises and saving their money. People are paying off their college debts quickly, the housing boom is being paid for by responsible workers who can easily afford their mortgages. Americans are eating better, getting better healthcare, the balance of payments has evened out, EVERYTHING is fine except that the national debt is increasing as it has always increased, as it has always increased while doing no harm to anyone.
Isn't this a solid argument in favor of MMT? We're already using MMT in an extreme way and the economy is just perfect!
Or if that's not true, maybe there is an argument that we should stop using MMT for military and tax cuts....
As I noted, QE is, yes, kind of like MMT.
ReplyDeleteAnd, with its own set of papered-over problems. Among other things, much of the money of QE has not been "productive."
Otherwise, you're right.
As Doug notes, much of that debt has been purchased by foreigners, and in many cases, as with the Gulf Arab states, it's been a semi-gunpoint forced purchase.
And we had worries in the past, such as when Japan bought so much debt. China, the major buyer beyond the Gulf states, is certainly less friendly than Japan.
And, contra MMTers, debt WILL pop up, somewhere.