[kovacs]

Organic demand growth is what we want, not this Frankenstein economy that's been created since at least 2008 if not earlier. Demand doesn't boost GDP, producing real goods and services boosts GDP. You can't spend your way to prosperity despite what any of the insane MMT economists might say.

I agree that wage growth is good but not in the manner it's happening right now, through insanely easy money policies creating massive inflation that's easily outpacing any of those wage gains. Again, you can't print and spend your way to prosperity. Maybe some of these tools would work if they'd ever let off the gas and removed them but that's not what's happening.

[PaulDavisThe1st]

> Demand doesn't boost GDP, producing real goods and services boosts GDP. You can't spend your way to prosperity despite what any of the insane MMT economists might say.

I appreciate that you feel strongly on this matter. However, the strength of your feelings are less relevant than the fact that different people (who all know quite a lot about this sort of thing) do not agree with you (or with each other). Calling MMT folk "insane" may make you feel good, but it neither refutes their arguments nor substantiates yours.

[fallingknife]

MMT does sound like those radio commercials they had back in the 90s saying they would teach you how to "borrow your way out of debt" though.

[neilwilson]

Only because you haven't taken the time to understand what is being said - just the twisted version that isn't actually the case.

Every financial debt has a corresponding financial asset. Why follow the 'debt' and not the 'asset'? Because you have a psychological anchor on the word 'debt' that causes an emotional reaction?

All money is somebody's debt. That's how the accounting works. Rather than looking at the books from the 'credit' side, why not look at it from the 'in credit' side?

What I find amusing is how the bank borrowing from you so you are 'in credit' with the bank is a good thing, but the government borrowing from you so you are 'in credit' with government is a bad thing.

Given those are identical propositions in accounting terms, rationally the view about them should be the same.

[slv77]

Because at some point the credits and the debits need to be settled with real goods and services and when they can’t be someone has to take a loss. The loss either comes through default or inflation but allocating those costs are extremely painful politically. In many cases those costs end up being paid in blood.

[PaulDavisThe1st]

> Because at some point the credits and the debits need to be settled with real goods and services

If that happened all at once, for every credit and every debit, it would indeed be a problem. But that doesn't happen, ever.

[neilwilson]

Money and stuff are inductively connected, like reactive power and active power in electrical engineering.

Assuming the 'power factor' of the economy is one is a category mistake.

[fallingknife]

When you go to the casino and change your cash for chips you are in credit with the casino. If that casino started handing out more chips without taking in cash, those people would be in credit with the casino too. Would you want to be in credit with that casino? You can create an accounting "asset" with the stroke of a pen but not a real one.

[RobertoG]

You get your chips in order to play in the casino. Without chips nobody can play.

What is a 'real asset', when nothing exist outside the casino? At most, you could change your chips for another casino's chips.

[neilwilson]

And when the country requires that you pay the taxes in casino chips - and only those casino chips - what then?

And when the banks decide to peg their liabilities to casino chips to leverage that drive from taxation, what then?

Once you are required to get casino chips, or else, you will offer up real goods and services to get them.

Cash isn't real. It's an accounting fiction.

[MrMan]

I dont agree with the previous poster but I think you should recognize that the bank and the government in your example are not playing symmetric games. The incentives for each are different, even though at a point in time accounting principles can describe their respective balance sheets.

[imtringued]

MMT is just the credit theory of money plus the realization that the government runs its own bank.

I don't know what you are talking about.

[kovacs]

Your comment added nothing of value to this discussion. Replying and telling someone that you appreciate their "feelings" while ignoring the points made may make you feel good, but it neither refutes their arguments nor substantiates yours... if you'd even care to make any.

[ren_engineer]

how would MMT work in a pre-industrial economy? Technological progress that boosts efficiency is what drives real growth, not economists printing money

[imtringued]

Boring answer: MMT says boost production.

[paganel]

> not this Frankenstein economy that's been created since at least 2008 if not earlier

For what it's worth the US has economically out-competed the European Union in that time-frame, with the US basically following Keynes and the UE going the austerity route most of the time (and only at times, begrudgingly, also following Keynes as a result of the Americans doing it first). There's also China that has out-competed the US and the UE both, but that's another story.

[slv77]

Both the US and China have paid the costs as that liquidity has flooded into speculative assets such as land which has increased wealth inequality. In addition it likely has resulted in misallocation of capital and a future tidal wave of bad debt.

While households are typically cash constrained economies operating in a fiat system rarely are because cash is essentially created at will by the banking industry. Economic constraints are largely due to the ability to identify, fund and execute in good investments that will provide a reasonable return on capital given the risk.

Is there any investment area in the economy that is currently constrained by the lack of cash?

[imtringued]

That's just the nature of imbalanced trade. The US reserve currency mandates permanent trade imbalances. It's a double edged sword.