Modern Monetary Theory (MMT) Explained in One Minute
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- Опубліковано 12 лют 2021
- Yes, it's time for one of the most requested videos in the "history" of the channel: the Modern Monetary Theory (aka MMT) one. MMT is also, as you might have guessed, one of the most controversial topics in economics at the moment of writing.
Simply put, all of the ingredients are there for videos about Modern Monetary Theory to generate a fair bit of buzz. On the one hand because, due to the post-pandemic context we find ourselves in, there is undeniable demand for economic "medicine" that promises to fix everything and MMT definitely qualifies.
At the same time, however, many economists doubt that Modern Monetary Theory can deliver on those promises. To put it differently, quite a few economic thinkers consider MMT nothing more than populism articulated by intellectuals rather than politicians.
As you will find out by watching the video, Modern Monetary Theory promotes a far more aggressive approach to currency creation than even Neo-Keynesianism and from many perspectives, can be considered the exact opposite of Austrian Economics. Needless to say, for these reasons and many others, debates surrounding these topics are far too frequently anything but civil.
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censorship?
YOUR A COWARD! YOU BLOCKED OPINIONS, WHY CENSORSHIP?
Can you do a video on the great reset?
@@johnterry8998 John Birch society talking point!
@One Minute Economics Why not use the budget to balance the economy? It's always, what is the interest on the Canadian securities auctioned to investors! What's the annually cost of the interest on there securities, less than Corporate welfare? Or is it the less than the military budget? Do you really think the public debt is going bankrupt Canadians? And isn't that the mandate of the Bank of Canada keep Canada sovereign?
This was nice, thanks! Do you have any suggestions for further learning (a deeper dive into the propositions and justifications underpinning MMT)?
One of these days, I'll get around to publishing a dedicated mini-series. For now, the best I have is my "money and banking" playlist: ua-cam.com/play/PLhICud5IUwVimLuZK0Qfi6OzCB0CloH5J.html
@@OneMinuteEconomics thanks! I look forward to the series you have in mind!
@@OneMinuteEconomics I’ve been continuing to learn more about MMT over the couple days since I made this comment, and I have so far found it a somewhat confusing but also very compelling framework. I came back here to reiterate my interest in your explanatory series on the subject. Just turned your channel notifications on. Thanks! I look forward to your series (no pressure btw, I’m just trying to show some support).
Truly appreciate the support, will do my best :)
The Deficit Myth by Stephanie Kelton is a good place to start.
I'll try to add some additional perspectives to the complex topic of MMT:
1.) The Federal Reserve becomes redundant with the US Treasury when rates hit 0%. Think about it; a $100 bond which pays no interest is basically a $100 bill. Rates are not exactly at zero, they're at .25%, but when inflation is factored in real interest rates are negative. If inflation is going to be tackled by tax policy versus monetary policy (interest rates) in the future, then keeping the Fed around starts to seem less likely.
2.) The Fed's main mechanism for stimulating the economy is to lower interest rates (i.e. the price of money) which causes asset prices to rise. This economic stimulation disproportionately goes to asset owners, who are often not the ones in need of economic stimulus. Over time, dropping rates to raise asset prices in an economic downturn (called "reflation") drives the wealth gap higher and higher, which eventually reaches a threshold where social unrest becomes more likely. Several democracies in Europe voluntarily gave up being democracies and moved to autocratic regimes in the 1930s; under the right circumstances radical ideas are welcomed, not rejected. This reminds me: I've heard the period that we're in compared to the 1930s in more ways than one, now would be a good time to refresh yourself on the 1930-45 period so that you understand the need to modify monetary systems. Incremental monetary changes today will pay dividends (no pun intended) in the form of a more peaceful and prosperous future.
3.) Bernie Sanders is now the head of the Senate Budget Committee and is a strong supporter of MMT. Janet Yellen is the former Fed chair and is now the US Treasury Secretary. Why would someone with so much monetary policy expertise now be put in chart of fiscal policy? The answer is obvious: The Treasury will be taking over the lead role on money supply from here on out (MMT).
4.) The Fed has largely not been able to achieve its target of 2%+ inflation despite record low interest rates, low unemployment and wage growth (pre-COVID). If the US can't achieve a modest level of inflation, the debt load will eventually lead to larger systemic issues. Inflation is a better alternative to default.
5.) As stakeholder capitalism becomes more mainstream, expect the government to get more involved in the economy (much more than it is now). Having the money printer in the Treasury department (which is basically what MMT does) allows for the government to have the ultimate incentive tool (money) for rewarding businesses that are serving the public's (government's) interests.
Final note: New rules create new opportunities. As the "social contract" evolves, monetary incentives will be there for anyone who is cognizant of, and wishes to contribute to, the changing structure of how things operate. I am personally very optimistic about what the future holds; don't let the growing pains of a transition period overwhelm you with pessimism. The future is bright!
Very pertinent observations, thank you for providing so much value Michael!
Our time has come. I've been a follower of MMT since 2016.
This is very thought-provoking!
But, does the gov ACTUALLY serve the public's interest, or is that only in theory, with reality being much more corrupted?
"Floor it?"
"What? No! Powell, don't do that!"
"Okay! Floor it!"
:)))
This video is not a true explanation of the theory but an opinionated piece, clearly showing a lack of deep understanding.
MMT says that currency creation is the monopoly of governments, thus, they can never run out so long as they are in charge of their own currency. They can never go bankrupt in the currency that they control. Japan and U.S. will never go bankrupt. Country's that borrow in currency they don't control can go bankrupt like Greece and Argentina.
On a macro level, printing money doesn't lead to inflation if the country is operating less than its productive capacity. For example, if many people are unemployed, stores and restaurants are empty, factories machines are off, farms are sitting fallow. The government can print money and spend it injecting money into the economy, and increasing economic activity without increasing prices up until productive capacity is reached. Ideally, government spends on things that increase productive capacity - education and job training, R&D, infrastructure, etc.
On a sector by sector level, there could be inflation if government spending is bidding for resources in an already hot market while other sectors are cold.
The constraint of MMT is inflation. When a country's economy is at its productive capacity - full employment, factories running all hours, shops and restaurants full, then pumping more money into the economy will lead to inflation because the extra money injected will cause bidding on scarce goods and services.
To combat inflation, governments need to lower the money supply - selling bonds, raising taxes, reducing spending.
Hyperinflation happens when there is too much money relative to productive capacity. In Germany, Zimbabwe, Venezuela, the productive capacity went down relative to money supply. Germany because of war reparation, Zimbabwe by chasing out white farmers, Venezuela when price of oil went below extraction costs.
The value of the currency is all about the country's productive capacity matching with the money supply.
I am politically and ideologically agnostic, for what it's worth.
What gives me goosebumps when it comes to this interpretation is the straightforward nature of it. Or, if you will, the idea that governments and central banks write a script that market participants then diligently act out. That is, in my experience, hardly the case. With, on the contrary, downright manic-depressive excesses being more than common.
We control our currency, so we'll keep creating and allocating until productive capacity is reached. If anything overheats, not to worry, we'll just raise taxes and deploy some austerity. Doesn't that sound nice? :)
Of course it does.
Too nice. So nice, in fact, that I consider it an exercise in naivete more so than robust economics. In my opinion, such oversimplifications and displays of overconfidence should be taken with mountains of salt, not just a grain. I'm not saying these models do not come from a place of sincere desire to help. Instead, what I am saying is that my hands-on experience with markets makes me raise an eyebrow whenever I come across such utopic value propositions. Really hate to be "that guy" here but I have to :(
@@OneMinuteEconomics
1. You can explain a theory without believing in it but it requires you actually understand it first. To explain it succinctly requires deep understanding.
2. You don't actually explain the theory but rather present your opinions which are common misconceptions about the theory. It shows lack of true understanding.
3. You conflate MMT theory with MMT based prescriptions. MMT doesn't make prescriptions per se but simply explains how money works. People can then come up with ideas on how to use the theory.
4. The word theory has multiple meanings. In the term MMT, it means an explanatory mechanism of a phenomenon - its an academic term. When you say "just a theory", you're using the colloquial meaning of "theory" as in hypothesis or guess. Hope you were aware of that because it sounds ignorant.
Are you willing to accept the possibility that perhaps MMT proponents have not accurately explained how money works? That they are, in fact, wrong about how money works?
@@OneMinuteEconomics Of course, anybody can be wrong. I think the money creation thing is right, but you also have to add in the banking sector. However, I speculate the limit to spending without causing inflation is much tighter than what proponents might think.
@@OneMinuteEconomics No one is politically and ideologically agnostic. To say so means you are unaware of your own ideology and political beliefs. That's dangerous as it leads to making implicit assumptions while thinking you're being 100% based in objective fact. Only by knowing your own ideology, and exploring the contradictions between your ideology and others' can you approach objectivity
Isn’t MMT 2023 just Keynes 1930 ?
MMT actually tells the way the Fiat Money works. Policy decisions that follow are not MMT.
Ivan, does the manner in which it "tells" this or that not carry anything in terms of policymaking nudges?
@@OneMinuteEconomics any time you enhance your understanding then decision making changes. When you realize the Earth rotates around the Sun and not vice versa, you would be nudged toward making better predictions on astronomy. Modern economists and politicians who still complain about spending deficits are like those clinging to geocentrism, validating the concept with Scripture instead of facts.
Do you truly believe MMT's depiction of reality is in apples to apples territory to the astronomy analogy you have made?
@@ivanbrown1924 You are living in fantasy land MMT belief. There are so many things wrong with it that it is a fatally flawed theory that does not even describe the process of money creation. It is based on responses to emotionally driven desires rather than clear observations of present and historical facts which it contradicts.
Monetary Sovereignity is key to MMT
Yep :)
The Queen of England asserts this.
Wtf would she know the old goat.
Not exactly. As a macroeconomic framework, MMT describes economies with varying degrees of monetary sovereignty and the effects. Higher levels of sovereignty provide more fiscal space.
Judging from your comments on the video, and the video itself, I'm not entirely sure if you know what MMT really is.
MMT is not a set of policies to achieve, it's an observation of how the world is actually run, as they see it. Now maybe you think that they need a new pair of glasses. This is a valid stance to attack from, and the argument I find most compelling against MMT come from.
You, on the other hand, don't appear to be doing that. You don't contest that MMT describes the world wrong, while also believing that MMT implies certain solutions, you also don't seem to have faith in MMT, which is a clear contradiction. If A implies B, and A is uncontested, then B must be true.
I also dislike the notion that MMT is too good to be true. Not as a conclusion, but as an argument. If MMT is the right pair of glasses, and these pairs of glasses show you how to cure cancer, then you shouldn't have a problem with curing cancer unless you already have reason to believe that the glasses are wrong. Imagine if the old doctors argued that washing their hands could reduce deaths by the hundreds according to the theory on germs, and because of that the theory itself must be distrusted because its "too good to be true"
One of the most obvious analogies between MMT and cult-like behavior is represented by this ultra-common idea that if you articulate viewpoints in the realm of (constructive) criticism, it must be because you don't "get" it :(
fed shill
@@OneMinuteEconomics I didn't see constructive criticism. Only short quips without any elaboration
The U.S. dollar has value without runaway inflation and bankruptcy for a few reasons. Oil is traded in the dollar and the dollar has been the reserve currency of the world. This has occurred for several reasons. 1. The U.S. built power by manufacturing things. We have steadily been losing power in this area and have been surpassed by China who is gaining strength from manufacturing. 2. Until 1972 the U.S. dollar was tied to gold. Gold is valuable all over the world. 3. We have a strong military and weaponry. 4. We've had a growing population. 5. Our economy is huge. Other countries depend on us purchasing their goods. 6. The country has been able to service it's debt because we can still afford to make the payments.
Every great civilization has failed because of bankruptcy. If our country continues down the financial path we are on we too will become bankrupt. MMT is short-sided. It believes that just because the U.S. hasn't gone bankrupt yet that we can't go bankrupt. It's blind, delusional, infantile invisibility. MMT is holding the gas pedal to the floor on an extremely fast car. MMT will lead to hyperinflation and bankruptcy.
MMT isn't macroeconomics. It is the stupid and narrow thinking that just because you haven't maxed out your credit card yet and can still make the minimum payments that you can continue to run up your credit card balance forever with no negative consequences.
MMT is not coming, it's here. We're all on board this runaway train. This hockey stick graph of printing money, and free-for-all spending cannot be overcome through raising taxes (which would have a negative effect anyway). Expect an inverse hockey stick graph for the value of the dollar, and skyrocketing hyperinflation... it'll be a joy-ride until the runaway train finally crashes, along with all our, and our children's, dreams... Sometime in the, not so distant, future.
I believe high inflation is pretty much inevitable. Hyperinflation less so, in the most developed of countries that is. At least, not unless something else of epic proportions happens so as to knock the countries in question off their current positions with respect to the global GDP pie. Simply put, there's just no historical precedent involving a nation going from one of the world's top economies to hyperinflation. Post-WWI Germany is not a valid example, precisely because something happened in-between (losing WWI) that weakened the country enough to be a hyperinflation candidate
@@OneMinuteEconomics you were right of course and it's only just beginning
End of day this is nothing more than massive counterfeiting. These people sit around and then wonder why stores are being looted and the borders are wide open for legions of salary killers to enter.
But not to fret as long as they lie and people believe we have 3% inflation it works til it doesn't.
Sounds like Keynesian 2.0; propped up by faith in the US dollar being the global reserve. Not too smart, IMO...
Quite aggressive indeed. Even folks like Paul Krugman have expressed grave concern with MMT on occasion :)
FIAT currancy has been opperating happily since 1971 when Nixon dropped the gold standard. With nothing behind ANY currancy, every player in the market has a vested interest in keeping the currancy in demand, and this is what the insitutions do for the most part.
The idea that all governments someohow do not have political control over spending is just noncence. There are countless indirect ways, governments control spending. Actual budgets are just academic exercises in spin.
It's like Keynesianism 2.0.....where they removed the things about Keynesianism that actually has some function, and distilled all the nonsense that doesn't work.
It actually has nothing to do with the dollar being the global reserve.
@@OneMinuteEconomics LMAO Oy Vey~! Neoliberal in Keynesian clothing Krugman? Doesn't agree? Whatever shall we do X-D
"idiocracy was a documentary" --anonymous
:P
if taxation reduces excess liquidity, why doesn't deficit spending increase it?
If any action can claim, by reducing excess liquidity, to somehow stifle inflation, velocity in the opposite direction encourages it.
There are outright logical incongruencies that pop up when anyone asks, "Given MMT, why not reduce taxes 10%?"
The certainties around taxation that oftentimes surround MMT narratives increase as a policy tool concern me as well
is there any country which already implement this kind of policy? and at least you can called it successfull?
Short answer: no. Longer answer: it's only a matter of time, IMO, until many Western nations will implement such policies. Whether or not they will be successful remains to be seen :)
Italy did something vaguely similar in the past and almost went bankrupt if it wasn’t for the EU and the switch from Liras to Euros. We’re still paying the huge public debt resulted from that
@@ultimatejager4058 ahh I see
The US alreadi *IS* doing MMT. Same with Japan: www.washingtonpost.com/news/wonk/wp/2017/05/16/how-japan-proved-printing-money-can-be-a-great-idea/
Short answer is that MMT is a school of economic thought, not a set of policies. It describes economies that are already in place. The difference is how we analyze potential policy effects and determine how much fiscal space is available.
I was looking for a video to explain some economic issues to my son. I took a little too over his head because my undergrad is an economics. It seems like I started listening in in the middle of a conversation. I can't figure out the point of the video.
Sorry you didn't like it. I've been meaning to publish a mini-series about MMT given how much demand there is for this, but... yeah, things are too insane on my end to allocate time in this direction. Plus, when I do have more time to publish videos, I'll probably have to prioritize in other directions, since there's even more demand for content about the position central banks find themselves in, QT and so on. Hope some of my other videos will provide more value to you and your son, take care.
This video doesn’t even attempt to explain modern monetary theory it just makes a few points for it. 🤷♂️
If there is anything specific you'd like me to address, let me know and once I manage to find a bit of free time to start publishing videos more frequently, I will do my best to create a video about the topic(s) in question :)
@@OneMinuteEconomics Posted above, but here is a better description: bilbo.economicoutlook.net/blog/?p=41133
Mmt is the dumbest thing ive ever heard of
@@LiterallyGod which part of it? Because MMT is just a description of what its academics believe to be happening, not an end goal.
This seem pertty off base from what I've read. MMT points out flaws in how most schools of enconmice believe in how money get's it's value. How money get's it's value is key pillar in how money works. So if money doesn't get it's value they way most school of schools of enconmice says it dose then a lot of the models just fall apart.. most economic will admit they they don't have working models and that economic is a soft science but they don't want to chang ethier their idea on any thing.
What is your opinion on the matter, your interpretation if you will?
This channel is amazing, so glad I've found it!
Welcome to the community and thanks a ton for the kind words, happy to have you here :)
At this point gravity is also a theory.
:P
Also MMT isn't coming. MMT is the study of what we already have. Policy options and MMT are entirely different things.
We may need a one minute explainer on "theory" too. A lot of people tend to use it to mean something like guess or hunch, but it is much stronger than that, especially for those of us with a more scientific background.
jump out of your window if its just a theory u goof
Don't these formulations only apply to governments who don't have a balance of payments deficit? If the BOP is in deficit you have to borrow from other countries to finance it. You can't fund a BOP deficit by increasing the supply of domestic currency. (sure, this may not apply if your currency is the world reserve currency and everyone else is borrowing in your currency, but then wouldn't these formulae only hold for the special case of the country that happens to have the world reserve currency?)
Of course you can and, fortunately or unfortunately (depending on how you choose to see it), it's done all the time. The only requirement is that you have a currency others want. The world reserve currency represents the most obvious example indeed, but the same principle is valid for currencies such as the EUR. As long as enough entities want your currency, you can most definitely get away with "printing" it in a balance of payments deficit scenario :)
@@OneMinuteEconomics Could you elaborate? It's still unclear to me how, if country A with fiat currency B owes X billion dollars to country C, (due to recurring BOP deficits) and country A can't print dollars, it can somehow service these dollar-denominated debts by printing more of fiat currency B. It would seem to me that, ceteris paribus, all that would do would devalue fiat currency B relative to the dollar, potentially increasing the burden of those debts. So even if other countries 'want' fiat currency B, allowing country A to redeem it for dollars in the FX exchange market, the problem would remain the same, since the more fiat currency B country A injects into the FX market, the less dollars it would buy. (doesn't have to be dollars either, just any foreign currency really) What would MMT say about this situation that would be different?
It all depends on what currency B is. If there is a lot of demand for currency B, country A can "get away" with creating a ton of currency B and exchanging it for US dollars, to over-simplify. It most definitely isn't as easy as saying that if country A creates x% more currency B, it is straightforward to predict with laser precision to what degree currency B will do down relative to the USD. Far too many moving parts involved for that to be simple, with quite a few of them demand-related.
For example, is the EUR the world reserve currency?
No.
Is there a lot of demand for EUR?
Yes.
Thus, proverbially getting away with printing a lot of EUR and exchanging said EUR for USD so as to service USD debts is far easier compared to let's say the Turkish lira.
@@OneMinuteEconomics I see. So would the MMT argument then be more or less that country A can service continual BOP deficits and external debts denominated in foreign currency X by running domestic budget deficits (i.e., "printing" more domestic currency) so long as those deficits don't cause the exchange rate of country A's currency to decline vis a vis foreign currency X? If so it seems like exchange rate stability is an unspoken assumption underpinning a lot of its theoretical formulae. (rather than just exchange rate flexibility and the ability to have a floating exchange rate) Most of the discussions of MMT I've perused don't talk a lot about that. Do you know of any discussions or articles/books by Kelton, Mosler, or others that go into more detail about how trade and the BOP are integrated into MMT?
Wish I could help further but as you've discovered yourself, the scenario we have discussed thus far is (in my opinion) not covered in a satisfactory manner in the MMT space at this point in time :(
Can you do a video on the great reset?
Will do my best to cover various great reset scenarios :)
Not a very good video for its purported purpose - explaining MMT. You can't explain something solely by raising questions. From what I understand, MMT has answers for those questions. That's what I came here looking for, but you didn't provide any. I understand this is 1 minute economics, but still...
Please explain this : if country is having inflation problem and then government comes and starts stealing more money from them via taxes wouldn't that cause more problems in short term ? Is this increasing taxes to combat inflation supposed to be long term solution and is its short term problem guaranteed
In the eyes of many MMT promoters, whether one considers taxation theft or not matters little. What matters, in their view again, is that money is eliminated from circulation and as such, there is less of it chasing goods and services. Taxation, from this perspective, can be considered a short or long-term solution, depending on context. Short-term speaking by imposing swift tax hikes when inflation... well, spikes. Long-term speaking by putting together a framework based on how they want inflation to be tackled. There is logic behind this, sure, but all in all, they are underestimating how tricky tackling inflation can get IMO. I concede the point that being more afraid of deflation makes sense, but downright underestimating inflation by potentially bringing a knife to a military-level confrontation is just plain unwise :(
@@OneMinuteEconomics Why is what you say not untrue when you say "What matters, in their view again, is that money is eliminated from circulation and as such, there is less of it chasing goods and services."
Taxation does NOT remove money from the conomy because taxes are re spent by government as part of their budget. It is NOT eliminated. If that were the case the the federal budget would be always in massive deficit and Never could have been in surplus beause the taxes are re spent. The evidence is in the records of the various government budgets. Those records are available online for all to see.
See this for an example of the US Whitehouse historical federal budget records
Hi Rob, think about it from the perspective of a government that tries to tackle rising inflation. Normally, yes, you generate money via taxation and spend it all (plus more, hence today's deficits). But if you wanted to fight inflation, just for the sake of our example, why couldn't you raise money via taxation and simply let it lie dormant? As in, not do anything at all with that money. As an extreme example, you increase taxes to such an extent that you end up with a surplus and then just set all that money aside rather than inject it in the economy through infrastructure spending, wage increases, etc.... I know it sounds crazy given the deficits we keep seeing. But impossible? Nope. Highly, highly unlikely, however.
@@OneMinuteEconomics It would be far better if you end up with a surplus to spend that on eliminating the debt that was created by Treasury buying back some of the Treasury securities. No, it is not impossible at all and has been done in many instances because all Treasuries mature and have to be paid out by taxes.
.
I agree 100% that ending up with a surplus and using it to tackle debt levels would be better. That ship, however, has sailed in my view. Simply put, I do not believe it is possible to "sell" the pain required to get there politically at this point in time :(
Even the US Dollar indirectly relies on the value of other currencies. In order to “work” (and I doubt it would work whatsoever) MMT should be carried out by most if not every country on Earth. If only the economically sovereign countries are able to switch to MMT, the other foreign countries wouldn’t see those currencies as reliable or stable enough to deal with like they do now.
Imagine having an MMT United States and a non-MMT European Union: Euro would immediately outclass USD becoming a much stronger and reliable currency, the US would then lose its economical supremacy and drastically reduce most of its trade relations with other nations, while the EU would increase and empower its own. That would be an economical catastrophe for the USA.
MMT is nothing desirable at all.
In terms of the dovishness trend, are major blocks not aligned policy-wise at the moment of writing?
Do keep in mind that as aggressive as the US has been, the European Union and Japan for example even ventured into marginally negative rate territory :)
Umm your aware that every country that owns their own printing press and has floated their currency (not pegged to another currency) is engaged in MMT. The difference is that they are limited by how much goods/services/debt they need to take on from other currencies.
MMT is not a prescription to do anything, it's simply an explanation of how a fiat currency functions within a nation with monetary sovereignty.
Imagine if the American public understood that Federal taxes don't fund Federal spending?
It would be just like Henry Ford said: revolution before morning.
But that's an interesting point. But almost all countries that issue their own currency are monetarily sovereign, like the EU.
☮️
What do you mean indirectly? That’s its only value.
@@rhetoric5173 the real wealth are resources. The dollar doesn't depend on other currencies. The US is a monetarily sovereign nation that creates its own currency.
The tax obligation (the need to pay taxes and pay them in dollars) is what drives the value of the currency.
Few things are less understood than the modern monetary system.
The Federal government is the CREATOR of the currency. Therefore, they are NOT funded by taxes. Now, States are different because States are like us, USERS of the currency. So State taxes do fund State spending.
But the Federal government just creates its own currency and the reason people accept it is because they can pay their taxes with it.
So when Federal taxes are redeemed, they are deleted.
I know this is very counterintuitive and counter to the narrative lie, but it's the truth.
I'm not here to debate, just to try to spread the truth about how the monetary system really works.
If interested, click the hashtag or read anything by Stephanie Kelton, L. Randall Wray or Warren Mosler. They're all highly educated economist's.
Prof Wray has a PhD.
#learnMMT
MMT is not a theory. It explains how the monetary system works. Congress has the ability to issue currency per the Constitution which is implemented by the Fed/Treasury. Inflation is a concern but it depends upon the productivity capacity of the economy. For example, we need more workers in medicine. The costs is rising. If the government funded schools that could train more doctors, nurses, medical staff, costs should go down.
Areas of the economy need to be funded to make the economy more productive, increasing GDP. Funding childcare, education gives people skills & frees up parents to be in the work force.
What happened with FDR, through the 1960s? Keynesian economics not neoliberalism. Workers prospered and wealth gap was not enormous.
Read Dr. Kelton’s book “The Deficit Myth” for a better understanding.
Hi Sandy, are you willing to entertain the possibility that MMT proponents are wrong about how the monetary system works?
"Modern Monetary Theory is not a Theory".
Wow thanks for the great insight sandy
Your head is stuck in a cloud of fantasy. You are totally wrong when you say " For example, we need more workers in medicine. The costs is rising. If the government funded schools that could train more doctors, nurses, medical staff, costs should go down. ".
The reality is government does not fund anything because government is just a wealth transfer system. It has no money of it's own and the money it spends comes from either one or two sources which is borrowing from the market or borrowing from the Central bank (the Federal Reserve).
The people are the funders of what government spends and pay through taxes for all of it.
You need to look at the historical facts instead of rationalizing things. Your statement about FDR and the 1960's is also pure fantasy not backed by historical facts. FDR borrowed and taxed to fund his new deal which resulted in the longest and most severe depression in history. Depression unemployment was higher and longer and rose to over 20% with FDR's new deal. It was twice the level of the few years before he came to power.
Kelton's book is just rubbish that is contrary to fact and contray to the historical mathematics. Her statemets like taxes being destroyedand not funding spending is just total lies.
If you disagree then explain how US government spending between 2010 and 2020 was over 30 trillion but over that time the national debt ( the sum of all spending as she often says) only increased by about 10 trillion.
But of course you and she can't because it shows that pivotal MMT claim to be false.
@@OneMinuteEconomics "MMT proponents" are wrong or MMT is wrong? There's a difference.
Lots of people who are "gravity theory proponents" are wrong about how physics works but Newton's theory of gravity* and Einstein's theory of general relativity accurately describe reality
If we are going by the constitution then we should have never gotten off the Gold standard. We experiencing high inflation right now if we raised taxes people would have even less MMT is a disaster. I’m order for currency to be respected it needs to have real value mmt will make people realize that indeed paper money has no value.
Great video my friend
Thank you, really appreciate the support! :)
Won't high taxes disincentivise people to work and cause supply to decrease causing prices to rise and GDP to fall? And how about the Laffer curve?
Shhhhh... 'tis sinful to state anything that doesn't subscribe to the "MMT has it all figured out, there is something wrong with you if you don't get it" mantra :(
Who said anything about high taxes?
@@OneMinuteEconomics your response is disgusting and shows your lack of actual understanding of MMT.
There are many taxes besides income tax. "Raising taxes" doesn't require income taxes to be raised. It could be a sales tax, a carbon tax, hell it could be a poor tax or a yacht tax. Depends on what your goals are.
Just because it’s working short term doesn’t mean it will long term. No such thing as a free lunch.
Examples of "miracle fixes" that worked short-term speaking but ultimately failed do indeed abound unfortunately :(
The whole point of monopolising government contracts is to ensure free lunches for the privilaged classes indefinitely.
. . .short term has been working for 75 years.
Nice that you use the hillbilly "got me a theory" dictionary definition #5 as a slight. Adds credibility to your argument...not.
What a maroon bootliquor.
Funny, but Billionaires getting tax breaks have had a "free lunch" forever. Same with the Defense budget. Nice try.
This video does a horrible job at explaining what MMT is. MMT is literally how our economy works at a macroeconomic level. The ideas introduced by people who understand MMT aren't MMT itself. MMT just explains how our fiat monetary system actually works.
Soooo.. what is it?
It just is, David. Just like all of us :D
The definition of MMT is missing in your video!
Did my best to organize this video in a manner conducive to helping as many viewers "get" what MMT is all about. There is a fair bit of demand here, so it definitely won't be my only vid. If you have suggestions for future videos, topics or otherwise, please let me know and I'll do my best to incorporate them
Raise Federal taxes - solve the inflation problem by removing dollars from the economy.
Wait - what?
If taxes are not collected to be spent, then why are they collected at all?
That's the idea in the modern day. Taxation isn't to raise funds, it's to create scarcity and keep the dollar valuable.
Proponents of MMT would say this is why deficits don't really matter. What matters in the end is keeping inflation at a reasonable level.
@@CplHenderson is there any country which already implement this kind of policy?
@@honor9lite1337 It's called the United States. Or do youi think the defense budget is all paid for?
I think it will still increases the general demand for dollars, which will help against inflation.
@@qudizzle1 More rubbish that defies reality. Taxes never increased the demand for money or made it valuable and the evidence is in all of the countries where inflation caused the money to become worthless despite taxes. Even their own governments dumped their money in favour of some other country's money.
The artificial creation of money by any entity creates distortions in the pricing mechanism that, in turn, cause the misallocation of resources. Inflation does not represent the problem. Disrupting the normal process of exchange causes extreme fluctuations in the market and all the problems that MMT claims to control.
Couldn't the same be said about taxation, though? Based on your username, I believe you'd opt for an Austrian model, correct?
@@OneMinuteEconomics Correct. Taxation distorts resource allocation. This video, however, was only about money, which has a more insidious influence. Money expansion causes market participants to "steal" from each other.
The main claim of mmt (at least stephanie kelton) is that "the only thing to worry about is _inflation_ when expanding the money supply"
Which is simply not true.
Cheap credit misallocates resources to undemanded/lesser demanded ventures, & at the same time as higher order production (thereby distorting our time preference/the structure of production). Monetary expansion also creates a dependency on continuous overvaluations. Not to mention distorts price signals, because of relative price stickiness, unequal velocity within different sectors, circular demand within scarce demanded goods (assets), & the cantillon effect (which outpaces wages). Speculation also increases as lesser educated consumers spend & borrow, thereby exacerbating volatility & the misallocation of resources.
When these ever-growing malinvestments inevitably must end, & the spigots of cheap credit are cut, a _'deflationary death spiral'_ must ensue.
You *have to* allow resources to be freed up, consumption to be detered, & then properly allocate them to where they're demanded. If not, you're only exacerbating the inevitable.
Market set interest rates & a scarce divisible currency naturally fix this. Lenders & borrowers must compete for *scarce* savings. Through sound credit standards, based on proper price signals, these funds are allocated to demanded ventures. In direct proportion to how demanded they are & how much consumption is detered through saving. Since there's no inflationary effects, our time preference of consumption & production is balanced, thereby allowing projects to reach their full potential.
Artificially cheap inflationary credit interferes with needed corrections & exacerbates structural issues. We need to raise rates (default if need be) & let the market properly restructure.
Building up our productive capacity is the only way to viably get demanded goods & services.
*There's no shortcut.*
Mmters also define 'inflation' differently, which leads to a lot of confusion in the debate over their stupid policies. They define it as the *cpi,* & a *terrible* measure of it at that. There's obvious problems with this, as different (numerical) prices can be affected differently by monetary expansion. Prices could drop, rise, or stay in various sectors. What you're not factoring in is *opportunity cost & foreign investment.*
Prices would've been lower had we not intervened. Foreigners finance our reckless spending. We get most of our produce from imports & don't produce much of anything, especially that the world demands. Nor do we have any plan to in the future. Our trade & budget deficit is only going up.
In other words, our entire economy is a bubble built on inflationary credit, at the world's expense, & we have no surplus coming anytime soon.
The world would abandon us...if their job markets weren't built on fueling consumption. Plus they have a huge amount of public & private dollar-denominated debt, & will get sanctioned out of the global economy if they don't comply with the US's wishes. That or we pull Bush & invade in the name of _'fweedom'._ It's a global monetary order that should break down. Since it's conception real wages have relatively stagnated, productivity has worsened, & the only way out of further global deterioration is to swallow the painful medicine of a credit crunch & freer markets.
The longer we wait, the harder it will be to correct these malinvestments & put us on a better path.
If you don't mind I'm going to ask a few questions and challenge your response.
_"Cheap credit misallocates resources to undemanded/lesser demanded ventures"_
So I'm clear, when you say "misallocate", I take that as meaning that resources have uses and the "free market" is best as determining their use by some unspoken but understood priority.
For example, if a community needed resources to make piping to deliver water, but instead the resources for those pipes were diverted to make a water park instead because political policies drive the decision here, not the "free market".
Is that a fair assessment?
_"Monetary expansion also creates a dependency on continuous overvaluations."_
Like housing?
Is this something you think won't happen in a "free market"?
_"When these ever-growing malinvestments inevitably must end, & the spigots of cheap credit are cut, a 'deflationary death spiral' must ensue. "_
Why?
_"Lenders & borrowers must compete for scarce savings."_
But loans aren't determined by savings (aka reserves), loans are constrained _only_ by capital and the wiliness of a borrower to pay whatever price is set (the interest rate), in the case of the US by the FED, to borrow. The Interest rate has nothing to do with the availability of reserves. If that we're true, the US interest rate would be zero for the foreseeable future because of the massive availability of reserves.
_"Mmters also define 'inflation' differently, which leads to a lot of confusion in the debate over their stupid policies."_
I believe that Austrians define inflation as:
"any increase in the money supply not supported by an increase in the production of goods and services leads to an increase in prices, but the prices of all goods do not increase simultaneously."
But here is my question in response.
What happens when the potential capacity to create output (labor) is increased without a corresponding increase in demand? There are a net ~150k net new workers that enter the job market each month in the US (population increases). When you add to that the effect of technology (the capacity to do more work with fewer people, the effect is compounded.
Unemployment. When the supply of workers increases without an equal increase in jobs to support them, the price of labor falls. That is, supply of labor increases but demand stays the same, price falls. This will drag down wages for everyone (well, for most people, there are some that make more money when the price of labor declines).
Assuming a reasonably fair market:
Inflation is an increase in the general price level
Inflation happens when demand exceeds supply
_"Prices would've been lower had we not intervened."_
Case-in-point, wages are a price. So if that's true, wages will also fall. Lending evidence to the idea that there is no "right price" or "right wage", there are only wages relative to prices.
If I'm wrong, explain to me why it matters if I work 160 hours a month to pay my bills (home, car, utilities ect) and I make $500 or $5000 a month as long as my bills are the same in relative terms, why does it matter? Or does it?
_"Foreigners finance our reckless spending."_
Are we still on "what MMT'ers believe? Because if so, this is not what MMT'ers believe. Foreigners purchase Treasuries. The US does not ask for money, it does not fill out a form at the bank of China or Japan. The US sells treasuries because China and Japan not only want them, they _need_ them. I'm often baffled at how people misrepresent the situation of foreign trade deficits and what it means.
As far as "reckless spending", are we talking about reckless from a policy point of view? If so, that's a political issue, not an economic one.
_"In other words, our entire economy is a bubble built on inflationary credit, at the world's expense, & we have no surplus coming anytime soon."_
All that so-called "credit" purchased something, didn't it? I mean, switching here to an intuitive example, a business can be in debt and still make a profit, right?
In the government's case, it's not the government that makes the profits, it's the people. So we need to look at the government's debts vs the private sectors assets. If the private sector has greater assets, then in the net, that's a good thing, right?
The debt clock, here: www.usdebtclock.org, shows a national debt of $30 trillion (of which about $9 trillion the government owes to itself, so really it's about $21 trillion in real terms). Now let's look at the private sector assets:
$194 trillion! That's pretty good, even if you subtract out private sector debt of what? $45 trillion?
I'd say that's a won when looked at from a 10,000ft view.
Now if you want to focus in closer and look at how the wealth is distributed, then maybe, we could agree there are problems.
_"The world would abandon us...if their job markets weren't built on fueling consumption."_
By "abandon" you mean utterly collapse? In real terms what China and the US are trading are:
US wants low prices
China, Japan, Brazil, India ect want low unemployment.
Stop buying US bonds and it all collapses, the US will see MUCH higher prices, the nations that have a high trade deficit will see catastrophic levels of unemployment. Which is why China and other adversarial nations to the US NEVER threaten not to buy US treasuries. They cannot weaponize debt purchases because they can't
@alueshen Your first question is a fair assessment. Cheap credit diverts land, labor, & capital towards more ventures, & all at the same time. This inherently distorts the time structure of production, & spreads ourselves thin across undemanded/lesser demanded projects.
For your second question, yes, like housing. It's artificially appreciated through inflation. Specifically circular demand sparked by cheap credit. This wouldn't happen in a free market. When savings is profitable, asset flipping falls through the floor. It offers consumers an alternative to everything. A safe haven. Everything becomes more elastic to consumer demands.
If the price of housing is being bid up by speculative borrowers &/or flippers, then buyers will stop buying & hold appreciating currency. They'd also rent, move away, & less people would come to the country, as the price of housing is artificially high. Those savings are then lent out, but because consumers have stopped buying, then lenders don't lend into housing. Its demand has fallen, is purely built on speculation, & other sectors are now more appealing. Funds are allocated elsewhere to actually demanded sectors, which draws away the speculative asset flippers.
The ones who stay face the 'greater fool' scenario, & are quickly punished. Under a scarce currency lenders & borrowers don't want to waste their time in a gambling game. Inflation creates artificial demand, which perpetuates & exacerbates the bubble.
I don't quite understand your third question. Even mmters know sucking liquidity out of the system causes a 'deflationary death spiral'. That term was actually coined by keynes. What we disagree about is whether this (painful) credit crunch is good or bad. I, & other austrian economists, say it's good. The malinvestments dependant upon this artificially high spending *should fail.* They should be liquidated. Real savings, where we deter consumption, should be built up.
For your last question I can tell you didn't read that part of my comment. I know that (under our current system) lenders don't have to compete for scarce savings. They lend money into existence.
I was saying that lenders *should* have to compete for scarce savings. That would be preferable.
@@austinbyrd4164
"Your first question is a fair assessment. Cheap credit diverts land, labor, & capital towards more ventures, & all at the same time. This inherently distorts the time structure of production, & spreads ourselves thin across undemanded/lesser demanded projects. "
If that's true, won't the market sort that out?
Take my example, if a water park is built, but the water to fill it isn't, wouldn't the price or unavailability of water cause the park to close?
Now I know this is a hypothetical, but it's intended as a metaphor. That said, don't investors in these projects, as most large projects aren't financed by banks giving loans, but institutional and private investment, vet these sorts of things? isn't this where the "markets discipline" comes in? Risk tolerance?
Therefore, I don't think it's simply rates that determine the strength of our fanatical structure, but the underlying risk assessment that is pivotal. This is, IMO, what happened in 2008. It wasn't so-called, easy credit, that caused the collapse, it was a fundamental mismanagement of risk, but both the government but probably more so, the private sector.
_"For your second question, yes, like housing. It's artificially appreciated through inflation."_
I won't deny there is an aspect of the easy attainability of credit that plays a role. That said, I'd put the onus on the investor to create and follow a risk formula, not rely on the capricious whims of individual borrowers, to determine the risk structure of our financial institutions. Regardless if if interest rates are zero or 20%.
Further, I'd point out that higher interest rates have a net neutral effect (at best) on the amount of money being generated in the overall economy. Think about it. While the cost of borrowing increases discouraging borrowing, especially in the lower half of wage earners, at the same time, higher rates encourage people to move out of productive investments and flee to zero risk bonds. So now, higher rates discourage real investment and the government pays higher rates to those people that hold bonds , usually the upper half of the income earners. So while you want rates to discourage real purchases which slows real output, at the same time on the investor side people are paid higher "rent" for simply holding government bonds. So your decreasing income to the lower half of the economy and increasing it on the upper half?
That's not a solution.
I'd point the finger at the accumulation of wealth. Hedge funds and private equity firms controlling 100's of billions or even 10's of trillions of dollars can have disproportionate effects in all sorts of markets though speculation. When average people cannot afford to purchase their home (or profit from speculation), they cannot amass wealth (as home purchases are overwhelming way the lower half of the income earning population creates wealth). I read a paper the other day, and I wish I could remember what it was or I'd share it, that claimed that the recent shortage of microchips, while real, was grossly exacerbated by global hedge funds, buying up supply in order to increase shortages and prices so they could profit. Indeed, Samsung CEO stated that they knew the production level of their chips and what was making it to the end users, in other words, some percentage of chips were not making it to their intended uses, rather profiteers are using absurd sums of money to interfere in a supply chain, that's stretched to it's limits.
I'd argue that this sort of profiteering was happening in the global space where laws are minimal and the so called "free market" is really just a euphemism for "lawless market".
Now in finishing, don't misunderstand me. I think capitalism is the greatest invention in human history (well, that and chocolate), but like anything, it can be taken to extremes and it needs to constrained within a cultural, political and moral framework and I think Austrians, taken as a whole, tend to believe that market solutions result in better overall outcomes by definition (rather than consideration of the cultural and moral constraints I spoke of). I think there are countless examples of where market forces don't tend toward better human outcomes and unnecessarily constrain productivity and cause unnecessary unemployment.
So where you see misallocation of resources, I see unnecessary waste of real potential productivity. We can agree that capital and investment can be wasted, but that seems to me to be a flaw in the institution of the market structure we've created rather than a wholesale indictment of the system as a whole.
"_I was saying that lenders should have to compete for scarce savings. That would be preferable."_
Fair enough, the problem with that is unemployment.
Respectfully,
Chris
Why tax incomes if you can just print money?
Because governments need to fulfill their tradition of stealing from the public.
Taxes are the glue that keep Canada's sovereignty! Use the budget as the tool to balance the economy, remember the debt is only one part of the economy as a whole!
To cool the heated up inflationary economy! Tax back and pay the interest on the debt!
What is the annual cost of the debt in interest? $24 billion? Less than 1,000 lobbyist, and their corporate welfare bums!
@@kaaijer Is that all you know?
It's yet another tool in your arsenal. From the perspective of MMT, it is in many ways *the* tool in terms of curbing inflation, should it become problematic
@@OneMinuteEconomics
I'm not an economist but I played one on TV!
Wouldn't taxing the money recirculate the money back into the economy after the government pays for things with those taxes??
You tax it, it's yours and thus, you get to decide how to use the amounts in question. With there being a distinct possibility that in a scenario involving problematically high inflation, said money would be deployed differently than let's say today :)
The government doesn't pay for anything with taxes. Taxation simply subtracts dollars from circulation, helping to prevent an oversupply of money for instance. Spending works by the Treasury authorising the Reserve to mark up the correct accounts using purely digital currency. This is why taxation is completely irrelevant to spending. It isn't even used for it in the first place. Taxed money doesn't go into some savings account for the government, as the government doesn't need its own money back, instead it's simply removed from the system.
@@FriendOfN0ne so how do government employees get paid?
@@westg463 They credit the right accounts....
@@FriendOfN0ne wouldn’t the government employees be spending the credit into the economy
what is MMT's solution to stagflation?
Brrrrrrr (print) the stag problem away, tax if/when inflation, heh
@@OneMinuteEconomics And staagflation has happened how many times in US history? Just don't have another Yom Kippur war.
I'm new UA-camr from India, when I created my channel few days ago I didn't know that someone has already created a channel on the same idea but now when I know that you're not only doing the same idea but doing it greatly, I want you to help me in growing my channel. Would you help me ?
Nixon called, he wants his gold back
Does he accept asteroid mining coupons? :D
I'm sure you are aware of the calls for a wealth tax, as I understand a tax on the net worth of the super rich. According to MMT, would there be any point in this? As it would mean the treasury would receive, for example, £10bn of stagnant money which was essentially sitting there doing nothing, which they can now inject into the economy and spend on public services. Would I be right in saying that according to MMT, the CB / govt could conjure up this 10bn into existence without a wealth tax and inject it into the economy, and the inflationary pressure caused by this injection would be the same since, in the case of the wealth tax, the money was just sat there doing nothing? Thanks and I hope my question made sense 😂
Don't forget about the idea of raising taxes as primarily an inflation reduction tool rather than let's say an approach toward funding public works, for which MMT believes there are better solutions
@@OneMinuteEconomics my point is that, say a 1% tax on the wealth of billionaires would surely have barely any impact on inflation, so would the wealth tax have any use?
It also rely on the dollar being backed by a dominant US military.
Can't argue with that :P
Tell 1935 Germany that MMT is just a theory.
I'm sometimes tempted to also call it a promising cult :P
That was a very poor explanation. You didn't even cover taxes thru the MMT lens (Federal taxes don't fund Federal spending) and the only thing theoretical about MMT are its possible applications, like the Federal Jobs Guarantee, which should be separated from the non theoretical explanation MMT provides of how a fiat currency functions within a nation with monetary sovereignty.
Only so much you can do through just one video. If I garner enough productivity momentum to publish a lot more frequently on the channel (hope so), a MMT mini-series is coming. Can't make any promises though because life can get in the way :(
You don’t understand MMT. Why didn’t you point out the job guarantee as the primary way of controlling inflation instead of saying it was taxation etc?
I should get in touch with a bunch of econ creators and play a game: we all publish videos about MMT and "sin" by not portraying it as pure perfection, then do a pushup for every "you just don't understand MMT" comment :)
@@OneMinuteEconomics or you could just spend a few minutes understanding the basics. If I can do it - so can you. You’re either too lazy & incompetent or you’ve got underhand motives for misrepresenting it so badly…which is it?
TWO MINUTES. Not one minute.
I beg to differ... even 1:59 is still ONE minute and fifty-nine seconds. Anything over 1:59 and you'd be right, though :P
@@OneMinuteEconomics can you lend me a thousand dollars? $1,999 will be great, I'll give you $1,000 back. Many thanks!
one word argentina
:(
You should make a video on why deficits and the national debt do matter, contrary to popular belief. At this point in the u.s. economy, you cannot have economic growth, real gdp go up without either the private debt to gdp ratio going up or public debt to gdp ratio going up or both. People mistakenly believe that the treasury/federal reserve can just “print more money” without really understanding what that is. Only gdp revenue pays off existing debt. These ratios cannot go up forever and when they do hit the peak, the u.s. will go through a deleveraging economic depression which will be catastrophic.
Hi John, I have an entire playlist dedicated to debt, would recommend checking it out when you get a chance to:
ua-cam.com/play/PLhICud5IUwViQHrsd--zp3dx68Ko9ldnh.html
@@OneMinuteEconomics thanks. But do you mind if I ask do you agree that deficits and debt do matter?
I wholeheartedly agree :)
@@OneMinuteEconomics one last question if you don’t mind and then I promise I’ll stop. Is it possible for the United States to default on its public national debt? If the answer is yes, do you think this is going to happen? Thanks.
Yep, it's possible. But probable? No. If I were to guess, in the spirit of speculation of course, I'd say a far more probable scenario would revolve around inflating it away. Perhaps thinkers smarter than myself have more compelling deflationary scenarios in mind. But I, for one, find it difficult to envision anything other than an inflationary future. Not "everyone run, hyperinflation tomorrow" but rather increasingly problematic inflation problems
So, hyperinflation?
I'd say more so problematically high inflation, not hyperinflation
@@OneMinuteEconomics
This guy might argue differently.
ua-cam.com/video/mAcrqFcEAos/v-deo.html
Everyone has the right to an opinion. But please understand that it would be historically unprecedented for let's say the United States to be brought by its knees by hyperinflation. Impossible? No. But in my opinion, improbable. For the most part, countries that experience hyperinflation had already been brought to their knees by other factors prior to becoming hyperinflation candidates. From losing WWI in Germany's case to chronic/structural weakness like with Zimbabwe. But to go from strong economy (still the world's #1 economy) to hyperinflation... unprecedented indeed. Thus, I'd happily take the other side of hyperinflation bets involving the US, today's Germany or any other economy that is currently strong.
Seems like a recipe for disaster.
It isn't difficult to envision scenarios where this could go epically wrong :(
@@OneMinuteEconomics such as specific like?
As mentioned in another comment that I've published today, I have no specifics to put on the table. Simply put, we do not know what forces these policies can unleash. With inflationary forces obviously being on people's mind. Is it difficult to envision scenarios where inflation spirals out of control? No. But this doesn't mean it's guaranteed to happen. At this point, we just do not know.
As others have said: MMT accurately describes the way the modern monetary system operates. What’s been taught in university economics degrees has been inaccurate or negligent due to omissions. That’s deeply concerning. You should lead with that.
Under which circumstances would you be willing to agree you are wrong? In other words, what would it take for you to change your opinion and say that MMT does not accurately describe the manner in which today's monetary system operates?
@@OneMinuteEconomics Evidence. I haven’t seen any that suggests otherwise. Do you have any? I’m talking about an accurate description of how money is created, flows through the economy & gets destroyed. Which bit does MMT get wrong?
MMT is not coming... its already here. I would argue its been here for a long time.
I tend to agree it's already here in certain ways, so with the first part of your statement. I disagree that it's been here for a long time though
@@OneMinuteEconomics MMT is two things. Personally I am not a fan of the name. Mainly because of the fact that it is two things. There is a description about how Govt Open Market operations occurs. Then there are a set of policy proposals born from the observation of that description. I agree that the police proposals have not been tested at least in modernity that I could point to. However, I believe government representatives at least in the US are willing to leverage MMT when it comes to their pet projects, while actively working to keep people from understanding that is how the country works.
To once again disagree with the final part of your statement (heh), I don't necessarily think they will do everything they can to keep people from understanding how things stand. I do agree with everything else, however. The fact that the proverbial stars are aligned to enough of a degree for us to see large-scale tests with respect to MMT policies sooner rather than later. Let's be honest, it's difficult to "sell" almost anything else atm :(
@@OneMinuteEconomics I agree that the last part of my response is a bit tin foil hattish. Do I believe every elected representative behaves as described no. I do think there is a spectrum. I think there are those who dont beleive at all. I think there are those that have seen behind the proverbial looking glass and due to their ideological belief around governments working like households and businesses they are in varying states of shock and denial. I also think there are those that are aware and see it as an opportunity to win relection as long as they keep the masses uninformed.
How many people belong in each I could not say. But I would point to the afghanistan war costs as support. Doesnt mean I didnt support the justification for the war starting the way it did. But what MAKES ZERO SENSE. Is no real concerted effort was made to standup a mining industry that would have provided economic justification for long term american support. While providing a source of labor away from the afghanistan poppy fields. in my mind that didnt happen because from the American perspective America didnt need it. the 20 Trillion spent was spent within the american economy.
We could go way back to world war 1 to find the US govt taking advantage of their right as currency issuer and ability to tax citizens to spend way beyond what the budgeting narrative would have you believe. Same goes for World War 2.
Its why I think a line needs to be drawn between how government market operations work and the policy prescriptions. Because the policies being prescribed by MMT'ers today are not the only possible policies.
MMTers cringing when hear it described as just a "theory". *screaming* "NO ITS A DESCRIPTION OF THE ACTUAL STATE OF AFFAIRS RE MONEY SYSTEMS WTF AHHHHHHH"
You forgot about the "you don't get it" part whenever someone makes a statement even remotely in the realm of not even criticism but just genuine intellectual curiosity that doesn't involve cheerleading :(
@@OneMinuteEconomics You don't actually "get it" at all which is evident in your MMT beliefs.
No, YOU don't get it. Ha.
Hmmm...all I heard was a bunch of questions...what I didn't hear was an answer tot he question "explained in one minute".
What question? :P
@@OneMinuteEconomics the bit at the end of my note in quotes
MMT More Money Today!
... but not *only* today! ;)
@@OneMinuteEconomics More Money Tomorrow 🤔
If the government can print unlimited amounts of money, why are we paying taxes?
Hi Frank. It's central banks that proverbially print money, not governments. Why pay taxes? Another tool in the arsenal. In the context of MMT, taxation is considered the number one game in town with respect to action that can be taken if inflation becomes problematic precisely due to said money printing.
In other words, taxation is the opposite of printing money. Print money to pay for things. Pay taxes to burn excess money in the economy. When too much money is being exchanged in the economy, you get inflation.
Dollar will become a shitcoin
It already is
Bitcoin has no sovereignty!
@@cdncrooner1 go read the sovereign individual!
@@BatmanBoss You tell me.
More than 100,000 cryptocurrency holders have learned a hard lesson in finality, after the 30-year-old CEO of a major Canadian exchange died, effectively freezing the company’s assets.
A Crypto Exchange CEO Dies-With the Only Key to $137 Million
Customers of QuadrigaCX are out as much as $190 million after CEO Gerry Cotten died;
@@cdncrooner1 it makes us all sovereign individuals
explained? what is explained? complained?
MMT explained in one second :- - 'Complete total Rubbish !'
Issuing bonds is how the government creates money... At least where I'm from in Canada... The central bank could only claim its independency if there were some reason for them to reject free money from the government... It's a great illusion of independence for those who should still be in the fourth grade, which unfortunately is most of us...
MMT economics equals the Idi Amin Dada (former Dictator President of Uganda in the 1970's) school of money mismanagement who when told the Treasury had run out of money replied to his Treasury officials telling them they were all stupid because they could print more money to spend which they did. It all ended very badly with massive inflation and loss of GDP then a loss of his presidency and being kicked out of his own country.
One important aspect, though: there is multiple orders of magnitude more demand for US dollars, so the comparison is definitely not an apples to apples one :)
@@OneMinuteEconomics It is an aspect of huge consequences because all prices are the mathematically determined relationship between the availabe money people are willing to put on something and what people consider the value of most things at any specific time.
@@OneMinuteEconomics Appearances are deceptive and that is often the case in financial matters.
The comparison of one nation's currency or present financial position to another toady is irrelevant as far as economic theory is concerned because an economic theory is not something that only applies to one country or number of countries.
The currency of many countries have like the U.S. today been world reserve currency at times so it is not an exclusive right that gives theory exclusivity over any time or a country a continuing exclusive right if that is assumed to be a permanent feature over time.
So to be purely unbiased one must take all of these factors into consideration before making any analysis of the situation that is economics or finance. That bias includes drawing conclusions from biased opinions or ones that are shown to be false on historical grounds or in fact just incorrect today when ther is higher grade information that shows the assumption or part of the theory that is being put is wrong. .
Many of MMT's theory is simply wrong for various reasons including present factually wrong information or historically wrong information or information that is put across by confusion of terminology.
This is their way of explaining to us the country is totally bankrupt.
Bankruptcy has been outlawed in this new paradigm :P
In order for MMT to work it needs a couple of things :
1. Extremly more formality in economy
2. Extremly more bureaucracy to guarantee formality
3. Extremly more data analytics and trafic information to guarantee bureaucracy
4. Artificial inteligence to analise data ( couse human resources cant at this level )
5. All this leads to FED regulating the taxes not the goverment to control inflation and the Banks acting as FED to decide who is going to take a loan.
6. Who takes a loan acording to a business plan and accomplish it 100% or more is not going to pay back the loan
7. Who takes a loan and fail to accomplish it totaly will be immediately closed
8. The data analytics its enormous and the most likely MMT can be applied is the State and Enterprenours ( in order for MMT to be applied in consumers it need an insane amount of data to be analised by AI )
9. Wages can be controled thrugh indexing monthly 😁 ( means you may take a diffrent wage evry month but with the same purchaseing power )
Ps. its welfare that drives the system to be pushed to its limits and print money and couse inflation etc etc.
Not going to lie, imagining this scenario kind of gave me goosebumps :)
We are so fucked
Fear is the #1 tool to divide and control!
It can get a lot worse, but I'd say we definitely have valid reasons to pay close attention to what's happening around us. (Much) More so than in the recent past.
@@OneMinuteEconomics i agree, we need to keep our eyes wide open
At some point in the not too distant future, we will realise that MMT was flawed and revert back to the gold standard.
Why not go back to tally sticks? So you know? Well talk is cheap, how is MMT flawed?
Even if we do end up switching to a system that somehow keeps money creation in check, I'm not sure the gold standard would be the first choice. At least not exclusively. My best guess is that it would be a hybrid system involving a basket of assets.
@@cdncrooner1 MMT is flawed in that it assumes that it can pay an accurate price for labour to get rid of excess capacity. Basically they want to print money to hire workers (100% employment promise) that will produce as much or more productivity than they consume (via inflation tax). Obviously, virtually no government agencies or employees have a net positive in terms of cost vs productivity (hence why communism fails), so the 100% employment guarantee will result in a net loss of productivity for the nation, and worst case scenario it will cause collapse of the currency. Its just another way of forcing more of the private sector to subsidize unproductive industries and employees, but done more sneakily by robbing purchasing power from productive private enterprises.
@@4biFarm Funny, butJapan has almost 100% employment: www.washingtonpost.com/news/wonk/wp/2017/05/16/how-japan-proved-printing-money-can-be-a-great-idea/
@Hakim Habib when the central bank owns the bonds, the government just pays the interest to the state (the central Bank gives the interest back to the government), when banks keep the bonds they can make some profit with it and the state can pay the interest by selling bonds. Once (almost) everyone has a job (because companys need to produce more when people have more money to buy stuff, which means companys need more employees) the government can pay back some debt with taxes but should keep spending enough to keep enough money for everyone in the economy.
Higher interest rates are not a problem in MMT.
Bitcoin fixes this ⚡️
MMT: Create as much money as desired or needed to put into the economy (pay for things). Tax as necessary (removing money from the economy) to combat inflation.
So, if a government puts more in than they take out, that will cause inflation, so MMT says increasing taxes will correct that. The end result seems to be the exact same thing as looking at the federal budget in traditional economic theory.
MMT sounds like magical thinking to me. The same real consequences of injecting (spending) more money than you remove (taxing) still apply. If you inject more than you remove, inflation happens. If you remove more than you inject, deflation happens.
One of the things that scares me here is the "illusion of control" dimension. Overestimating the extent to which you can control this or that. For example, just look at how difficult it has been for central banks to spur meaningful inflation. Not talking about the present, rather the post-Great-Recession framework. Seeing how convinced MMT proponents are of various statements gives me goosebumps on occasion. Not because they can't be right, maybe they will be. But the conviction... let's just say I tend to be extra-careful whenever I come across economists who "just know" and to whom it's all obvious. Very few things that matter are obvious in economics :(
@@OneMinuteEconomics Agreed. Some do seem overly-confident that MMT is some sort of magic bullet solution or theory to base policy on. Having learned more about MMT (and macro-economics in general) recently, I am slightly less concerned about having a yearly deficit, but that doesn't mean having a deficit is something we can simply ignore, which many MMT proponents seem to suggest. I am however, still concerned with the amount of *debt* owed to foreign countries and to our own citizens.
MMt is just rubbish. It fantasizes about what money is, It makes absurd claims like saying Taxes drive value into money when they failed to do so in every country where inflation led to valueless currency.
They claim government deficits are a saving for the private sector because money flows into the private sector when the reality is the private sector incurs a liability to pay off the deficits when the treasuries that were sold to fund it mature and have to be paid out by the private sector.
They misrepresent the money creation process and say government creates all of the money when the reality is private banks create most of the money.
They confuse terminologies and use terms in an inconsistent manner.
Printing spigot will never be shut off.
@@GoodmanMIke59 Of course not because politicians wil tell and promote any lie or play any hypocritical game to get into power or stay there.
No its NOT a theory, its an accurate portrayal of money at the macro level.
My question would be this: who gets to provide the "accurate" verdict and based on what criteria?
@@OneMinuteEconomics money is based on man-made rules and laws - not laws of nature. The law most relevant to MMT is that a government has a power to print sovereign money. Everything else in MMT is a logical extension from that fact. You can argue/debate/quibble over the details of this logic, but it doesn't change the core and critical fact of sovereign currency creation which is 99% of the 'theory'.
The ability to print sovereign money? Sure, nothing to comment here. But the consequences of the various forms of action you undertake? Faaaar more difficult to meaningfully understand and here is where we will have to agree to disagree, as any attempt to paint the picture of "MMT has it all figured out" in this department is excessively optimistic in my view. MMT or any other current, for that matter :(
It’s literally doesn’t explain anything…
It’s using a lot of words and not making anything clear whatsoever.
Sorry you didn't like it Dave, is there anything specific you'd like me to address through perhaps a future video?
@@OneMinuteEconomics sorry if I came across as rude and I appreciate your kind response…
I guess I was just looking more for in overall explanation of what it is in a clear and concise way.
I guess I still feel like I don’t know what it is…does that make sense?
It's one of those topics that tends to be so "fuzzy" that let's say "nailing it" in terms of a simple explanation is easier said than done. There seems to be a lot of interest in MMT, so I think the best approach would involve a mini-series, hope I can publish one a little later this year
This idea is incredibly stupid
I would not call it that. Instead, I believes it has the potential of being anything from brilliant to destructive. The fact that MMT proponents consider the former a given and aren't the list bit willing to even accept the latter as a possibility in many cases... well, scares me, quite frankly
@@OneMinuteEconomics it's not brillant, printing money like that generates inflation and that's a fact, it's not an opinion, and I call who don't believe that economic deniers
I believe inflation represents the most probable outcome, not hyperinflation overnight and other doom and gloom scenarios, but problematic inflation nonetheless. Still, I am more than willing to accept the possibility that I am wrong and that MMT does prove to be game-changing and brilliant. Just trying to deploy intellectual honesty :)
@@rodrigogomes4677 nope - because you use taxation to remove the excess - it's really not that difficult and it's already used to fluff the rich ... you all don't realize this do you?
Ask argentina if works
To be fair, Argentina was and is in a completely different situation. Let's not forget, for example, how Argentina got in trouble with a debt to GDP level well below that of more developed nations.
Argentina fixed their exchange rate and took on massive foreign debt. MMT would imply a debt default based on those fundamentals.
@@OneMinuteEconomics But what about the exchange rate for countries that need dollars to import?
MMT seems to work well in the USA, which has the dollar as the international currency (not exactly, but is ..)
MMT explained in one second :- RUBBISH !
Quite harsh, heh. Do you believe nothing exists in the way of merits?
@@OneMinuteEconomics MMT has no merits. It is full of contraditctions and false assumptions.
@@Rob-fx2dw such as…?
@@Hmza92 Lets just start with a simple straight forward example of a big ticket item about government federal deficit spending.
MMT, including Kleton, says the national debt does Not have to be paid off. That is totally incorrect because the Treasury bonds and notes that were sold to investors and which comprise it actually all mature in times ranging from a few months to 30 years. They have to be paid out with interest and the source of funds to pay are taxes which area drain on people's s wealth.
Another example is the belief that all money comes from the government. This is false since most of the money in the economy is created by private bank lending. MMT (Mosler and Kelton ) falsely claims private banks are agents of government. Such an utterly absurd claim based either on the ignorance of whoever stated it (Mosler) or their dishonesty in perpetuating the claim. Private banks are purely private entities who operate on the profit basis and employ private people to run them. They are not agents in any real sense since agency is an operation defined by law that relates to entities who do not produce the goods they create but merely act as an intermediary while private banks actually produce more fiat credit money and take the risk of losses for those loans whish they arrange for their borrowers..
To say the private banks are agents is totally wrong and rather like saying a private driver is an agent of government because they have a driver's license or a license to have a firearm. It is a totally absurd distortion of the facts concocted to deceive..
@@Rob-fx2dw You deserved at least one thumbs up. What your antagonists won't admit in a public forum is that a majority of them don't believe in private banks, or certain people, having such private wealth. Heaven forbid they don't get their covid checks mind you. MMT is just more of the same neo-marxist, progressive, John-Lennon-Imagine, reshaping the world prop. It's alarming because it's coming closer to reality "You will own nothing, but be happy. You will lack for nothing, for you will be nothing. You silly cog, you dumb sheep" -a very slight paraphrasing from the recent World Economic Forum.
You most definitely need to conduct extensive research regarding Modern Monetary Theory, or your sources are flawed. Our U.S. Congress has full power of the purse pursuant to Article 1 Section 8 of our U.S. Constitution. As such, under the law, the Federal Reserve must comply with Congress' monetary instructions. Delete this erroneous video and try again.
Hi Mary, which specific clause(s) of Section 8 are you referring to? And based on which interpretation thereof have you articulated your viewpoint?
@@OneMinuteEconomics Clause 1 and all other clauses related to the power of the purse in Article 1, Sec. 8. Article I, Sec. 7, Clause 1 is pertinent as well. Congress has the power of the public purse, the Federal Reserve is the bank of the United States, the Fed literally uses its electronic system to create the money we use. The actual printing of paper (and coins) U.S. Dollars is done by the Treasury Department's Bureau of Engraving and Printing. The facts I stated in my initial comment hereinabove are based on my interpretation of the pertinent literature/law. I
theres nothing modern about modern monetary theory.
:)
Well duh, I'm a fan of MMT and most of us knows this.
Inflation doesn't exist, at least not as some natural phenomenon of the economy, which isn't natural either, economy and money and made up.
Inflation is a matter of prize control on goods and services for which most other smaller goods and services and the economic sector that produces them, are dependent on, which is what's known as inflation index.
Ever wondered why printing trillions to bail out companies isn't suspiciously rising prizes of oi?
Oil and its refinement, and the distribution of the products of that refinement, is probably the good and its related goods and services (not just civilization's fuel, but it's materials like plastics and various other polymers) with the highest inflation index of all, which is why corporate consolidation is the culprit behind almost every single case of inflation in the history of humanity.
And if someone tries to push the gold standard, well, a simple equation of words I propose for them to ponder:
Spanish Doubloon + Habsburg imbreeding .(countless ramifications of imbreeding related incompetence) + Expenditure of sustained rebellion quenching in the Netherlands that almost escalates to holly war times .(pressure from competing empires such as Britain, and the United States shortly after) = Even one of the most iconic golden coins in Earth's history succumbs to inflation.
It wasn't because there were too many coins either, that's not how it works, it's because the golden coins with a cousin effer's visage stamped on it isn't backed by a serious industry and military under serious rulers and thus, the rest of the world trading with them doesn't take them, nor their dominion, as seriously as they once used to.
How would you define "natural"?
@@OneMinuteEconomics Nothing in the economy is natural, the only natural thing in economics, is the fact that we use economics to quantify nature, to give it a number and turn it into resources.
The closest thing that would ever get any closer to anything resembling something that could be labeled as "Natural Inflation", would be prize raising of natural resources and the goods and services they depend on, for the purpose of basically rationing.
BTW human labor counts as a natural resource, which is basically Labor Theory of Value, since labor, or human input if you prefer, makes states of order to remain for longer before they succumb to entropy and thus disorder, something easier to understand after reading Asimov's short story "The Last Question", where humanity evolves into a 4.5 in the Kardashev scale, using conservation of energy technologies to use human labor to reignite what would've been the last stars in the universe, should no advanced enough intelligence to literally put the universe in life support, have had evolved in the first place.
Now we have individual people with more money than galaxies in the universe, and it's not even theirs since it's the labor of millions that have kept their star lit.
I hope it didn't take you more than One Minute to read this XD.
Seriously tho, I think I just wrote the One Minute Economics episode that answers the great question about the purpose of life, by referencing the Asimov's short story that already answered that question long before I was born.
Do you believe someone like (I'm gonna say it, yes) Elon Musk does not deserve to be ridiculously wealthy?
@@OneMinuteEconomics No, he deserves to be in jail.
I'm making the questions now.
Do you really think he works as hard as he tells you he does?
Do you also buy into the fairy tale that he has invented a single thing in his life?
Are you unironically about to simp for every other modern day, tech bro equivalent of a Dickensian villain, or only Musk because you're easily impresionable and thus buy his slick and futuristic aesthetics?
@@OneMinuteEconomics Quick note, I stand by my words while apologizing for the tone.
It sounds good!
... but does it work? :D
Don’t be fooled, he who controls the power controls everything. This is a stepping stone to dictatorship type governance. -Jeff booth
@@MichaelMerritt I'm a big government guy, look at China, they are leaving us for dust. The CPC is run by professionals, many are engineers and scientists, they know how to run a country. In 40 years it has gone from a rural economy to one surpassing the US. Two thirds of the economy is state run, and all services are supplied at cost or are subsidised. They haven't got oligarchs creaming it off. It means that the small and medium sized businesses can boom.
Best thing about this video? it was only a minute of nonsense.
OMG He thinks it's just a "theory" because of the stupid name. It is actually an exact explanation of how countries that print their own currency work. Know what you're talking about before you try to teach others.
No, it is not. Primarily because it is anything but straightforward "how countries that print their own currency work" :( Like in many other instances when it comes to economics, opinions with respect to how countries that print their own currency work come in all shapes and sizes. With ardent supporters on various sides of the debate and various theories (sic) that sound exquisitely coherent yet end up empirically invalidated time and time again. The certainty I see from many opinion formers surrounding the topic of MMT scares me.
Too many questions, not enough explanation.
Let me know if you have additional questions and perhaps I can help, or maybe someone else can chime in through a comment
@@OneMinuteEconomics This video is called "MMT Explained" but you do not explain ANYTHING about MMT! The closest this video gets to an explanation is that MMT says a country with currency that is in demand can be more aggressive in printing money. That's it? That's all MMT is? I don't think so. At best that's a broad simplification of a key takeaway. For a real explanation, you need to (at least) say why MMT suggests this, and how this way of thinking is different from traditional monetary theory. Instead, this whole video is about open questions that don't seem to be answered by your own overly-simple definition.
It's my first MMT video, what you're describing requires a mini-series in my view. Hopefully I will end up publishing one early next year, once my schedule starts resembling that of a sane person again :)
@@OneMinuteEconomics Here, try this: "Modern Monetary Theory is the idea that a large stable government with its own fiat currency does not have to operate its budget like a household checkbook, where expenditures are directly dependent on income. Instead of a budget that strictly limits spending to tax revenue, MMT theorizes that the government can directly create however much money is needed for programs that support the country, with the only limitation being industrial production capacity. If the government dumps so much money into the economy that supply can't keep up with demand, the result is an economically painful increase in inflation. If inflation is under control, that means there's room to spend more newly created money. This doesn't mean taxes are irrelevant according to MMT. Taxes are the primary tool used by the government to remove currency from the economy in a controlled and predictable manner. Without taxes, the money supply would allow demand to rapidly outpace production capacity. So taxes still matter, but not as the direct basis of the government's spending."
Feel free to disagree with my description, but I think one minute is still enough for a lot more "explanation", as long as you make statements instead of asking questions.
Criticizing MMT is criticizing capitalism. Watch out, you will get cancelled.
Wait, what? :D
Its sarcasm. Capitalism is almost worshiped like a religion in the US. Criticizing capitalism in the US is taboo. @@OneMinuteEconomics
This guy is biased against MMT.
For what it's worth, I'm ideologically agnostic. That doesn't mean I'm always able to put a 100% unbiased perspective on the table, there's no such thing... but I do my best :)
@@OneMinuteEconomics you may want to research the topic with an open mind.
We have MMT right now. No 'printing' money was involved. It is just the way it works, with government spending, government taxation, selling bonds, etc.
This video is a huge straw man.
Hi Tony, my first reaction to this was "sweet summer child" haha. While I understand where you're coming from, I'd strongly recommend following a few MMT proponents to see what they envision, we're looking at stuff multiple orders of magnitude more aggressive than the status quo :)
Tony, why not use the budget to balance the economy!
Because debt is only one part of the whole economy!
Economic stimulation should heat up the economy, to tax back and pay down the debt!
What's the annual average cost of the interest on the debt????????????
The cost of the interest on the Canadian securities auctioned to investors that wants a long-term secure investment into Canada's fantastic future........
Is it less than the 1000 registered lobbyist representing the company looking for corporate welfare! Is greater than the cost for the interest on the Canadian public debt!
Where the big problem????????
@Hakim Habib The Bank of Canada issues the Canadian sovereign dollars backed up by Canadian securities auction to investors that want long-term secured investment in Canada's promising future!
For the 2nd time! What is the average annual cost of the interest on the Canadian government's public debt?
@Hakim Habib The Bank of Canadian issues the Canadian sovereign dollar! Right? But to cover that Canadian digital currency an equal amount of Canadian securities or auctioned to investors! Okay? Why would a smart investment be Canadian securities? It's in the name, because their a secure investment, and the investors are payed that interest anually! So how much is that? Keeping in mind the Bank of Canada has joined many central bank's in the world wide Quantitative easing club, keeping Interest rate low. How is this amount ever going to bankrupt Canada? I have done the research! But you have not!
@Hakim Habib
Mar. 6, 2021 - Government of Canada Debt in Selected Years. We are paying almost $24 billion in interest on the federal debt every year, at historically low interest rates!
This is bad for crypto but that's probably a good thing.
Why do you believe that? I'm curious what your perspective is in both cases. Why it is bad for crypto on the one hand and why it's a good thing on the other :)
@@OneMinuteEconomics Because MMT thrives on just one centralised currency controlled by the state. Unless they pick a crypto it will inevitably lead to the outlawing of crypto and any other forms of hedge or currency. As to why crypto is a bad thing, I dislike it and am out because of market manipulation, whales can dump on a coin and - 50% its value in seconds, I belive the biggest whale with bitcoin, ETH, ADA, XRP and Litecoin is the American government, recently crypto has gained the ability to crash so fast that it breaks your stop limit trigger, crypto is another tool to make the rich richer and the poor poorer only those with inside knowledge really know when to invest and exit in order to maximise profits, in other words my belife and experience with trading and holding multiple cryptocurrencies is it is a trap, the quicker it is gone the better. If its here to stay then we will have a very distopian future.
@@Deatg-ek8rf Wow your view is very microcosmic with crypto. You def should stop trading. Sounds like you are a day trader, one-way ticket yeh. Later on this year BTC will become less volatile and behave much like a currency. It has achieved that to a certain degree already looking at implied volatility models for BTC options. BTC and its ilk are long-term propositions going into the 22nd century and as the last bitcoin is mined a true new dawn will be mong us with a currency we can depend upon with confidence due to mathematics NOT government. ps keep away from tight stops, HODL.
@@Diponty I wish this was true, unfortunately you actually can not use bitcoin as currency because the transaction time is to slow, it's around an hour. Bitclin is hedge not currency unfortunately. Maybe ADA, ETH 2.0 or DOT coukd one day bevome currency but Bitcoin had to dump on ADA and crash it to get the stabalisation your talking of - Bitcoin goes up the whales dump, a crash will happen and the powers that be have to eat another crypto coin to prop up bitcoin, this is not a good solution. Also I've never day traded. Bitcoin does crash and it takes years to recover this is a fact, using MMT to eat other coins and stablise bitcoin is a really bad solution it'll create a monopoly. Also Bitcoin didn't break the recent market cap, XRP did and that pump was a move to decentralise XRP which kill the entire concept of the coin (again bitcoin canabalising other coin as bitcoin then fed off the market cap increase). Hopefully things go well for you and bitcoin never crashes again, I don't hate people who repeat the rhetoric of the cult of Bitcoin but I'm out mostly on the morals of what's going on more then anything.
Hmm... realistically speaking, any implementation of the status quo would be incentivized to somehow punish crypto and anything else that might constitute an alternative. Not just under MMT. Wouldn't you agree?
With respect to both long and short squeezes (the latter has been much more common this year), I agree that volatility spikes are problematic. However, things have been this way for quite a while, I do not believe volatility is necessarily more pronounced at this point in time compared to other cycles.
MMT is a lens in which to view modern money as it is today. Your interpretation is off base and as Mary said earlier, you should delete this erroneous video.
Does it not worry you that a fair bit of cult-like behavior and side-taking surrounds MMT? With your two comments representing an example to that effect, in my view :(
MMT is a total sham. Trying to rationalize that the supply of anything (including money) doesn’t affect its exchange value is just plain wrong. This is an excuse for more govt intervention, Keynesian economics repackaged. Huge thumbs down.
Keynesianism is quite tame compared to MMT, Keynes would surely blush if he were around browsing the MMT twittersphere :)
@@OneMinuteEconomics It seems like you're saying MMT is a good thing in the video. Keynesianism is deeply flawed and has been debunked. If you're saying MMT is Keynes on steroids then I wonder why is that not portrayed in the video.
We can put money into the economy by printing but when it creates inflation its not so easy to tax it back out. People are not inert blocks of wood as Thomas Sowell has said, they'll simply adjust their behavior to avoid the tax. Look at the mega wealthy "committing" their fortunes to foundations in their names (tax exemption). Think about all of the rich folks who move away from places like California/New York/etc. when their fortunes see increased tax risk (modified behavior to avoid tax).
Instead of printing money unabated and then trying to tax it out, we would do better to carefully manage and balance necessary tools like wealth redistribution, monetary and fiscal policy, tax and incentive structures. Taking extreme action like MMT has consequences and we would do better to exercise prudence.
I did my best to portray MMT in an unbiased manner, I'm ideologically agnostic for what it's worth. And it seems to work, since some folks a few comments back accused me of being biased against MMT because I don't "get" it, you are kind of accusing me of being pro-MMT. So as always with vids on sensitive topics, they're a surefire way to ensure everyone ends up hating you :)
Beast
The essence of MMt's economic argument that federal government politicians should have "Policy Space" to spend in excess of it's income for what it considers is better for the economy.
The same in their minds a great theory that talks about the evil of inequality but when it comes to the reality only politicians should have "Policy Space" when everyone else like the average person and those on less than average incomes should be restrained and have no "Policy Space" to spend more than it's income. Not you, not anyone else but politicians because the MMT pushers are telling everyone else that they are all too stupid but the irony of it all is some are stupid enough to believe them.
Japan is not experiencing INFLATION... they are experiencing DEFLATION... so this whole "deficit" boogey man resulting in higher taxes is bogus and unfound. Japan AND the US both have currency sovereignty. They will never have to "pay that deficit debt" to anyone else, so it doesnt really matter.
Having your own currency is great, but a "get out of debt free" card it is not. Ask Turkey. Now thus far, deflationary forces have prevailed in the more developed world, with Japan as the textbook example to that effect. But past performance in no way guarantees future results, not even in the West.
@@OneMinuteEconomics if you have your own currency, borrow in your own currency, dont peg your currency to anything else, the "debt" will not be unsustainable if you make sure you have the productive capacity and real recources available in the economy before you spend.
MMT explained in a second :- "Rubbish ! "
Poor explanation tbh
Better short accurate explanation of MMT :- It is Rubbish !
@@Rob-fx2dw You don't know the difference between an opinion and an explanation!
Why not use the budget as the tool to balance the economy?
@@cdncrooner1 Because the term "balancing the economy" requires the balancing of finances which means budget balances. How else is anyone going to "balance the economy' without balancing the most obvious and accurately measured part of it ( the finances) which is easier and more connected with every aspect than any other single thing.
@@cdncrooner1 Explanations have to be rational and to be credible but where is the credibility in this video. Not on this video.
“Just a theory” says you don’t understand the word theory. Your channel is gross
I am sorry this video made you feel bad. But please re-read your comment, see how "charged" it is and accept the possibility that maybe you are too emotionally/ideologically invested in this :(
@@OneMinuteEconomics rewatch your video and see how ignorant it is
I respect your right to an opinion, and as you can see your comments are still here despite not exactly being polite, but ad hominems do not a debate make.
we could always raise int rates as per monetary policy for supply side issues because like ...thatll work, taxation isnt the policy tool for inflation either, the Job gurantee is - i suggest you read more on MMT , cheers
Yep, that's the only problem with MMT. That people didn't read enough on it.