Did the MMT Camp Correctly Predict the Post-Covid Economy?
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- Опубліковано 2 лип 2024
- Recently on Twitter, as a reaction to an FT post worrying about the growing debts of various governments, fans of MMT were posting screenshots from a May 2020 FT debate involving Stephanie Kelton. The implication was that Kelton had correctly predicted that government debt would be benign. Bob and guest Jonathan Newman dissent.
Stephanie Kelton and Edward Chancellor's Debate on Government Debt: Mises.org/HAP445a
Martin Wolf's Article on Government Debt: Mises.org/HAP445b
Bob's Debate with Warren Mosler on MMT: Mises.org/HAP445c
Bob and Jonathan's Episode on Price Inflation: Mises.org/HAP445d
Bob's Article on the Economic Outlook for the US: Mises.org/HAP445e
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Chapters
00:00 Free Book!
00:25 Introduction
03:38 MMT's Results over the Past Four Years
12:49 How MMT Views Debt Differently
20:48 Using Interest Rates as a Policy Tool
26:26 Debt Crisis Risks and Historical Examples
34:39 Could Inflation be Useful for Governments?
38:10 Did Kelton Think Inflation was Transitory?
40:05 Kelton's Prediction
The overarching issue is that MMT is that those who support MMT aren't really taking a genuine stance and their typical fallback to anything they can't counter is, "well, you just don't get it, man" or they'll claim they don't support it, but, "it just is". The fact of the matter is that MMT ignores fundamental Econ 101 and the concept of scarcity. This isn't to say that scams and bad systems don't exist or operate and that people don't make money off of them but it is to say that scams are not only morally wrong but also unstable and doomed to failure.
Remember that a big divide between MMT and Austrian is the origin of money and the purpose of money. The fact is that MMT could not have existed without first real commodity money being represented by paper to "boil the frog" in people's minds that paper meant actual value or wealth. MMT took that idea and basically ran with it, and completely taking the piss. The implication being that ultimately when the illusion is gone, the system crashes. Think Weimar Germany or Zimbabwe. There's a reason you can't just print tickets and call it wealth not matter what you do.
A central issue also with MMT is the very concept of value and it cannot be understated that MMT, inherent in its system, is the call for and support for the use of coercive force to try and create value. I shouldn't have to go into detail the problems of coercive force and centralized control in the concept of a functioning economy, let alone basic rights of our fellow man. Sure, to give the devil his due, you can put a gun to his head and alter his stated preference but this is not a true value or a true demonstrated preference. Even their own stated solution to inflationary spending which they support creating is to turn around and take back the currency you're forced to use and work for to make it through your one chance on this earth.
Without going into as much detail as I would like; there is a reason people prefer to hold goods rather than vast sums of dollars anymore. It's because the tickets don't actually have the stable value of a good and real money. Despite the bluster of MMT and their creation of value, it simply isn't there aside from a hollow shell and much like the Keynesians, reality never pans out with their claims and people are expected to ignore the myriad of very real consequences past, present and to come.
MMTers seem to argue that government issued currency is the source of all value, and without these currency units, nothing would have value. However, they then frequently go on to contradict themselves.
OK They do deny that barter or sound money ever existed. They say money was always a government affair
They don't claim scarcity is fiction, they say that our current monetary system is overtaxed
@@Richest_Person_in_the_World *They say money was always a government affair*
Yeah, it's hilariously dumb, isn't it?
@@willnitschkeNot sure, they claim to have anthropological studies confirming it. They even say that gold coinage was used not for the metal, but was still sovereign currency propped up by taxation
A comment to help boost the UA-cam algorithm!
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Angry troll reply to boost engagement.
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Replying to you for this purpose! More people need to see this great discussion
I love the clear and concise presentations of Bob. So eloquent and insightful.
I have watched and read Bob for about 20 years. I would not describe his presentations as clear and concise.
@@MengerMania Bob often starts and doesn't finish sentences. Which can be confusing. His written work is excellent.
@@zastorlexa9800 Read his work more carefully and critically.
@@MengerMania Have done. Books, articles, podcasts (includiing the Human Action one), listened to his ContraKrugman podcasts for several years & read that particular book. Maybe you should leave your preconceptions at the door and do the same as i don't think whatever they are serve you very well.
🙂
@@zastorlexa9800 Yes, I have preconceptions. I base them on having listened to and read Bob Murphy for more than twenty years. I also have preconceptions about MMT, having read material about the "theory" for many years.
Sorry, you have no preconceptions.
Finally, at the end of all this gabbing, Jonathan Newman made the only important point: government "spending" causes a misallocation of resources. MMT simply gives another mechanism for this destructive process. MMT does not deserve this much discussion. It is mental garbage.
We are always very clear on the subject matter. You can choose not to listen to any future MMT episodes.
MengerMania
I am as convinced as you are, of the status of MMT as specious nonsense. However the claims made by MMT proponents are many, and they need to be rebutted in every case.
MMT has wheedled its way into many, especially young minds, and instances of its folly need to be argued with more rigour than can be expected from a one-liner.
MMT is mental garbade. Its diarrhea of the brain. BUT it is gaining ground. Its providing a justification for some truly horrendous public policies (e.g., reparations, Net Zero). And i think those economists who are able to dismiss it are providing a pblc service when they do.
@@edwardmclaughlin7935 If you convince people that taxation is theft and monetary expansion is counterfeiting, you're on your way. The government produces nothing, so it must steal and counterfeit in order to "spend" (redistribute)>
@@BobMurphyAncap After being a member of The Mises Institute, I quit because the presentations by you and a few other presenters tend to be misleading or confusing - not clear. I listened to this one podcast because I wanted to know whether you could expose the few fatal flaws in MMT. As usual I came away disappointed. Address the purpose of money as a medium of INDIRECT exchange. Address the calculation problem. MMT is a mental poison. Austrians have the antidote, if they will use it.
Inb4 you start a Contra Kelton podcast
LOL I’d love to see that. Clearly, it’s what the world needs.
17:09 Yeah but it's a Nominal asset. We didn't extend the claim into saying those dollars will definitely buy X good. Although they likely will. But why do you doubt that $2000 in someone's private account is an asset?
'Nominal asset' means 'in name only'. As in, not an actual asset. 😂
@willnitschke I’m always amazed at MMTers inability to see that MMT relies solely on accounting and semantic tricks while totally ignoring economic laws.
@@Pau11Wa11 The 'tricks' are in the rhetoric. As I've explained elsewhere, when I present my balance sheet to the government I have to conform to GAAP. The government has no higher authority it is held accountable to, hence it can do whatever it wants, even though if I did the same, I'd be put in jail. For example, it can just credit equity and debit its bank account.
Hence, the slogan 'governments are not households' is perfectly true, but also irrelevant. During the Zimbabwe hyper inflation the government balance sheet no doubt continued to look pristine and would never go 'bankrupt' in an abstract sense. Yet the economy collapsed.
6:43 analogy of United States foreign intervention
If MMT is true, eliminate federal taxes
MMT literally says that federal taxes are the only thing propping up the monetary system
Taxes are there to prevent inflation. LMAO that's economics 101.
@@dangerzone007 According to MMT, the purpose of tax is to create unemployment. According to Austrianism, all tax is theft (equally a correct view)
@@dangerzone007 According to MMT taxes exist to create unemployment. According to Austrians, tax is theft (also correct)
Lmao watching Austrian's trying to understand mmt is like watching primary school kids trying to understand quantum mechanics. Economist Randall Wray explains very clearly what taxes are for.
Why is your go to analogy individualistic?
Because the individual is the smallest constituent, contrary to what you commies think
If you have a society of 5 people, then it is NOT the case it consists of 6 elements: {1, 2, 3, 4, 5, and The Government} but rather just 5.
When I listened to the Murphy vs Mosler debate I got mad that Murphy didn't deliver a verbal knockout by explaining the implications of MMT, he should've explained in detail where the newly created fiat money go to and the ultimate implications along the way. I can argue that MMT causes tens if millions of deaths yearly and globally by creating crisis, bankrupts, misery, etc. When the FED creates a trillion dollars and this newly created purchasing power out of air enters the commercial banks, it's leveraged 10 fold to 10 trillion and when it starts to circulate through the derivatives market it could reach quadrillion and gradually bankrupt countries economies, corporations, etc, eetc. It was as if Murphy and Mosler were debating the physics of ballistics, but somehow forgot to mention that a ballistic rocket is primarily used to deliver nuclear warheads....
Murphy was new to MMT so it's understandable that he couldn't "win." However now 10 years later Murphy still doesn't get it
Generally there is underprinting. So it would be beneficial if what you said was true, namely that quadrillions are being minted
@@Richest_Person_in_the_World Sadly, there is so much stupid in MMT, and too few hours to describe it all.
@@willnitschkeBob should try more to understand the actual theory. Maybe start with the very basics: Austrians have long claimed that repaying the debt is impossible. But MMT says it's a matter of keystrokes. Now Murphy would probably say: "OK we didn't mean debt couldn't technically be paid, but it would have consequences." Well is that really true, have Austrians always claimed that technically repaying the debt was a piece of cake?
@@Richest_Person_in_the_World Again, you're confusing a balance sheet with an economy. The Zimbabwe balance sheet looked pristine even as the economy collapsed.
No.
I clearly remember you people panicking about debt when it was 1/3 of this
They'll have to deflate the debt 12% p yr for the next decade to "win"
That's if they stopped borrowing more. Which they won't. So it's even worse
No, the claim is that debt is a myh. It will be 72 trillion and nobody will get an electric shock
@@Richest_Person_in_the_World Ah yes, the myth of debt is a myth...
The current debt servicing costs for the US are around 1 trillion. That's a lot of schools, hospitals, roads, bridges and such like, that didn't get built.
@@willnitschkeNot at all. Typing $1,000,000,000,000 into a computer is the easiest thing in the world, in fact I just did it
@@Richest_Person_in_the_World Again, you're confusing a balance sheet with an economy. The Zimbabwe balance sheet looked pristine even as the economy collapsed.
When good things aren't happening that's also very bad. An MMTer would pretend it's all OK.
The interest rate basically is the inflation. So if you want it at 2% you put it at 2%
Inflation is commonly defined as the measured rise in prices, and interest rates are the price of money.
@@willnitschke That is according to old thinking, which is why I stress the importance of MMT revolution.
When someone owns $1,000,000 in bonds he gets $0 new printed money with 0% interest rates and $200,000 newly printed money with 20% interest rates
@@Richest_Person_in_the_World You mean correct old thinking versus stupid new pretend.
If someone owns 1 million in bonds, that's because he handed over 1 million in cash, hence he converts cash to bonds, not the other way around smooth brain. As for the rest of your asinine babble, nobody can know what that means, although most likely nothing.
@@willnitschkeThe coupon is paid out and depending on the interest rate he gets either 0% or 20%. You tell me which payout would pump more dollars into the economy
@@Richest_Person_in_the_World He gets the coupon because he holds it to maturity, smooth brain.
MMT?
Modern Monetary Theory.
Magic Money Tree
@michaelmurphy4253 much more descriptive and honest. “There’s no such thing as a free lunch,” unless the central bank is printing money for it, then it really is free with no downsides, according to MMT folks.
The end conversation on potential feedback loops of inflation needs more explanation. It’s more complicated than how you describe it and pass it off.
It turns out inflation is always Discreet and there is no such thing as runaway inflation, MMT explains
@@Richest_Person_in_the_World So the long and sad history of hyper inflations didn't happen in MMT pretend world?
@@willnitschkeYeah they could have been arrested with a clear MMT mindset
@@Richest_Person_in_the_World No they couldn't. The policy prescriptions of MMT are completely insane and disconnected from reality. 🤣
A quart of milk goes up to 1000 marks due to the printing of too many central bank monetary units. The MMT fix, according to Mosler, is to tax people so they can't afford to buy any milk. This will reduce demand for milk and lower the price. Sure, a bit of starvation there, but the inflation is reigned in.
Have you actually ever read any Mosler?
@@willnitschkeI haven't read but I've listened to his video classes. When the government spends, it defines the price level. So if they say: "This year's tax is Double last year's. But this year's government spending will be 1/2 last year's." Then there will be huge deflation because everyone's scramming to save dollars for the taxman
A
B
Do Australians get that government money spent on increasing productive capacity is deflationary.
No they observe that any increase of the money supply is inflation by definition
1. Do dumbnuts get that Australia and Austria are different countries?
2. That government always engage in more mal-investment than productive investment?
Government that will slow down naturally when people run out enough money to buy the debt. That's how markets work.
All government spending is always debt. Since they have "spent" it and the same amount is obviously not in their possession at the same time, it means they haven't collected ("earned") what they have spent.
Incorrect. Japan monetizes its debt, hence can go on in misery, theoretically, forever. Well, at least until an external shock blows things up.
@@Richest_Person_in_the_World Wrong. If a government taxes you $100 and the government spends that $100, there is no debt. It's called a balanced budget, champ.
The MMT belief/assertion that government currency units is the source of all value, is just silly nonsense.
@@willnitschkeIt's not "the source of all value," I don't believe that. To address your example, it's impossible for the government to "tax $100 and then spend $100" because there was nothing to tax prior to spending.
@@Richest_Person_in_the_World So it's the source of all value? In other words, valuable things like land, resources, buildings, bridges, roads, etc., didn't exist until a government invented a currency unit to represent those things?
Did you go to the same school of economics that AOC got her qualifications from? 🤣😅😂
shoutout state apologia
Are you referring to central bank apologists (MMT people)?
Australians don't get that higher interest rates increases inflation because the interest rate channel transfers more money into the private sector.
Yes they view it as an increase of "price of money" which therefore makes the currency more scarce or sought after
Being an Australian myself mate, I'm not inclined to expect most of my fellow citizens understand much about economics.
But certainly, actual economists from all schools understand that higher interest rates can be a source of inflation. Nonetheless, the Fed has a limited tool set, and the expectation is that raising interest rates will do more damage to the economy, than stimulate it overall.
See, the fun thing about economies, is many different things can happen at the same time.
@@Richest_Person_in_the_World No "they" don't. They view it as making the acquisition or servicing costs of assets more costly, because that's what higher interest rates do. It's got nothing to do with changing the nature of currency units.
Or enter the 3rd millennium and use Bitcoin instead of fiat or gold.
Bitcoin is worthless from both the Austrian and MMT perspective hoss
@@Richest_Person_in_the_World Go on...
@@azdjedi He won't go on. He only has one brain fart. ;-)
@@azdjediSorry I didn't notice your question. Bitcoin is worthless from the Austrian perspective, explained by the god himself Peter Schiff, because unlike gold it has no industrial metal use. From MMT perspective, Bitcoin is worthless because it is NOT the tax money.
@@Richest_Person_in_the_World $hitcoin is not worthless from the 'Austrian perspective'. Schiff's argument is that a token representing value must instill confidence, and eventually confidence in $hitcoin will be lost, hence its value will go to zero over time.
From the MMT perspective $hitcoin has no value (even though it's priced in USD 🤣) because it's not State sanctioned money.
As MMTer's would like to say (but dare not): 'All within the state, nothing outside the state, nothing against the state.'
Isn't 7-11 robbery illegal, while moneyprinting is legal
What is your point actually, that government is unfair? We knew that, but doesn't disprove MMT
I can’t imagine your asking this in good faith. What’s there to understand? The point is that government giving central banks the ability to print money is legalized counterfeiting. Everything the government does that is criminal is renamed to make something that is morally wrong “good”. Being an MMT person yourself, you of all people should appreciate the semantic games the state plays, as MMT relies on the same tricks (debt = asset): Counterfeiting = quantitative easy. Extortion/robbery= taxes. Slavery = conscription. Murder = war. State-sponsored gang = police. Indoctrination = education. Breaking and entering = no-knock raid. Stalking/spying = national security. Hostage taking = indefinite detention. Mass-surveillance = national security.
Deep MMT nailed it with highly accurate predictions. When are we going to see a Deep Austrian AI. Something with useful predictions for trading the markets
If Palpatine was an MMTer you would expect him to say something like
"Everything is proceeding as deep MMT has foreseen." I'm sure Douglas @MMTMacroTrader would agree with me
Stephanie Kelton is spot on.
No she is quite stupid. Socialists have no grasp of economics
@@Richest_Person_in_the_World Skelton may be dogmatic. She may be partisan. But she is not stupid. Now Mosler...
@@willnitschkeMosler is uneducated but sharp. Kelton has a Ph.D. but knows nothing
@@Richest_Person_in_the_World And how would you know any of this?
@@willnitschkeBy listening to them talk. Mosler is a mere college grad, and Kelton unfortunately is a Ph.D.
The only people who think MMT is wrong are people who don't understand it.
How many theories do you think are wrong simply because you don't understand them?
then explain why MMTers suggestion that governments with “monetary sovereignty” should finance keynesian schemes with money creation would not in and of itself kill off that monetary sovereignty privilege. that is the main point of contention here
@@CPubi Well there is no solvency issue because they can print
Circular logic. Hallmark of MMT.
No "people" think MMT is wrong because it's nonsensical gibberish. The Weimer Republic, Zimbabwe etc etc etc., all had failed economies even though they printed their own currencies. Even if the balance sheets of these governments looked pristine. So what?
Given that the core claims of MMT are observably wrong, why should rational people take their "theories" seriously?
Originally The Federal Reserve was restricted from buying govt debt until the program was inevitably corrupted by inevitably corrupt politicians. That’s the problem, that change. Go back to school. Two more nutty professors.
I’m confused. Who is it you think are nutty professors?
Ridiculous analogies Bob. Falling back on beliefs that MMT has debunked. Mises does have an inherent upside, degrowth!
Degrowth doesn't sound appealing