Tue February 12, 2019 7:16 pm
Tue February 12, 2019 7:52 pm
Tue February 12, 2019 8:16 pm
McParadigm wrote:I will happily explain it in a WebEx for $1499.99.
Tue February 12, 2019 8:19 pm
Bi_3 wrote:Can someone explain this? I don’t understand how this is suppose to work outside a classroom setting.
Tue February 12, 2019 8:28 pm
Electromatic wrote:Bi_3 wrote:Can someone explain this? I don’t understand how this is suppose to work outside a classroom setting.
It's pretty much Quantitative Easing no?
Need Money? Just print some.
Tue February 12, 2019 8:41 pm
Bi_3 wrote:McParadigm wrote:I will happily explain it in a WebEx for $1499.99.
We usually do this over PM bro
Tue February 12, 2019 9:06 pm
McParadigm wrote:Bi_3 wrote:McParadigm wrote:I will happily explain it in a WebEx for $1499.99.
We usually do this over PM bro
Which is why you aren’t able to command a $1,500 speaker fee
Tue February 12, 2019 9:06 pm
Tue February 12, 2019 10:10 pm
Tue February 12, 2019 10:17 pm
4/5 wrote:They say that you raise taxes to decrease the money supply. Basically all money belongs to the government because they create it so they can create and spend as much as they want. Then if inflation picks up they just raise taxes. In this theory taxes aren’t used to pay for spending, they’re used to remove money from society essentially.
Tue February 12, 2019 11:06 pm
Electromatic wrote:4/5 wrote:They say that you raise taxes to decrease the money supply. Basically all money belongs to the government because they create it so they can create and spend as much as they want. Then if inflation picks up they just raise taxes. In this theory taxes aren’t used to pay for spending, they’re used to remove money from society essentially.
How do they explain Venezuela and Zimbabwe?
Tue February 12, 2019 11:09 pm
Tue February 12, 2019 11:55 pm
4/5 wrote:Electromatic wrote:4/5 wrote:They say that you raise taxes to decrease the money supply. Basically all money belongs to the government because they create it so they can create and spend as much as they want. Then if inflation picks up they just raise taxes. In this theory taxes aren’t used to pay for spending, they’re used to remove money from society essentially.
How do they explain Venezuela and Zimbabwe?
That’s a good question. I’m not sure but I know for the theory to work the government’s debt has to be denominated in its own currency and foreign debt can be problematic. So that could be part of their answer. More generally their answer to prevent inflation is to raise taxes when an economy reaches full employment (though full employment certainly wasn’t the cause of those hyperinflations). The end game is to remove taxation powers from Congress or elected officials for fear that they wouldn’t raise taxes when necessary.
Wed February 13, 2019 12:20 am
Bi_3 wrote:4/5 wrote:Electromatic wrote:4/5 wrote:They say that you raise taxes to decrease the money supply. Basically all money belongs to the government because they create it so they can create and spend as much as they want. Then if inflation picks up they just raise taxes. In this theory taxes aren’t used to pay for spending, they’re used to remove money from society essentially.
How do they explain Venezuela and Zimbabwe?
That’s a good question. I’m not sure but I know for the theory to work the government’s debt has to be denominated in its own currency and foreign debt can be problematic. So that could be part of their answer. More generally their answer to prevent inflation is to raise taxes when an economy reaches full employment (though full employment certainly wasn’t the cause of those hyperinflations). The end game is to remove taxation powers from Congress or elected officials for fear that they wouldn’t raise taxes when necessary.
How would it be possible to tax at the levels that would be needed to pay for universal care or the GND? You couldn’t tax income, there isn’t that much of it. You couldn’t tax wealth because asset prices would plummet and people would move wealth overseas.
Wed February 13, 2019 1:04 am
Wed February 13, 2019 3:11 am
4/5 wrote:Bi_3 wrote:4/5 wrote:Electromatic wrote:4/5 wrote:They say that you raise taxes to decrease the money supply. Basically all money belongs to the government because they create it so they can create and spend as much as they want. Then if inflation picks up they just raise taxes. In this theory taxes aren’t used to pay for spending, they’re used to remove money from society essentially.
How do they explain Venezuela and Zimbabwe?
That’s a good question. I’m not sure but I know for the theory to work the government’s debt has to be denominated in its own currency and foreign debt can be problematic. So that could be part of their answer. More generally their answer to prevent inflation is to raise taxes when an economy reaches full employment (though full employment certainly wasn’t the cause of those hyperinflations). The end game is to remove taxation powers from Congress or elected officials for fear that they wouldn’t raise taxes when necessary.
How would it be possible to tax at the levels that would be needed to pay for universal care or the GND? You couldn’t tax income, there isn’t that much of it. You couldn’t tax wealth because asset prices would plummet and people would move wealth overseas.
MMT argues that the government doesn't need to tax or borrow to get money. It has a monopoly on sovereign currency and can therefore print and spend it at will. That's why it has some popularity in leftist circles because universal health care or a jobs guarantee, etc., can be paid for simply by creating the money and spending it. Since the government creates money it doesn't actually borrow money. All money is essentially an IOU to the government and the government can't owe somebody else an IOU to itself so government borrowing and debts and deficits are really just misnomers. Their claim is that the purpose of taxation is not to finance spending, because again the government is the source of money and can therefore create and spend it at will so they aren't reliant on the public for money either in the form of debt or taxes. And since the government is able to tax and can mandate that taxes be paid in the sovereign currency the currency will always have value.
They claim that the government can continue spending as much as it wants until the economy reaches full employment; only then will inflation become a concern. At that point they need to raise taxes, again not to increase revenue, but rather to remove money from the economy. In the real world we typically view this as the job of the Fed. When inflationary pressures are rising they decrease the money supply by selling treasury securities and essentially removing the dollars they receive in exchange for the securities from the money supply. MMT instead views this as the purpose of taxation.
Wed February 13, 2019 4:04 am
Bi_3 wrote:Thanks, it’s the second part where I am getting lost. How does increased taxation halt inflation? lowering the money supply?
Wed February 13, 2019 4:14 am
Yeah, for all the controversy that's slung at MMT, I'm come to see it as just a really boring explanation as to how governments with fiat currency operate: add money via the printing press when its supply is too low in recessions, and then subtract it via taxes when its supply is too high via inflation. It's a very powerful arrangement, yet one that's also delicate, as going too far either way can ruin a country's economy (and there have been plenty of examples in history), but when run properly it just seems like boring modus operandi.BurtReynolds wrote:Isn't MMT just an explanation for how government works today?
Wed February 13, 2019 2:15 pm
4/5 wrote:Bi_3 wrote:Thanks, it’s the second part where I am getting lost. How does increased taxation halt inflation? lowering the money supply?
I think the easiest way to view it is that the taxes are removing money from circulation according to MMT. So if inflation is too many dollars chasing after too few goods, then by removing some of those excess dollars you can get inflation back under control. When you raise taxes you decrease a person’s disposable income and they have less money to spend, and in the MMT world that will decrease the money supply. Remember that in this view tax revenue isn’t used to finance government spending or borrowing, so the money that is taxed would for all intents and purposes exit the economy. And since this is only supposed to happen when the economy is fully employing its resources this would also be the time where government spending should be less than at other times since it wouldn’t be necessary to spend more to increase output/decrease unemployment.
Wed February 13, 2019 4:18 pm
Green Habit wrote:Yeah, for all the controversy that's slung at MMT, I'm come to see it as just a really boring explanation as to how governments with fiat currency operate: add money via the printing press when its supply is too low in recessions, and then subtract it via taxes when its supply is too high via inflation. It's a very powerful arrangement, yet one that's also delicate, as going too far either way can ruin a country's economy (and there have been plenty of examples in history), but when run properly it just seems like boring modus operandi.BurtReynolds wrote:Isn't MMT just an explanation for how government works today?