Comments on RWER issue no. 89

  1. golfer1john
    October 4, 2019 at 7:35 pm

    Kudos. Very complete, with some logically incontrovertible analogies and historical facts that I haven’t seen elsewhere, and that I think will help advance acceptance of MMT.

  2. October 5, 2019 at 1:56 pm

    For Lavoie’s piece – whilst his critique of MMT hasn’t changed much, if at all, I read both versions of his friendly critique at the time. His own work shows that the accounting comes out the same whether the Treasury and Central Bank are consolidated or not.

    My understanding of Post Keynesian criticism of Modern Monetary Theory is the Balance of Payments and Exchange rate situations. My own study of this critique is that it depends on what the political actors do. It in no way invalidates MMT.

    MMT is a public breakthrough of a coherent consistent post-keynesian (true Keynes) macroeconomics and logic explained correctly.

    Wray has previously outlined MMT as including Chartalism+Credit Money+SFC(Godley)+Functional Finance+Endogenous Money+Financial Instability Hypothesis+Marx Keynes Veblen & PK & Institutional thought

    If other post-keynesians have picked up on and published on loans create deposits and other MMT insights, high praise to them indeed but have they pushed it into public consciousness. Yourself and Seccareccia have attended the Modern Money Network symposia and suspect you are now aware of the MMT conference.

    Also thank you for showing me what I always thought to be true that horizontalism and bank endogenous money are the same but Rochon once told me that was wrong. It is much appreciated. Thank you, Marc.

  3. Josée Marmol Saez
    October 5, 2019 at 7:10 pm

    The MMT has focused its analysis on the financing of public deficits with money. His contributions have been important and his effort has been enormous. Their detractors have been abundant and will soon realize their mistakes and their poor understanding of money.
    But to complete the modern money paradigm it is necessary to face the challenge of understanding what it means that money is a public good. Money is a matter of general interest. When society understands and accepts what this means, the structures of today’s banks will begin to shake. It is the forgotten proposal to create the so-called Monetary Authority that proposed the Chicago Plan.

    In fact they are already shaking, we just have to look at the new ways that elites have to try to supplant money as a state monopoly. Product of this perception is the creation of BITCOIN, La libra (from facebook), the GRAM (from instagran) and other electronic currencies.
    Randy greetings.

  4. Helen Sakho
    October 10, 2019 at 11:49 pm

    I read through the original post and appreciate the analysis and the contribution. With reference to Keynes’s momentary “Babylonian madness” I would strongly recommend that interested readers in any aspect of economics, finance, wealth, poverty and richness, gender and equality should read (apologies for being presumptuous in assuming that they have not already) The Richest Man in Babylon. It really surpasses by thousands of years the current economic wisdom on the market.

  5. October 13, 2019 at 7:45 pm

    This special issue on MMT is impressive. I am gradually going through some of the articles and Tony Lawson’s got my attention for now.

    I like that Lawson [again] forces us to take a step back and think about (or in terms of) the (social) ontology of economics. The distinction between ‘money is debt’ and ‘debt can be positioned as money’ is not minor. In the latter, it does not mean that money is [always] debt, and there is no ‘redeeming of currency’, no ‘puzzle’.

    Despite coming from a different starting point, Lawson echoes some of the Brunhoff’s observation on the need for a monetary theory of money and not a credit theory of money.

    Lawson’s starting point is his social positioning theory, which has its more recent discussion in his new book “The Nature of Social Reality: issues in social ontology” (2019), especially chapter 1 and 2. In the same book, Lawson also offers a much more detailed discussion of his positioning theory of money, where he compares the positing and credit theories of money (chapter 6). Really worth reading. https://www.taylorfrancis.com/books/9780429199035

  6. lobdillj
    October 14, 2019 at 5:43 pm

    There is a reason why the public is told that the money supply is not relevant to the condition of the economy and that they must accept austerity as the inevitable result of unaffordable social spending that must now be cut back.

    What in the world is this all about? Well, it’s about balances of components that must obtain when conservative processes involving different quantities of the components occur. Chemists and physicists grasped the concept from the beginning of their development of the sciences. But amazingly, macroeconomists are still arguing about whether the concept of balances applies to economies.

    An economy must be a conservative system unless there are identifiable, quantifiable sources and leakages that exactly balance each other with the passage of time. And if there are unbalanced sources and leakages, the system not conservative.

    By ignoring the effect of changes in the money supply not only have we missed a conservative element in defining the system, but now we can’t explain why our model doesn’t detect the onset of booms and busts (which are caused by a shortage or excess of money). Some economists avoid this problem by denying its existence.

    I know…this is illogical, but it’s true. Some macroeconomists claim that the size of the money supply is not a factor in analyzing the performance of the economy.

    The purpose of this comment is to demonstrate that the money supply is an essential factor in the money balance equation and cannot be ignored without invoking magic.

    The essential function of a nation’s economy is to provide the stuff that the population consumes and the wherewithal to get it. The population trades labor for income. Simply put,
    Source materials + Labor = Production —> $ transactions —> GDP

    This equation assumes that materials and labor are present in exactly sufficient quantity to enable the consumption of all of the production and that there are no unaccounted sources or transactions in the process.

    But what if there is economic activity that produces no product to be consumed by the public? In that case a profit results from casino-like operations that produce nothing of value to the society at large. But that profit is not used by the players to grow the general economy. It remains in the casino and is used to pay interest on the new debt that fuels the next scheme to suck up all the surplus generated in the marketplace. The debt on interest grows as time passes, and the players grow more reckless as the stakes balloon.

    The masters of the scheme (investment bankers on Wall Street) have gained control and have engineered the rules so that they never suffer losses when the inevitable collapses occur. The US government will use sleight of hand to create the money to bail out the masters and bill the unwitting taxpayers with unpayable exponentially escalating debt.

    It is imperative that the mass of taxpayers be kept unaware as long as possible of the inescapable fact that they are falling at an accelerating rate so that the next crash is as profitable as possible for the masters. [In the aftermath of the 2008 crash the US government created roughly $26T and gave it to the masters, who promptly transferred it to themselves and bankrupted the victims.]

    So it is no wonder that the masters are horrified that the truth may come out and trigger class war. This is why the public is told that the money supply is not relevant to the condition of the economy and that they must accept austerity as the inevitable result of unaffordable social spending that must now be cut back.

  7. lobdillj
    October 14, 2019 at 7:04 pm

    CORRECTION: The following paragraph is replaced: “An economy must be a conservative system unless there are identifiable, quantifiable sources and leakages that exactly balance each other with the passage of time. And if there are unbalanced sources and leakages, the system [is] not conservative.”

    REPLACEMENT: Mainstream economists argue that the money supply either does not change over a reporting period, or that it’s irrelevant if it does change. This is wrong.

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