Frankly, I find it disturbing how something as simple as MMT, something based not as much on theory but on our daily monetary practices across the world, remains so misunderstood and so hotly debated.
Also, I do hope your modeling work with Minsky gains far greater recognition and appreciation. It is exemplary.
hailymusic
One issue I have always thought about is that when a nongovernment surplus goes to a few people, quite often, that currency is taken out of the country and unable to be used for local consumption.
Excellent discussion! I have been in the MMT camp since I started reading Michael Hudson and Steve Keen about twelve years ago. I even delved into Minsky', although he is a bit difficult to navigate. It amazes me, when I was listening to the parliamentary debate in the UK today over the budget...and even after all the covid spending...that only a handful of MPs (in any party!) seemed familiar with MMT. It was all about WHEN we should start raising taxes...not IF!
duncanmckeown
I'm getting sent here when I click on "Reply" to Rob's comment starting "It seems you read comments and but only answer people who agree with you but can't answer people who disagree or challenge your theory's basic assumptions...". So I'll reply here. In brief, I'm writing a book that answers misconceptions such as yours, and I sporadically check comments here and reply equally sporadically. If I were to pull apart all your misconceptions, I'd be wasting my time here and not writing that book.
ProfSteveKeen
Professor Keen, I'm a graduate student looking to do some work on the role of private debt in the economy. Where can I find the latest data? I can of course find your excellent chart going back to the 1830s but I don't feel comfortable citing a website, is there a more "formal" source it can be found, or how can I find the data to construct a similar graph myself? Thank you for all the work you do in helping to debunk economics! The mainstream will keep resisting, but you and others, and hopefully the next wave of us, will have to just keep correcting their bull.
SchrodingersCat
I just read Hicks “The Market theory of Money” where he argues that everyone is obsessed with inflation but nobody seems to care about deflation. He finds it strange since the concern should be stability. “To impose a condition of non-inflation, upon an economy which has become adjusted to rising prices, would surely, from this point of view, be quite as much of an upset.” (Hicks, 1989)
Also from trying to find decent debates between heterodox and orthodox economics I find it increasingly weird how arguments are just being ignored or (purposely) misunderstood, resulting in polite but boring discussions. I guess what I am really missing is intellectual curiosity, especially since economics failed the public so miserably. I am studying economics, because I thought there is this huge moment for change in the profession after 2009. I can tell that in my university the great shift was from fresh- to salt water economics.
mariofischer
Love me some MMT love me some Deficit Myth!!! Love me some Stephanie Kelton!!!! ❤️❤️❤️
krisinmcirvin
Dr. Keen dropping cold hard truth BOMD's on the academic paradigm!
floridaman
A dissent-free debate. The debate we need is on MMT's implicit hypothesis about what creates economic growth. MMTers apparently believes it should go like this:
1. Government hires (and encourages the private sector to hire) the least promising workers (the unemployed) to do...what? Something that was a net loss before they were laid off. Dig ditches, cash paychecks and buy consumer products to boost the Aggregate Demand figures the economic models like.
2. Through one financial means or another, government commandeers a quarter (?) of workers' output for its important infrastructure projects, preempting projects private investors would otherwise have funded. Whereas private investors can evaluate projects based on cost/benefit analysis, MMT teaches the ministers that their costs are always zero, which would seem to make their job harder. But despite that, despite having no skin in the outcome, and despite the peculiar incentives of poilitical optics, they'll somehow make shrewder decisions than the private sector.
jasonglazer
Great discussion. Maybe someone can help: Kelton's example at 1:22 of a federal job guarantee program during economic slumps offering a way to create anti-inflationary pressure made me ask myself if in fact economic downturns and high unemployment tend to cause inflation, and it seems that the opposite is true. So is there a problem with her suggestion?
markmilne
very interesting. I ran through your balance sheet example and I have a few questions Professor Keen.
First: when the CB repurchases bonds from banks, and the latter incurs a profit, does that create money? I suppose yes, as the profit would be recorded as retained earnings, hence increasing the money supply.
Second: does your example imply that bond sales and repos don't create money, but rather provide and drain liquidity when needed?
Lastly: when the treasury needs to pay for the interest it borrowed from the Fed, how does it do that? does it just roll over its loans by borrowing continuously from the fed? this would also answer how the TGA manages to be always positive (as if that was not the case, the TGA could be maintained positive only by bond sales and tax revenues, indicating those as actual sources of spending). So i guess the last question is summarised as: how does the circle end?
Thank you :)
RiccardoSorelli
The only deficit we need to be worried about is “Private debt “!!!!
krisinmcirvin
9:19 it's true. What is money and what does it represent? Answer this and you see the only money gov has is from the market. But when money can be created from nothing then those creating it have the power to tip the scales and direct value to where they choose at the same time devaluing everyone else
Richard-kinkgm
The sole person who were critical of MMT had arguments that could have been spouted on Fox News. Utterly uninformed about the most fundamental facts. Pretty funny that he name-dropped Krugman. Keen probably chuckled inside.
gustav
A unit of account can never run out... it’s about RESOURCES! Resources we could run out. The federal government spending is on resources... not profit.... unlike corporations
krisinmcirvin
This is much more informative than the Brady Bunch
merfymac
Workers are a natural resource!!!! Spend federally to keep people in work!!! That benefits all of us
