Economist warns Modern Monetary Theory is dangerous

"The U.S. government creating 100 dollar bills is not making planet Earth 100 dollars wealthier with each bill they print," says economist and author Bob Murphy, as he refutes Stephanie Kelton, who was an advisor to Bernie Sanders's 2016 presidential campaign.

[LordItachi]

Don't look at foreclosure as losing a home, think of it as a bank gaining an asset.

[tristan]

I only had in an account, but I had a talk with the branch manager, turned the statement upside down, and she agreed and fixed the computer, I'm a multimillionaire now. It's all about communication skills.

[joecummings]

Ripping people off isn't bad. You need to look at it from the perspective of the scam artist

[kirk]

Following Kelton's logic, if deficits don't matter, why bother taxing at all?

[donnagiamo]

Devaluing the dollar is insane unless you hate citizens.

[novacorponline]

Listening to her speak is like listening to a teenager talk about credit cards. "Yeah, you just use the piece of plastic and it pays for whatever you want! its free money!"

[AB-qtdj]

If deficits are a good thing, why have any taxes?

[jonahansen]

She's totally disconnected actual goods and services from the amount of money and increase in productive capacity. A recipe for inflation.

[macsnafu]

An important point for anyone to understand is that money itself is not wealth; it's merely a tool, a medium of exchange for goods and services. A good currency, like gold or silver, will also have other properties and can be a store of wealth, but ultimately, it's the exchange function that's the most important.

Wealth is actual goods, services, and resources utilized for goods and services. It should be obvious that merely printing more money not only doesn't create new wealth in the form of goods and services, it dilutes the rest of the currency in circulation, devaluing the currency and causing price inflation.

Borrowing money is trickier, especially when the government's doing it. Still, like any borrower, the government either has to pay it back or default on the loan. They often get a pass because it's the government borrowing the money, but they shouldn't. The money government borrows has to come from somewhere, and the question is where would the money have gone if government hadn't borrowed it?

Either way, printing or borrowing, the government isn't "stimulating" the economy into creating more goods and services, it is merely redirecting the economy into whatever industries or sectors they think need 'stimulating'. The government can never run out of money, but the more that they borrow or print, the more bad consequences they create. That's why it's not "free" money!

Stephanie Kelton is wrong to say that it would be inflationary for government to spend only during "full employment". How many concrete workers and architects does she think are unemployed? And government spending rarely targets specific groups of people in such a way. She's just expecting, or perhaps *hoping* that those unemployed people will become employed due to government spending. This is reckless thinking when you can't explain how it will happen.

[tfustudios]

Dont think of an IRS audit as something to dread, think of it as they're your friends coming by for a beer

[TomPekarcik]

I’m 70 years old and retired. I’ve become more cynical and listening to things like MMT over the past years. The main reason the government doesn’t have to worry about where the money comes from. Is they can always take it. They have law enforcement and jails to put you in if you don’t give the government the money.

[stevo]

Creating more money is necessary when your real economy is growing. More cash is needed to complete the increased growth in transactions. But supporters of MMT mistakenly believe this relationship also works the other way around. That if you increase the amount of cash circulating, this automatically increases economic activity. In real life this doesn't work. What happens is that sellers of non-discretionary goods elevate their prices rather than creating more goods and services. There is no growth in real economic activity, just inflated prices.

[rjl]

She advised Bernie Sanders, is there really anything else that needs to be said?

[orangeofmars]

All of the interest paid on the National Debt does go to someone as Stephanie Kelton stated. This issue is it is govt. money paid that does not come back into the system in fair taxes or production. For the system to work that has to be the case.

[krani]

I knew that lady was nuts when she used that "6 or 9" analogy. Someone drew that 6 or 9, so someone knows which one it is, therefore there is an objective right and wrong answer.

Subjective morality is poison to ethics. Didn't know subjective economy was a thing.

[crbondur]

I had a discussion with some friends who seemed to want to champion MMT. What they failed to recognize is that inflation is the real killer of MMT, and you can't print your way out of it. The latest round of money printing by the government, where they increased the money supply to the tune of 30%, led to approximately 20% cumulative inflation from the time they started printing the money. Not good at all.

[theybrokemywatch]

She should’ve explained why the government cares so much about collecting my taxes if they can just print all the money needed for high speed rail, free housing, and foreign wars.

[neilpace]

She's an economist?!?
I went out on the car lot....
There's six cars out there. But when I stand on my head? I can clearly see that now there's STILL 6 Cars there! But they're upside down now.
6 represents something. Turn a 6 upside down, and it's still a Fricken 6.
But she's actually stumbled upon something... Just like so many other areas of daily existence... We've disconnected practice and theory from reality. And it's no wonder that so many people are now starting to say, "I don't trust the experts anymore!" When experts like this spout nonsense.
Sadly this has led to legitimate Science and technology and mathematics being called into question... Because experts have sold out 'Truth' to the highest bidder for so Long that the masses, who recognized their own limited understanding started to realize that their intuitive sense of what is, wasn't lining up with the experts anymore

[jacobframe]

Deficit spending is a significant problem because it harbors corruption

[JohnDaniels]

97% of our currency is created by commercial banks. When a bank issues a loan, it creates new money digitally and charges interest on it.

For a 30-year mortgage, you’d work about 15 years to pay off the interest alone, all for money created with a few keystrokes. Let that reality sink in, and you’ll begin to understand the flaws in our financial system.