It's about time I shared some thoughts on modern monetary theory (MMT).
I'm not a fan. In this video, I'll explain what it is and why I don't like it.
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MMT is just the latest repackaging of mercantilism. Tell the people in charge what they want to hear. I do think they have a technically correct point in that taxation is used as a deflation/brake on the system. Most people would rather make their own decisions though instead of responding to these carrots and sticks.
Hope you survived the tree!
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Haha! I survived the tree this time. Fingers crossed for the rest of the Winter.
Extremely well said. MMT benefits the politically connected and allows them to hide behind the inflation rate. Trouble is, we already know the inflation is a very blunt and one-dimensional way of looking at the economy and money supply. Take my, and many similar countries; the central bank rate is very low because the post-covid economy would tank. Trouble is low-interest rates make the housing market much much worse. For many countries, MMT will be disastrous for their foreign exchange values if allowed to get out of hand; again, that's something the politically connected can benefit from. My predication for any country that goes solid MMT - capital flight. It's not like people 8 digits rich don't have options.
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Excellent comment, thanks for sharing! Agree with the point you made about capital flight as well.
MMT is just saying let's do what we currently do without the debt ceiling keeping us back and that its all relative. I mean in theory it can work its all just allowing us all competitive printing on another scale I mean if everything goes up 10x in price along with wages but you reduced debt in the process you are technically better off
However, markets don't work like that unless they can be fully centrally controlled by a CBDC, I think MMT'ers are being intellectually dishonest and don't speak about the fact that it doesn't guarantee an improvement in production and supply of goods and services and if you hit certain inflation rates its hard to ring it back in even impossible.
I don't mind MMT I don't agree with it and that's fine I don't want to hold any MMT money in any case, anyone who agrees with it is happy to hold their value in an MMT based currency
Crypto peeps should rejoice for MMT, it's bullish for cypto, as private money becomes a bigger part of the world economy everyone will have to compete not on access but on monetary policy, so If I don't agree with what the Brits do I can hold USDT if I don't agree with that I hold BTC, and so on.
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Excellent comment. Thank you for sharing your POV :)
There have always been multiple forms of money. Precious metals are money. Money can be defined in different ways to include many forms. It does not include just the most liquid forms, which are cash and bank deposits. Cryptocurrencies are yet another form of money. Money is a game of confidence people play amongst themselves. MMT is all about a single entity dictating the rules of the game.
That said, in this particular situation the MMT proponents may be right in that there is plenty of scope to print more money. The production capacity of the economy is looking at accelerating gains from the cost of computing power, bandwidth and data storage dropping exponentially and the fact that an increasing share of the economy is IT. Bitcoin is, in fact, a part of the proliferation of money along with other cryptocurrencies cropping up left, right and center.
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Your second paragraph gave me much food for thought. Thanks for sharing!
No problem. I rewrote one sentence for clarity.
It is a somewhat thorny issue and more so now with the virus causing many governments to move large amounts of money and then taxes will end us financially, but most of the time governments get away with it.
lol I came into this thinking I better not invest in this MMT shitcoin.
oops.
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Haha not too far off the mark tbh. Just the MMT shitcoin is called USD! (Or GBP, or EUR etc depending on where you live)
MMT is like a classic version of Problem-Reaction-Solution.
Looks like you've got a good mike that cuts out the wind very effectively :D
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1st critic of MMT is the moral hazard, as you outlined.
The second is simple, you can't raise taxes forever. People will never pay a 70-75% tax, they'll just exit. Go in another country or something.
So what do you do when inflation kicks in and you're already at maximum taxation? Raising interests rates won't work you kill the economy.
Well said!
MAGIC MONEY THEORY
^^