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Professor Gerald (Friedman) certainly is (an idiot)! I love the magical thinking that went into the claims that Bernie's big-spending initiatives would boost growth to virtually unprecedented levels. Almost like magic!
Yeah, I looked up the idiot's wiki page. It was created due to this controversy. It seems a few of Gerry's defenders bristled at the criticism and lashed back at the former CEA chairs. They identified the magical growth sources as ginormous productivity gains and huge increases in labor force participation (despite Bernie Sanders' work-discouraging freebies). JK Galbraith (whom I consider the real daddy of MMT but hold in much lower regard than his biological daddy) claims the (Keynesian) fiscal multipliers used by (the lesser) Professor Friedman were "standard" and "mainstream" - but he says nothing about the other, off-the-chart assumptions.
Have any of you folks read Stephanie Kelton's new book on MMT?
"The People's Economy" -- I mean, who could oppose that? (Certainly not those who act as though they'd like to change the name of our nation to "The People's Republic of America.")
Here's her message in a nutshell:
Since we borrow in our own currency, and therefore cannot "go broke" in the usual sense (since we can just print up all the currency the Treasury needs and spend it), we need not be concerned about deficits and debt accumulation. However, Professor Stephanie rambles on and on about various things without trying to tell us at what point between where we are now and an infinite amount of debt accumulation some sort of problem or constraint could arise.
Which reminds me of the very first day of my very first economics class back in the Phillips Curve era ... My Econ 101 Professor, who had served on the CEA, explained that economics is a discipline based on the assumption that resources are limited (at any specific point in time) and must be allocated among competing demands. Now I guess we can toss that dismal idea out the window, thanks to MMT! My Professor mapped out a very simple model to help policy-makers choose between guns v. butter. How antiquated! Thanks to Professor Stephanie's scholarly efforts, there is no more scarcity! No need to choose between competing wants! We can have an infinite supply of BOTH guns AND butter!
I'm not sure why Professor Stephanie didn't borrow the title of an old Helen Gurley Brown book for her own work:
If you are expecting to see any rigorous analysis or solid mathematics that undergird her arguments, you will be very disappointed.
The "People's Economy" includes just what you expect it would -- federal job guarantees for everyone, very large (unspecified) "infrastructure" projects, most elements of the "green new deal." tuition-free college, greatly expanded free or heavily subsidized health care, and possibly some version of UBI.
Apparently the only constraint would be the resurgence of inflation, which will eventually erupt if you pour almost unlimited demand into the economy. The MMTers' "solution" then is to raise taxes in order to suck some demand out of the economy and dampen inflation. (Sure! Good luck with that!)
Once the embers of inflation ignite into a full-on brush fire (think California and Oregon right now), it becomes very difficult to tamp down again without inflicting significant economic pain on the populace. Is Professor Stephanie even old enough to remember the double-digit inflation years of yore, circa late 70s/early 80s?
This is why Liz Ann Sonders (and many others in the investment community) have been referring to MMT as the "magic money tree."
Excellent! Where can I get one? At my local nursery, botanical garden, or aboretum?
Did you happen to see the snarky exchanges (on Twitter and elsewhere) between Professor Stephanie and far-left IYI economist Paul Krugman? The latter dissed the whole idea of MMT in a couple of columns, prompting Stephanie to post that he did not understand the issue and had no idea what he was talking about. The back-and-forth on Twitter was hilarious!
The Great and Powerful Krugtron does not take kindly to being condescended to by other left-wing economists!
Thanks for the tip. I'll look it up for the entertainment value.
Sadly, I've been ignoring the Great and Powerful Krugtron lately. Every time I commented on one of his NYT columns in years past, it was like poking my hand into a hornets' nest! Last time I skimmed his column I noticed he was personally responding to some of the comments. Hmmm... maybe we can "engage" him like Professor Stephanie did!
Our proposal to amend corporate law to ensure responsible corporate citizenship will prompt a predictable outcry from vested interests and traditional academic quarters, claiming that it will be unworkable, devastating for entrepreneurship and innovation, undermine a capitalist system that has been an engine for growth and prosperity, and threaten jobs, pensions, and investment around the world. If putting the purpose of a business at the heart of corporate law does all of that, one might well wonder why we invented the corporation in the first place.
Chartalism, "functional finance," and the musings of Abba Lerner -- did they germinate the thinking that led to MMT?
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Originally Posted by lustylad
Thanks for the tip. I'll look it up for the entertainment value.
Well, there was a fair bit of free entertainment value there. But unless I'm overlooking them, it appears that the principals deleted all the funniest tweets!
Sadly, I've been ignoring the Great and Powerful Krugtron lately. Every time I commented on one of his NYT columns in years past, it was like poking my hand into a hornets' nest! Last time I skimmed his column I noticed he was personally responding to some of the comments. Hmmm... maybe we can "engage" him like Professor Stephanie did!
Although I never gave it a try, perhaps I should have taken a shot at poking The Krugtron in a comments section somewhere along the way!
Over the last year, it seems that a lot of MMT students have been taking a second look at the work of Abba Lerner, who pioneered the doctrine known as "functional finance" many decades ago. To that end, a long-forgotten paper he wrote in the 1940s has been circulating around.
In any case, it's been written by a few observers that today's MMTers draw inspiration from Lerner's works.
He certainly seemed to be something of an odd character. He wrote and mused about many things, although it appears that many of them were in all likelihood not very good. For instance, he seemed to like to talk and write about how to make socialism "work better." (Yeah, good luck with that!)
Here he is:
He's getting a bit up there in years here. But with the right attire, wouldn't he have fit right in at a 1960s Abbie Hoffman Yippie protest?
And he was a Berkeley prof for a while, too. So he was packing some serious counterculture cred!
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Over the last year, it seems that a lot of MMT students have been taking a second look at the work of Abba Lerner, who pioneered the doctrine known as "functional finance" many decades ago. To that end, a long-forgotten paper he wrote in the 1940s has been circulating around.
In any case, it's been written by a few observers that today's MMTers draw inspiration from Lerner's works.
Hmmm... and I thought Abba was a Swedish pop group.
It seems this Abba has a pretty colorful history. Some of his ideas on "functional finance" even alarmed Keynes. At one point, Lerner is reported to have traveled to Mexico to meet the exiled Leon Trotsky and convince him of the flaws and errors in his interpretation of Marxism!
Here's a distillation of the argument I assume is embraced by Lerner's "inspired" MMTers:
As Abba Lerner put it, the "national debt is not a burden on posterity because if posterity pays the debt it will be paying it to the same posterity that will be alive at the time when the payment is made."
Umm, excuse me while I scratch my head... I'm having a little trouble with that one.
Is it just another iteration of Keynes' wry observation that "In the long run, we're all dead" or the glib dismissal of debt because "we owe it all to ourselves"... or both?
It's one thing to say deficits don't matter in the short run. It's another thing entirely to argue that debt doesn't matter in the long run.
If debt doesn't matter and it's completely optional whether our Government needs to repay or even service it, then why don't we just cancel it all now (all $26.7 trillion) and literally wipe out the markets overnight for US Treasury and other government obligations? Fuck you, bondholders! Fuck you, banks and insurance companies! Fuck you, pension funds! Fuck you, Social Security Trust Funds! Fuck you, small savers looking for "safety". Fuck you, China, Japan, Britain and all you other foreign suckers who purchased our debt! Write it all off!
The lesson stung, but I ended up agreeing. That’s why the most important part of Friedman’s essay spoke to me. It’s simply wrong, when you’re working for someone, to use his resources for your ends when they don’t promote his ends. In the case with my brother, I was using my time to help others but my time was really his time: he was paying for it. In the case of corporations, managers might be using both their time and the corporation’s resources to help others even though shareholders own those resources and own the manager’s time that they are paying for.
maybe someday 9500 will post something cogent sand constructive - other than marxist economic theories supported by mass terrorism
DPST's already have their OBLM and antifa terrorists in place.
Lenin worshippers are in for a rude surprise from an armed population when they try their riots and looting and take-overs in Texas
Here's a good clip from another era, back when liberal and conservative economists treated each other with professional respect. Walter Heller was the Chairman of the Council of Economic Advisors under JFK/LBJ and chief architect of the 1964 tax cuts, which are widely regarded as one of the best historical examples of successful Keynesian macro-economic "fine-tuning". But this success was quickly derailed in the late '60s by LBJ's inflationary over-spending on both the Great Society and the Vietnam War. By 1978 (two recessions later), economists like Friedman and Heller were debating how to break out of Jimmy Carter's stagflation.
I got the book but haven't gotten through much because of work. The prefaces to this book originally published in 1962, while they contain nothing new to you or me, should be eye-opening to Eccieuser and our other esteemed anti-liberal posters.
When Friedman wrote the book, U.S. government spending, federal, state and local, was 26% of GDP. It was ignored by the political elite. No major newspaper published a review. The world was trending towards bigger government and more socialism.
By the time 1982 rolled around, when Friedman wrote the first preface, USA government spending was up to 39% of GDP. But it was obvious big government policies and socialism were huge failures, in the USA, Great Britain, the Soviet Union, China, and the third world countries which adopted socialism. Ronald Reagan and Margaret Thatcher were elected in reaction. Deng Xiaoping became the leader of China.
Friedman wrote the second preface in 2002. By then almost all nations had realized they were on the wrong paths and the trend was back towards sanity. We can look back and compare East Germany and West Germany, North Korea and South Korea. And see how well places like Taiwan, South Korea, Hong Kong and Singapore have done compared to developing countries that maintained anti-liberal policies.
This is all so obvious. I don't understand why many on the left don't understand it.
I got the book but haven't gotten through much because of work. The prefaces to this book originally published in 1962, while they contain nothing new to you or me, should be eye-opening to Eccieuser and our other esteemed anti-liberal posters.
This is all so obvious. I don't understand why many on the left don't understand it.
US GDP (1998 dollars): $585.2 billion
Federal spending: $106.82 billion
Federal debt $302.9 billion
Consumer Price Index: $30.2
Unemployment: 6.7%
Cost of a first-class stamp: $0.04
