Re:Unsolved problems in economics
by bryanlarsen on Tuesday May 17, 2022 @12:32PM
(#31413072)
That's Mosler's MMT, there are other MMT proposals which are closer to the path taken by the administration. Kelton's for example.
Re:Unsolved problems in economics
by neilwilson on Wednesday May 18, 2022 @01:39AM
(#31419579)
It's the same thing with a different marketing emphasis. Although increasingly they appear to be heading down the same policy dead ends as Post Keynesianism, simply to try to appeal to the Democratic Party.
You won't find any MMT proposal that proposes changing taxes to control inflation, because that doesn't work any more than changing interest rates does. You don't want humans involved in the stabilisation system - it has to be done by the automatic stabilisers, and on the spend side.
Taxes are set based upon fiscal policy goals which are, or should be, indifferent to the business cycle.
The analysis within MMT comes from an understanding that we control inflation via a buffer stock of human labour, and that government sets the price of currency when it spends.
Except that it doesn't say that.
The basics of MMT analysis is that put forward by Warren Mosler in Argentina recently. [0]
- Floating exchange rate
- 0% interest rates and no further issuance of public debt
- a guaranteed job for all at a fixed living wage
Taxes are very much secondary in MMT analysis. The stabilisation comes from government refraining from giving people free money for doing nothing, which is what paying interest on debt and reserves represents.
"As Mosler tirelessly repeated in his expositions, the price level of an economy, and therefore its level of inflation, can only be explained by the price that the State is willing to pay for the goods and services it needs to supply itself. This especially concerns the price of labour reflected in wages, since the origin of all goods and services is socially embodied human labour. "
[0]: https://gimms.org.uk/2022/05/16/journey-to-the-heart-of-arge...