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One Trader Delivers Everything You Wanted To Know About MMT (But Were Afraid To Ask)

"Today’s topic is sure to incite some pretty strong reactions."

"Today’s topic is sure to incite some pretty strong reactions."
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18 comments on “One Trader Delivers Everything You Wanted To Know About MMT (But Were Afraid To Ask)

  1. Quovadiszero

    Thanks for the reference, very interesting.

  2. I like it. Specially the part where citizens are allowed to print their own money to pay their taxes. So there’s never any pain. If the IRS wants a million dollars just print it and send it. What a great scheme.

  3. Actually, this is a good description of Trumponomics — not that Cheetoh could explain it you. Spend money you haven’t raised through taxes to fix longstanding structural problems, and print more $$ to paper over the debts. And if it blows up in your face, fuck it, we’ll all be dead. #MAGA

    • “Apart from being a professor, Stephanie was also the economic advisor for Bernie Sanders’ campaign.”
      Your Trump comment does not square with the source.

  4. In an MMT type system there will always be losers in a globally linked financial system….So read between the lines …you create international turmoil unless you own the one ring that “controls them all “

  5. Why have money as a constraint at all then if debt gets the middle finget? MMT is hipster VR douchebaggery designed not to improve the future, but to scapegoat the past and leave to others permanently the real work needed to get things done.

    Academia needs a hard slap upside the head

  6. Just have the MMT’ers place some dollars in my 401(k) so Donald Trump doesn’t have to ask me on Twitter.

  7. This is very important egg head stuff, definitely worth the effort. To advance the discussion It might be helpful to lay out the theoretical underpinning for MMT to help folks understand the concept at a deeper level (e.g., explain the Faucet and Drain concept of money flowing through the economy and the related formula) – as well as how MMT relates to Debt Monetization, an inflation inducing concept that might come into force if current economic theories prevail, given the level of sovereign debt in the world Understanding these ideas is vital to long range investing strategies.

  8. Harvey Cotton

    MMT is hogwash.

    The far more likely outcome is that that Left, Right, and Center in American politics will come together and agree on a series of entitlement cuts, reduced defense budgets, sensible spending cuts and tax increases that will lead to annual budget surpluses that will used to pay down twenty-one trillion dollars worth of federal debt. The private monies freed up by not buying Treasuries will then be used towards capital expenditures that will boost productivity to the point that the economy will boom despite the reduced government spending, and keep asset, consumer, producer, and wage inflation all in check. The Fed will continue to wind down its holdings of Treasuries and mortgage-backed securities until its balance sheet reaches equilibrium with the amount of currency in circulation and its other liabilities. The excesses built into the system by years of deficit spending and loose monetary policy will wind themselves down gently, with rules-based and orderly restructuring and productivity-boosting bankruptcies that will deflate all asset bubbles with minimal pain. Social cohesion will never be higher.

    Or we implement MMT. One of the two. Who knows?

    • Since the former is delusional the latter is the choice, or this was all satire and there is no choice (see pitchforks below).

  9. Lance Manly

    Seems a majority of the comments don’t notice the people with the pitchforks are coming. The peasants are getting sick of the scraps. Even they can tell Trump screwed them and sent the money to the rich.

    • Bingo!
      Or, as my (seriously-in-student-debt-and-still-worked-my-azz-off-to-live-in-student-housing civil engineer nephew said), “Why should I be so far in debt for 8 coming years, all to be a productive taxpaying member of the US? This country is not a guild!”

      Good question.

  10. Quovadiszero

    After some ponderment; So..if the Confederacy had won the Civil War, the dollar would have become worthless. Iceland had a sovereign currency, right? Does not each financial crisis revolve around inability to refinance/rollover debt?

  11. Um, why’s all that gold in Fort Knox?

  12. The Vietnam War was our first MMT journey. We spent it on that campaign rather than on starving kids. The whole piece here is too low in dimensionality. It is a global economy. And the single currency Eurozone is your laboratory for hypersoverign currency application. MMT induces gaming the induced system. The human element tends to discredit the efficacy of good intentions. And the real problem is that gifted human beings that could act as agents for Pareto optimal human welfare instead would prefer to conclude “it is not my responsibility and I’ll spend $800 on a Superbowl ticket rather than spend time helping my less fortunate neighbor to succeed”. So, as if the government has enough social workers etc. to work with the 40 million heavily disadvantaged humans in the United States alone, we get some pseudointellectual in the SUNY to complain about the billionaires, when the real key is transcendence as an answer to intransigent social reality. Materialist metaphysics is the core foundational problem here. It is so obvious. That is the conceptual underpinning of even trying to model money, when maybe we should prioritize figuring out who we are and better yet, who we can become, not as individuals, but as a whole.

  13. Does mmt lead to stagflation? To Japan-itus?

  14. Another super interesting article – thanks a lot, Mr. Muir!
    Well noted your remarks abt. arguing what should be instead vs. trying to understand what will be – can’t stress that enough.

    However, there are 2 aspects to MMT I am trying to wrap my head around in order to achieve the latter.

    So they flooded the system with money through quantitative easing – much to the howls of protest from the economic and Wall Street elite who insisted this would cause inflation. But much to almost everyone’s surprise, there was almost no inflation – at least little inflation as we generally think about it. There was plenty of financial asset inflation as all that new money pushed down interest rates and caused asset prices to lift, but the average worker saw little benefit from the Fed’s largesse.

    I admit I’m a total rookie when it comes to MMT (currently trying to educate myself using the links provided), but I get the impression the theory does not account for one important factor:
    The tremendous (sorry) deflationary force of
    1) a deluge of cheap labor in China and the rest of East Asia, which is being made accesible to the world via
    2) global trade &
    3) the internet (think Amazon and other online retailers)

    How does monetizing sovereign debt adress this structual issue?

    Also (and this is probably more more within-the-model) I would definitively concur that it makes sense for the government to step in and try to put economic capacity sitting fallow to a better use, but would that not simply constitute Keynesian fiscal stimulus?

    Other than in a liquidity-trap-Situation (here’s Keeeyynes, again :-)) fiscal stimulus is always to be preferred to monetary stimulus.
    One could certainly argue that all efforts of global CBs to re-flate the economy HAD to end in inflation of financial asset prices since the transmission to the real economy is not working as well as expected => governments should have opted for fiscal largesse in fighting the 2008 crisis instead of leaving it to central banks.

    But that is more of a political debate, just as how to put the debt-funded stimulus to the best use (tax cuts for super-rich folks versus investments in infrastructure or social security or preservation of natural or cultural monuments, etc.).

    What I fail to understand is why this constitutes a new MONETARY theory.

    Anybody help?

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