[late]

You haven't even shown that you have an *understanding* of my politics -- you've only been *dismissive* by using the term 'fantasy' -- so your point is moot.

This is not simple stuff, you will have to show the whole freaking world it can work.

Not only is my point not moot, it's a killer.

[Steve_American]

Steve -- devil's advocate here -- would you like to address the fact that debt is a real quantity, and that creditors have an interest in collecting on their loans? (Also that overextended assets / bad loans / toxic debt / junk bonds, will be less attractive to buyers going-forward.) (March 2020.) The same goes for the U.S. balance sheet.

Now that the U.S. and other countries have rapidly increased their debt in the past few years, what do you think about *solvency* concerns among such nation-states, and how might all of these national balance sheets be resolved internationally, do you think?

Is it time for another Plaza Accord?

The US Gov's creditors do always get paid. Always. However, they only get paid with dollars that the US Gov. borrows from someone else. MMTers assert that because thee US Gov. and Fed issue the dollar, there is zero risk of non-payment. This means that US bonds are the opposite of junk bonds. MMTers deny the truth of the money theory of inflation. They assert that economic historical data show no relation between the money supply and inflation.

Solvency is a big problem for nations in the EU and especially the euro zone. The latter have to get euros from someone else. Nations not in the EZ, but that are in the EU are constrained by EU rules, so they have more of a solvency risk.
. . . MMTers assert that there is zero risk of insolvency for nations that issue their own currency, float that currency, and never borrow in any other currency. However, there is risk of inflation, so they do have a limit.
. . . MMTers point out that banks create more money in most years than the Gov. of most nations do. Banks create more in the boom years and less in recession years. But, the total over decades is more than the nation's Gov. has created. Yet, economists never stress about this newly created money, they only stress about it when a gov. is doing it.
. . . IMHO, this is because MS economists don't care a gnats ass about 'truth'. They only care about how their theory helps the rich get richer, because the rich are their paymasters.

I'm not sure what you are talking about when you say 'balance sheets', but I'll try to reply.
. . . The balance sheets are a problem because of economists refusal to address the problem that international trade is a zero-sum game. That is, for some nation to be a net exporter, some other nation must be a net importer. There can be no flexibility at all.
. . . Prof. Steve Keen has proposed debt forgiveness. He points out that the Bible talks about this when it talks about a jubilee every 50 years.
https://www.jubileeusa.org/faith/faith- ... -norm.html

The Plaza accord is all about the US Gov. devaluing the dollar. Two years later there was another accord to stop the devaluation.
. . . Today most gov. float their currencies. They do not peg them, so more such accords are off the table.
.

[quetzalcoatl]

A few things in support of MMT.
1] The only policy MMTers demand is the national Job Guarantee Program, which a doubt you grok. I'm not sure what the difference is between "political positions" and "policies MMT wants".

2] AFAIK, only MMT only uses 100% true assumptions in its "proofs" of its assertions.
. . . All other Economic Theories include many false assumptions, and in logic no proof can have any false assumptions in it. Therefore MS Econ. Theories have never been proved and they also don't line up with econ. history either.

3] What is it that you reject about MMT?
.

This was not intended as a particular critique of MMT (as opposed to other economic schools). I just question the usefulness of "theory" in the context of social sciences. Certainly MMT is far more useful to me than, say Friedman's monetarism, Austrian school, or the various permutations of mainstream theory (Krugman, Summers, et al).

Personally, I think MMT would be better off if it openly acknowledged the "political" part of political economy, and stopped dancing around its prescriptive aspect. By its intrinsic nature economics is a servant of politics. It's no accident that Kelton was economic adviser to Sanders' presidential campaign! And btw we should, as well, never forget the continuing role of the economic profession in propping up status quo corporatism and extreme toxic inequality.

My position is that politics (and therefore economics) are primarily moral/ethical in nature. Economics can never be a science. The phenomena it addresses do not exist in nature. Economic systems arise from social systems, not from nature. At a basic level they are rules-based systems whose rules are written to advance the interests of the rule writers. Since humans wrote the rules humans can change the rules.

Steve -- devil's advocate here -- would you like to address the fact that debt is a real quantity, and that creditors have an interest in collecting on their loans? (Also that overextended assets / bad loans / toxic debt / junk bonds, will be less attractive to buyers going-forward.) (March 2020.) The same goes for the U.S. balance sheet.

Now that the U.S. and other countries have rapidly increased their debt in the past few years, what do you think about *solvency* concerns among such nation-states, and how might all of these national balance sheets be resolved internationally, do you think?

Is it time for another Plaza Accord?

I'll take a crack at that. No analysis of debt as a macroscopic phenomenon is legitimate unless it carefully distinguishes between private debt and public debt. They are fundamentally different and have different causes and effects.

This is not simple stuff, you will have to show the whole freaking world it can work.

Not only is my point not moot, it's a killer.

Considering the way our current economics "works" it always baffles me that the same reflexive doubt isn't applied to existing arrangements.

[ckaihatsu]

This is not simple stuff, you will have to show the whole freaking world it can work.

Not only is my point not moot, it's a killer.

Yes, I understand all of the aspects of capitalism's empirical / logistical functioning that need to be covered by any proferred *post*-capitalist political-economy model, or framework.

I'm responding point-by-point, at this other thread:

viewtopic.php?f=10&t=181236

[ckaihatsu]

(Okay on anything that I *don't* address.)

They assert that economic historical data show no relation between the money supply and inflation.

I think this is only a historically 'recent' development -- basically post-1970s, once the U.S. shifted to a 'financialization' economy, which itself implies that there's something to 'financialize' *over*, meaning the huge surplus labor value of hyper-exploited Chinese workers.

The hyperinflation in the U.S. in the 1970s was *scary* for economic nationalists like yourself -- though I was just a kid at the time -- because there was no visible way-forward *out* of it then. And then Nixon met with Mao, and China become colonized, and the dollar became strong with purchasing power for cheap sweatshop imports. Problem fixed.

The Plaza accord is all about the US Gov. devaluing the dollar. Two years later there was another accord to stop the devaluation.
. . . Today most gov. float their currencies. They do not peg them, so more such accords are off the table.

My understanding is that *all* currencies floated, post-Bretton-Woods (post-gold-window), so by the time of the Plaza Accord there was certainly no peg to be seen *anywhere* by that point (though smaller countries often index their currency to the U.S. dollar).

Nonetheless you're correct that at the *international* scale there's no more 'up' direction to go to, so everything *must* balance-out, which only serves to bolster my point that perhaps the major economies *will* have to 'tweak' trade balances and such going-forward so as to even things out within the world's bourgeoisie.

[ckaihatsu]

By its intrinsic nature economics is a servant of politics.

(Jumping in here....)

I can't agree, because there *is* a real *material world* that exists out there that is 'attached' to politics, certainly, but is *not* 'adjacent' to it, like a feudal estate.

Please recall that historical developments have been favorable for the 'freedom' of capital, and then ultimately for its *domination* at global scales -- this has *little* to do with politics itself, and can even be thought of as having a life of its *own*.

[wat0n]

My position is that politics (and therefore economics) are primarily moral/ethical in nature. Economics can never be a science. The phenomena it addresses do not exist in nature. Economic systems arise from social systems, not from nature. At a basic level they are rules-based systems whose rules are written to advance the interests of the rule writers. Since humans wrote the rules humans can change the rules.

One would think experiments such as the Big Leap Forward showed that changing the rules either does not really change the features that were intended to be changed or, worse, in doing so creates far, far worse problems, of the type that leads to famines.

Some key concepts in mainstream economics seem to apply to other animals, such as rational choice theory (where an animal's preferences are geared toward maximizing evolutionary fitness). Likewise, some types of economic behavior (including the type that older mainstream models wouldn't account for) are actually grounded on biology.

[Steve_American]

(Okay on anything that I *don't* address.)


I think this is only a historically 'recent' development -- basically post-1970s, once the U.S. shifted to a 'financialization' economy, which itself implies that there's something to 'financialize' *over*, meaning the huge surplus labor value of hyper-exploited Chinese workers.

The hyperinflation in the U.S. in the 1970s was *scary* for economic nationalists like yourself -- though I was just a kid at the time -- because there was no visible way-forward *out* of it then. And then Nixon met with Mao, and China become colonized, and the dollar became strong with purchasing power for cheap sweatshop imports. Problem fixed.


My understanding is that *all* currencies floated, post-Bretton-Woods (post-gold-window), so by the time of the Plaza Accord there was certainly no peg to be seen *anywhere* by that point (though smaller countries often index their currency to the U.S. dollar).

Nonetheless you're correct that at the *international* scale there's no more 'up' direction to go to, so everything *must* balance-out, which only serves to bolster my point that perhaps the major economies *will* have to 'tweak' trade balances and such going-forward so as to even things out within the world's bourgeoisie.

Frankly what you and I "think" doesn't matter. the data is there somewhere for all to see.
IIRC, Prof. Bill Mitchell said that going back to before 1900 there is no relation between inflation and the money supply. The money supply theory of inflation is really guess an idea or in science a hypothesis. In science to become a "theory" it must be backed up with a lot of evidence and a good explanation of how it works. It sort of has an explanation but no other evidence.

MMT has a better idea/theory. It is that if all the resources and labor are being used by the private sector and then the Gov. wants to start a new large program (like a big war in Vietnam) then the biding war between corps and the gov. causes inflation. And the inflation can be kept going if labor and corps bet into a conflict to see who is going to lose out. The 70s saw inflation because of the Vietnam War, Nixon imposing wage and price controls in '71 IIRC, then OPEC raised oil prices by about 200%. This triggered a conflict between labor unions and corps to see who would see their real incomes drop. So,, MMTers assert that the money supply was not the cause.

Your import cheap shit from China solution was not a good solution, because it hurt the workers who lost their jobs. And, the inflation lasted until Reagan crushed the labor unions in the mid to late 80s.

I read te Wiki article about the Plaza Accord. It didn't say exactly that the dollar was pegged, but it did say that the US Gov. from 2 years worked to devalue the dollar. From this I deduced that the dollar was pegged. Later the article said that after 2000 all advanced currencies were floated.

BTW -- late night it came to me that a nation like Germany, Japan, and China saves its trade surplus. They don't spend it to buy something internationally. German banks used it to make loans to Greece, Spain and Italy.
. . This is a form of saving. It lets the Greeks buy more from Ger. corps for a while but someday this will have to end and then Greece can't pay the loans back. This will be another crisis.
. . Steve Keen is right, debts must be forgiven. That is a lender/bank who makes a loan to a poor person is more guilty of stupidity than the poor borrower is, and morally the stupidest is the one who should take the fall.

Like I said, the international trade system is a disaster waiting to happen. Like "a dead man walking".

.

[ckaihatsu]

the biding war between corps and the gov. causes inflation.

Okay. I would tend to call this 'military syndicalism', or, economically, 'military Keynesianism'.

And the inflation can be kept going if labor and corps bet into a conflict to see who is going to lose out.

Over government *contracts*, right, like defense -- ?

MMTers assert that the money supply was not the cause.

Okay, got it, makes sense, thanks.

Your import cheap shit from China solution was not a good solution, because it hurt the workers who lost their jobs. And, the inflation lasted until Reagan crushed the labor unions in the mid to late 80s.

'Mine' -- ? It wasn't 'mine' -- I was a kid then. Also not a Maoist.

the US Gov. from 2 years worked to devalue the dollar.

I'm sorry, 'worked' -- ? I don't think so. It was a *diplomatic* / political thing, mainly.

From this I deduced that the dollar was pegged.

Pegged to *what* -- ?

a nation like Germany, Japan, and China saves its trade surplus. They don't spend it to buy something internationally.

Um, Steve, no disrespect, but that's because they don't *have* to -- they're the countries on-top these days, in Europe and Asia, respectively. Germany with its production goods (factories, large equipment) and China and Japan with consumer goods.

The rest of the world goes *to* those countries, enabling them both economically *and* in terms of domestic productive infrastructure, for exactly the kind of stuff that anyone in the world would want.

That said of course there's *some* 'back-trade', so-to-speak, as with Asian tourism. (Still not waving any flags.)

German banks used it to make loans to Greece, Spain and Italy.

(Popularly known as 'Europe'.)

[Steve_American]

1] Okay. I would tend to call this 'military syndicalism', or, economically, 'military Keynesianism'.


2] Over government *contracts*, right, like defense -- ?


3] Okay, got it, makes sense, thanks.


4] 'Mine' -- ? It wasn't 'mine' -- I was a kid then. Also not a Maoist.


5] I'm sorry, 'worked' -- ? I don't think so. It was a *diplomatic* / political thing, mainly.


6] Pegged to *what* -- ?


7] Um, Steve, no disrespect, but that's because they don't *have* to -- they're the countries on-top these days, in Europe and Asia, respectively. Germany with its production goods (factories, large equipment) and China and Japan with consumer goods.

The rest of the world goes *to* those countries, enabling them both economically *and* in terms of domestic productive infrastructure, for exactly the kind of stuff that anyone in the world would want.

That said of course there's *some* 'back-trade', so-to-speak, as with Asian tourism. (Still not waving any flags.)

(Popularly known as 'Europe'.)

#1] Gov. always spend more in war time. It was because the nation was doing so well that the extra spending was a problem. Most nations raise taxes in wartime, I don't remember that Johnson did.

#2] No, over both the Gov. contracts and over the other private spending that wasn't reduced by a tax increase.

#3] To repeat for the lurkers, MMT says the money supply is not the cause. It is to bidding war because every resource and labor is already being used in the private sector and then the Gov. needs to buy more.

#4] You were the one who proposed that that was why Nixon went to China.

#5] The article said the US Gov. did something over time to keep devaluing the dollar. I used the word "work'.

#6] I don't know what it was pegged to except gold, and I don't think that was changed until we went off gold completely.

#7] Yes, they do have to save it in order to have a trade surplus. If they go and buy somethings from other nations, that eliminates the surplus. All trade surpluses must be saved. Investing them is saving them.
. . . Most foreign investment is done to trap the nation with debts it will not be able to pay, and then economists tell them they must sell the national infrastructure or other resources to make the payments. This of course, just makes the problem worse. It is a con, a scam, it's evil in my eyes.
. . . Tourism is, of course, spending so it's just fine, except when it makes the poor nation buy expensive food and stuff for the picky tourists to dine on or buy. This likely will add to their trade deficit.

.

[quetzalcoatl]

One would think experiments such as the Big Leap Forward showed that changing the rules either does not really change the features that were intended to be changed or, worse, in doing so creates far, far worse problems, of the type that leads to famines.

It's quite interesting to note what experiments are considered too risky to implement (Medicare for All, for example) and what experiments are just fine (privatizing municipal utilities and hospitals on a mass scale). Changing the rules to favor the right apparently carries no risk - the stellar condition of western democracies confirms this.

[Steve_American]

Oops.

In my reply just above point #3 should read " It is the [not 'to'] bidding war because every resource and labor is already being used in the private sector and then the Gov. needs to buy more."
.