Names dropped(for research): 3:06 Alfred Mitchell-Innes, Credit theory of money 3:13 Georg Friedrich Knapp, State theory of money 3:21 "reading from the more modern monetary theorists" Bill Mitchel, Warren Mosler, L. Randall Wray, Scott Fullwiler, Stephanie Kelton 3:36 L. Randall Wray, Modern monetary theory for beginners he mostly focuses on the work of L. Randall Wray, Scott Fullwiler and, Stephanie Kelton.
More Names: 19:46 Mises, Theory of Money and Credit 26:49 Michael V. Szpindor Watson, Did Debt Exist Before Money? It Doesn't Matter 39:00 W.H. Hutt's Theory of Idle Resources 39:30 Keynes 42:20 L. Randall Wray Government as Employer of Last Resort
ruclips.net/video/iiKr-i022mY/видео.html At the year 2013 was discovered The Progressive Growth of Money Supply Principle, which shows us how the Money Supply must growth, i.e., the quantity of money that market needs. If we increase the money supply by an amount equal to the sum of interest generated by the financial system during the preceding period, the market interest rate will be the natural interest (Wicksell) Thanks to the Progressive Growth of the Money Supply Principle we know today that it is impossible to return to the Gold Standard.
My main issue with MMT is that it pretty much removes the store of value quality that a good money should have. If I choose to save for the future, but the government, seeing that there are unused resources that it can commandeer for its own purposes, consumes those resources, then it doesn't make sense to save for the future in government issued money. It would be like storing your saved labor in a public location where everyone can just take what they want, when they want. Savings are guaranteed to evaporate over time. At this point, over time, seeing this, people would choose to save in a commodity, like gold or beans or whatever, which would eventually become the new money, logically. A better store of value is a better medium of exchange. Having a monetary system based on the government holding a gun to everyone's head their whole lives is a recipe for a revolution. Many MMT people say that they are simply describing the economic system we currently have, and that I would agree with. Saving money in dollars under your mattress for retirement would be incredibly stupid, as forty years of inflation at the current rates would leave those "savings" in tatters. That is what we have now, a monetary system that you can't rely on as a durable long-term store of value. At least MMT might make more people aware of this fact.
Yeah. - But Randall Way could re employ those "idle" resources of Zimbabwe - you know those idle Zimbabwe dollars that the government there doesn't now use but existed in their trillions ! Then he could tax them so they are worth something !!. Oh ship !! I should not have said that because when you think about it despite taxes Zimbabwe dollars fell to No value at all ! I wonder how that happened if taxes 'drive' value into money ???
@@Rob-fx2dw Yep, as per MMT, rather than basing our monetary system on some kind of commodity that everyone could voluntarily use, you should instead base it on a piece of paper that everyone is forced to use it at gunpoint. Instead of the invisible hand, we now have the invisible boot on our throats. I'm sure glad to have been born in the land of the free!
@@gt5713 Well said. I must add that if the claims of some that MMT is the system we have then why are they saying it wil do better than the system we have? It makes about as much sense as re inventing a wheel to make it the sme as the existing wheel.
@@Rob-fx2dw I think they are saying that this is the system we have, so we should stop pretending to care about deficits and debt, since they don't matter unless there is inflation. Maybe to them it's just a path forward where the government doesn't need to confine themselves to giving massive amounts of assistance to only the super rich and the super poor. Now they can print money for everyone, whenever they feel the itch. I'm sure they tell themselves they are more worried about fairness than they are about self-interested confiscation from others. Remove enough incentives for potentially productive and innovative people, and they will just stop trying. Society as a whole will suffer. Big government leads to a weak society.
This is blatantly wrong. The market voluntarily chooses to store $20 trillion in U.S. savings bonds, not to mention bonds of other countries etc. I totally agree that bonds and currency are not the best place to START saving money, but once you have a degree of savings in a local credit union, local property, some valuable commodities that you actually use, like a bicycle, tools, firearms, etc. After that then you want to look at a balance of commodities(including btc, crypto), stocks, and bonds. There is no way that private companies could support the huge volume of savings that the government supports, because they are dependent on fickle consumer preferences that can come and go. The private sector is definitely a better growth opportunity, because they are more responsive in the short term. But the government mediates productive trade, it quells regional and local isolation or antagonism in favor of collaboration and expanded trade and infrastructure. Property rights require some form of government to enforce in a consistent way. I think effective personal government is the highest priority, but then after that local, state, federal, and yes even global accountability can be beneficial. Yes, inflation is a risk, but all investments and savings have risks. Whenever you accumulate wealth there are costs and difficulties required to defend that wealth. Inflation is just one example. Arguing that USD and other currencies never have any utility as a store of value just flies in the face of all experience. You can pick good or bad stocks, or commodities. Same thing with currencies.
Printing currency is only inflationary (in the CPI sense) when that currency comes into circulation and buys up consumer goods. If people are earning a ton of currency and putting it all in stocks, bonds and other intangible assets, then it will not cause consumer price inflation. But when people need to retire (for example) and start selling their assets to pay for a new house, a new car or holidays, all that inflation potential which had been accumulating in their intangible assets will be unleashed. Whenever money is created and it doesn't increase inflation, it increases fragility instead; it becomes inflation potential (bubbles). When the bubbles pop, they pop suddenly and they ensure that the majority of people always lose.
This is a very interesting point. Is that same thought true, though, of capital accumulation by individuals generally? So save printing currency didn’t accelerate, BUT everyone adopted the Dave Ramsey plan and started saving like crazy in order to invest in growth mutual funds. Then at retirement everyone unloads their asset positions and you get a drop in prices that causes addition sell offs and then then everything goes bust. Why isn’t this any different?
@@timgwallis This is true in general but some kinds of capital are more dependent on money printing than others. Another factor to consider is that money printing, done at the 'right time' and injected into the economy in the 'right way' can prevent the collapse of any bubble. Newly 'printed' currency given out (essentially for free) to hedge funds and investment firms via shady QE programs or asset repurchase agreements allows them to create artificial buy pressure; enough newly printed money injected into the economy in this way can offset the sell pressure which would occur as a result of many investors dumping their stocks at around the same time. This is because asset prices are denominated in a fiat currency and all countries print their own national currencies in proportion to each other as to maintain relatively stable exchange rates. It's essentially a money laundering operation straight from the reserve banks but history has shown us that if the majority of people among the elite participate in a crime, it's not considered a crime.
@@Remindor I’m a bit turned around. Didn’t you counter your own argument? Your original argument, to paraphrase, was that new money creation might not cause inflation today because that inflationary potential could be stored in financial assets, and when those financial assets are liquidated all of the inflationary potential is released. But then you’re follow us, which seemed like a counter of your original point, was that the liquidation of assets wouldn’t cause inflation if new money creation were put to work on encouraging asset purchases. To my ear that sounds to my ear like inflation isn’t a problem because yet more new money creation could prevent a bust.
@@timgwallis Yes you read correctly and maybe I was unclear. My first comment is what I suspect would happen if the Fed will stop bailing out the markets. My second comment is what I suspect will happen if they keep bailing out the markets. That said, I think in both cases, it creates economic fragility regardless; even in the second case where reserve banks manage to stop every stock market 'crash' (relative to the dollar) - The real economic value is still being destroyed even though the nominal value of assets keeps going up; fiat currencies and everything denominated in fiat currencies is losing value in real terms (nominal gains are growing but buying power is dropping). In the first case we will get a stock market crash in nominal terms but the value of fiat currency won't be affected (no hyperinflation). In the second case, there will be no stock market crash but the value of fiat currency will hyperinflate. My view is that either way the economy will be destroyed.
So basically, MMT is giving government carte blanche to spend money and hoping people continue to value that money. Kind of reminds me of when I was a kid playing with Monopoly money.
Despite what MMT proponents claim, MMT has a lot of problems, and chief among those problems and false claims are the following - 1.) MMT is not compatible with a central bank 2.) Taxation is not an effective way to reduce the money supply to fight inflation (for obvious reasons) 3.) Borrowing is not an effective way to reduce the money supply to fight inflation (for subtle reasons) 4.) Tax revenue in the USA is not being destroyed upon receipt, nor stored nor hoarded, by the government to reduce the money supply. 5.) A sovereign that issues it's own currency and issues debt denominated in its own currency, can, indeed, go bankrupt and that's because there are far worse things that could happen if a sovereign's bankruptcy were avoided by simply printing money to pay obligations as they come due. 6.) MMT is not "being practiced" here in the USA, nor anywhere else in the world (in the modern era). 7.) MMT is being hoisted as a "viable monetary regime" to students who lack the academic background to question its validity, such as Law School students ... as, of course, Law School Students are more likely to become future politicians and policy makers, who would place great reliance on (self-proclaimed) experts in monetary economics. 8.) MMT is not new, nor modern. (Arguably partially "in use" widely before the Medieval Era, resulted in hyperinflation, contributing to the *Fall Of The Roman Empire *, and starting what became 900 years of the Dark Ages.) 9.) MMT's viability as a monetary regime is predicated on the mystery that "no inflation" resulted from the Fed's three QE programs from 2008 to 2014, which pushed $3.5 trillion of newly-printed money into circulation. MMT relies on this (so-called) mystery via an implicit presumption that "Things Are Different Now" i.e., "Inflation Does Not Result From Printing Money". My theory is that "Nothing Has Changed". My theory is predicated on the notion that we've simply been blinded by too much change, too fast, drowning-out simple signals. EXAMPLE: In 1995, no one recognized that when Greenspan was venerated as "The Maestro" (for orchestrating the first soft-landing of any economy), that moniker elevated him beyond his office, christening him with charisma that made him practically irreplaceable. That should have been recognized as a bad omen (i.e., a "negative" signal based on the notion/cliche that "power corrupts"). EXAMPLE: In 2000, no one recognized that "The Greenspan Put", was a term coined by the bond market because they were able to correctly predict that the Greenspan-Fed would intervene (i.e., rescue) with increased liquidity. That should have been recognized as a bad omen, because Greenspan had marketed himself as the "High Priest of Free Market Capitalism" (yes, the venerated Ayn Rand attended his 2nd swearing-in) and such a "Priest" would never intervene except under the most dire of circumstances ... and certainly not to "rescue predictably". That should have been recognized as a bad omen (i.e., a "negative" signal based on the notion that the High Priest was an imposter). So, it should be "no shocker" that no one noticed that although the Fed's balance suddenly bloated with each round of QE, the money supply (i.e., M2) did not suddenly bloat. In fact, throughout the painfully slow recovery from 2008 to 2014, M2 continued to grow gently, albeit at an admittedly slightly higher rate than it's average growth rate during the previous 60 years, i.e., roughly from 1947 to 2007. So, under traditional economic theory, one should expect nothing but gentle inflation, at worst. So, that seems to solve the "Mystery about No Inflation* but there's a bit more add to that, which might also help explain *Why the recovery was so slow*. (NOTE: M2 normally grows a bit more than 6% per year due to: 2% for population growth, 2% for productivity growth and 2% for desired inflation). Surely, what we-the-public failed to recall was that the U.S. money supply is comprised of both "Fed-created" money and "commercial bank created" money. Therefore, if banks weren't lending while loans were being paid-down (as in the normal course of business) during the start of the Financial Crisis of 2007-8, then a lot of deleveraging should be expected, and such deleveraging was indeed reported widely in the media, albeit not labeled reassuringly as "expected". Nor was it widely-noted that such deleveraging reduces the "commercial bank created" portion of money supply, i.e., by reducing the volume of outstanding bank-loans. If the Fed had let the money supply shrink from 2008 to 2014 (as the Fed did following the Crash of 1929, which arguably caused the Great Depression), that could have led to monetary deflation in 2008, and perhaps even an economic depression in 2009. The Fed is particularly aware that they have no tools to fight a depression, so the best they can do is avoid deflation of the money supply (which results in money becoming more valuable) The question today is not - *Why was there no inflation from QE* - ... but different kind of question, *Did the Fed do too much QE* . I ask that question because when interest rates are exceedingly low as in an unhealthy economy, banks are literally unable to lend because the risk of default is heightened, and banks must cover that heightened risk-of-default in the interest rate charged. I also suspect that the resulting dearth of bank loans was borne disproportionately by small businesses ... and the Bond Market helped large businesses disproportionately with historically low rates, leading to the highest level of the Gini Index since 1929. Let's not be fooled by the charlatans trying to hoist MMT over our eyes, like a bale of wool spun from their academic negligence and/or our public ignorance. And, finally, sorry for rambling.
You can add these:- MMT claims taxes are destroyed and do not fund government spending. But the reality is if they didn't the federal budget deficit and national debt would be massively higher than they are. Also the historical records as show in the Whitehouse documents would support that - but they don't . www.whitehouse.gov/omb/historical-tables/ Just see table 1.1 Also the MMT claim that taxes drive the value into the money are demonstrably false as shown by the fact that taxes existed in all of the 30 or more countries where the money failed through hyperinflation despite those taxes.
One point I'd add here, 2008-2014 QE was inflationary to producers. PPI went up in most industries. But businesses actually absorbed those costs, due to low consumer demand.
@@FastlaneProductions1 I didn't know that! That's hugely important!! And it reminds me that (I'm pretty sure this is correct)) the US Trade Deficit with China inadvertently suppressed US Inflation by satisfying a lot of "US Aggregate Demand" (when US dollars bought Chinese goods), and to a lesser extent), adding to "US Aggregate Demand" (when China bought US goods). China's tariffs made US goods more expensive to Chinese business who held US dollars after selling their goods to US purchasers, so Chinese firms were "left" with US dollars. But, the People's Bank of China (PBoC) knew this would happen and gladly printed up plenty of Chinese money to buy the "stranded" US dollars from the Chinese firms. The PBoC was issuing Chinese money by buying US dollars with newly-printed yuan, the Chinese money. That's some part of the reason Trump labeled China as a currency manipulator. Yuan is pronounced "You An"
@@FastlaneProductions1 I bookmark the video, and then email it (as "a link") to my email account. I add a a note such as "Search comments for "FastLane" ... and sometimes include a copy of your comments, as I did a few minutes ago. Thank you very much! Only problem is that this creates two emails, one in my in-box, and one in my our-box.
As far as the cigarettes being money. MMT is about state monetary system. Unemployment is not caused by a lack of cigarettes for example. This question is really trivial. I don't think that MMTers say there has never been a barter economy. There is no lack of clarity of how you know what the value of those 100 currency units is if state says what you have to do to get them. It may be 10 units for one labor hour. Not all people want to work for the state and they start offering goods and services to those who do.
@@FabioSantos-sk5ho I'd love to, but first please answer (with a simple Yes or No) a few random questions (with a very simple "Yes" or "No") I'll assume you're totally honest when you answer Yes or No, and that you do (in fact) have the correct answer whenever you say "Yes". 1.) Do you understand how & why the US money supply has grown a bit more that 6% per annum since 1945? 2.) Do you know the difference between "inside" and "outside" money 3.) Do you know why, under F.D.Roosevelt, the US had to leave the gold standard in 1933 and then again, under Nixon, in 1971? 4.) Do you know why FDR issued a Presidential Order making US citizens' ownership of gold illegal? 5.) Do you understand MMT? 6.) Are you favorable to MMT? 7.) Do you know why QE did not result in hyper-inflation? 8.) Do you understand (in theory) how the "Law of Demand & Supply" determines the price (or market value) of goods & services? 9.) Do you understand how the Fed creates money. 10.) Do you understand how Banks create money. 11.) Do you know why the US experienced 3 bouts of stagflation from 1970 to 1981? 12.) Do you understand Supply Side Economics? 13.) Do you understand Says Law? Whenever you say Yes, I'll be able to avoid long-winded explanations, because you'll already be familiar with concepts I refer to.
Rendall wray in his video for beginners is saying that the debt of the state is not relevant. It is the contrary of what austrians are stated. I am confused.
The reason why you would require state money --- is because the LAW says that if you don't pay taxes on what you earned you can be put in jail and have your property seized. This is why you pay your taxes - not going to jail is what motivates people to pay their taxes. State used money to provision for itself - it how it pays for military, courts, infrastructure ect. MONEY originated by authority to provison for itself.
It is amazing and a real expose of the foolishness and hypocrisy of the MMt idea when you point out that they only apply the idea of a benefit of no restraint in spending (their "policy space" claim) to monopoly central governments. Not local government, Not State governments. - Somehow they don't need "Policy Space" despite it being so beneficial to central government.
@@masington56 Why is it so urgent that government has to have "Policy Space" when nobody else has it? If their so called 'Policy Space" is any good it can be done with borrowing after using taxes previously collected ? When the private sector want's to invest they have no option of borrowing from government and making governemnt pay for the borrowing as is done when government borrows.
@@Individual_Lives_Matter Yeah - Like a person is just 'helping' the police with their inquiries when they are taken in for 'questioning' in handcuffs !
Yep. I enjoyed this, but it was work to create a mental model of the points he was making and keep it updated as he spoke. I did a lot of pause/rewind. I wouldn't have gotten as much from it had I attended live. Distill it down to a graphic animation, and I think it'd become much easier for many people to follow. Obviously, that wouldn't fit here, as an in-person lecture, however, his live talk still would've benefited from a slideshow deck. Other MU presenters have used visual aids.
Much of this presentation is true. What people don't realize is that it describes the fiat monetary system, that we have been under since 1973. When the removal of the gold standard was done by Nixon. The problem is that the fiat system and the commodity-based system are quite different. There should be no argument there. The latter is based on the value of money derived from, good faith and trust in the issuer of the currency, and the other is tied to the value of a commodity like gold or silver. Both systems share an inflation/deflation threat. If we tied the value of the currency to gold it would ride the supply and demand gold roller coaster. Not to mention that there is nowhere near enough minded gold in the world to cover world wealth. The gold standsrd makes no sense. As I see it, the danger of MMT lies in the confidence of a sovereign currency, like the US dollar. But that fear is subdued by the fact that the dollar continues to be the world's reserved currency since we left the gold standard 50 years ago. These two systems are so different that the rules that govern them must also be different, and they, in fact, are. The problem is that when we left the gold standard we never accepted a new set of rules. Too many of us know that we have fiat money and still hang on to the Gold Standard rules and ignore the rules of fiat money. The result of that is that it makes it difficult to understand and agree with MMTers when they tell us that deficits are an important and necessary part of MMT and that our government does not finance itself with taxpayer money, and the national debt is nothing to fear. See the attached video. The bitcoin remarks are totally wrong. It is not money because it is neither backed by the good faith and trust of a sovereign nation nor even a commodity. Although the presented gave us a number of true facts relating to MMT he still dwells on the possibility that it supports creating limitless money. Which is absolutely not true. He is confused intentionally or not, about what MMTers support. In a nutshell, they believe that it is the responsibility of governments to keep their economies running at full capacity at all times, no more no less. This means that when there is slack in the economy that the private sector is unable or unwilling to fill, as demonstrated by a high rate of unemployment of people who want to work, the availability of currently idle manufacturing capabilities, and/or raw material resources, the government should spend on programs that fill these gaps. They should spend as much as it takes to fill these needs without unnecessarily competing with the private sector. They are adamant about the fact that too much spending can lead to inflation. So inflation is the limitation of government spending. ruclips.net/video/TDL4c8fMODk/видео.html
MMT puts across the idea of utilizing resources that are idle. The problem with this is it fails to have any effective way to measure for what reason the resources are idle. They may be idle because they are inefficient in producing goods at a price that people are willing to pay or because they are seasonally idle such as farm equipment is idle for long periods due to seasonal factors that relate to their usefulness. There are many other specific reasons why resources are idle for periods . MMT takes no account of these critical factors which render their idea just a poorly thought out pie in the sky idea.
@@timgwallis Why are those resources idle ?. Take for instance wagon wheels for 1830's, wagons. Why is there no demand and the capital resources to make them only in museums? The government could employ people to produce the wheels with those idle resources and then pay people to buy them. But what would that achieve ? Lots of wagon wheels - All what for? Nothing of use at all. Maybe government could just employ unemployed people around the town smashing windows so they could create a demand for new windows. What would that achieve? Nothing good but just waste.
@@Rob-fx2dw I think the idea of resources being idle due to aggregate demand is that purchasing power in the economy is low. Entrepreneurs might find uses for those idle resources if individuals had the excess purchasing power to make the employment of those idle resources profitable for the entrepreneur.
@@timgwallis Idle resources are there for a reason and it is Not all because they are not demanded. It is mostly because they are not demanded at a price that is comparable to other choices people have already made for substitutes or identical goods or services. Purchasing power is term that depends on value in the currency and available profits after considering all costs. If you look at those factors then it becomes more clear that increased money (increased currency) alone will not produce any more purchasing power because introducing more money alone does not produce more purchasing power. All it does is re align purchasing power from the group which gets it to spend first.. The Term "aggregate demand" is an abstract term that does Not exist in the economy ever on it's own. Yet it is thrown around like it is a meaningful term. That is because it ignores the limiting factor which is 'price'. Nothing is sold in any transaction in the economy without the concept of demand, supply and price together so you cannot dismantle part of the equation (demand, supply ,Price) and look at one part (say "Price") and ever get a meaningful understanding of the operation of the economy. Just imagine if someone said "I am going to examine the volume of some drinking glasses by measuring their height to prove taller glasses mean more volume. You would think they are an idiot because the dimension of their height is only one factor that creates their volume.
@@Rob-fx2dw your point is a bit meandering. Of course resources are idle for a reason. Someone which are not due to a lack of demand, but lack of demand is clearly a reason. Look at any recession. Resources were employed prior to the recession. Once an economic dip starts, wages drop and therefore spending potential shrinks. As that spending potential shrinks more resources become idle. That’s what a recession is. That lack of spending potential of the population is alternatively known as lack of aggregate demand. It’s odd to say aggregate demand isn’t real as it’s a simple summation of the demand of individuals across the economy. It’s pretty plain.
4 года назад
On complementary resources - I don't think that's a big issue or at least as important as other issues caused by the (aptly named) employer of last resort employing the unemployed. The list includes - By emptying the unemployed queue salaries are raised. When I moved to where I'm living now there was 100% employment and it was disastrous - people could as for whatever salaries they wanted, agree to arrive late 4 days out of 5 and insist on having fresh flows on their desk every day. - Skills - new project is a kindergarten - ex-coalminers aren't really going to fit the bill - Competition - if your new project is wanted the almost certainly you're going to be competing with the private sector
Actually MMTers have an answer for what ultimately creates the demand for money and guarantees its acceptabality : the obligation to pay taxes and fines. As long as an actor (generally, and preferably, the state, but not necessarly...) has the power to demand payment in a certain currency, that currency becomes acceptable as money, even if it is just a piece of paper that this actor issues backed by nothing.
Nope. The obligation to pay taxes and fines in "the" currency is what gives that currency an edge over other alternative currencies, and it has was already well-known before Mosler, Wray et al were born. And the obligation to pay taxes and fines does not guarantee that said currency will face no compettion ... I guess you missed where Mr Engelhardt mentioned that Ohio accepts bitcoin as payment. And what the MMTer's have missed completely is that not only the requirement to pay in "the" currency is important towards "moniness", it is just a important that the spending of the "tax-revenue currency" must also be widely accepted, and usually is, due to the volume of the spending.
MMT's claim that taxes creates a demand for money is rubbish. It's just an illusion that some people can't see past. Taxes don't drive any demand for the money because they didn't in all economies where taxes were imposed but the money fell to being worthless through infaltion and not wanted by anyone including their own government.
Overall the most honest criticism of MMT I've seen yet. Some of the minor criticisms on the credit theory of money are valid but some of the bigger ones I disagree with. As for govt credit money entering exchange, the govt might tax everyone 10 units a month and pay its workers 11 or more a month, without hiring everyone. This is the way large empires ran their armies two thousand years ago. The purpose of this was to get the private sector to supply the army in a far more efficient and decentralised way. There's all sorts of evidence for the purchasing power of govt money being established through imposed taxes and spending. The French imposing money in Madagascar is a good example. His points about resources being idle are moot as the government can only employ resources that are explicitly for sale. If you want to keep your car pseudo idle and available, then simply don't sell your car. Same applies to grandma selling her labour. And he must admit that the mmt view of spending and inflation is superior to mainstream views as it looks at the actual resource implications. The mainstream theory considers a dollar of tax from anywhere to be good for a dollar of spending anywhere else, which clearly isn't true.
His entire rant on theory of money is sort of dumb in the context of MMT though. MMT is only about sovereign fiat currency. The fact that credit money and medium of exchange currency can both exist is utterly irrelevant to the topic at hand. This talk really reminds me of a creationist trying to 'explain' the theory of evolution. It's sort of sad. I'd like to see a real critique of what MMT does and doesn't predict well, not some irrelevant philosophical rambling. I get it, he doesn't like that MMT concludes that government spending isn't constrained by simple accounting balances (it is constrained by resource limits and inflation, which is sort of a "no duh" IMO). But he doesn't do anything to actually explain, much less challenge, that conclusion. As for where the value of that sovereign fiat currency comes from... MMT is quite clear on that. He even mentioned it earlier in the talk. The government demands (coercive) payment of taxes (and sometimes other payments) in that currency. This is really obvious and uncontroversial. FFS, Russia is using that exact same mechanism to prop up the ruble right now by demanding more payments in rubles. BTW: It is entirely possible for more than one model to fit the facts equally well.
MMTers claim taxes drive money and that puts a value into it. This totally disproved since taxes failed to drive any value or acceptance of money in all of the 30 or more economies in the past 60 years where the money fell to absolutely no value at all due to hyperinflation despite taxes and even their own sovereign governments ditched their own money.
its not that taxes drive money, its that the power to actually collect the taxes drive the value of money. Also, those currencies were backed by gold so they dont apply under MMT.
@@masington56 You said all these currencies were backed by gold. - That is factually WRONG !! Example - Brazil's currrency was a fiat based one. What about Zimbabwe? What about Peru ? Same with all of them. Get your facts right before answering. Also get your understanding of principles right and don't justmake yourself a happless dupe of some power seeking economists who have a faulty theory like MMT . If they were backed by gold then people could have gotten the gold in exchange for the currency. They did Not get it. If I am wrong then who got the gold in any of them?
@@masington56 That cannot be right. Why? - Because there is no evidence that "power to collect" something makes that something more valuable. Does the power to collect you rubbish disposable bin make the rubbish valuable? No, of course not. Did the power to collect taxes make the money more valuable in all those economies where the money became worthless ? No. It did not.
In respect to bitcoin - Why would anyone even have contemplated mining bitcoin if bitcoin was not in their mind a coin that would be exchangeable for something else be that real goods, a coin in a computer game other coins or many or a payment ? They wouldn't if it was not marketed as have some of those properties immediately or the promise of some of them!
They would have done so to test the network"s actual resilience against a 51% attack (which would generate a double spend opportunity). Though, should that theoretical resiliency be confirmed (which it has), the fact that the network's tokens (the private address) would become valuable was fairly predictable, it wasn't strictly necessary that that particular value proposition was necessary to those who may have been, for example, interested primarily in decentralized encryption.
Fun. Curiosity. Novelty. Also obtaining something on the basis that it *might* be used as money in the future is different from obtaining it because it is currently money. All money is currency but not all currency is money and the regression theorem explains the emergence of money. Until a currency has general acceptability it is still a commodity.
@@Castle3179 Seriously not just fun or curiosity or novelty on such a grand scale which unless it has an expectation of being worth more in the future than it does today.
randal way in the same lecture the above speaker said is talking about and taking bits and pieces of from is way points out that the credit portion stated as a tax in Rome I think then at some point the boarder system which way was talking about involved rice and fish came after then during the gold rush is the era came the iou's due to the gold bar being held by what would later become central banks and the jobs portion came in after the point of the unemployed and crowding hiring in the private sector since people hiring would be unlikely to hire someone latter about 5 years (I have gone thruogh this) the jobs plan would be a way to keep people employed until the economy started back up through people opening back up or starting back up and it would set a market based pay and inflation comes in when there is more currency supply then real resources causing the market prices of goods and services which is why they used to mess with the interest rates which are attached to savings account for those that buy treasuries bonds instead of putting in a reg saving account with low interest rates and its from the deficit spending that they pay the interest off every 6 months-1 year
The answer to your doubt about "where does the purchasing power of money come from" is very clearly stated by Mosler. Since fiat currency is a monopoly of the Government, the price level must be a function of prices paid by the Government when it spends, and of the collateral demanded when it lends. For reference: moslereconomics-kg5winhhtut.stackpathdns.com/wp-content/uploads/2019/02/Full-Employment-AND-Price-Stability.pdf
why do black markets not trade in units of currency other than dollars? If there were no tax penalty, would they not be more willing to trade in different denominations?
@@gtpk3527 substantial in relation to what? the vast majority of bitcoin is traded for dollars, and beyond that, the vast majority of monetary exchange in the black market occurs in dollars.
MMT is about government of the government, by the government, for the government. Wander down that path long enough and all of a sudden people become very expensive commodities.
@@lepidoptera9337 taxation is theft. Government routinely lies to us. MMT makes what we earn through voluntary activity worth less and less. MMT is just another nice, academic-sounding term for the government printing all the money it wants then passing the costs off through taxes and inflation. So my question to you is, what did liberty ever do to you to make you want to be a tax slave? Not taxed enough?
@@lepidoptera9337 Oh please! Did you know this country went its first 140+- years without a federal income tax, Excepting the Civil War period when Lincoln printed Greenbacks, we won every foreign war without one. We don't need an income tax. So you agree that your government owns you?
@@lepidoptera9337 Aren't you forgetting the half million White Americans who died in the struggle to free the slaves? And then there were the Whites who struggled alongside Blacks to secure their civil rights, some of whom died in that struggle as well. I think you spectacurlarly missed the point of the sacrifices made by our forebearers for our liberties. They made those sacrifices so that we wouldn't have to put up with things like a progressive income tax, heavy regulations, undeclared, unjust wars, a Central Bank overriding our democratic processes, dependency on a bureaucratic welfare state (Our Founding Fathers warned us about this one) , federal control of education, healthcare, etc. . . The Patriot Act and the surveillance state. Need I go on? They sacrificed so we would be free of government overeach, not free to embrace it and use it to bully our neighbors for not wanting to participate in our enslavement. If our Founders and the generation that fought in the Revolutionary War knew what we were putting up with today, they would be rolling over in graves, knowing that all they fought and died has come has all but disappeared.
The folks at NPR would subscribe to any theory that grants their desired gravy train a level of perceived validation. Fantastic talk. I have a question though and please point out if my question is invalid if I am mischaracterizing the MMT position. If it is that government can create value and print it ad infinitum how does inflation come into existence under MMT? I recall a debate with an MMT member and he gave an example of how fiat money is valued by using his business card. He admitted that on its own, it was worthless to those in the room. However if he then changed the dynamic and said that unless you have one of his cards, you cannot leave the room because an armed guard working for him would shoot you and therefor, you will value the card. Setting aside for a moment the myriad of presupposed authority and all the other problems with that example; but with that example if they could just arbitrarily and forcefully make others value something that was before useless, why then could they not by that logic, print more of the business cards and force others to value them as much as if there were still only one?
I have had many analogous debates with italian supporters of MMT and, as far as I know, your comment is a fair depiction of one of MMT's main tenets. The answer is the following: government, thanks to its monopoly on violence, can establish the price of your freedom; concretely, government can plainly impose upon you how much you should work for it (like the medieval corvèes) or impose upon you how many pieces of paper (or business cards) you owe to it so as to be left free and unharmed. So, as Dr. Engelhardt was explaining, government can indeed increase the amount of circulating money (ie, debt towards the private sector) provided that it is willing to increase the amount of money it will take back from private sector itself (ie, credit towards the private sector). In principle, government can enslave you or just impose upon you a 100% taxation. However, even if government can maintain constant the value of money in terms of the service it monopolistically supplies (ie, your freedom), it cannot do the same in terms of any other physically limited resource within the economy: in your example, people in the room would start trading goods and services in terms of those business cards, but if the only physically available goods were breads and ham in fixed and constant quantities, their prices would soar.Lastly, as I see it, MMT is nothing special or innovative. It is simply a childish idea based on the absurd hypothesis that a capitalistic free-market mechanism (with Walrasian prices, defined property rights, utility and profit maximizing agents) is not capable to allocate all the resources which can be profitably allocated (ie, whose benefits exceed the cost of employment). MMT is simply a regress of marxism, forsaking even the most shallow pretence of logical soundness and historical realism.
@@fabriziofer1994 Agreed, people are not comfortable with the idea that things needn't be coordinated or planned. If someone asks me what my plan for x, y or z is, I would say... I have no idea, let's see what 7 billion people can come up with and let the best win. People don't need to be told about good things, you figure it out for yourself pretty quickly. These MMT beliefs are childish and they'd do well to read Leonard E. Read's paper "I, Pencil". Plus... if you choose a monolithic idea and it fails you're screwed, whereas many ideas are like submarine doors.
@@fabriziofer1994 Thanks for the reply. I'm trying to see their logic behind it, but the whole entire bit hinges on this presupposed authority, infallibility and angelic benevolence of government which actually contradicts itself. An authoritative body willing to put a gun to your head to force you to value the worthless thing they set as currency is right out of the gate unworthy of such consideration. Beyond that, the people that think such a thing is good are quite possibly more evil than those that enacted the farce in the first place. Realistically speaking as well, if MMT could in fact work there would be no such thing as poverty within the confines of a given set of borders but that ignores real concepts of wealth.
Credit money has to trace back, ultimately, to some sort of valued commodity. It was so obvious once Lucas stated it. I'd read Graeber's "Debt" (now recalling it from memory) and felt quite uneasy as he laid out his case for credit money coming first, barter → credit money; dismantling the often told story (by Austrian-school thinkers) of barter → commodity money. There was some sort of wrongness in his logic which (as an amateur at this) I couldn't quite put my finger on in contrast with the intuitive sense of Rothbard's "The Mystery of Banking". This talk caused me to realize that credit money by itself is fine (setting aside its potential to be misused and distort things), and either it and/or commodity money could come at any point after barter (and probably quickly, as Graeber suggests), thence growing/declining as the economy evolved. It seemed to me that Graeber wanted to use his evidence for early credit money to somehow discredit the whole Austrian approach. Austrians may in fact be wrong, historically, about which style of money tends to arise first in an economy. Lucas' talk helped me to understand that this doesn't actually matter. Which sort of money arises first isn't as important as understanding where the *value* in credit money originates. To have a common unit of account for your credit money, that unit has to be or trace back to something with generally recognized value, however circuitous your route in getting there. So it seems to me that while Graeber had plenty of anthropological evidence for the ubiquity of credit money in historical societies, it does no harm to the common Austrian picture of the evolution of commodity money. Graeber also focused early and often in "Debt" on tally stick type money. I at least enjoyed it immensely for the history it presents. I think it also makes a good foil for testing your comprehension of ideas of Austrian economics.
Something else too. So you are Lincoln, and youre issuing a fixed amount of green backs to fund your militias and army. Sure, these piece of paper may not be commodity based. HOWEVER, the fact that there are a *fixed* quantity of green pieces of paper, then the paper becomes a commodity....the commodity is Trust. Trust that the currency itself cannot be undermined. That too is valuable and arguably a real commodity. Like when you purchase access to a VPN service. You arent paying then because you like their server farms, your literally paying them as means of aquiring a feeling of privacy. Privacy is the commodity of VPNs. Trust is the commodity of fixed money, like bitcoin.
@@urbanverificationist Currencies collapse if they become to plentiful and the value gets distorted. Economics is about value, with numerics as proxy. Its isnt about fancy equations at the Fed. As long as the medium of economic exchange becomes more a medium of policy instruction instead of subjective value proxy, it will also collapse. Also, the Weimar Republic in 1927 had a soveriegn currency....hmmmmm.
There is zero evidence for the use of government credit as a medium of exchange early in accounts. There is only evidence for government loans and government tax records. There isn’t even much evidence for early governments as and sort of debtor. They had all the stuff-especially before the Bronze Age Collapse. Their prestige came from their wealth that allowed them to lend. Check the Sumerian accounts again. Future values assumed barley would be an average of 300 units to 1 shekel, but accounts in the present showed a free floating bimonetary system, and accounts of loans show an interest profit on the average values to be assumed. This doesn’t show money as credit at all. It shows barley and silver as credit with the understanding that barley is harvested only once a year and is only sometimes available. (Other taxes paid in kind, for which meticulous market equivalencies were calculated, were similar.)
@@genli5603 Thank you for the comment Gen, The reality you, Austrians, don't want to accept is that monetary systems throughout history have been evolving! Indeed there was a phase of barter economy, then metal monetary economy, and now it is pure fiat money, IOU; and the elite is pretty able to manipulate with the latter one, whose bitter consequences are born by the households.
Gen Li you’re perhaps not going far back enough. How were the first armies formed that served as the basis for the sovereign powers the first states exercised?
The first money was social credit. The first king could not give his soldiers land and wives without first acquiring them. It must also initially do so from within. The sovereignty comes before anything.
Barter and Commodity money transactions are also credit transactions, in the manner that one party is exchanging an asset-backed IOU for goods, and defaulting on it, letting the holder of the IOU the ownership of the commodity backing it. It just adds 2-3 extra layers over traditional barter to explain what money is and can be.
Scarcity comes from human end use. Bitcoin is mathematically scarce, it is not scarce from consumption. Only way Bitcoin could be sound money(I don't deny it can't be currency cause anything can) was if people somehow wanted to collect these digits. Since the digits are ideas and ideas are not scarce, why would the collection happen in the first place when you can create this digits yourself and infinitely. So the only way it happens that others come to accept it as currency is from a peer pressure type of effect and not fundamental scarcity, scarcity that requires consumption. For anything that is scarce but is not consumed has no value. Sound money is money that is ideal commodity because it has all the fundamental reasons for its existence in the market. It is fundamentally scarce and is consumed which gives it value and that is intrinsic value. Not philosophical intrinsic value where even food is not valueable intrinsicly since you can be suicidal and starve yourself so nothing has value but economic intrinsic value where since there is consumption and that is intersubjectively ascertainable that even though I don't want to consume it, I have to accept someone else does, its undeniable, so that gives it intrinsic value. All commodities are intrinsicly valuable but ideal commodities work best as money for the physical properties which makes them ideal commodities. Perishables in one form or another are not ideal commodities because they get consumed without instruction(rust, decay, erosion). Ideal commodities are those that are only consumed on the actor's instruction(changing it into a different form from previous; production). Cryptos are not consumed so they are not sound money. Sure can be currency but not sound money and the ideal currency is one which is sound money. So even though it is better than fiat of today which is maintained by State's force, it can be said that cryptos have current because of social 'trend'(that is current, like fashion trends because of this social current) this way they are more 'democratic' currency. Like bank IOUs of past except this is one bank IOU that cannot be infinitely created so it all just circulates. But the circulation gets value only because of redemption in commodity, without this redemption ultimately the whole thing crashes. So I have my doubts, I get where Lucas is coming from but I think he has certain confusions. Scarcity precedes humans and therefore human nature so human nature is built on scarcity. You cannot change human nature without changing fundamental scarcity which comes about as the desire from consumption. Sure, there may be temporary effects which can make anything currency, but not for too long. Its tulip manias one after another.
It seems that Randall Wray gets cranky when you ask him a question which disproves his theory. Such as why taxes didn't put any value into money where hyperinflation occurred. I have evidence of it and it is indication of the a low level of emotional maturity which that might explain why he cannot apply the necessary rational thinking that is needed to a comprehensive understanding of the subject matter.
@@masington56 Yes. He can't give any rational answer. His answer was just telling me to buy his book ! Why ? because no doubt there is no answer other than admitting he is wrong and that would destroy his theory. He is an angry man who is power driven and careful observation of his mannerisms and facial expressions supports that. Just look at the telling indicators in his videos.
36:01 "And so the question is whether there is any evidence of any fiat money coming into existence that was not tied to any commodity. I don’t think there is." Ummmmmmm -- Greenback Dollars 1862 - 1865 Still in circulation and legal to tender TODAY. So, like, only for about 150 years or so. That's about it til now. For the Money System Common.
Maybe you are right but there is an example in "The Travels of Marco Polo", by Marco Polo where he told a story of how the Great Khan ordered the bark from a tree to be made into money. He then had all the merchants who came into his city exchange their goods for his bark which they used to trade. After they finished their trading he went back to the Great Khan (my spelling is not correct) to collect what he had not sold. Or something like that. I really wish I had the link to the story but it expired. Though I think this might be an example of fiat money. And couldn't you consider tally sticks to be a form of fiat currency?
@@computertooter Thanks. But ---- 'Maybe you are right'. If I'm right, and I'm sure I am, then what else is there to say ? Austrians conveniently forget everything from Aristotle to Menger. Of course Tally Sticks were of 'fiat' origin. I'm just saying that Lucas cannot dismiss fiat public money issuance in the discussion of modern money and MMT. Randy Wray claims there's no such thing as debt-free money. Among other things. MMT combines Post-Keynesian Economics (Wray, Kelton, Mitchell, Fullwiler, etc.) within a Banker Status Quo M.O. (Mosler). All paid for by Mosler. It's a sham. If this were one of their YT channels, I'd already be blocked. Finally, 95 percent of Colonial 'currencies' were issued without associated debt. Only Virginia conflated their money with its repatriation and destruction. Let's talk Public Money. www.govtrack.us/congress/bills/112/hr2990/text Thanks.
You are stressing the semantics of the theory. Fact of the matter is this, who cares how money was created MMTvis agnostic to this. Second, whether its do to expectations or the need to pay taxes, only government can issue it's own currency or institutions that the government allows. This means that there it nothing stopping government from buying anything that's for sale in its own currency. Does this mean that everyone who is not working will be force to get job? No! Chill out dude. If your grandmother doesnt want to work she doesn't have too and that goes for everyone else who doesnt want to work. The job guarantee program is a sophisticated policy tool that if put in effect can help greatly with the business cycle in my opinion. By government paying workers a wage to work you can do away with the minimum wage and simply let those who want to work decide. If the economy is in the downturn and the private sector is laying people off workers can go in to the the job guarantee program and maintain employed. This also means that aggregate spending doesn't take as much of a hit since workers from the private sector now work for the public. Once the economy picks up again workers can transition to the private sector and without having long periods of unemployment.
You’re a moron. Early governments demanded payment in commodity money or in kind. They paid for things in commodity money or in kind. The IOUs were almost never government to individual. The IOUs were farmers and merchants who borrowed real stuff of value from the government in return for future real stuff of greater value. The earliest governments were lenders, not borrowers. They got all the stuff for lending from these levies and taxes.
That's great. - I could go down the beach all the day or go fishing in the hills and still get benefits. Great idea since the government can create more money and buy a everything and give it away to those who don't want to work !! Don't know why nobody has thought of that before .
@@soulfuzz368 Exactly - Some do their best to not work so why would they change. Others would just want the moeny and not care what they achieved in a day's work.
I’ll I heard was....right right right right right right right, okay, right right right right right right, okay, alright, right right right right right, okay. Good Lord
At 35 minute mark, where the speaker says that there is a lack of clarity as to what money would be worth. Well, in this case, the Government would set the worth of money by saying, "I will pay an engineer 100 units per hour". So this argument does not invalidate the MMT as such.
MMT has lots of problems, but chief among them is that 1.) MMT is not compatible with a central bank 2.) Taxation is not an effective way to reduce the money supply (for obvious reasons) 3.) Borrowing is not an effective way to reduce the money supply (for subtle reasons) 4.) MMT is not new, nor modern.
I would like to refer you to the "economic calculation problem" or to be precise to Mises' impossibility of economic calculation under socialism argument.
No, sir, offering to pay an engineer 100 units per hour wouldn't set the value of money because the value of money is set by supply and demand. The government might be overpaying the engineer, or underpaying him. At 35:00, where the speaker says that there is a lack of clarity as to what money would be worth ... well, obviously the next question is "Wait a second -> Was the tax based on income or wealth?" Which leads to the next question, "How did the gov't evaluate the taxpayer's income or wealth?" Which leads to the final question, "How did the government assess how much tax revenue (in the new money) did it need to fund itself for the policies and projects that it wanted to do?" This leads me to conclude that the tax must have been levied in an arbitrary way, and as time goes on the value of money is more firmly established, just like the bitcoin .... like when one of the first bitcoin transactions was to by a pizza and the transaction participants were just guessing what the price in bitcoin should be. I recall that years later the pizza was purchased for something like $25,000 worth of bitcoin ... but still a small purchase at an arbitrary price.
MMT people overestimate quantity of idle reources, they always use examples with factories producing goods. Why? Because it's easy to imagine that factory lines are underperforming and output can be easily increased. But we all know what exactly is highly demanded and insuffiecient in supply. And that's not another pair of shoes. That's housing, education and healthcare. And beleive you or not, all additional money will be sucked by these sectors with no additional supply. MMT guys ignore real economy and real constraints.
Yes. that is true but not only that and the big failure of the idea of employing idle resources is that they have become idle for a reason. That reason is mostly because people are unwilling to purchase their output at current prices. So why would anyone want to purchase their output at a higher price or cost that is higher but hidden by re allocation of taxes to subsidize them and make them appear the same or a cheaper price?
The points made are mostly good ones, specifically, the inconsistent definition of money and the value of idle resources. However, I don't agree with regression theorem, because I believe money functions as an informational tool for enforcing accounting norms, of which, barter and exchange are only a small part. Most of our accounting norms are about where you can go, what you can do, what you should do, what you have to do, what is worthwhile, legal vs illegal, etc. There is largely one source of income but many points of consumption, so consumption and production are very asymmetrical in the way they are negotiated with the rest of society. Consumption is mediated with spending tokens, whereas production is mediated politically, because it is an easier target of political entities, because you have to unify factors of production in one place. That's my only thoughts really.
Strange! I actually find the idea of money being credit convincing after this explanation, but my thought was precisely that that explains why BitCoin is money even though it’s not backed by a commodity. Money is precisely society’s IOU.
Cigarettes as money, even commodity money are thought as money because they eliminates counterparty risk of default. if I receive an IOU instead of a commodity as payment, that would entail credit risk into the transaction. Unless that IOU is government debt/bank debt which I have trust in, then the transaction can happen with the lowest risk of default on repayment.
MMT has lots of problems, but chief among them are the following: 1.) Any MMT Regime is incompatible with a Central Bank , which can fight inflation quickly and precisely by selling its bond portfolio to retrieve money from circulation in the economy. 2.) Taxation is not an effective way to fight inflation. Taxes generally slow the economy. So do higher interest rates. So, to use taxation to reduce the money supply, you have 2 variables that interact, which becomes unpredictable, which requires constant readjustments, which makes life difficult for consumers & investors. There'd be a lot of discontent, especially if taxpayers realize the truth of #1. Not to mention that taxation should never come as a surprise to the taxpayer, because they need time to adjust, and inflation uses that time to establish itself. 3.) Borrowing is not an effective way to fight inflation, especially if bond-buyers realize the truth of #2. Who in their right mind would lend money to a government that can literally print money to pay its debts? Such a lender would realize the need for strong covenants and onerous penalties, and have clout with the government. And of course, we would Chiba and other foreign nations to continue to lend us money ... Oops, that's wrong, we'd need China et al to continue to roll-over their dollar-denominated bonds, and NOT buy goods from the USA. 4.) MMT is not new, nor modern, nor a proper "theory". It is literally a "Medieval Monetary Conjecture" (i.e., "MMC").
You MMT folks are hilarious in your way of poo pooing an alternative monetary theory without actually admitting that there may be more than one theory of economics that works.
Anyone can have a theory but some theories are clear rubbish like believing that cows move the moon around the earth. It is a matter of how well the theory works when confronted with reality. MMT does not work anywhere what you could reasonably describe as well. That's because of a number of a large fallacies it contains which it relies on as pivotal and it clearly contradicts historical facts that are undeniably accurate history.
Lucas Very Good argument that are well thought through and very well expressed. Randall Wray's idea is that taxes "drive" money (meaning they puta value into it) and this view is shared by his fellow MMT pushers like Mitchell, Mosler, Kelton and others. It is clearly wrong since taxes fail to drive any value into money because the evidence is that taxes exist in countries whose money has failed totally such as Brazil, Zimbabwe, Argentina, Chile and more than 30 other countries where the currency failed in the last 100 years. Some of those countries had currencies that were inflated away and their unit values fell by tens of thousands of a percent in a very short time. It's the fact that money has a relationship to goods or services that makes it of value. We call this 'Price' which exists in the demand/ supply/ price concept that only really exists in the real world in transactions. Another reason that MMT's claims about money were false is that before a community created money they were all individuals and then family units with a male and female and then children in a family which then share resources without any money at all. This is the family unit and it precedes all other forms of organized social structure. MMT ignore this for the sake of their own argument alone and if anthropologists ignore it they are simply wrong and in denial of their own existence which came about through a family unit. Families then formed communities with agreed sharing and exchange. This is evident that a form of barter existed before a form of government with a currency existed as it does today in a family where no money authority exists but barter and mutual exchange exists for real goods and services even today. You only have to ask that came first and that was not government since government or an authority cannot exist without a family unit preceding it because there would be nobody in existence to form government without the family unit coming first. Mosler argues that on a trip to Pompei when a tour guide said taxes were collected in form of their coins to pay people he tried to correct the guide of his group that people got paid first and then taxes were collected. The fallacy of that claim arises from Molser's and MMT's ignoring what that should know and what is fact to rationalize their observations to what they previously incorrectly conceived as theory. The realty is the money cannot have came first before someone worked for it since money cannot exist before work is done to create it. Organization and co operation Must come first before production is done in any society to create any form of currency. Things cannot exist before the agreement to exchange be it ideas or goods or services of any kind for a common cause. The changing of the concepts of money in MMT occurs frequently and it Kills the theory as being credible since in any reasonable conistant argument you cannot alter concepts to fit your claims or circumstances.
The family unit also explains the coercive “egalitarian” hunter gatherer societies. They travel in clans of extended families. That’s why people could make such onerous claims on each other. Only when you break away from these extended obligations can you develop ownership within a clan (vs between clans). Even the limited form of intraclan communalism is completely crippling to the development of surplus, capital, trade, etc. Pretty interesting.
@@genli5603 Very y interesting stuff. But breaking away from within a particular clan is just connecting to a larger entity since nobody can live for long without others and length of life is one requirement that allows us to grow wealth and are able to invest and pass on new knowledge that benefits others.
Just listening at the beginning of the talk. An economist who „...usally does not talk about money, but nowthat its been pushed into the limelight...“. I wonder by what? Oh yeah, that big financial crash that the economic science community did not see comming. Mainstream macroeconomics does not include money outside of what central banks do. In a system thats called capitalism thats realy astonishing. Also he doesn‘t like reality thats why he does economics. And than goes on to talk about barter was a thing or not. He offers an opinion instead of scientific arguments. The barter idea is from Adam Smith and developed at a time when nobody knew better. Anthropologists now do know better. Beeing ignorent of historical payment systems does not make a good argument. Its been 12 years now since the financial crises and mainstream economics cant even explain „stagdeflation“! They go on dealing in phlogiston and FWUTV and beeing smug about it. As a student you study all this stuff in your lectures that explain nothing and all you get is a shrug and more models with asumptions that are outrages. No not funny and no not „right“ and I don‘t care how many holes mmt has - at least they start including money in economic theory.
This guy is the worst public speaker of all history. Ever other word is “right” muttered under his breath and some grating “ummmm *pop*.” Absolutely impossible to listen to which is such a total shame.
Some fallacies of MMT - 1. Taxes drive money and make it valuable. Reality - Taxes do not drive money and the proof is that in all of the countries over the past hundred years there were taxes and the money fell to zero value due to inflation. - Conclusion - Taxes do not drive money - the claim is Wrong. MMT claims Taxes are not used to pay for government spending. - Historical facts- The US government (Whitehouse) records for the last 200 or more years show tax collections are the main component of government budget spending (i.e outgoings). see www.whitehouse.gov/omb/historical-tables/ and Table 1.1 - SUMMARY OF RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS ( - ): 1789 - 2024 conclusion - MMT is Wrong again. MMT claims the national debt does not have to be paid off !!. - Facts are the national debt (sum of treasury bond debt ) is continually paid off throughout the year with existing money when the treasury bonds that were sold some time ago reach their maturity date. Taxes are used to pay for them so the lenders get their money back. New debt is sold to replace the bonds paid off so it appears that the debt is not paid off. Conclusion - MMT is wring in it's claim. More to come.
@Nonso Okonkwo Fiat money is created out of debt. Debt cannot back money since if it could anyone's debts could back their own other debts which is an oxymoron.
@Nonso Okonkwo If it is credit it may be debt to someone but it is a financial asset to the person ity is owed to. No financial asstes are real assets in a fiat money system.
@@steviewonder417 You have misread what I wrote- I will re phrase it so it is simpler:- All currencies where there was rampant inflation and as a consequence the currencies fell to no value despite taxes. So anyone who can actually think properly would understand that the MMT idea of taxes driving money is just plain stupid. Taxes are Not levied on the currency. They are levied on production activities that are expressed in a currency and Not on the currency itself.
@@Rob-fx2dw You're changing your claim now but it doesn't matter you still don't get it. Money is the main driver of a sociological system of incentives that gets people to do paid work so they may pay the tax imposed on them by the sovereign. Money is about debt and power not whatever goofy libertarian bullshit you believe. Saying taxes aren't levied on the currency is nonsense as we have examples of wealth taxes and death taxe that have nothing to do with work. Try stepping outside your little cult bubble for a change.
70s inflation was created by foreign oil monopoly. The point Engelhardt presents about targeting spending is not wrong concerning MMT but it is pretty much universally accepted by Post Keynesians that 70s inflation was created by oil prices rising rapidly. Bitcoin can never be money because It is not backed by government taxes. Austrians cannot deny this even about the gold standard or gold coin money. Gold price was stable during gold standard and It has been very volatile after that. Same thing with bitcoin. So government taxes behind money make the value stable. Engelhardt doesn't get the price level and value of money correct in MMT. MMT states that government is currency monopolist, the price level is determined what government demands from the private sector to get the money. Mosler gives an example of government paying for people to join the military and in this simple model it makes a difference if $100 or $200 dollar salary is offered for the soldiers. Some will join military, some sell food to the soldiers to pay their taxes etc. This is enough to determine price level Demand for money is created by threat of violence. State is not run like a church, Austrians know this. It is a lot better analysis than Bob Murphy would do but find It deficient. You cannot say that unemployment is pseudo idleness. That is just stupidity.
Very few economists have concerned themselves with actual early history. When they do, it’s usually to twist it around to their point of view-like the WILD misinterpretation of the quite straightforward neo-Sumerian accounts. These do not even vaguely begin to show a central government creating money through credit. It shows a government getting rich with levies in commodity and metallic moneys with two main free floating currencies with a nominal trade value that was often different in real world terms, leading to elaborate accounts of the current market prices of whatever they might be owed in various alternatives commodities. (Joe farmer owes 1 calf per year. This year a calf is worth 1 shekel or 330 measures of barley or the wool of 12 sheep. So if he brings me 312 measures of barley, he’s trying to skimp on his taxes.). This shows that the foundation of the monetary system was real market prices and not some imaginary government value measure. I’m addition, the skim over the fact that the government in these states rarely issued IOUs. All the data points to the government being the lender of real stuff in return for future payment that included interest. Which means that regular people were the money inventors, not the government. Which makes no sense at all and is exactly the opposite what they’re trying to say. Historically, governments only issued IOUs when they were short on money. Which usually meant they were unstable.
Lucas like many neo- austrian and neo- classical economists you find it hard to see beyond your paradigm. I honestly believe you haven't engaged seriously with the MMT body of thought that is out there.
@@genli5603 Where do they fail utterly to understand very simple early accounts and lie about the historical data? Have you read any of Michael Hudson's work?
The Neo-Austrians who are commenting here, are big on rhetoric, but small on empirical evidence and peer reviewed scholarship. Their knowledge of the history of money, public finance and taxation is selective, biased and erroneous. It is a waste of time attempting to have a serious academic discussion with them.
The MMT solution is to address the boom/busts cycles which leave out many unemployed. This happens due to rise in interest rates at near full employment (Phillips Curve). Instead of tackling inflation through interest rate change, which would leave many unemployed, MMT proposes to soften inflation by providing job guarantee minimum wage when the person is unemployed. This would not only reduce consumption to lower inflation but also maintain decent survival of the unemployed person. Governments can control markets to avoid depression/recessions if they use MMT!!
And the Austrians would reply that: the recession status is merely where we were supposed to be in the first place, once the true value of credit has caught up, and the underlying absence of real liquidity has been exposed. Alan Greenspan papered over the cracks and ultimately delayed a crash until 2008. The same thing keeps happening because people are happy to keep exchanging IOUs while tiptoeing around systemic risk.
Names dropped(for research):
3:06 Alfred Mitchell-Innes, Credit theory of money
3:13 Georg Friedrich Knapp, State theory of money
3:21 "reading from the more modern monetary theorists" Bill Mitchel, Warren Mosler, L. Randall Wray, Scott Fullwiler, Stephanie Kelton
3:36 L. Randall Wray, Modern monetary theory for beginners
he mostly focuses on the work of L. Randall Wray, Scott Fullwiler and, Stephanie Kelton.
More Names:
19:46 Mises, Theory of Money and Credit
26:49 Michael V. Szpindor Watson, Did Debt Exist Before Money? It Doesn't Matter
39:00 W.H. Hutt's Theory of Idle Resources
39:30 Keynes
42:20 L. Randall Wray Government as Employer of Last Resort
They really do just hate the idea of being "out of control". We can't just leave people alone and not control society. Society needs to be shaped.
These are sick people.
your every move is for a king you don't know. Welcome to communism.
ruclips.net/video/iiKr-i022mY/видео.html At the year 2013 was discovered The Progressive Growth of Money Supply Principle, which shows us how the Money Supply must growth, i.e., the quantity of money that market needs. If we increase the money supply by an amount equal to the sum of interest generated by the financial system during the preceding period, the market interest rate will be the natural interest (Wicksell) Thanks to the Progressive Growth of the Money Supply Principle we know today that it is impossible to return to the Gold Standard.
Who’s “they”?
@@herbertspencer8293 Would the gold standard be the only way to have money without top down control?
A path?, You mean like a road?... A road to... Wait!
S. E. R. F. D. O. M.
My main issue with MMT is that it pretty much removes the store of value quality that a good money should have. If I choose to save for the future, but the government, seeing that there are unused resources that it can commandeer for its own purposes, consumes those resources, then it doesn't make sense to save for the future in government issued money. It would be like storing your saved labor in a public location where everyone can just take what they want, when they want. Savings are guaranteed to evaporate over time.
At this point, over time, seeing this, people would choose to save in a commodity, like gold or beans or whatever, which would eventually become the new money, logically. A better store of value is a better medium of exchange. Having a monetary system based on the government holding a gun to everyone's head their whole lives is a recipe for a revolution.
Many MMT people say that they are simply describing the economic system we currently have, and that I would agree with. Saving money in dollars under your mattress for retirement would be incredibly stupid, as forty years of inflation at the current rates would leave those "savings" in tatters. That is what we have now, a monetary system that you can't rely on as a durable long-term store of value. At least MMT might make more people aware of this fact.
Yeah. - But Randall Way could re employ those "idle" resources of Zimbabwe - you know those idle Zimbabwe dollars that the government there doesn't now use but existed in their trillions ! Then he could tax them so they are worth something !!.
Oh ship !! I should not have said that because when you think about it despite taxes Zimbabwe dollars fell to No value at all ! I wonder how that happened if taxes 'drive' value into money ???
@@Rob-fx2dw Yep, as per MMT, rather than basing our monetary system on some kind of commodity that everyone could voluntarily use, you should instead base it on a piece of paper that everyone is forced to use it at gunpoint. Instead of the invisible hand, we now have the invisible boot on our throats. I'm sure glad to have been born in the land of the free!
@@gt5713 Well said. I must add that if the claims of some that MMT is the system we have then why are they saying it wil do better than the system we have? It makes about as much sense as re inventing a wheel to make it the sme as the existing wheel.
@@Rob-fx2dw I think they are saying that this is the system we have, so we should stop pretending to care about deficits and debt, since they don't matter unless there is inflation. Maybe to them it's just a path forward where the government doesn't need to confine themselves to giving massive amounts of assistance to only the super rich and the super poor. Now they can print money for everyone, whenever they feel the itch. I'm sure they tell themselves they are more worried about fairness than they are about self-interested confiscation from others.
Remove enough incentives for potentially productive and innovative people, and they will just stop trying. Society as a whole will suffer. Big government leads to a weak society.
This is blatantly wrong. The market voluntarily chooses to store $20 trillion in U.S. savings bonds, not to mention bonds of other countries etc.
I totally agree that bonds and currency are not the best place to START saving money, but once you have a degree of savings in a local credit union, local property, some valuable commodities that you actually use, like a bicycle, tools, firearms, etc.
After that then you want to look at a balance of commodities(including btc, crypto), stocks, and bonds. There is no way that private companies could support the huge volume of savings that the government supports, because they are dependent on fickle consumer preferences that can come and go. The private sector is definitely a better growth opportunity, because they are more responsive in the short term. But the government mediates productive trade, it quells regional and local isolation or antagonism in favor of collaboration and expanded trade and infrastructure. Property rights require some form of government to enforce in a consistent way. I think effective personal government is the highest priority, but then after that local, state, federal, and yes even global accountability can be beneficial.
Yes, inflation is a risk, but all investments and savings have risks. Whenever you accumulate wealth there are costs and difficulties required to defend that wealth. Inflation is just one example.
Arguing that USD and other currencies never have any utility as a store of value just flies in the face of all experience. You can pick good or bad stocks, or commodities. Same thing with currencies.
Printing currency is only inflationary (in the CPI sense) when that currency comes into circulation and buys up consumer goods. If people are earning a ton of currency and putting it all in stocks, bonds and other intangible assets, then it will not cause consumer price inflation. But when people need to retire (for example) and start selling their assets to pay for a new house, a new car or holidays, all that inflation potential which had been accumulating in their intangible assets will be unleashed. Whenever money is created and it doesn't increase inflation, it increases fragility instead; it becomes inflation potential (bubbles). When the bubbles pop, they pop suddenly and they ensure that the majority of people always lose.
This is a very interesting point. Is that same thought true, though, of capital accumulation by individuals generally?
So save printing currency didn’t accelerate, BUT everyone adopted the Dave Ramsey plan and started saving like crazy in order to invest in growth mutual funds. Then at retirement everyone unloads their asset positions and you get a drop in prices that causes addition sell offs and then then everything goes bust. Why isn’t this any different?
@@timgwallis This is true in general but some kinds of capital are more dependent on money printing than others. Another factor to consider is that money printing, done at the 'right time' and injected into the economy in the 'right way' can prevent the collapse of any bubble.
Newly 'printed' currency given out (essentially for free) to hedge funds and investment firms via shady QE programs or asset repurchase agreements allows them to create artificial buy pressure; enough newly printed money injected into the economy in this way can offset the sell pressure which would occur as a result of many investors dumping their stocks at around the same time. This is because asset prices are denominated in a fiat currency and all countries print their own national currencies in proportion to each other as to maintain relatively stable exchange rates.
It's essentially a money laundering operation straight from the reserve banks but history has shown us that if the majority of people among the elite participate in a crime, it's not considered a crime.
@@Remindor I’m a bit turned around. Didn’t you counter your own argument?
Your original argument, to paraphrase, was that new money creation might not cause inflation today because that inflationary potential could be stored in financial assets, and when those financial assets are liquidated all of the inflationary potential is released.
But then you’re follow us, which seemed like a counter of your original point, was that the liquidation of assets wouldn’t cause inflation if new money creation were put to work on encouraging asset purchases.
To my ear that sounds to my ear like inflation isn’t a problem because yet more new money creation could prevent a bust.
@@timgwallis Yes you read correctly and maybe I was unclear.
My first comment is what I suspect would happen if the Fed will stop bailing out the markets.
My second comment is what I suspect will happen if they keep bailing out the markets.
That said, I think in both cases, it creates economic fragility regardless; even in the second case where reserve banks manage to stop every stock market 'crash' (relative to the dollar) - The real economic value is still being destroyed even though the nominal value of assets keeps going up; fiat currencies and everything denominated in fiat currencies is losing value in real terms (nominal gains are growing but buying power is dropping).
In the first case we will get a stock market crash in nominal terms but the value of fiat currency won't be affected (no hyperinflation). In the second case, there will be no stock market crash but the value of fiat currency will hyperinflate.
My view is that either way the economy will be destroyed.
@@Remindor gotcha. Much clearer, thank you.
Yes. Replace the private sector with the public sector. What could go wrong?
So basically, MMT is giving government carte blanche to spend money and hoping people continue to value that money. Kind of reminds me of when I was a kid playing with Monopoly money.
Sign on the back of public toilet door "HELP, HELP, HEP - The government is trying to saaaave me ! "
Despite what MMT proponents claim, MMT has a lot of problems, and chief among those problems and false claims are the following -
1.) MMT is not compatible with a central bank
2.) Taxation is not an effective way to reduce the money supply to fight inflation (for obvious reasons)
3.) Borrowing is not an effective way to reduce the money supply to fight inflation (for subtle reasons)
4.) Tax revenue in the USA is not being destroyed upon receipt, nor stored nor hoarded, by the government to reduce the money supply.
5.) A sovereign that issues it's own currency and issues debt denominated in its own currency, can, indeed, go bankrupt and that's because there are far worse things that could happen if a sovereign's bankruptcy were avoided by simply printing money to pay obligations as they come due.
6.) MMT is not "being practiced" here in the USA, nor anywhere else in the world (in the modern era).
7.) MMT is being hoisted as a "viable monetary regime" to students who lack the academic background to question its validity, such as Law School students ... as, of course, Law School Students are more likely to become future politicians and policy makers, who would place great reliance on (self-proclaimed) experts in monetary economics.
8.) MMT is not new, nor modern. (Arguably partially "in use" widely before the Medieval Era, resulted in hyperinflation, contributing to the *Fall Of The Roman Empire
*, and starting what became 900 years of the Dark Ages.)
9.) MMT's viability as a monetary regime is predicated on the mystery that "no inflation" resulted from the Fed's three QE programs from 2008 to 2014, which pushed $3.5 trillion of newly-printed money into circulation. MMT relies on this (so-called) mystery via an implicit presumption that "Things Are Different Now" i.e., "Inflation Does Not Result From Printing Money". My theory is that "Nothing Has Changed". My theory is predicated on the notion that we've simply been blinded by too much change, too fast, drowning-out simple signals.
EXAMPLE: In 1995, no one recognized that when Greenspan was venerated as "The Maestro" (for orchestrating the first soft-landing of any economy), that moniker elevated him beyond his office, christening him with charisma that made him practically irreplaceable. That should have been recognized as a bad omen (i.e., a "negative" signal based on the notion/cliche that "power corrupts").
EXAMPLE: In 2000, no one recognized that "The Greenspan Put", was a term coined by the bond market because they were able to correctly predict that the Greenspan-Fed would intervene (i.e., rescue) with increased liquidity. That should have been recognized as a bad omen, because Greenspan had marketed himself as the "High Priest of Free Market Capitalism" (yes, the venerated Ayn Rand attended his 2nd swearing-in) and such a "Priest" would never intervene except under the most dire of circumstances ... and certainly not to "rescue predictably". That should have been recognized as a bad omen (i.e., a "negative" signal based on the notion that the High Priest was an imposter).
So, it should be "no shocker" that no one noticed that although the Fed's balance suddenly bloated with each round of QE, the money supply (i.e., M2) did not suddenly bloat. In fact, throughout the painfully slow recovery from 2008 to 2014, M2 continued to grow gently, albeit at an admittedly slightly higher rate than it's average growth rate during the previous 60 years, i.e., roughly from 1947 to 2007. So, under traditional economic theory, one should expect nothing but gentle inflation, at worst. So, that seems to solve the "Mystery about No Inflation* but there's a bit more add to that, which might also help explain *Why the recovery was so slow*. (NOTE: M2 normally grows a bit more than 6% per year due to: 2% for population growth, 2% for productivity growth and 2% for desired inflation).
Surely, what we-the-public failed to recall was that the U.S. money supply is comprised of both "Fed-created" money and "commercial bank created" money. Therefore, if banks weren't lending while loans were being paid-down (as in the normal course of business) during the start of the Financial Crisis of 2007-8, then a lot of deleveraging should be expected, and such deleveraging was indeed reported widely in the media, albeit not labeled reassuringly as "expected". Nor was it widely-noted that such deleveraging reduces the "commercial bank created" portion of money supply, i.e., by reducing the volume of outstanding bank-loans.
If the Fed had let the money supply shrink from 2008 to 2014 (as the Fed did following the Crash of 1929, which arguably caused the Great Depression), that could have led to monetary deflation in 2008, and perhaps even an economic depression in 2009. The Fed is particularly aware that they have no tools to fight a depression, so the best they can do is avoid deflation of the money supply (which results in money becoming more valuable)
The question today is not - *Why was there no inflation from QE* - ... but different kind of question, *Did the Fed do too much QE* . I ask that question because when interest rates are exceedingly low as in an unhealthy economy, banks are literally unable to lend because the risk of default is heightened, and banks must cover that heightened risk-of-default in the interest rate charged. I also suspect that the resulting dearth of bank loans was borne disproportionately by small businesses ... and the Bond Market helped large businesses disproportionately with historically low rates, leading to the highest level of the Gini Index since 1929.
Let's not be fooled by the charlatans trying to hoist MMT over our eyes, like a bale of wool spun from their academic negligence and/or our public ignorance. And, finally, sorry for rambling.
You can add these:-
MMT claims taxes are destroyed and do not fund government spending. But the reality is if they didn't the federal budget deficit and national debt would be massively higher than they are. Also the historical records as show in the Whitehouse documents would support that - but they don't . www.whitehouse.gov/omb/historical-tables/ Just see table 1.1
Also the MMT claim that taxes drive the value into the money are demonstrably false as shown by the fact that taxes existed in all of the 30 or more countries where the money failed through hyperinflation despite those taxes.
Dude I wish youtube had a feature to bookmark a comment. You should seriously make a video on your points here. Hell I'd watch it!
One point I'd add here, 2008-2014 QE was inflationary to producers. PPI went up in most industries. But businesses actually absorbed those costs, due to low consumer demand.
@@FastlaneProductions1 I didn't know that! That's hugely important!! And it reminds me that (I'm pretty sure this is correct)) the US Trade Deficit with China inadvertently suppressed US Inflation by satisfying a lot of "US Aggregate Demand" (when US dollars bought Chinese goods), and to a lesser extent), adding to "US Aggregate Demand" (when China bought US goods).
China's tariffs made US goods more expensive to Chinese business who held US dollars after selling their goods to US purchasers, so Chinese firms were "left" with US dollars. But, the People's Bank of China (PBoC) knew this would happen and gladly printed up plenty of Chinese money to buy the "stranded" US dollars from the Chinese firms. The PBoC was issuing Chinese money by buying US dollars with newly-printed yuan, the Chinese money. That's some part of the reason Trump labeled China as a currency manipulator.
Yuan is pronounced "You An"
@@FastlaneProductions1 I bookmark the video, and then email it (as "a link") to my email account. I add a a note such as "Search comments for "FastLane" ... and sometimes include a copy of your comments, as I did a few minutes ago. Thank you very much!
Only problem is that this creates two emails, one in my in-box, and one in my our-box.
As far as the cigarettes being money. MMT is about state monetary system. Unemployment is not caused by a lack of cigarettes for example. This question is really trivial. I don't think that MMTers say there has never been a barter economy.
There is no lack of clarity of how you know what the value of those 100 currency units is if state says what you have to do to get them. It may be 10 units for one labor hour. Not all people want to work for the state and they start offering goods and services to those who do.
Hi Kristjan
@@neilanderson891
Particularly curious on 1) but would love to hear your exposition from 1) to 4)
@@FabioSantos-sk5ho I'd love to, but first please answer (with a simple Yes or No) a few random questions (with a very simple "Yes" or "No")
I'll assume you're totally honest when you answer Yes or No, and that you do (in fact) have the correct answer whenever you say "Yes".
1.) Do you understand how & why the US money supply has grown a bit more that 6% per annum since 1945?
2.) Do you know the difference between "inside" and "outside" money
3.) Do you know why, under F.D.Roosevelt, the US had to leave the gold standard in 1933 and then again, under Nixon, in 1971?
4.) Do you know why FDR issued a Presidential Order making US citizens' ownership of gold illegal?
5.) Do you understand MMT?
6.) Are you favorable to MMT?
7.) Do you know why QE did not result in hyper-inflation?
8.) Do you understand (in theory) how the "Law of Demand & Supply" determines the price (or market value) of goods & services?
9.) Do you understand how the Fed creates money.
10.) Do you understand how Banks create money.
11.) Do you know why the US experienced 3 bouts of stagflation from 1970 to 1981?
12.) Do you understand Supply Side Economics?
13.) Do you understand Says Law?
Whenever you say Yes, I'll be able to avoid long-winded explanations, because you'll already be familiar with concepts I refer to.
@@neilanderson891
Yes 1) to 13), with the exception of 6)
@@FabioSantos-sk5ho 2 days later, I'm desiring a response (pos or neg) before addressing the other issues. Lost interest?
The price anker rises form the relationship between 1. the amount of spending in relation to the kind of work 2. Taxes 3. Will to save
This guys knowledge is incredible! Facebook news, didn't know what mmt was last week..
Economies are gardens to be tended, not machines to be engineered.
That was supposed to refute MMT?
Rendall wray in his video for beginners is saying that the debt of the state is not relevant. It is the contrary of what austrians are stated. I am confused.
Yes. I see better, it is the critic.
The reason why you would require state money --- is because the LAW says that if you don't pay taxes on what you earned you can be put in jail and have your property seized. This is why you pay your taxes - not going to jail is what motivates people to pay their taxes. State used money to provision for itself - it how it pays for military, courts, infrastructure ect. MONEY originated by authority to provison for itself.
I loved this guy's talk, but did anyone else notice he has a tick of saying "right"?
Now that you said it, its all i hear 😤😤😫
@@ouss Lol
I know, right? ;) lol
It is amazing and a real expose of the foolishness and hypocrisy of the MMt idea when you point out that they only apply the idea of a benefit of no restraint in spending (their "policy space" claim) to monopoly central governments. Not local government, Not State governments. - Somehow they don't need "Policy Space" despite it being so beneficial to central government.
no, the argument is that they don't have policy space unless they first collect taxes.
@@masington56 Why is it so urgent that government has to have "Policy Space" when nobody else has it?
If their so called 'Policy Space" is any good it can be done with borrowing after using taxes previously collected ?
When the private sector want's to invest they have no option of borrowing from government and making governemnt pay for the borrowing as is done when government borrows.
@@Rob-fx2dw But the government Is HeRe To HeLp YoU….
@@Individual_Lives_Matter Yeah - Like a person is just 'helping' the police with their inquiries when they are taken in for 'questioning' in handcuffs !
@@Individual_Lives_Matter ARRGGGHHHH - Noooooooooooooooooo! - So who do i get to save me from the HeLp ?
I’d like to see a different lecturer do a lecture on this subject. I wasn’t able to follow due to his style of presentation and delivery.
Yep. I enjoyed this, but it was work to create a mental model of the points he was making and keep it updated as he spoke. I did a lot of pause/rewind. I wouldn't have gotten as much from it had I attended live. Distill it down to a graphic animation, and I think it'd become much easier for many people to follow. Obviously, that wouldn't fit here, as an in-person lecture, however, his live talk still would've benefited from a slideshow deck. Other MU presenters have used visual aids.
@@atsdroid Nothing could benefit this smug, pretentious little fucker.
Much of this presentation is true. What people don't realize is that it describes the fiat monetary system, that we have been under since 1973. When the removal of the gold standard was done by Nixon. The problem is that the fiat system and the commodity-based system are quite different. There should be no argument there. The latter is based on the value of money derived from, good faith and trust in the issuer of the currency, and the other is tied to the value of a commodity like gold or silver. Both systems share an inflation/deflation threat. If we tied the value of the currency to gold it would ride the supply and demand gold roller coaster. Not to mention that there is nowhere near enough minded gold in the world to cover world wealth. The gold standsrd makes no sense. As I see it, the danger of MMT lies in the confidence of a sovereign currency, like the US dollar. But that fear is subdued by the fact that the dollar continues to be the world's reserved currency since we left the gold standard 50 years ago. These two systems are so different that the rules that govern them must also be different, and they, in fact, are. The problem is that when we left the gold standard we never accepted a new set of rules. Too many of us know that we have fiat money and still hang on to the Gold Standard rules and ignore the rules of fiat money. The result of that is that it makes it difficult to understand and agree with MMTers when they tell us that deficits are an important and necessary part of MMT and that our government does not finance itself with taxpayer money, and the national debt is nothing to fear. See the attached video. The bitcoin remarks are totally wrong. It is not money because it is neither backed by the good faith and trust of a sovereign nation nor even a commodity. Although the presented gave us a number of true facts relating to MMT he still dwells on the possibility that it supports creating limitless money. Which is absolutely not true. He is confused intentionally or not, about what MMTers support. In a nutshell, they believe that it is the responsibility of governments to keep their economies running at full capacity at all times, no more no less. This means that when there is slack in the economy that the private sector is unable or unwilling to fill, as demonstrated by a high rate of unemployment of people who want to work, the availability of currently idle manufacturing capabilities, and/or raw material resources, the government should spend on programs that fill these gaps. They should spend as much as it takes to fill these needs without unnecessarily competing with the private sector. They are adamant about the fact that too much spending can lead to inflation. So inflation is the limitation of government spending. ruclips.net/video/TDL4c8fMODk/видео.html
MMT puts across the idea of utilizing resources that are idle. The problem with this is it fails to have any effective way to measure for what reason the resources are idle. They may be idle because they are inefficient in producing goods at a price that people are willing to pay or because they are seasonally idle such as farm equipment is idle for long periods due to seasonal factors that relate to their usefulness. There are many other specific reasons why resources are idle for periods . MMT takes no account of these critical factors which render their idea just a poorly thought out pie in the sky idea.
I might be wrong, but I believe the position of the MMT school is that resources are idle because of a lack of aggregate demand.
@@timgwallis Why are those resources idle ?. Take for instance wagon wheels for 1830's, wagons. Why is there no demand and the capital resources to make them only in museums? The government could employ people to produce the wheels with those idle resources and then pay people to buy them. But what would that achieve ? Lots of wagon wheels - All what for? Nothing of use at all.
Maybe government could just employ unemployed people around the town smashing windows so they could create a demand for new windows. What would that achieve?
Nothing good but just waste.
@@Rob-fx2dw I think the idea of resources being idle due to aggregate demand is that purchasing power in the economy is low. Entrepreneurs might find uses for those idle resources if individuals had the excess purchasing power to make the employment of those idle resources profitable for the entrepreneur.
@@timgwallis Idle resources are there for a reason and it is Not all because they are not demanded. It is mostly because they are not demanded at a price that is comparable to other choices people have already made for substitutes or identical goods or services.
Purchasing power is term that depends on value in the currency and available profits after considering all costs. If you look at those factors then it becomes more clear that increased money (increased currency) alone will not produce any more purchasing power because introducing more money alone does not produce more purchasing power. All it does is re align purchasing power from the group which gets it to spend first..
The Term "aggregate demand" is an abstract term that does Not exist in the economy ever on it's own. Yet it is thrown around like it is a meaningful term.
That is because it ignores the limiting factor which is 'price'.
Nothing is sold in any transaction in the economy without the concept of demand, supply and price together so you cannot dismantle part of the equation (demand, supply ,Price) and look at one part (say "Price") and ever get a meaningful understanding of the operation of the economy. Just imagine if someone said "I am going to examine the volume of some drinking glasses by measuring their height to prove taller glasses mean more volume. You would think they are an idiot because the dimension of their height is only one factor that creates their volume.
@@Rob-fx2dw your point is a bit meandering. Of course resources are idle for a reason. Someone which are not due to a lack of demand, but lack of demand is clearly a reason. Look at any recession. Resources were employed prior to the recession. Once an economic dip starts, wages drop and therefore spending potential shrinks. As that spending potential shrinks more resources become idle. That’s what a recession is. That lack of spending potential of the population is alternatively known as lack of aggregate demand. It’s odd to say aggregate demand isn’t real as it’s a simple summation of the demand of individuals across the economy. It’s pretty plain.
On complementary resources - I don't think that's a big issue or at least as important as other issues caused by the (aptly named) employer of last resort employing the unemployed. The list includes
- By emptying the unemployed queue salaries are raised. When I moved to where I'm living now there was 100% employment and it was disastrous - people could as for whatever salaries they wanted, agree to arrive late 4 days out of 5 and insist on having fresh flows on their desk every day.
- Skills - new project is a kindergarten - ex-coalminers aren't really going to fit the bill
- Competition - if your new project is wanted the almost certainly you're going to be competing with the private sector
Actually MMTers have an answer for what ultimately creates the demand for money and guarantees its acceptabality : the obligation to pay taxes and fines. As long as an actor (generally, and preferably, the state, but not necessarly...) has the power to demand payment in a certain currency, that currency becomes acceptable as money, even if it is just a piece of paper that this actor issues backed by nothing.
Sami Louati the commodity view of money is so asinine.
Sami Louati they don’t realize this about sociology and that economics is basically fake and gay.
Nope. The obligation to pay taxes and fines in "the" currency is what gives that currency an edge over other alternative currencies, and it has was already well-known before Mosler, Wray et al were born. And the obligation to pay taxes and fines does not guarantee that said currency will face no compettion ... I guess you missed where Mr Engelhardt mentioned that Ohio accepts bitcoin as payment.
And what the MMTer's have missed completely is that not only the requirement to pay in "the" currency is important towards "moniness", it is just a important that the spending of the "tax-revenue currency" must also be widely accepted, and usually is, due to the volume of the spending.
MMT's claim that taxes creates a demand for money is rubbish. It's just an illusion that some people can't see past.
Taxes don't drive any demand for the money because they didn't in all economies where taxes were imposed but the money fell to being worthless through infaltion and not wanted by anyone including their own government.
Overall the most honest criticism of MMT I've seen yet.
Some of the minor criticisms on the credit theory of money are valid but some of the bigger ones I disagree with.
As for govt credit money entering exchange, the govt might tax everyone 10 units a month and pay its workers 11 or more a month, without hiring everyone. This is the way large empires ran their armies two thousand years ago. The purpose of this was to get the private sector to supply the army in a far more efficient and decentralised way.
There's all sorts of evidence for the purchasing power of govt money being established through imposed taxes and spending. The French imposing money in Madagascar is a good example.
His points about resources being idle are moot as the government can only employ resources that are explicitly for sale. If you want to keep your car pseudo idle and available, then simply don't sell your car. Same applies to grandma selling her labour.
And he must admit that the mmt view of spending and inflation is superior to mainstream views as it looks at the actual resource implications. The mainstream theory considers a dollar of tax from anywhere to be good for a dollar of spending anywhere else, which clearly isn't true.
Debt theory of money actually suits Menger and Mises’ regression. In this case the commonly accepted commodity is not a metal but debt.
His entire rant on theory of money is sort of dumb in the context of MMT though. MMT is only about sovereign fiat currency. The fact that credit money and medium of exchange currency can both exist is utterly irrelevant to the topic at hand.
This talk really reminds me of a creationist trying to 'explain' the theory of evolution. It's sort of sad.
I'd like to see a real critique of what MMT does and doesn't predict well, not some irrelevant philosophical rambling.
I get it, he doesn't like that MMT concludes that government spending isn't constrained by simple accounting balances (it is constrained by resource limits and inflation, which is sort of a "no duh" IMO). But he doesn't do anything to actually explain, much less challenge, that conclusion.
As for where the value of that sovereign fiat currency comes from... MMT is quite clear on that. He even mentioned it earlier in the talk. The government demands (coercive) payment of taxes (and sometimes other payments) in that currency. This is really obvious and uncontroversial. FFS, Russia is using that exact same mechanism to prop up the ruble right now by demanding more payments in rubles.
BTW: It is entirely possible for more than one model to fit the facts equally well.
MMTers claim taxes drive money and that puts a value into it.
This totally disproved since taxes failed to drive any value or acceptance of money in all of the 30 or more economies in the past 60 years where the money fell to absolutely no value at all due to hyperinflation despite taxes and even their own sovereign governments ditched their own money.
its not that taxes drive money, its that the power to actually collect the taxes drive the value of money. Also, those currencies were backed by gold so they dont apply under MMT.
@@masington56 You said all these currencies were backed by gold. - That is factually WRONG !! Example - Brazil's currrency was a fiat based one. What about Zimbabwe? What about Peru ? Same with all of them.
Get your facts right before answering. Also get your understanding of principles right and don't justmake yourself a happless dupe of some power seeking economists who have a faulty theory like MMT .
If they were backed by gold then people could have gotten the gold in exchange for the currency. They did Not get it.
If I am wrong then who got the gold in any of them?
@@masington56 That cannot be right. Why? - Because there is no evidence that "power to collect" something makes that something more valuable. Does the power to collect you rubbish disposable bin make the rubbish valuable? No, of course not. Did the power to collect taxes make the money more valuable in all those economies where the money became worthless ? No. It did not.
In respect to bitcoin - Why would anyone even have contemplated mining bitcoin if bitcoin was not in their mind a coin that would be exchangeable for something else be that real goods, a coin in a computer game other coins or many or a payment ? They wouldn't if it was not marketed as have some of those properties immediately or the promise of some of them!
They would have done so to test the network"s actual resilience against a 51% attack (which would generate a double spend opportunity). Though, should that theoretical resiliency be confirmed (which it has), the fact that the network's tokens (the private address) would become valuable was fairly predictable, it wasn't strictly necessary that that particular value proposition was necessary to those who may have been, for example, interested primarily in decentralized encryption.
Fun. Curiosity. Novelty. Also obtaining something on the basis that it *might* be used as money in the future is different from obtaining it because it is currently money. All money is currency but not all currency is money and the regression theorem explains the emergence of money. Until a currency has general acceptability it is still a commodity.
@@Castle3179 Seriously not just fun or curiosity or novelty on such a grand scale which unless it has an expectation of being worth more in the future than it does today.
randal way in the same lecture the above speaker said is talking about and taking bits and pieces of from is way points out that the credit portion stated as a tax in Rome I think then at some point the boarder system which way was talking about involved rice and fish came after then during the gold rush is the era came the iou's due to the gold bar being held by what would later become central banks and the jobs portion came in after the point of the unemployed and crowding hiring in the private sector since people hiring would be unlikely to hire someone latter about 5 years (I have gone thruogh this) the jobs plan would be a way to keep people employed until the economy started back up through people opening back up or starting back up and it would set a market based pay and inflation comes in when there is more currency supply then real resources causing the market prices of goods and services which is why they used to mess with the interest rates which are attached to savings account for those that buy treasuries bonds instead of putting in a reg saving account with low interest rates and its from the deficit spending that they pay the interest off every 6 months-1 year
The answer to your doubt about "where does the purchasing power of money come from" is very clearly stated by Mosler. Since fiat currency is a monopoly of the Government, the price level must be a function of prices paid by the Government when it spends, and of the collateral demanded when it lends. For reference: moslereconomics-kg5winhhtut.stackpathdns.com/wp-content/uploads/2019/02/Full-Employment-AND-Price-Stability.pdf
Black markets alone are enough to refute Modern Monetary "Theory".
why do black markets not trade in units of currency other than dollars? If there were no tax penalty, would they not be more willing to trade in different denominations?
@@masington56 They do. There's quite substantial amount of black trade going on in bitcoin.
@@gtpk3527 substantial in relation to what? the vast majority of bitcoin is traded for dollars, and beyond that, the vast majority of monetary exchange in the black market occurs in dollars.
@@masington56 Substantial on it’s own. According to MMT, bitcoin shouldn’t be able to function as money.
@@gtpk3527 how so?
MMT is about government of the government, by the government, for the government. Wander down that path long enough and all of a sudden people become very expensive commodities.
@@lepidoptera9337 taxation is theft. Government routinely lies to us. MMT makes what we earn through voluntary activity worth less and less. MMT is just another nice, academic-sounding term for the government printing all the money it wants then passing the costs off through taxes and inflation.
So my question to you is, what did liberty ever do to you to make you want to be a tax slave? Not taxed enough?
@@lepidoptera9337 Oh please! Did you know this country went its first 140+- years without a federal income tax, Excepting the Civil War period when Lincoln printed Greenbacks, we won every foreign war without one. We don't need an income tax. So you agree that your government owns you?
@@lepidoptera9337 Aren't you forgetting the half million White Americans who died in the struggle to free the slaves? And then there were the Whites who struggled alongside Blacks to secure their civil rights, some of whom died in that struggle as well.
I think you spectacurlarly missed the point of the sacrifices made by our forebearers for our liberties. They made those sacrifices so that we wouldn't have to put up with things like a progressive income tax, heavy regulations, undeclared, unjust wars, a Central Bank overriding our democratic processes, dependency on a bureaucratic welfare state (Our Founding Fathers warned us about this one) , federal control of education, healthcare, etc. . . The Patriot Act and the surveillance state. Need I go on? They sacrificed so we would be free of government overeach, not free to embrace it and use it to bully our neighbors for not wanting to participate in our enslavement. If our Founders and the generation that fought in the Revolutionary War knew what we were putting up with today, they would be rolling over in graves, knowing that all they fought and died has come has all but disappeared.
Hutt is awesome. His analysis in _The Theory of Idle Resources_ is incredibly insightful.
The folks at NPR would subscribe to any theory that grants their desired gravy train a level of perceived validation.
Fantastic talk. I have a question though and please point out if my question is invalid if I am mischaracterizing the MMT position.
If it is that government can create value and print it ad infinitum how does inflation come into existence under MMT? I recall a debate with an MMT member and he gave an example of how fiat money is valued by using his business card. He admitted that on its own, it was worthless to those in the room. However if he then changed the dynamic and said that unless you have one of his cards, you cannot leave the room because an armed guard working for him would shoot you and therefor, you will value the card. Setting aside for a moment the myriad of presupposed authority and all the other problems with that example; but with that example if they could just arbitrarily and forcefully make others value something that was before useless, why then could they not by that logic, print more of the business cards and force others to value them as much as if there were still only one?
I have had many analogous debates with italian supporters of MMT and, as far as I know, your comment is a fair depiction of one of MMT's main tenets. The answer is the following: government, thanks to its monopoly on violence, can establish the price of your freedom; concretely, government can plainly impose upon you how much you should work for it (like the medieval corvèes) or impose upon you how many pieces of paper (or business cards) you owe to it so as to be left free and unharmed. So, as Dr. Engelhardt was explaining, government can indeed increase the amount of circulating money (ie, debt towards the private sector) provided that it is willing to increase the amount of money it will take back from private sector itself (ie, credit towards the private sector). In principle, government can enslave you or just impose upon you a 100% taxation. However, even if government can maintain constant the value of money in terms of the service it monopolistically supplies (ie, your freedom), it cannot do the same in terms of any other physically limited resource within the economy: in your example, people in the room would start trading goods and services in terms of those business cards, but if the only physically available goods were breads and ham in fixed and constant quantities, their prices would soar.Lastly, as I see it, MMT is nothing special or innovative. It is simply a childish idea based on the absurd hypothesis that a capitalistic free-market mechanism (with Walrasian prices, defined property rights, utility and profit maximizing agents) is not capable to allocate all the resources which can be profitably allocated (ie, whose benefits exceed the cost of employment). MMT is simply a regress of marxism, forsaking even the most shallow pretence of logical soundness and historical realism.
@@fabriziofer1994 Agreed, people are not comfortable with the idea that things needn't be coordinated or planned. If someone asks me what my plan for x, y or z is, I would say... I have no idea, let's see what 7 billion people can come up with and let the best win. People don't need to be told about good things, you figure it out for yourself pretty quickly. These MMT beliefs are childish and they'd do well to read Leonard E. Read's paper "I, Pencil". Plus... if you choose a monolithic idea and it fails you're screwed, whereas many ideas are like submarine doors.
@@fabriziofer1994 Thanks for the reply. I'm trying to see their logic behind it, but the whole entire bit hinges on this presupposed authority, infallibility and angelic benevolence of government which actually contradicts itself. An authoritative body willing to put a gun to your head to force you to value the worthless thing they set as currency is right out of the gate unworthy of such consideration. Beyond that, the people that think such a thing is good are quite possibly more evil than those that enacted the farce in the first place. Realistically speaking as well, if MMT could in fact work there would be no such thing as poverty within the confines of a given set of borders but that ignores real concepts of wealth.
Credit money has to trace back, ultimately, to some sort of valued commodity. It was so obvious once Lucas stated it. I'd read Graeber's "Debt" (now recalling it from memory) and felt quite uneasy as he laid out his case for credit money coming first, barter → credit money; dismantling the often told story (by Austrian-school thinkers) of barter → commodity money. There was some sort of wrongness in his logic which (as an amateur at this) I couldn't quite put my finger on in contrast with the intuitive sense of Rothbard's "The Mystery of Banking".
This talk caused me to realize that credit money by itself is fine (setting aside its potential to be misused and distort things), and either it and/or commodity money could come at any point after barter (and probably quickly, as Graeber suggests), thence growing/declining as the economy evolved. It seemed to me that Graeber wanted to use his evidence for early credit money to somehow discredit the whole Austrian approach. Austrians may in fact be wrong, historically, about which style of money tends to arise first in an economy. Lucas' talk helped me to understand that this doesn't actually matter. Which sort of money arises first isn't as important as understanding where the *value* in credit money originates. To have a common unit of account for your credit money, that unit has to be or trace back to something with generally recognized value, however circuitous your route in getting there. So it seems to me that while Graeber had plenty of anthropological evidence for the ubiquity of credit money in historical societies, it does no harm to the common Austrian picture of the evolution of commodity money.
Graeber also focused early and often in "Debt" on tally stick type money. I at least enjoyed it immensely for the history it presents. I think it also makes a good foil for testing your comprehension of ideas of Austrian economics.
Something else too. So you are Lincoln, and youre issuing a fixed amount of green backs to fund your militias and army. Sure, these piece of paper may not be commodity based. HOWEVER, the fact that there are a *fixed* quantity of green pieces of paper, then the paper becomes a commodity....the commodity is Trust. Trust that the currency itself cannot be undermined. That too is valuable and arguably a real commodity. Like when you purchase access to a VPN service. You arent paying then because you like their server farms, your literally paying them as means of aquiring a feeling of privacy. Privacy is the commodity of VPNs. Trust is the commodity of fixed money, like bitcoin.
@@razzberry6180 Try paying your taxes with bitcoin.
@@urbanverificationist Try buying anything when the currency collapses. Also, point missed.
@@razzberry6180 We have a Sovereign Government with a Sovereign currency. Why should its currency collapse?
@@urbanverificationist Currencies collapse if they become to plentiful and the value gets distorted. Economics is about value, with numerics as proxy. Its isnt about fancy equations at the Fed. As long as the medium of economic exchange becomes more a medium of policy instruction instead of subjective value proxy, it will also collapse.
Also, the Weimar Republic in 1927 had a soveriegn currency....hmmmmm.
All of his points against MMT are debatable apart from what he mentions on historical facts on barter economy. There, I think, he is right.
There is zero evidence for the use of government credit as a medium of exchange early in accounts. There is only evidence for government loans and government tax records. There isn’t even much evidence for early governments as and sort of debtor. They had all the stuff-especially before the Bronze Age Collapse. Their prestige came from their wealth that allowed them to lend.
Check the Sumerian accounts again. Future values assumed barley would be an average of 300 units to 1 shekel, but accounts in the present showed a free floating bimonetary system, and accounts of loans show an interest profit on the average values to be assumed. This doesn’t show money as credit at all. It shows barley and silver as credit with the understanding that barley is harvested only once a year and is only sometimes available. (Other taxes paid in kind, for which meticulous market equivalencies were calculated, were similar.)
@@genli5603 Thank you for the comment Gen, The reality you, Austrians, don't want to accept is that monetary systems throughout history have been evolving! Indeed there was a phase of barter economy, then metal monetary economy, and now it is pure fiat money, IOU; and the elite is pretty able to manipulate with the latter one, whose bitter consequences are born by the households.
Gen Li you’re perhaps not going far back enough. How were the first armies formed that served as the basis for the sovereign powers the first states exercised?
The first money was social credit. The first king could not give his soldiers land and wives without first acquiring them. It must also initially do so from within. The sovereignty comes before anything.
'Right'.
Maduro Mugabe Theory 😎👍
Barter and Commodity money transactions are also credit transactions, in the manner that one party is exchanging an asset-backed IOU for goods, and defaulting on it, letting the holder of the IOU the ownership of the commodity backing it. It just adds 2-3 extra layers over traditional barter to explain what money is and can be.
i literally couldn’t listen to him after i started noticing his “right”s and “okay”’s
it should not bother me this bad lol
I feel this right now.
Gives me my plot of my next toon! 🤑
Barter never happened because there was no free market
Scarcity comes from human end use. Bitcoin is mathematically scarce, it is not scarce from consumption. Only way Bitcoin could be sound money(I don't deny it can't be currency cause anything can) was if people somehow wanted to collect these digits. Since the digits are ideas and ideas are not scarce, why would the collection happen in the first place when you can create this digits yourself and infinitely. So the only way it happens that others come to accept it as currency is from a peer pressure type of effect and not fundamental scarcity, scarcity that requires consumption. For anything that is scarce but is not consumed has no value. Sound money is money that is ideal commodity because it has all the fundamental reasons for its existence in the market. It is fundamentally scarce and is consumed which gives it value and that is intrinsic value. Not philosophical intrinsic value where even food is not valueable intrinsicly since you can be suicidal and starve yourself so nothing has value but economic intrinsic value where since there is consumption and that is intersubjectively ascertainable that even though I don't want to consume it, I have to accept someone else does, its undeniable, so that gives it intrinsic value. All commodities are intrinsicly valuable but ideal commodities work best as money for the physical properties which makes them ideal commodities. Perishables in one form or another are not ideal commodities because they get consumed without instruction(rust, decay, erosion). Ideal commodities are those that are only consumed on the actor's instruction(changing it into a different form from previous; production). Cryptos are not consumed so they are not sound money. Sure can be currency but not sound money and the ideal currency is one which is sound money. So even though it is better than fiat of today which is maintained by State's force, it can be said that cryptos have current because of social 'trend'(that is current, like fashion trends because of this social current) this way they are more 'democratic' currency. Like bank IOUs of past except this is one bank IOU that cannot be infinitely created so it all just circulates. But the circulation gets value only because of redemption in commodity, without this redemption ultimately the whole thing crashes. So I have my doubts, I get where Lucas is coming from but I think he has certain confusions. Scarcity precedes humans and therefore human nature so human nature is built on scarcity. You cannot change human nature without changing fundamental scarcity which comes about as the desire from consumption. Sure, there may be temporary effects which can make anything currency, but not for too long. Its tulip manias one after another.
It seems that Randall Wray gets cranky when you ask him a question which disproves his theory. Such as why taxes didn't put any value into money where hyperinflation occurred. I have evidence of it and it is indication of the a low level of emotional maturity which that might explain why he cannot apply the necessary rational thinking that is needed to a comprehensive understanding of the subject matter.
did you ask him?
@@masington56 Yes. He can't give any rational answer. His answer was just telling me to buy his book ! Why ? because no doubt there is no answer other than admitting he is wrong and that would destroy his theory. He is an angry man who is power driven and careful observation of his mannerisms and facial expressions supports that. Just look at the telling indicators in his videos.
MMT is limited but not so limited as represented here. For a better overview and critique of the good and bad of MMT see Steve Keen's work
36:01
"And so the question is whether there is any evidence of any fiat money coming into existence that was not tied to any commodity. I don’t think there is."
Ummmmmmm -- Greenback Dollars 1862 - 1865
Still in circulation and legal to tender TODAY.
So, like, only for about 150 years or so. That's about it til now.
For the Money System Common.
Maybe you are right but there is an example in "The Travels of Marco Polo", by Marco Polo where he told a story of how the Great Khan ordered the bark from a tree to be made into money. He then had all the merchants who came into his city exchange their goods for his bark which they used to trade. After they finished their trading he went back to the Great Khan (my spelling is not correct) to collect what he had not sold. Or something like that. I really wish I had the link to the story but it expired. Though I think this might be an example of fiat money. And couldn't you consider tally sticks to be a form of fiat currency?
@@computertooter Thanks.
But ---- 'Maybe you are right'.
If I'm right, and I'm sure I am, then what else is there to say ?
Austrians conveniently forget everything from Aristotle to Menger.
Of course Tally Sticks were of 'fiat' origin.
I'm just saying that Lucas cannot dismiss fiat public money issuance in the discussion of modern money and MMT.
Randy Wray claims there's no such thing as debt-free money. Among other things.
MMT combines Post-Keynesian Economics (Wray, Kelton, Mitchell, Fullwiler, etc.) within a Banker Status Quo M.O. (Mosler). All paid for by Mosler.
It's a sham.
If this were one of their YT channels, I'd already be blocked.
Finally, 95 percent of Colonial 'currencies' were issued without associated debt.
Only Virginia conflated their money with its repatriation and destruction.
Let's talk Public Money.
www.govtrack.us/congress/bills/112/hr2990/text
Thanks.
You are stressing the semantics of the theory. Fact of the matter is this, who cares how money was created MMTvis agnostic to this. Second, whether its do to expectations or the need to pay taxes, only government can issue it's own currency or institutions that the government allows. This means that there it nothing stopping government from buying anything that's for sale in its own currency. Does this mean that everyone who is not working will be force to get job? No! Chill out dude. If your grandmother doesnt want to work she doesn't have too and that goes for everyone else who doesnt want to work.
The job guarantee program is a sophisticated policy tool that if put in effect can help greatly with the business cycle in my opinion. By government paying workers a wage to work you can do away with the minimum wage and simply let those who want to work decide. If the economy is in the downturn and the private sector is laying people off workers can go in to the the job guarantee program and maintain employed. This also means that aggregate spending doesn't take as much of a hit since workers from the private sector now work for the public. Once the economy picks up again workers can transition to the private sector and without having long periods of unemployment.
You’re a moron. Early governments demanded payment in commodity money or in kind. They paid for things in commodity money or in kind. The IOUs were almost never government to individual. The IOUs were farmers and merchants who borrowed real stuff of value from the government in return for future real stuff of greater value. The earliest governments were lenders, not borrowers. They got all the stuff for lending from these levies and taxes.
That's great. - I could go down the beach all the day or go fishing in the hills and still get benefits. Great idea since the government can create more money and buy a everything and give it away to those who don't want to work !! Don't know why nobody has thought of that before .
Rafael you forget that people don’t actually want to work. Sure they might show up...
@@soulfuzz368 Exactly - Some do their best to not work so why would they change. Others would just want the moeny and not care what they achieved in a day's work.
lol, best ending
I’ll I heard was....right right right right right right right, okay, right right right right right right, okay, alright, right right right right right, okay.
Good Lord
At 35 minute mark, where the speaker says that there is a lack of clarity as to what money would be worth. Well, in this case, the Government would set the worth of money by saying, "I will pay an engineer 100 units per hour". So this argument does not invalidate the MMT as such.
MMT has lots of problems, but chief among them is that
1.) MMT is not compatible with a central bank
2.) Taxation is not an effective way to reduce the money supply (for obvious reasons)
3.) Borrowing is not an effective way to reduce the money supply (for subtle reasons)
4.) MMT is not new, nor modern.
I would like to refer you to the "economic calculation problem" or to be precise to Mises' impossibility of economic calculation under socialism argument.
No, sir, offering to pay an engineer 100 units per hour wouldn't set the value of money because the value of money is set by supply and demand. The government might be overpaying the engineer, or underpaying him.
At 35:00, where the speaker says that there is a lack of clarity as to what money would be worth ... well, obviously the next question is
"Wait a second -> Was the tax based on income or wealth?" Which leads to the next question,
"How did the gov't evaluate the taxpayer's income or wealth?" Which leads to the final question,
"How did the government assess how much tax revenue (in the new money) did it need to fund itself for the policies and projects that it wanted to do?"
This leads me to conclude that the tax must have been levied in an arbitrary way, and as time goes on the value of money is more firmly established, just like the bitcoin .... like when one of the first bitcoin transactions was to by a pizza and the transaction participants were just guessing what the price in bitcoin should be. I recall that years later the pizza was purchased for something like $25,000 worth of bitcoin ... but still a small purchase at an arbitrary price.
Shallow. Might be better to debate someone who actually understands MMT.
Can’t listen to this guy because he finishes every statement with “right.”
MMT people overestimate quantity of idle reources, they always use examples with factories producing goods. Why? Because it's easy to imagine that factory lines are underperforming and output can be easily increased. But we all know what exactly is highly demanded and insuffiecient in supply. And that's not another pair of shoes. That's housing, education and healthcare.
And beleive you or not, all additional money will be sucked by these sectors with no additional supply.
MMT guys ignore real economy and real constraints.
Yes. that is true but not only that and the big failure of the idea of employing idle resources is that they have become idle for a reason. That reason is mostly because people are unwilling to purchase their output at current prices. So why would anyone want to purchase their output at a higher price or cost that is higher but hidden by re allocation of taxes to subsidize them and make them appear the same or a cheaper price?
The points made are mostly good ones, specifically, the inconsistent definition of money and the value of idle resources. However, I don't agree with regression theorem, because I believe money functions as an informational tool for enforcing accounting norms, of which, barter and exchange are only a small part. Most of our accounting norms are about where you can go, what you can do, what you should do, what you have to do, what is worthwhile, legal vs illegal, etc. There is largely one source of income but many points of consumption, so consumption and production are very asymmetrical in the way they are negotiated with the rest of society. Consumption is mediated with spending tokens, whereas production is mediated politically, because it is an easier target of political entities, because you have to unify factors of production in one place. That's my only thoughts really.
Strange! I actually find the idea of money being credit convincing after this explanation, but my thought was precisely that that explains why BitCoin is money even though it’s not backed by a commodity. Money is precisely society’s IOU.
Dead audience bro. I laughed at “post modern monetary theory.”
I just came to comments to say this lol
I and very very familiar with MMT and the start of this was nowhere close. So I left.
Cigarettes as money, even commodity money are thought as money because they eliminates counterparty risk of default. if I receive an IOU instead of a commodity as payment, that would entail credit risk into the transaction. Unless that IOU is government debt/bank debt which I have trust in, then the transaction can happen with the lowest risk of default on repayment.
MMT has lots of problems, but chief among them are the following:
1.) Any MMT Regime is incompatible with a Central Bank
, which can fight inflation quickly and precisely by selling its bond portfolio to retrieve money from circulation in the economy.
2.) Taxation is not an effective way to fight inflation. Taxes generally slow the economy. So do higher interest rates. So, to use taxation to reduce the money supply, you have 2 variables that interact, which becomes unpredictable, which requires constant readjustments, which makes life difficult for consumers & investors. There'd be a lot of discontent, especially if taxpayers realize the truth of #1. Not to mention that taxation should never come as a surprise to the taxpayer, because they need time to adjust, and inflation uses that time to establish itself.
3.) Borrowing is not an effective way to fight inflation, especially if bond-buyers realize the truth of #2. Who in their right mind would lend money to a government that can literally print money to pay its debts? Such a lender would realize the need for strong covenants and onerous penalties, and have clout with the government. And of course, we would Chiba and other foreign nations to continue to lend us money ... Oops, that's wrong, we'd need China et al to continue to roll-over their dollar-denominated bonds, and NOT buy goods from the USA.
4.) MMT is not new, nor modern, nor a proper "theory". It is literally a "Medieval Monetary Conjecture" (i.e., "MMC").
You MMT folks are hilarious in your way of poo pooing an alternative monetary theory without actually admitting that there may be more than one theory of economics that works.
Anyone can have a theory but some theories are clear rubbish like believing that cows move the moon around the earth. It is a matter of how well the theory works when confronted with reality. MMT does not work anywhere what you could reasonably describe as well. That's because of a number of a large fallacies it contains which it relies on as pivotal and it clearly contradicts historical facts that are undeniably accurate history.
Well, at least he is honest. He is disconnected from reality and that's all I needed to know.
Lucas Very Good argument that are well thought through and very well expressed.
Randall Wray's idea is that taxes "drive" money (meaning they puta value into it) and this view is shared by his fellow MMT pushers like Mitchell, Mosler, Kelton and others.
It is clearly wrong since taxes fail to drive any value into money because the evidence is that taxes exist in countries whose money has failed totally such as Brazil, Zimbabwe, Argentina, Chile and more than 30 other countries where the currency failed in the last 100 years. Some of those countries had currencies that were inflated away and their unit values fell by tens of thousands of a percent in a very short time.
It's the fact that money has a relationship to goods or services that makes it of value. We call this 'Price' which exists in the demand/ supply/ price concept that only really exists in the real world in transactions.
Another reason that MMT's claims about money were false is that before a community created money they were all individuals and then family units with a male and female and then children in a family which then share resources without any money at all.
This is the family unit and it precedes all other forms of organized social structure.
MMT ignore this for the sake of their own argument alone and if anthropologists ignore it they are simply wrong and in denial of their own existence which came about through a family unit.
Families then formed communities with agreed sharing and exchange. This is evident that a form of barter existed before a form of government with a currency existed as it does today in a family where no money authority exists but barter and mutual exchange exists for real goods and services even today.
You only have to ask that came first and that was not government since government or an authority cannot exist without a family unit preceding it because there would be nobody in existence to form government without the family unit coming first.
Mosler argues that on a trip to Pompei when a tour guide said taxes were collected in form of their coins to pay people he tried to correct the guide of his group that people got paid first and then taxes were collected.
The fallacy of that claim arises from Molser's and MMT's ignoring what that should know and what is fact to rationalize their observations to what they previously incorrectly conceived as theory.
The realty is the money cannot have came first before someone worked for it since money cannot exist before work is done to create it. Organization and co operation Must come first before production is done in any society to create any form of currency.
Things cannot exist before the agreement to exchange be it ideas or goods or services of any kind for a common cause.
The changing of the concepts of money in MMT occurs frequently and it Kills the theory as being credible since in any reasonable conistant argument you cannot alter concepts to fit your claims or circumstances.
The family unit also explains the coercive “egalitarian” hunter gatherer societies. They travel in clans of extended families. That’s why people could make such onerous claims on each other. Only when you break away from these extended obligations can you develop ownership within a clan (vs between clans). Even the limited form of intraclan communalism is completely crippling to the development of surplus, capital, trade, etc. Pretty interesting.
@@genli5603 Very y interesting stuff. But breaking away from within a particular clan is just connecting to a larger entity since nobody can live for long without others and length of life is one requirement that allows us to grow wealth and are able to invest and pass on new knowledge that benefits others.
Just listening at the beginning of the talk. An economist who „...usally does not talk about money, but nowthat its been pushed into the limelight...“. I wonder by what? Oh yeah, that big financial crash that the economic science community did not see comming. Mainstream macroeconomics does not include money outside of what central banks do. In a system thats called capitalism thats realy astonishing. Also he doesn‘t like reality thats why he does economics. And than goes on to talk about barter was a thing or not. He offers an opinion instead of scientific arguments. The barter idea is from Adam Smith and developed at a time when nobody knew better. Anthropologists now do know better. Beeing ignorent of historical payment systems does not make a good argument. Its been 12 years now since the financial crises and mainstream economics cant even explain „stagdeflation“! They go on dealing in phlogiston and FWUTV and beeing smug about it. As a student you study all this stuff in your lectures that explain nothing and all you get is a shrug and more models with asumptions that are outrages. No not funny and no not „right“ and I don‘t care how many holes mmt has - at least they start including money in economic theory.
The double coincidence argument of wants doesn't necessarily predict any barter economy, in fact it rebukes the possibility of it.
This guy is the worst public speaker of all history. Ever other word is “right” muttered under his breath and some grating “ummmm *pop*.” Absolutely impossible to listen to which is such a total shame.
Anyone else get annoyed OUT OF THEIR MIND by this guy mumbling “right” literally every half fucking second
“Right” seriously, the speaker needs to address his constant filler word dependency
Some fallacies of MMT - 1. Taxes drive money and make it valuable. Reality - Taxes do not drive money and the proof is that in all of the countries over the past hundred years there were taxes and the money fell to zero value due to inflation. - Conclusion - Taxes do not drive money - the claim is Wrong.
MMT claims Taxes are not used to pay for government spending. - Historical facts- The US government (Whitehouse) records for the last 200 or more years show tax collections are the main component of government budget spending (i.e outgoings). see www.whitehouse.gov/omb/historical-tables/ and Table 1.1 - SUMMARY OF RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS ( - ): 1789 - 2024 conclusion - MMT is Wrong again.
MMT claims the national debt does not have to be paid off !!. - Facts are the national debt (sum of treasury bond debt ) is continually paid off throughout the year with existing money when the treasury bonds that were sold some time ago reach their maturity date. Taxes are used to pay for them so the lenders get their money back. New debt is sold to replace the bonds paid off so it appears that the debt is not paid off. Conclusion - MMT is wring in it's claim.
More to come.
@Nonso Okonkwo Fiat money is created out of debt. Debt cannot back money since if it could anyone's debts could back their own other debts which is an oxymoron.
@Nonso Okonkwo If it is credit it may be debt to someone but it is a financial asset to the person ity is owed to. No financial asstes are real assets in a fiat money system.
Rob lol you’re just blatantly making up this claim that all currencies over the last hundred years fell to zero value. You’re in a cult.
@@steviewonder417 You have misread what I wrote- I will re phrase it so it is simpler:- All currencies where there was rampant inflation and as a consequence the currencies fell to no value despite taxes. So anyone who can actually think properly would understand that the MMT idea of taxes driving money is just plain stupid. Taxes are Not levied on the currency.
They are levied on production activities that are expressed in a currency and Not on the currency itself.
@@Rob-fx2dw You're changing your claim now but it doesn't matter you still don't get it. Money is the main driver of a sociological system of incentives that gets people to do paid work so they may pay the tax imposed on them by the sovereign. Money is about debt and power not whatever goofy libertarian bullshit you believe. Saying taxes aren't levied on the currency is nonsense as we have examples of wealth taxes and death taxe that have nothing to do with work. Try stepping outside your little cult bubble for a change.
70s inflation was created by foreign oil monopoly. The point Engelhardt presents about targeting spending is not wrong concerning MMT but it is pretty much universally accepted by Post Keynesians that 70s inflation was created by oil prices rising rapidly. Bitcoin can never be money because It is not backed by government taxes. Austrians cannot deny this even about the gold standard or gold coin money. Gold price was stable during gold standard and It has been very volatile after that. Same thing with bitcoin. So government taxes behind money make the value stable. Engelhardt doesn't get the price level and value of money correct in MMT. MMT states that government is currency monopolist, the price level is determined what government demands from the private sector to get the money. Mosler gives an example of government paying for people to join the military and in this simple model it makes a difference if $100 or $200 dollar salary is offered for the soldiers. Some will join military, some sell food to the soldiers to pay their taxes etc. This is enough to determine price level
Demand for money is created by threat of violence. State is not run like a church, Austrians know this. It is a lot better analysis than Bob Murphy would do but find It deficient.
You cannot say that unemployment is pseudo idleness. That is just stupidity.
I wonder if Mises himself was this arrogant?
For Cripes He didn't know about Tally Sticks?! Calls himself an economist, I'm just run of mill jackass and knew about Tally Sticks. Damn.
Very few economists have concerned themselves with actual early history. When they do, it’s usually to twist it around to their point of view-like the WILD misinterpretation of the quite straightforward neo-Sumerian accounts. These do not even vaguely begin to show a central government creating money through credit. It shows a government getting rich with levies in commodity and metallic moneys with two main free floating currencies with a nominal trade value that was often different in real world terms, leading to elaborate accounts of the current market prices of whatever they might be owed in various alternatives commodities. (Joe farmer owes 1 calf per year. This year a calf is worth 1 shekel or 330 measures of barley or the wool of 12 sheep. So if he brings me 312 measures of barley, he’s trying to skimp on his taxes.). This shows that the foundation of the monetary system was real market prices and not some imaginary government value measure. I’m addition, the skim over the fact that the government in these states rarely issued IOUs. All the data points to the government being the lender of real stuff in return for future payment that included interest. Which means that regular people were the money inventors, not the government. Which makes no sense at all and is exactly the opposite what they’re trying to say. Historically, governments only issued IOUs when they were short on money. Which usually meant they were unstable.
@@genli5603 Thank you
This is a terrible explanation misrepresentation of MMT. Don't waste your time. Watch Stephanie Kelton
This guy is far too smug for how naive and ignorant of the subject matter his arguments are. Pretty impressive.
Lucas like many neo- austrian and neo- classical economists you find it hard to see beyond your paradigm. I honestly believe you haven't engaged seriously with the MMT body of thought that is out there.
Fuck off commie.
MMT fails utterly to understand very simple early accounts. They lie about the historical data.
@@genli5603 Where do they fail utterly to understand very simple early accounts and lie about the historical data? Have you read any of Michael Hudson's work?
waist of time...
This talk sounds an awful lot like a creationist trying to describe the theory of evolution. -_-
The Neo-Austrians who are commenting here, are big on rhetoric, but small on empirical evidence and peer reviewed scholarship. Their knowledge of the history of money, public finance and taxation is selective, biased and erroneous. It is a waste of time attempting to have a serious academic discussion with them.
The MMT solution is to address the boom/busts cycles which leave out many unemployed. This happens due to rise in interest rates at near full employment (Phillips Curve).
Instead of tackling inflation through interest rate change, which would leave many unemployed, MMT proposes to soften inflation by providing job guarantee minimum wage when the person is unemployed. This would not only reduce consumption to lower inflation but also maintain decent survival of the unemployed person.
Governments can control markets to avoid depression/recessions if they use MMT!!
Wrong.
And the Austrians would reply that: the recession status is merely where we were supposed to be in the first place, once the true value of credit has caught up, and the underlying absence of real liquidity has been exposed. Alan Greenspan papered over the cracks and ultimately delayed a crash until 2008. The same thing keeps happening because people are happy to keep exchanging IOUs while tiptoeing around systemic risk.
MMT is not a tool. It’s an idea. And it’s wrong.
Philip's Curve is a hoax dude.