The fiscal theory is the more comprehensive, the monetary theory the more narrowly focused (or invariant) one. Yet the monetary theory loses its effective applicability, when the social, political, economical and financial framework becomes increasingly dysfunctional by an unsustainable government debt level. This can be illustrated by the example of a Central Bank of a country with vastly excessive debt, if ever this Central Bank would be confronted with high inflation they simply couldn’t increase interest rates effectively, because they then would destroy the economy and with very high probability the political order of this country. This is unfortunately not an abstract example, but might (hopefully not) become very visible in case the Bank of Japan should be ‚forced‘ to increase interest rates after decades of yield curve control and due to that having accumulated Japanese Government Bonds equivalent to more than 200 % of GDP. In that case the instruments of Monetary Theory would still be effectively applicable but only at the cost of the destruction of the country. One could a bit sarcastically summarize: MMT (Modern Monetary Theory) shows the limits of the applicability of Monetary Theory
The fiscal theory is the more comprehensive, the monetary theory the more narrowly focused (or invariant) one.
Yet the monetary theory loses its effective applicability, when the social, political, economical and financial framework becomes increasingly dysfunctional by an unsustainable government debt level.
This can be illustrated by the example of a Central Bank of a country with vastly excessive debt, if ever this Central Bank would be confronted with high inflation they simply couldn’t increase interest rates effectively, because they then would destroy the economy and with very high probability the political order of this country.
This is unfortunately not an abstract example, but might (hopefully not) become very visible in case the Bank of Japan should be ‚forced‘ to increase interest rates after decades of yield curve control and due to that having accumulated Japanese Government Bonds equivalent to more than 200 % of GDP.
In that case the instruments of Monetary Theory would still be effectively applicable but only at the cost of the destruction of the country.
One could a bit sarcastically summarize: MMT (Modern Monetary Theory) shows the limits of the applicability of Monetary Theory
Part 1:
ruclips.net/video/tIA_UtvRQQU/видео.html
Part 2:
ruclips.net/video/N-AKMv5dhZk/видео.html
Part 3:
ruclips.net/video/VyiCIBILhRM/видео.html
the bank holds your debt because housing prices have gone up and up and up. you dont pay, they get the house.
If you owe a bank a million dollars, it's your problem. If you owe a bank a billion dollars, it is their problem.