Re: [Marxism] MMT, Chartalism, and Keynesianism

[MM via Marxism]

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> On Apr 21, 2020, at 1:22 PM, John Reimann via Marxism 
>  wrote:
> 
> Question for the MMT advocates, or anybody who understands the theory: Am I
> right that MMT advocates that countries simply print up cash rather than
> float bonds and T-notes - in other words rather than go into debt? A simple
> "yes" or "no" will do.


A simple yes or no won’t do because the question reflects multiple 
misunderstandings.

MMT doesn’t advocate any specific policy for all countries, or for any specific 
country. It offers a description of how central government spending works, and 
a framework for understanding how much fiscal space a given country has for 
using that spending power. As I wrote earlier, it’s best understood as a lens 
through which to understand structural impediments to the effective use of 
public spending. To the extent that the MMT lens is more widely understood 
among the public, it then becomes increasingly possible to assert 
mass-democratic pressure on that spending, in ways that can advance the kinds 
of social goals that hopefully everyone on this list would embrace.

“Print up cash” isn’t an accurate description of how money is created. The 
authorizing government body (in the US, Congress) passes a spending bill, and 
that spending takes place through keystrokes that change bank balances. But far 
more importantly, it matters a great deal how that money is spent, because even 
for a country with “full monetary sovereignty,” the impacts of public spending 
are constrained by the availability of real resources — including labor, but 
also raw materials, energy, food, technology, etc.

When new spending happens, new money is created. In accounting terms, the 
record of that spending is a “deficit”; on the other side of the ledger it is 
simply “money in circulation.” Each dollar is worth exactly one other dollar, 
so the government technically “owes” exactly the amount of money that is in 
circulation — but it is also the sole issuer of the currency it offers in 
exchange for existing dollars.

In the US, there is a legal requirement to turn that deficit into debt through 
the issuance of bonds / T-bills, but that’s because of a law passed by 
Congress; it isn’t an inherent part of the money creation process. There are 
different views among MMT scholars on the wisdom of that. Either way, MMT 
doesn’t “advocate” “printing up cash,” or the reverse; it offers a description 
of how the process works; an explanation of why many countries can do more of 
that than many people realize; some suggestions on how that greater spending 
power could best be used (although the details will always be dependent on the 
concrete national context); and some ideas for how countries that are 
especially constrained in that regard can move towards greater independence and 
autonomy. 

BTW, I’m not particularly an advocate of MMT, but I am an advocate of reading 
in good faith and taking advantage of useful insights wherever they originate. 
The refusal of folks on the left to engage with this body of thought is beyond 
bizarre — borderline pathological. What I’m waiting for now is what typically 
comes next: As folks spend enough time with the material for the penny to drop, 
they’ll suddenly say, “Oh, of course, I’ve known that all along! MMT has 
nothing new to offer!” Wait for it.
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Re: [Marxism] MMT, Chartalism, and Keynesianism

[John Reimann via Marxism]

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Question for the MMT advocates, or anybody who understands the theory: Am I
right that MMT advocates that countries simply print up cash rather than
float bonds and T-notes - in other words rather than go into debt? A simple
"yes" or "no" will do.

John Reimann

-- 
*“In politics, abstract terms conceal treachery.” *from "The Black
Jacobins" by C. L. R. James
Check out:https:http://oaklandsocialist.com also on Facebook
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Re: [Marxism] MMT, Chartalism, and Keynesianism

[Michael Meeropol via Marxism]

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Hey folks --- just in case you are wondering --- I am a person mostly
(totally??) ignorant of MMT (haven't taught Macro since 2014 and never used
it in any of my classes) who VERY MUCH APPRECIATES the debate you have been
having --- it is clarifying a lot for me --

So don't think you are a handful of people listening to echoes in an empty
room --

There is an "audience"

Thanks, Mike

[SO NOW A QUESTION FROM THE PEANUT GALLERY --- is the recent collapse of
the price of oil and the improvement in the competitive position of
renewables something that may reduce (eliminate) the importance of the fact
that oil is priced in dollars?]
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Re: [Marxism] MMT, Chartalism, and Keynesianism

[Andrew Stewart via Marxism]

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The basic premise of MMT is that a country can print mountains of cash
without any consequence in relation to the world economy. Except for
America, which has the unique privilege of being the world reserve
currency, and Saudi Arabia, which produces the commodity that the dollar is
pegged to, that function is fundamentally impossible BECAUSE Global
Northern imperialism would basically scuttle the implementation of an MMT
project overnight. MMT exists in an ideological bubble divorced from the
rule of finance capital. Even if you have issues with varieties of
Leninism, any Marxist analysis divorced from imperialism in this manner is
pretty inept. Except for the efforts of the Chinese, who have stockpiled
gold so they can eventually transition the yuan to the gold standard, there
isn't a world currency not dependent on the American petro-dollar in our
post-Bretton Woods worldwide economic landscape.

>From Henwood (again so it sinks in this time):

Countries around the world keep their reserves (basically rainy-day funds
on a very large scale held by governments at their central banks) in
dollars, which make them effectively a captive market for US Treasury bonds
(which is how the dollars are kept). Also, major commodities like oil are
priced in dollars, forcing countries to accumulate the currency to pay for
essential imports. That means the United States, exceptionally, can run
giant deficits and borrow on a vast scale with little constraint (so far).
Nor do we have to worry about the value of the dollar (for now, though you
have to wonder how long the exorbitant privilege will last in a world where
US dominance is eroding). But less privileged countries have to worry about
foreign investors dumping their bonds and driving down the value of their
currency, which would jack up interest rates and inflation.

-- 
Best regards,

Andrew Stewart


Message: 13
Date: Tue, 21 Apr 2020 09:26:12 -0400
From: MM 
To: Louis Proyect 
Cc: Activists and scholars in Marxist tradition

Subject: Re: [Marxism] MMT, Chartalism, and Keynesianism
Message-ID: 
Content-Type: text/plain;   charset=utf-8

> On Apr 21, 2020, at 8:50 AM, Louis Proyect  wrote:
>
> Actually, I think it is probably beyond the scope of MMT. I just read
Doug Henwood's article that makes clear it is a policy for G7 nations,
especially the USA, not poor countries like Nicaragua. Indeed, I came to
the conclusion long ago that post-Keynesian economics has little to offer
places like Nicaragua. I got to know Nathan Tankus fairly well when I was
writing some stuff about the difficulties of getting Greece back on the
drachma that were cross-posted on Naked Capitalism. As I began reading Yves
Smith's blog and spending some time with her and Nathan, it occurred to me
at some point that they had zero interest in the global South or what is
sometimes called "development economics".

That?s why I recommended the interview with Fadhel ? the application of MMT
to the global South is *exactly* what he is focused on. But it?s easy to
convince yourself you?ve won an argument when you refuse to listen to the
other side.
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Re: [Marxism] MMT, Chartalism, and Keynesianism

[MM via Marxism]

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> On Apr 21, 2020, at 9:26 AM, MM  wrote:
> 
>> On Apr 21, 2020, at 8:50 AM, Louis Proyect > > wrote:
>> 
>> Actually, I think it is probably beyond the scope of MMT. I just read Doug 
>> Henwood's article that makes clear it is a policy for G7 nations, especially 
>> the USA, not poor countries like Nicaragua. Indeed, I came to the conclusion 
>> long ago that post-Keynesian economics has little to offer places like 
>> Nicaragua. I got to know Nathan Tankus fairly well when I was writing some 
>> stuff about the difficulties of getting Greece back on the drachma that were 
>> cross-posted on Naked Capitalism. As I began reading Yves Smith's blog and 
>> spending some time with her and Nathan, it occurred to me at some point that 
>> they had zero interest in the global South or what is sometimes called 
>> "development economics".
> 
> That’s why I recommended the interview with Fadhel — the application of MMT 
> to the global South is *exactly* what he is focused on. But it’s easy to 
> convince yourself you’ve won an argument when you refuse to listen to the 
> other side.

By the way, the only thing that Doug’s Jacobin piece “makes clear” is that he 
also refused to do any serious study of MMT, because he was convinced he 
already understood it. Pavlina Tcherneva’s response to it is also worth 
reading, although she doesn’t deal explicitly with the developmental econ side:

https://jacobinmag.com/2019/02/mmt-modern-monetary-theory-doug-henwood-overton-window

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Re: [Marxism] MMT, Chartalism, and Keynesianism

[Louis Proyect via Marxism]

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On 4/21/20 9:26 AM, MM wrote:


That’s why I recommended the interview with Fadhel — the application of 
MMT to the global South is *exactly* what he is focused on. But it’s 
easy to convince yourself you’ve won an argument when you refuse to 
listen to the other side.


Yes, he addresses the question of how developing countries can gain 
monetary sovereignty in a podcast. I am not trying to avoid his ideas 
but I have a real antipathy to podcasts. I just can't abide by the idea 
of sitting through an hour of someone making impromptu observations. I 
get my information from reading, not listening.


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Re: [Marxism] MMT, Chartalism, and Keynesianism

[MM via Marxism]

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> On Apr 21, 2020, at 8:50 AM, Louis Proyect  wrote:
> 
> Actually, I think it is probably beyond the scope of MMT. I just read Doug 
> Henwood's article that makes clear it is a policy for G7 nations, especially 
> the USA, not poor countries like Nicaragua. Indeed, I came to the conclusion 
> long ago that post-Keynesian economics has little to offer places like 
> Nicaragua. I got to know Nathan Tankus fairly well when I was writing some 
> stuff about the difficulties of getting Greece back on the drachma that were 
> cross-posted on Naked Capitalism. As I began reading Yves Smith's blog and 
> spending some time with her and Nathan, it occurred to me at some point that 
> they had zero interest in the global South or what is sometimes called 
> "development economics".

That’s why I recommended the interview with Fadhel — the application of MMT to 
the global South is *exactly* what he is focused on. But it’s easy to convince 
yourself you’ve won an argument when you refuse to listen to the other side.
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Re: [Marxism] MMT, Chartalism, and Keynesianism

[MM via Marxism]

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> On Apr 21, 2020, at 9:42 AM, Louis Proyect  wrote:
> 
> Yes, he addresses the question of how developing countries can gain monetary 
> sovereignty in a podcast. I am not trying to avoid his ideas but I have a 
> real antipathy to podcasts. I just can't abide by the idea of sitting through 
> an hour of someone making impromptu observations. I get my information from 
> reading, not listening.

I can’t make you listen to it, but it isn’t “impromptu observations” — it’s a 
fairly systematic presentation of the key issues. And I suspect you’ll 
immediately know what sorts of questions need to be asked and answered about 
the Nicaraguan economy in order to understand what went wrong: questions mainly 
around food imports, energy, and technology. I just don’t know enough about the 
country to say much of use, and I can’t justify putting the time into it given 
other writing obligations.
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Re: [Marxism] MMT, Chartalism, and Keynesianism

[Louis Proyect via Marxism]

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On 4/21/20 8:37 AM, MM wrote:


You want me to spend time reading up on the Nicaraguan economy from 
decades ago so that I can write an essay specifically for you, because 
you can’t be bothered to listen to a recorded interview while you do the 
dishes? No thank you.


Actually, I think it is probably beyond the scope of MMT. I just read 
Doug Henwood's article that makes clear it is a policy for G7 nations, 
especially the USA, not poor countries like Nicaragua. Indeed, I came to 
the conclusion long ago that post-Keynesian economics has little to 
offer places like Nicaragua. I got to know Nathan Tankus fairly well 
when I was writing some stuff about the difficulties of getting Greece 
back on the drachma that were cross-posted on Naked Capitalism. As I 
began reading Yves Smith's blog and spending some time with her and 
Nathan, it occurred to me at some point that they had zero interest in 
the global South or what is sometimes called "development economics".


"I did get to explain MMT to Emmanuel Wallerstein recently. He was 
non-committal, saying essentially that he did not understand it. Not in 
his bailiwick."


--Binoy Kampmark

Doug Henwood:
Another serious problem with MMT is its embeddedness in a rich-country 
perspective, and in particular American exceptionalism — in this case 
the “exorbitant privilege,” as a French finance minister once put it, 
that comes with issuing the world’s dominant currency. Countries around 
the world keep their reserves (basically rainy-day funds on a very large 
scale held by governments at their central banks) in dollars, which make 
them effectively a captive market for US Treasury bonds (which is how 
the dollars are kept). Also, major commodities like oil are priced in 
dollars, forcing countries to accumulate the currency to pay for 
essential imports. That means the United States, exceptionally, can run 
giant deficits and borrow on a vast scale with little constraint (so 
far). Nor do we have to worry about the value of the dollar (for now, 
though you have to wonder how long the exorbitant privilege will last in 
a world where US dominance is eroding).


But less privileged countries have to worry about foreign investors 
dumping their bonds and driving down the value of their currency, which 
would jack up interest rates and inflation. Salvador Allende’s 
government greatly increased spending and raised the incomes of the 
poorest in Chile in the early 1970s; that worked nicely for a while, but 
then inflation took off. Allende wasn’t operating from the MMT playbook, 
merely resorting to policies pursued by many progressive governments 
facing political opposition and resource constraints. But such 
experiments rarely end well, and similar problems would face a poor 
country trying to stimulate its way to prosperity today, as we see in 
Venezuela now.


Compared to the United States, such countries enjoy less “monetary 
sovereignty” — a core MMT concept. A monetarily sovereign state is one 
that can spend its currency at will, including from pure keystrokes. 
America enjoys a lot of monetary sovereignty; so do Canada, Japan, and 
Britain, though to a lesser degree. Those countries need, for example, 
to import things priced in dollars, like oil, and the value of their 
currency has a direct effect on living standards that Americans are 
insulated from because we can print the currency in which that oil is 
priced. Brazil, in turn, has even less freedom; it needs harder 
currencies like dollars and euros to import commodities and advanced 
manufactured goods; and poorer countries like Bolivia or Ghana have even 
less. To buy essential imports, these countries often have to borrow in 
those hard currencies. To pay off the loans, they need to earn foreign 
currency through exports.


MMT has little helpful to say about that situation — in fact, its 
advocates sometimes seem to lecture them that foreign borrowing is 
risky, which it is, but sometimes it’s the only way you can buy power 
plants and locomotives. MMTers like William Mitchell and Wray write as 
if borrowing abroad is just a bad choice, and not something forced on 
subordinate economies. When I asked Mosler what MMT had to offer Turkey, 
a country whose currency has been losing value for the last four years 
and had something of a financial crisis in the summer of 2018, he 
responded with a bit of avian whimsy: “Without our recipe for Turkey 
they’re a dead duck.” (In fact, Turkey had been pursuing MMT-friendly 
expansionary fiscal and monetary policies, including state guarantees of 
private corporate debt, and inflation was around 11–12 percent and 
rising.) Not satisfied 

Re: [Marxism] MMT, Chartalism, and Keynesianism

[Louis Proyect via Marxism]

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On 4/20/20 10:55 PM, MM via Marxism wrote:

This is really getting embarrassing. Why are people so enthusiastically 
committed to pronouncing on stuff they don’t have the first clue about? I feel 
like I’m trapped in a Monty Python sketch.


If you were in command of the theory, you wouldn't need to continue to 
write such abusive stuff. When I asked you about Nicaragua, you had an 
opportunity to write a thousand words or so explaining why it didn't 
work there. Asking me to listen to a podcast, which I never do because 
they take too long to make key points, or to read Nathan Tankus was just 
your way of telling me that you don't want to be bothered putting 
together a small essay.


One of the unfortunate legacies of social media is that it has led to 
the Twitterization of debates. I stay away from debating people on FB 
because it is a waste of time. The listserv is a bit of a brontosaurus 
because the norm is for people to develop their ideas at some length 
rather than to shoot out 3 or 4 sentence comments. If I were you, I'd 
lay off the cheap insults and stick to the substantive or else you might 
end up like Michael Probsting.


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Re: [Marxism] MMT, Chartalism, and Keynesianism

[MM via Marxism]

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> On Apr 20, 2020, at 9:49 PM, Anthony Boynton via Marxism 
>  wrote:
> 
> MMT's prescriptions can be seen as extensions of Keynesian economics. Their
> limited value for saving capitalism applies only to imperialist countries
> without debts denominated in currencies other than their own currency and
> cannot and does not apply to the world economy.


This is a staggeringly ignorant and cringingly “priestly” couple of sentences. 
Let me just rip a few phrases to shreds for now:

“MMT's prescriptions” — as if there is a single set of prescriptions coming out 
of this school of thought — when even leading voices of MMT insist that the 
main thing that unifies “MMT” is a descriptive account of the money function, 
as for instance in this interview: 
https://theintercept.com/2020/03/20/deconstructed-podcast-alexandria-ocasio-cortez-coronavirus-economy/

"can be seen” — by whom? Sectarian idiots? Great; not really very concerned 
about them.

“Their limited value for saving capitalism” — as if MMT is focused on saving 
capitalism, as opposed to saving societies from capitalism, as would be 
apparent to anyone who spent even a few minutes trying sincerely to become 
familiar with the body of thought in question.

"cannot and does not apply to the world economy” — already dispensed with in 
earlier posts.

This is really getting embarrassing. Why are people so enthusiastically 
committed to pronouncing on stuff they don’t have the first clue about? I feel 
like I’m trapped in a Monty Python sketch.

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Re: [Marxism] MMT, Chartalism, and Keynesianism

[MM via Marxism]

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> On Apr 20, 2020, at 9:49 PM, Anthony Boynton via Marxism 
>  wrote:
> 
> A good place to start understanding MMT, its history, and its differences
> with traditional Keynesian economics is Wikipedia
> https://en.wikipedia.org/wiki/Modern_Monetary_Theory 
> 
> 
> ...
> MMT's prescriptions can be seen as extensions of Keynesian economics. 

And now we have someone purporting to be a serious Marxist thinker invoking 
Wikipedia as an authoritative source on MMT — a body of thought for which there 
is no single set of policy prescriptions.

And by the way, I’ve personally seen Michael Roberts admit that he couldn’t 
offer any source reference for his characterization of MMT because it was 
simply “his opinion.” 

This is getting ridiculous. It’s truly astonishing how committed some people 
are to defending their own ignorance.

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[Marxism] MMT, Chartalism, and Keynesianism

[Anthony Boynton via Marxism]

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A good place to start understanding MMT, its history, and its differences
with traditional Keynesian economics is Wikipedia
https://en.wikipedia.org/wiki/Modern_Monetary_Theory

The chart showing differences between MMT and Keynesians is especially
useful.

MMT's prescriptions can be seen as extensions of Keynesian economics. Their
limited value for saving capitalism applies only to imperialist countries
without debts denominated in currencies other than their own currency and
cannot and does not apply to the world economy.

For this reason alone, the theory fails to address the current crisis. For
more on the topic, read Michael Robert's three blog posts on MMT starting
here
https://thenextrecession.wordpress.com/2019/01/28/modern-monetary-theory-part-1-chartalism-and-marx/

Anthony
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