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> On Apr 21, 2020, at 1:22 PM, John Reimann via Marxism > <marxism@lists.csbs.utah.edu> 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. _________________________________________________________ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: https://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
