Sane Progressive Calls #MMT a "Cult" & Still Negating Importance of Minority Struggles
69Sadly Sane Progressive is still obfuscating/sidelining/negating importance of minority struggles & into the bargain calls Modern Monetary Theory (MMT) a "cult" (her vlog dated Aug 24). To find more about the background of this issue, view my earlier vlog here https://www.youtube.com/watch?v=k2rftfBHKhM&t=222s
Apologies if there was a bit of repetition in the first half of this vlog. The last half is clearer.
Here's a short description of MMT *(Modern Monetary Theory):
A few points about the economy :
1. The US government issues its own currency. It can’t go broke. It does not require taxes to pay for things. It can afford to pay for any social program it likes as long as there are real resources and labor to be spent on.
2. Inflation happens when not enough is being produced to meet demand. Therefore, spending on things that increase production is typically not inflationary. Employed, healthy, educated people are more productive. Single-payer healthcare, free education, a better transport network, and a Federal Job Guarantee could be paid for tomorrow without excessive inflation. Taxes are not needed to pay for it.
3. Taxes are still necessary. They remove money from the economy. That makes them a tool to control inflation and the value of the dollar. Taxes also express the public’s desire to redistribute wealth (progressive tax system), and to subsidize/penalize helpful/harmful industries (e.g. clean energy/tobacco). But, taxes do not fund spending. They are destroyed upon receipt.
4. The Federal Reserve is tasked with issuing new money. They are a tool of Congress. The Fed has some level of independence, but if Congress asks for new spending, the Fed does it. They are a public entity in the most important sense of the word.
5. If the government runs a budget deficit (spends more than it taxes), then you, me, and everyone else save money. The private sector is said to be in “surplus”. However, if the government runs a surplus, the private sector is in deficit and, if this goes on too long, you get a recession. As we know from 2008, governments must spend big to end recessions. This doesn’t cause inflation because they’re spending on underutilized resources.
6. The private sector can’t handle deficits because it’s like a household economy: income must equal or surpass costs. To keep the private sector in surplus, the government should nearly always run a budget deficit because it’s not like a household; it’s a currency issuer: income does not need to surpass costs. The bank in Monopoly can’t go broke, but the players can.
7. The national debt does not exist. The so-called debt is a collection of savings accounts at the Fed. Politicians use the idea of debt as an excuse to not spend on the people.
This is called Modern Monetary Theory (MMT). It's the world we live in - our economic reality. If we acknowledge that, we take away the excuse politicians use to not give people healthcare, jobs, an education, clean water, renewable energy, and better infrastructure. If we take away their excuse, the 99% win. That's why some progressives are desperately trying to educate the rest of us about MMT.
Some more MMT resources (This is not an exhaustive list): One of the most popular books is Warren Mosler's 7 Deadly Innocent Frauds. As Dr Joe Firestone said it's deceptively simple and very short, but really great for thinking about.
Next to check out is Randy Wray's Modern Money Theory Primer. It explains much more., but is also more expensive.
As for articles, Steven Hail's Introduction to MMT is very good.
Ellis Winningham just created a very short bullet point presentation. http://elliswinningham.net/index.php/2017/07/15/key-points-understand-regarding-macroeconomic-reality/
Stephanie Kelton has a series of two articles revolving around a teeter-totter analogy that is very good. http://neweconomicperspectives.org/2011/06/what-happens-when-government-tightens.html
Finally, there's Stephanie Kelton's key article showing that tax and bond revenue don't fund spending:
https://www.scribd.com/mobile/document/58324026/Bell-Stephanie-Do-Taxes-and-Bonds-Finance-Government-Spending#
To find out more about MMT, go to http://www.facebook.com/RealProgressive