Stats for nerds
2recommend
5mentions
3people
2015–2022years
40% recommend60% neutral
Mentions per year
What Hacker News says
- "It's now much higher and very evidently out of control."
Only to those that fixate on changing prices as though they should never happen and are a mortal sin.
In reality price is just the market allocating scarce resources to those who can make better use of them.
There's no magic here. We're making less stuff because people have thrown sand in the works due to bureaucratic government restrictions. So who gets to lose out?
We can do it by price, or we can do it by quantity. Pick one.
The "inflation out of control" rhetoric is just PR cover for throwing a lot of people out of work, but trying to get the central bank to do the dirty work, rather than the more awkward job of raising taxes and/or cutting government spending.
Which, funnily enough, is precisely what MMT says on the subject.
"Inflation is the process whereby the government causes higher prices by creating more money either directly through deficit spending, or indirectly by lowering interest rates or otherwise encouraging borrowing. For example, when a shortage of goods and services causes higher prices, a government may attempt to help its constituents to buy more by giving them more money. Of course, a shortage means that the desired products don't exist. More money just raises the price. When that, in turn, causes the government to further increase the money available, an inflationary spiral has been created The institutionalisation of this process is called indexing"
Soft Currency Economics, Warren Mosler, p71
When you start critiquing MMT, always best to understand the source material first, rather then getting your view from Twitter et al. They don't understand what MMT is saying either.
- I think you should read up on Modern Monetary Theory (MMT). There are quite a few people that would argue that printing money is not an issue as long as the debt is held in the same currency you're printing the money with. In theory, you could continue to print enough money to pay off the deficit.
The argument against that is that printing money will cause inflation. While this is true to an extent, it is not always the case. Only about 3% of money in circulation is actually "cash", while the other 97% is credit or a balance in a bank's computer system. Cash + Credit = people's ability to spend. When credit dries up, people aren't able to spend as much. In order to keep the system running the fed can print money to counterbalance the reduction in credit. The amount of money in the system stays the same, it's just that there's more cash and less credit. This is done to ensure that people continue to spend and keep the wheels of the economy turning. Printing money is not always bad.
Also, it's important to understand that while printing adds money to the system, taxes take money out of the system. The taxes the government collects don't actually get recirculated back into the economy. Remember, lots of taxes are paid electronically, which is just a debit on your bank account and a credit on the government's balance sheet. It's not like they're taking your physical dollar bills and spending it again by handing them back out. That money leaves the system and is effectively "destroyed". The government just goes ahead and prints the same amount of money again to balance everything out.
A "balanced budget" means that the government spent or printed the same amount of money that they took out of the system with taxes. While most people would argue this is a good thing, you have to realize that if there's no change in the amount of money in the system, people's wages and wealth effectively remain the same. Inequality can quickly creep in as certain populations of the economy amass more and more wealth. With a balanced budget, it is always a zero-sum game, with a winner and a loser.
By running a deficit (spending more than collecting in taxes), you're raising the amount of money in the system. A rising tide lifts all boats, and so more money in the system means more spending, more jobs, and people earn more. More people can build wealth and live a decent life. Of course, it's a balancing act though. But when done right, it can raise the living standards for all people in a nation.
I'm no MMT expert, but here are some resources I've found to be helpful:
How the economic machine works by Ray Dalio: https://www.youtube.com/watch?v=PHe0bXAIuk0
Soft Currency Economics II (This introduced the idea behind MMT): https://www.amazon.com/gp/product/B009XDGZLI/ref=ppx_yo_dt_b...
Diagrams & Dollars: Modern Money Illustrated: https://www.amazon.com/gp/product/B00HUF6POI/ref=ppx_yo_dt_b...
- "Little or no consideration has been given to the possibility that higher prices may simply be the market allocating resources and not inflation.
Prices reflect the indifference levels where buyers and sellers meet.
If, for example, there is a freeze in Brazil, the price of coffee may go up. The higher price accommodates the transfer of the remaining supply of coffee from the sellers to the remaining buyers"
Soft Currency Economics II, Warren Mosler, pp70
- Inflation is caused by somebody asking for more money and somebody else paying it.
That's a failure of competition keeping prices in check, and little else.
The wealthy person you are looking for is Warren Mosler. He retired to the US Virgin Islands many years ago having made a fortune off the back of people who believed in the Quantity Theory of Money
You can read his conclusions in the book "Soft Currency Economics".
- It's not my worldview. It's the world.
http://bankunderground.co.uk/2015/06/30/banks-are-not-interm...
http://www.amazon.com/Progress-Poverty-Henry-George-ebook/dp...
http://www.amazon.com/Soft-Currency-Economics-II-Monetary/dp...
I'm sure others can post more.
Reality is the dreamworld as far as I can see. It's a total disaster that people don't understand they are seeing all productivity gains now (and forever more) captured by land prices.
