Monetary Reform and Positive Money (and comparing them to MMT)

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Monetary Reform and Positive Money (and comparing them to MMT)

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mmt-and-monetary-reform

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Monetary Reform and Positive Money (and comparing them to MMT)


[Monetary Reform and Positive Money (and comparing them to MMT)](https://activistmmt.org/mmt-and-monetary-reform)
Monetary Reform and Positive Money (and comparing them to MMT)

  • Monetary Reform and Positive Money (and comparing them to MMT)
  • New #MMT resource: “Monetary Reform and Positive Money (and comparing them to MMT)”

    Includes interviews with Joe Firestone, Clint Ballinger, and Dan Sullivan, an explainer of MMT versus MR by me, several posts by Clint on PM, plus a response by PM to Clint.

    Link to resource: https://activistmmt.org/mmt-and-monetary-reform

    Dan is a Monetary Reformer. Far from an MMTer. “He is extremely well informed about mmt” He’s definitely reasonably knowledgeable about and has some important input and criticisms regarding MMT. He also obviously has some fundamental disagreements with MMT, in addition to some outright misunderstandings about the JG. Here’s his full response to my asking a several months ago “what is your disagreement/concerns with MMT?”

    Many people have raised these objections.
    * The idea that you can increase the money supply until you have “full employment” ignores the fact that there is no magic line between people who are employable and people who are not. The most intelligent, ambitious, socially competent and physically fit people are hired first, and you resort to less productive people as you approach full employment. If we removed all the obstacles to employment, many of those people would still be employable. However, MMT only addresses one obstacle and imagines that the other obstacles will magically disappear.
    * The same is true of land and natural resources. The best, most productive land is used first, unless it is held for speculation, and as we approach full use of resources, even in a theoretically sustainable way, we are resorting to less productive lands and to resources that are either of lower quality or are harder to access.
    * Measuring inflation by the consumer price index is deceptive, because the most immediate response to an increase in the supply of money (including monetized bank credit) is an increase in land prices. Consumer price inflation occurs more gradually as high land prices impede would-be competitors. Other asset prices also rise, but land is the big one.
    * The only effective restraint on bank lending is the belief by banks that they might not be paid back. Putting more government money into the system is therefore matched by more profligate bank lending, as the bankers see the additional government money as something with which loans can be repaid. Expansion of government money therefore encourages expansion of bank money.
    * The more the creation of bank money can be curtailed, the more money government can issue. I see MMT as too strong on creating government money and too weak on curtailing bank money.
    * The velocity argument is a red herring I have frequently seen in MMT arguments. The reason it fails is that velocity increases when inflation is anticipated and decreases when deflation is anticipated. That is, people spend their money faster if they expect goods (or real estate) to get more expensive the longer they wait, and spend it slower if they expect prices to fall. The result is that velocity only exacerbates the problems of inflation and deflation.