by Summary:
As [John Kenneth] Galbraith so clearly understood, that something so important [as "money"] can be so simple is repulsive to the mind seeking complex answers.That tax gives these records value, with an essential time component added as a consequence, which then means that this aspect of MMT necessarily contributes to a theory of inflation and provides an explanation as to how to address the issue, just adds insult to the injury. That is, I think why MMT cannot get traction with these economists [on the left] right now. Or rather it’s that, and one either thing. Having spent so long learning how they think money and banking works, with asset backing, banks as intermediaries, and maybe in more radical moments accepting that if money is credit then it is the private sector banks who create
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As [John Kenneth] Galbraith so clearly understood, that something so important [as "money"] can be so simple is repulsive to the mind seeking complex answers.That tax gives these records value, with an essential time component added as a consequence, which then means that this aspect of MMT necessarily contributes to a theory of inflation and provides an explanation as to how to address the issue, just adds insult to the injury. That is, I think why MMT cannot get traction with these economists [on the left] right now. Or rather it’s that, and one either thing. Having spent so long learning how they think money and banking works, with asset backing, banks as intermediaries, and maybe in more radical moments accepting that if money is credit then it is the private sector banks who create
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As [John Kenneth] Galbraith so clearly understood, that something so important [as "money"] can be so simple is repulsive to the mind seeking complex answers.
That tax gives these records value, with an essential time component added as a consequence, which then means that this aspect of MMT necessarily contributes to a theory of inflation and provides an explanation as to how to address the issue, just adds insult to the injury.
That is, I think why MMT cannot get traction with these economists [on the left] right now. Or rather it’s that, and one either thing. Having spent so long learning how they think money and banking works, with asset backing, banks as intermediaries, and maybe in more radical moments accepting that if money is credit then it is the private sector banks who create that credit, the idea that money is in fact made by the state after all, and is also given its power by the state is something they just cannot accept because it requires them to rethink everything, and they have too much invested in what they have already learned to do that.
And so we suffer supposedly left wing economists who deny the power of the state to create money. And who would rather we retain the idea that the state is dependent on private sector generated revenue than accept that it is in fact the private sector that is dependent on government-created money to stimulate the demand it requires to thrive. And so would rather do anything to eliminate what they call debt - which is how the state injects value into the economy - than believe that value can be created by government action, working with private sector partners.
No wonder the left is in trouble. Most is its economists don’t believe in the power of the state. Which is pretty worrying.
I was just reading another criticism of MMT yesterday by a political analyst who I think is insightful and informed about geopolitics. He was disparging Stephanie Kelton's presentation of MMT based on his own strongly held beliefs influenced by "vulgar" Austrian economics.
I am willing to give him a pass on this since he is not an economist or in finance and a lot of other people that I regard as good in their field may the same mistakes when they venture out of their field. But there is no excuse for trained economists or finance professionals since this is their field of expertise. Some so-called progressive economists are unintentionally hobbling the progressive movement by their pre-1971 thinking about economics, money & banking and finance and the connection among them. I don't think they are closet Austrian economists, but rather are victims of own cognitive-affective bias about "money" and what it "should" be.
Conflating what one wants or what one thinks should be with what is appears to be a common informal logical fallacy. It is likely based on cognitive-affective bias more than a mistake in reasoning. So it is difficult to counter using reasoning from evidence. I fact, evidence suggests that when confronted with evidence even some highly educated people double down.
Modern monetary theory says that the state has the ability to create and maintain the value in money and most left of centre economists appear to be repulsed by thatRichard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum