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We gotta stop with this misleading, ignorant and divisive characterization. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.pitbulleconomics.com/ Download my podcasts! New one every week. https://www.buzzsprout.com/1105286 Mike Norman Twitter https://twitter.com/mikenorman
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We gotta stop with this misleading, ignorant and divisive characterization. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.pitbulleconomics.com/ Download my podcasts! New one every week. https://www.buzzsprout.com/1105286 Mike Norman Twitter https://twitter.com/mikenorman
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| We gotta stop with this misleading, ignorant and divisive characterization. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.pitbulleconomics.com/ Download my podcasts! New one every week. https://www.buzzsprout.com/1105286 Mike Norman Twitter https://twitter.com/mikenorman |
Yes I believe you are missing the other side of the t accounts though. The other side of the money expansion (cash/asset) is a liability. The liability is either paid off or written off. The 1st option is practically impossible now because we are trapped in a downward spiral of a liquidity trap as rates have hit the zero bound.
@Alex Butler too much government debt drowns out private sector growth.
@Danger Zone Reloaded that’s what the Keynesian theory suggests. Their theory becomes invalid when the debt to gdp surpasses 90% though. Every dollar of debt no longer gets an equivalent amount of growth. It produces less.
@John Basher no it doesn't. The crowding out idea is only true if the currency is static. Government debt adds to the balance sheets of the private sector, it doesn't take away investment from elsewhere. We're seeing this play out currently. The government has borrowed trillions to pay for stimulus, but bank balance sheets have grown because the money borrowed is immediately put back into the private sector and the Bonds issued are just as good as cash. It alllows for more private sector growth, not less.
@John Basher Why do you think 90% is the magic number in the debt to GDP ratio? It's different in every scenario. Government debt only stops producing growth if there is a resource constraint that prevents growth from happening, or some other oddball scenario where everyone decides to save at once. The real economy doesn't care what the debt to GDP ratio is, it will always respond to supply and demand.
@Alex Butler yes the government has a liability. That liability is someone else’s asset such as a note receivable. That receivable has to be serviced either through revenues or additional debt. I believe your saying the governments ability to borrow is unaffected by revenue growth. I disagree but maybe your right and this time it’s different. Take care.
Whats the point of increasing savings if the currency is worth less
@Jackie R no the guy who's raising his prices will go out of business cos the other guy's doing it cheaper.
@Alex Butler I said "worth less" not "worthless"
@микаэл гордон it's a tradeoff. If there wasn't economic stimulus there would have been a massive prolonged recession due to Covid. Yeah your savings would be worth a little more but the economy would be in shambles. Also what your savings will actually be worth is dependent on future policy. Right now there really isn't much inflation anyway. It will ticknup about a percent or two but that's not much. If you're keeping a large enough amount of money in savings that a 2% inflation loss hurts you bad, invest it instead. Or put it in a high interest account. Easy solution much more preferable to a half decade long recession.
@Alex Butler Agree on most of that. I don't like the moral aspect of penalizing saving though. Stimulus is a wealth transfer from savers to debtors, it incentivises reckless borrowing and behaviour. Its a philosophical issue. But its not really important how I feel. What is important is to understand what is actually going on and how it affects the markets.
@микаэл гордон stimulating the economy does not make the currency worth less. When you don't stimulate the economy and the country falls into a deep depression is when your currency is worth less.
I agree with what you're saying in the immediate term but, at some point, taxes will need to be raised to regulate the amount of fiat in existence, to control inflation. This is one of the purposes of taxes, and it's what gives currencies their value. The money paid now will be, at least partly, paid by people's savings in the future. Of course, some people receiving money now will be paid by themselves in the future, when they're earning enough to pay taxes.
The progressive income tax system automatically collects more back as people earn more. So there is no obvious reason or rush to change the tax structure.
@Ernest Jones the problem with the tax system is that it causes too much inequality. We need to return to the days of 90% top marginal tax rate. We also need a wealth tax.a
@Danger Zone Reloaded agreed about the income tax. And definitely we currently have a wealth inequality problem right now.
Many people favor a property tax instead of an income tax and say it could be made progressive. But I am wondering whether it would be able to duplicate the stabilizing effect that the income tax is doing quickly or well enough.
@Ernest Jones yes add a LVT into the mix.
@Danger Zone Reloaded
Hmmm. I've been told that the income tax acts too strongly as a stabilizer. If that is true, a property tax might be a good addition.
I have no idea though, how you figure out what the balance needs to be.
I don't know what grass you are smoking, the government is transferring money through INFLATION. They print new currency and give it to people who never earned it by taking it from savers, so it's a pure transfer of wealth from one group to another. And to those who say there's no inflation, have you seen what happened to the price of commodities lately? Have you seen what happened to the price of Bitcoin? Are you watching what's happening to treasury yields? And yet they keep lieng and telling us there's no inflation.
Say whatever you want but they just robbed the public of about a trillion dollars and gave it to themselves.
They took money from others by diluted the dollar. So now the person with 0 have + 1 will chase good and services that couldn't afford before. Interrupt supply chain = create inflation
@Sectoral Balancesits call stagflation… when you exhaust your resources by printing but you still see unemployment everywhere with limited growth. Plywood sheet pre-pandemic was selling for 15; now it's around 40$
@Yaser K inflation is when all things go up in price consistently. Not one item with a one-time jump.
@Yaser K once the pandemic is over prices will go back to normal.
They didn’t “dilute” the dollar. That’s ridiculous. The dollar is stronger now than when Clinton ran surpluses. Stop repeating bullshit talking points that people like Peter Schiff state.
@Michael Norman , then how you bearish with the dollar? ? Make your mind, plz! We know the dollar is strong now, just temporary. Once the money velocity picks up, this rally can't sustain.
please help clarify, wont all money creation eventually decrease purchasing power of all dollars in existence. if we could just print wealth with no consequences why not just give everyone a million dollars. from what i understand, spending in excess of taxes is actually taxation thru inflation or it prevents price deflation, which is a more sneaky and unseen tax on anyone that holds cash or is owed money. and isn't most of the deficit spending borrowed from the total pool to begin with, so it is literally being redistributed, then the fed comes in and credits the bond holders for their initial purchase. what am i missing. i get it not all the stimulus comes from taxing the rich and giving to the poor, but the purchasing power of this money is not coming from no where.
As long as tax exist the dollar will have value. We will work in order to get the dollars to pay the taxes.
@Danny Windham right. But taxes will rise and everything will cost more… so let’s just add a 0 to the end of the price of everything… eventually no one will be willing to loan gov money at near zero interest, so rates will rise , debt will skyrocket, more borrowing etc, idk all fiat systems have failed this one will be no different, just can’t deny what is happening . There are no free lunches, you can’t print wealth. This is wealth redistribution
@Mike Heayn there is no debt the United States government has no f**** debt. We don't borrow money from f**** China it is never happened. Explain to me how do United States government is going to borrow Chinese Yuan and turn those at the dollars. Why would we want to do that we create our own currency. The so-called national debt it's nothing more then every untaxed dollar now being held in the form of treasury bills that's it
Ok. So why not give everyone a million? We would all be rich right? Everything would be great…. hmmmm
@Mike Heayn look you're a DieHard Gold bug there is no point in talking to you. Try talkin to that lunatic Ron Paul you have a lot in common
This doesn’t apply to state/local taxes though, right?
Right
You're right it does not apply to State and local taxes correct
The government spends new currency into existence and taxes existing currency out of existence. Any year 5 primary school kid can understand that. Why can't adults?
Because too many people listen to mainstream media neoliberal bulshit.
The Government has been robbing us blind for years it’s time they start giving it back.
The Government has been robbing us blind for years it’s about time they start giving it back.
Stimulus should include rolling back regulations and lowering energy costs.
it's a bandaid solution to save a dysfunctional system. any proper government would have spent money into the medical sector and infrastructure to avoid the crisis and kicked all the fiscal conservatives, that stood in the way, from political office.
Yes you won't get progress when you only have the choice between two right wing neoliberal parties. Next time vote for the people's party.
He lost that eye for the MIC!
They are taking from me and giving it the lazy welfare queen.
Yeah but there's Nominal tax and Real tax. It could be that Real consequences happen as the result of Nominal government behavior.
Totally obvious if you understand MMT.
Taxes at the federal level don't fund the government one would think after this past year it would be obvious to everyone. One would have to literally be brain dead not to realize this. Unbelievable
hey Mike would love to hear your opinion on Biden and Manchin suggesting an increase in the corporate rax rate from 21% to 28%. If I'm not mistaken that will only slow and increase the cost of production, potentially causing stagflation.
Consider government spending a sloped/skewed zero sum game.
It can be normalized to yield a strict zero sum game.
I believe Michael is intelligent enough to comprehend it and why he is after all wrong here.
Who would invest in a company that held back on improving its technology and core infrastructure for 70 years? It would be falling apart, crumbling. It would look like a sh___ole.