Corrente

If you have "no place to go," come here!

Public Purpose

letsgetitdone's picture

Avoiding A Debt Ceiling Election Sellout!

During the past few months the results of polling suggest that Barack Obama will be re-elected. But they also show that his support is shallow and could be shaken easily by an economic downturn during the next 6 months. Read below the fold...

letsgetitdone's picture

(MMT - JG) + Medicare for All Not = MMT

Thread: 

In my last post, I discussed the first part of Beowulf's post entitled: “(MMT - JG) + Medicare for All = MMT,” and also some dialogues between Jamie Galbraith and both TomThumb and Beowulf related to the MMT Job Guarantee at one of FiredogLake's Book Salon's featuring Jamie's n Read below the fold...

letsgetitdone's picture

Dialogues with Jamie Galbraith and the MMT Job Guarantee

A few days ago my friend Beowulf decided to exercise his wry sense of humor with this title of a post he offered for our consideration: “(MMT - JG) + Medicare for All = MMT.” Beo then goes on to talk about some details of a comment exchange with Jamie Galbraith at one of FiredogLak Read below the fold...

letsgetitdone's picture

John Carney Doesn't Believe That Government Spending Can Achieve Public Purpose

John Carney commented on a post by David Brooks and a follow-up by Randy Wray. Brooks says that a tax credit is essentially the same as Government spending and used an example from David Bradford, a Princeton economist, of the Pentagon wanting to acquire a new plane and paying for it with a tax credit.

Randy comments on the idea this way: Read below the fold...

letsgetitdone's picture

The WaPo MMT Post Explosion: Dean Baker's Second Try On MMT (3)

letsgetitdone's picture

The WaPo MMT Post Explosion: Dean Baker's Second Try On MMT (2)

This is the second installment of a critical review of Dean Baker's second reaction to the debate kicked off by the WaPo's piece on Modern Monetary Theory, written by Dylan Matthews. The first installment discussed Dean's views on using the monetary channel to boost aggregate demand, and began criticism on his views on devaluing the currency and increasing exports. This post continues that critique, and later takes up his views on work sharing.

Expanding US Exports at the Expense of Decreasing Real Wealth? (continued)

Dean goes on:

”To see this point, imagine a more extreme case. Suppose that we had a trade deficit equal to 50 percent of GDP. If the countries who were buying up dollar assets then decided that they had enough, so we could no longer rely on imports to meet half of our domestic demand, does anyone believe that the U.S. economy could quickly and painlessly replace our imports with domestic production?”

No, of course not! But, why do economists like Dean and Paul Krugman insist on relying on far-fetched scenarios to try to argue against simple truths that may apply today? The current account balance will probably be around 4-5% of GDP this year. As the economy recovers it will probably rise to 6% of GDP again, which represents a very real benefit to the United States. But there's no reason to expect that this growth would continue indefinitely or ever reach 50% of GDP. Why should it? What are the dynamics that would drive things this way, and make other nations value the dollar so much, that they will keep their own populations barefoot?

China, India, and Japan are all under pressure domestically to change their policies and make more of their production available to their own people. Europe may also abandon austerity soon, as they experience its ravages.

The long-term trend in the current account balance won't be up, It will be down, gradually down, for reasons I mentioned above. It just doesn't make sense for foreign nations to continue giving more than they're getting from the US. So, the 50% GDP scenario is just ridiculous. Why even bother suggesting it? What does the thought experiment prove, except that Dean Baker isn't thinking through a realistic model of the forces accounting for the international trade patterns we see?

In fact, Dean isn't even really serious about suggesting that this scenario somehow corresponds to a result of MMT economics. He says:

”I would not attribute this view to the MMTers, but then the question becomes one of a degree. Perhaps a trade deficit of 6 percent of GDP is okay, but presumably somewhere between 6 percent and 50 percent we get into a problem. It seems the question then has to be how quickly the U.S. economy could adjust to a much lower trade deficit and what is the risk that foreign countries will slow or stop their purchases of U.S. assets? We may differ on the answer to these questions, but they are the questions that must be asked.”

I think these are important questions. We should ask them. But, has Dean answered them? And do his answers indicate any serious problems for the United States economy? And if so, how does that relate to MMT? If these changes could possibly produce cost-push inflation in the United States, then MMT has some answers for that kind of problem. On the other hand, if other nations stop exporting so much to the US, then that may create less demand leakage for our economy. In which case, MMT predicts that we will get closer to full employment and also that we will have to moderate deficit spending as full employment is approached.

Dean continues with more scenarios about what would happen if foreign nations began to charge us more from imports. I won't reproduce each of these here or critique them. But, invariably, there is a general pattern to them. Read below the fold...

letsgetitdone's picture

The WaPo MMT Post Explosion: Kevin Drum's Take on MMT

Kevin Drum, posting in Mother Jones, also threw his hat into the ring of discussion about Dylan Matthews's post about Modern Monetary Theory (MMT). Kevin begins by characterizing MMT as “. . . . Read below the fold...

letsgetitdone's picture

The WaPo MMT Post Explosion: Dean Baker Weighs In on MMT

Dean Baker weighed in on MMT in the aftermath of Dylan Matthews's, MMT post on Ezra Klein's blog. Dean said:

I consider many of the leading proponents of MMT to be friends and generally find myself on the same side of political debates. However, I have to confess to being a bit unclear as to what exactly separates MMT from the good old Keynesian economics I learned in my youth.

Read below the fold...
letsgetitdone's picture

The WaPo MMT Post Explosion: Jared Bernstein's Cool Up To a Point

After stating his general approval for Dylan Matthews's, MMT post on Ezra Klein's blog, and his agreement with MMT on the issue of solvency, a big point that MMT's been trying to get across to the mainstream for years, Jared brought forth a number of points of disagreement, which I'll reply to based on my interpretation of the MMT perspective.

Tax Cuts Hard to Unwind? Not If You Legislate Properly! Read below the fold...

letsgetitdone's picture

One + One = Two (Not Too Wonkish)

After reading one of my rants about the stupidity of policies aiming at a balanced budget, somebody in my Facebook environment, commented by saying: “1 + 1 = 2.” Here's my answer.

Yes, 1+1 = 2.

Now here's an accounting identity from macroeconomics, called the Sectoral Financial Balances (SFB) model:

Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0.

It's like 1 + 1 = 2. But just slightly more "wonkish." Read below the fold...

letsgetitdone's picture

Alternative Fiscal Policies: Why the Job Guarantee is Superior (Wonkish)

By

Pavlina Tcherneva

A few weeks ago I called for a technocratic debate on the merits of the JG, relative to other fiscal policies. A number of bloggers took the charge but the debate was not immune to ideological biases, which proved the starting point of my piece that one cannot separate fact from theory or ideology (and by ideology I do not mean the derogatory use of the word, but that which signifies ‘ontology’ or a ‘world view’). What I didn’t expect is for friends and sympathizers to resurrect one particularly invidious charge we have long heard from MMT deniers, namely that MMT is pushing authoritarian policies.

Oh, boy. How did we even get here? I thought this was going to be a technocratic debate. Read below the fold...

Pages

Subscribe to RSS - Public Purpose
Turlock