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View Diary: Modern Monetary Theory vs the Fiscal Cliff (65 comments)

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  •  My comment should have been clearer. (2+ / 0-)
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    semiot, clonal antibody

    Bunnygirl60 - I'm a screwy rabid MMTer. And a very leftie one. Joe (Letsgetitdone) has paid me the compliment that he "almost always agrees with your incisive posts". And Wray paid me the compliment of saying "You're doing my work for me" for something similar to what I said above.  

    So I think you may be misinterpreting it. One point is that MMT is a general theory, and you can understand economics under a gold standard with it. Indeed that is what the earlier economists whose thought MMT is a synthesis of, had to do perforce, as they usually lived under some kind of commodity standard.

    This can be more than historically helpful as one can think of the Job Guarantee as a Labor Standard, setting the value of a dollar not to gold, a comparatively worthless metal, but to human labor, which basically every economist ever has always agreed is somehow or other the source of human wealth. Labor is the real gold. The real scarce, valuable, commodity.

    Government spending to employ the unemployed takes something which would have been destroyed - the labor of the unemployed - and does useful things with it. This is "transfering" wealth, which otherwise would have been destroyed, into the public sector. So it is a colossal free lunch. The money paid to the unemployed, by the Keynesian "multipler effect", will make the private sector work better and perhaps even employ more than the government programs do. (That happened in the 30s & 40s)  

    The hardest, most delicate thing is usually to get the simplest, easiest things really, really right, and then to realize how simple and easy things really are. Which here is understanding what money is and therefore clearly distinguishing between the nominal/financial/monetary & the "real" economy of goods & services. And getting how things "move" correctly.

    So that is why I criticized some things in your fine post as not exactly right.  Such deficits don't exactly move value to the private sector. They directly "move value" to the public sector but the monetary spending increase, which goes to from the public sector to the private sector, enables the private sector to create value better.

    •  Calgacus, (0+ / 0-)

      Please reply to Chris Cook above. I think you might do a better job of answering Chris' concerns than I would.

    •  I understand your point much more clearly now. (0+ / 0-)

      Thank you for the clarification. My thoughts would be two-fold.

      The first is that when one is trying to make an argument to a banker one has to talk like a banker and when one is making an argument to an artist, one must speak like an artist. Framing makes all the difference. MMT is, as best I can tell, desperately trying to break through the wall of long-established, conservative thinking. When you start speaking about labor as bring the true value, you sound, rightly or wrongly, like what they might even manage to call "communist." I'm not advocating for that in any way, I'm just saying it is so. An argument which has any hope of impact has to speak in a tongue which can be heard by its audience.

      My second thought, as a manufacturer, would be that, yes, you are absolutely right but it doesn't feel that way to me in a functioning day-to-day basis on the ground. There is no doubt that the people who work for me are an invaluable asset but when I go to the bank or present a business plan for expansion, no one ever asks me about my people. They ask me about our debt load, our hard assets, our orders backlog. They ask me about things that fit on a balance sheet. Sadly, that is the world I have to live in no matter how much I agree with you.

      "When in doubt, do the brave thing." - Jan Smuts

      by bunnygirl60 on Tue Nov 27, 2012 at 06:48:58 PM PST

      [ Parent ]

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