Ok, so as promised to @deficitowls and @txex, it’s time for a thread on MMT! My purpose here was to (in good faith) read as much MMT literature as I could bear, and to respond beyond the usual “this is meaningless quackery” many academic economists offer. 1/N
Let’s start with my reading list. Several blog posts from neweconomicperspectives.org like the MMT Primer, Huang’s Essays in Monetary Theory and Policy, and Tymoigne’s Money and Banking; also Warren Mosler’s “7 Deadly Innocent Frauds”, in addition to many others. 2/N
I want to start from the outset by saying I am NOT a macroeconomist. I say that as both as caution and critique. It is a caution because I am reticent to step outside the lanes of my training into commenting authoritatively in which I have limited advanced training. 3/N
It is a critique because not many writers on MMT share that proclivity (that’s a bit of shade on my part, granted). 3/N
Thanks to all who were kind enough to offer me MMT reading material and for the good faith and the patience. I really did read as much as I could over the past few days, but I feel like I’ve just listened to 15 remixes of a song I didn’t really care for to begin with. 4/N
Now, a it’s helpful to define MMT as I understand it: MMT posits that monetarily sovereign govts create demand for money by way of tax liabilities that can only be satisfied in their currency, and such a govt may never become insolvent. Crudely: taxes drive money. 5/N
That said, I want to start with some conclusions that I actually agree with: 1.) trade deficits are not inherently bad, 2.) govt deficits are not as huge a deal as they're made. 3.) a country is neither a company nor a household, and comparing it to either is a mistake. 6/N
I have 4 main critiques of MMT at the moment, but there are a few others kicking around in my mind. The critiques are: the erasure of barter, the minimization of consumption, the ignorance of neutrality, and that taxes are not magic. 7/N
There is a bizarre attempt in MMT circles to make the claim that barter economies never existed. This is untrue and is easily verifiable in historical and cultural records, & with contemporary scholars. You can’t just pretend it didn’t and doesn’t exist. 8/N
Another problem I have with MMT is the assumption that $, not consumption, is the end goal of production. Sure, maybe there is some utility in holding $, but only inasmuch as $ represents future consumption. Firms are owned by people who USE those profits for consumption. 9/N
Money is essentially neutral in the long run and non-neutral in the short run. There are dozens and dozens of papers and textbooks providing empirical evidence. I’m happy to provide a non-exhaustive list of them. 10/N
The endless and cyclical assertion that taxes drive money is always offered without evidence other than “look at X early economist who said something sort of almost similar to it.” If taxes drive money, I want to see an empirical estimate of the extent to which that’s true. 11/N
Anyway, those are my (very long, sorry) impressions from a weekend of reading MMT blog posts. My mind is for the most part unchanged, but I’m certainly better-read. Thanks for the time and resources, @deficitowls and @txex. I’m afraid I’m still not a convert. 12/N
