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Noah Smith @Noahpinion
, 3 tweets, 1 min read Read on Twitter
MMT folks always say: "government deficits equal private sector surpluses".

But who cares? Why care about NET private sector surpluses? It's GROSS private sector debt - i.e. money that private actors lend to each other - that really matters, right?

bloomberg.com/view/articles/…
Here is a graph of:
A) U.S. federal debt
B) Total credit to the non-financial sector in the U.S.

It's not at all clear to me that govt. deficits cause private sector deleveraging.
So while govt. deficits CAN help the private sector deleverage, it seems clear that they sometimes DON'T.

The MMT focus on NET private sector debt seems like it could be a distraction from the real danger: GROSS private sector debt.

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One thing I think would help reduce elite Millennial burnout/disappointment/rage is for people to stop thinking that their job should save the world.

"Save the world" and "make the world a better place" are probably just things employers tell you to get you to work for cheap.
Maybe your job will give you meaning and purpose and a sense of doing good for the world.

Or maybe it'll just make you some money so you can raise some kids, have some pet rabbits, and be active in your local community.

There's more than one way to get meaning in life.
Also, people glorify saving the world when it probably just gives you PTSD.

We like watching Star Wars and Lord of the Rings and whatever, but we wouldn't want to actually fight Darth Vader or slog through Mordor. That would cause major burnout!
Read 3 tweets
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1/Since Trump's demand for his Wall is in the headlines, I thought it would be a good time for a thread about a history book I just read:

"Dividing Lines: The Politics of Immigration Control in America", by Daniel Tichenor (2002)

amazon.com/Dividing-Lines…
2/The book starts out with a chapter or two of dense, unnecessary political science jargon, saying that - essentially - U.S. immigration policy tends to move very slowly, because powerful politicians and officials resist the tide of public opinion.
3/But most of the book is an extremely readable, eye-opening history of U.S. immigration policy, from the founding through the 1990s.

It shows how the immigration debates we're now having have been with us, in some form or another, for a very long time.
Read 27 tweets
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Thread about why very high tax rates on very rich people don't raise much revenue (or reduce inequality much, even within the top tier).

Our system has a million loopholes. Closing them is more important than raising top rates.
That's not to say there's a trade-off between raising the top rate and closing loopholes! They are complements, not substitutes.

But if you just raise the top rate without closing loopholes, you'll likely be disappointed.
The fact is, raising effective taxes on the very rich will require a comprehensive sustained push on a large number of policy fronts. There is not going to be one silver bullet.
Read 6 tweets

Related threads

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We know @AOC has been speaking with @StephanieKelton and other #MMT folks.

She’s been doing a GREAT job handling the “how are we gonna pay for it?” questions, but here are key points to remember:

• Gold standard ended in 1971.

• We have a fiat currency.

• Money is credit.
Our “tax dollars” don’t actually “pay for” things.

The Federal Reserve actually makes all of the Treasury payments, and it has been this way since 1913.

It gets more complicated than this, but:

1) Treasury has Fed CREDIT bank reserves.

2) Banks credit accounts (DIGITALLY).
The Treasury spends by having the central bank credit bank reserves.

The Treasury receives tax payments by debiting bank reserves.

This is pretty much (systematically) like burning paper notes.

We have special banks now (like dealer banks, for example), but that’s the gist.
Read 5 tweets
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Please note, this research is economic garbage.
The U.K. government doesn’t collect anyone’s tax to put aside for the future whether that’s for pensions or social care.
There will be no funding black hole for social care in 2031.
#MMT
It is a government choice not to fund it today and it will be a government choice whoever is in power to fund it or not in 2031.
The only constraint to the provision of social care services that any future government will face will be a resource one not a financial one.
#MMT
“Research carried out by pensions and risk consultancy Hymans Robertson suggested a German-style system could raise half of the money needed to plug the £30b-a-year gap in social care funding the U.K. is facing by 2031”
Read 4 tweets
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Thread: This is what I would like @billy_blog’s feedback on.
I *thought* MMT was 100% descriptive, 0% prescriptive. Here are two slides from my MMT-101 lesson (video: ):
In other words, it was my understanding that MMT was explicitly non-political. That people can take the *knowledge* of MMT and use it to implement policies that are progressive, neoliberal, Republican, Libertarian, etc. – or not use the knowledge at all.
Read 38 tweets
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Professor Philip Alston, Special Rapporteur to the UN, today begins a two week fact finding mission of the U.K. to examine the government’s efforts to eradicate poverty.
To establish whether it is meeting its obligations under international human rights law.
A full itinerary of Professor Alston’s mission to visit government officials and campaigning groups has been made available to the general public.
ohchr.org/EN/Issues/Pove…
The visit is intended to provide @Alston_UNSR with additional information on poverty & human rights in the UK.
Extensive input & research in advance of his visit has seen more than 300 submissions from people affected by poverty, civil groups, government officials and academics.
Read 10 tweets
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Politicians aren't leaders or rulers. They're puppets on strings. They have been ever since the signing of the Declaration of Independence, which was made invalid a few decades after it was signed. The United States OF America ceased to exist. The United States FOR America alive.
The Crown of England financed both sides of the Revolutionary war. When all said and done, threatened the newly formed United States OF America to a new war, which USofA couldn't afford. To avoid such war, a treaty was signed instead. After that, USofA became USforA. #US Corp.
Everything within United States FOR America is for sale. The #FederalReserve Bank was implemented, which deals in #debt based fake money, as currency, US has been bankrupted. It went into bankruptcy and NEVER came out it. Unfortunately, fact. #Enslavement hidden behind scenes.
Read 25 tweets
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"Then why does the military budget keep going up as social programs keep getting cut?"

Now that’s a good question.

[thread]

#LearnMMT
You & I require income (a paycheck) before we can spend. We must choose & prioritize what we spend each $ on. Food or medicine? Can’t afford both this week. Or...gotta chop that pill in half in order to buy bread & eggs to feed our kids. Hard choices. One or the other. Either or.
Before the United States went off the gold standard in August of 1971, the federal government was exactly the same way: they needed income (taxes, borrowing) before they could spend on federal programs.
Read 33 tweets

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