On Belief that spending occurs from taxing, and public saving (i.e., "deficit spending") from borrowing. First is directly false but indirectly true (the tax-credit must be created; no 1:1 ratio tho). The second is completely false. 1/4
Indirect argument heard against "deficits": that either taxes will rise in future or inflation act as a tax.
Neither holds as long as 1) there are ongoing savings desires, which there always will be and 2) spending doesn't surpass (desired) available real resources. 2/4
Simplistic inflation caricatures ignore 1) bad finance regulation 2) useful supply signals (e.g., we should have let energy costs cause innovation in 70s rather than allow Volcker to tank the economy w absurd monetary policy bc "iNflaTion")... 3/4
...3) perverse effects of monetary policy 4) lack of influence in gov by reality-based economists with sectoral expertise, who understand effects of spending preemptively, advise 4/4
(not to mention that the good economy crowding in causes also means more real resources and higher real wages; fixation on long term price levels misses the more important facts)
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Exhibit number 1 of why we have to get rid of treasuries for the public to ever elect representatives who will understand fiscal. The vast majority of public,...
..& many if their econ "teachers," will always think there is a "debt" problem as long as we have our current rococo system. Smart ppl know all spending by currency issuers shakes out to be direct spending,& the repo/primary dealers/treasuries system is irrelevant. Public doesn't
MMT explains and explains, but the media has something to point at, there is the "debt clock," "think" tanks point at the savings #, the public is afraid that # & China having $ (we buy from them tho!) & so on. The change to a no treasury system IS worth the political capital
"Raw Materials in the History of Economic Policy; or, Why List (the Protectionist) and Cobden (the Free Trader) Both Agreed on Free Trade in Corn" cambridge.org/core/books/vis…
Any correct heterodox theory of international trade must highlight the factors of decreasing vs increasing returns industries (primarily impact on domestic economy). #mmt
"Mercantilism and Economic Development:
Schumpeterian Dynamics, Institution Building and International
Benchmarking" google.com/url?sa=t&sourc…