MMT: overcoming the political divide.

https://twitter.com/i/broadcasts/1LyxBdrYDoYGN

Another wonderful video, exploring the capacity of the sovereign currency issuer to spend money into existence.

Very timely, given the current concerns among economic 'flat-earthers'** like these two who have introduced bills into congress banning MMT.

** because the earth seems to be flat, right? Only problem is, the earth is NOT flat....

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Hern, Braun introduce resolution condemning Modern Monetary Theory | U.S. Representative Kevin Hern (house.gov)

 

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ROSS GITTINS: Funding the budget by printing money is closer than you think

 

Opinion | Biden Can Go Bigger and Not ‘Pay for It’ the Old Way - The New York Times (nytimes.com)

"By focusing on how much revenue they think they can raise from a broad array of tax increases on the well-off, Democrats risk allowing the scope of their ambitions to be governed by the dated framework of fiscal responsibility in Washington and the political appetite for tax increases, rather than what is truly possible based on logistics in the real economy.

The Bureau of Labor Statistics, the Federal Reserve, the Treasury Department and other agencies that track labor force participation, price increases and supply shortages can be tasked with developing a specific dashboard of blinkers and warnings to alert to problems (of supply bottlenecks leading to inflation)

If Congress and the White House want to be responsible stewards of both society and the U.S. dollar’s value, then rather than focusing on taxation of the rich, they should prioritize and supply exactly what it would take, in terms of real resources, to electrify the nation’s power grid, repair every deficient bridge, give caretakers a living wage, upgrade our railways, and deliver clean drinking water and high-speed broadband to every home. How many people will it take to do all of that work? How much steel, concrete and fiber optic cable? How many tower cranes and other kinds of building equipment will be needed? The list goes on.

These are the questions we should ask our leaders, and the ones they should be asking themselves — not “How will we pay for it?”

 

Given the insane inflation, do you still stand by MMT?

 

Yes, definitely.

The current price increases (before the Ukraine war) of fuel, food and and rent are due to covid-related supply constraints; and as Bill Mitchell has wittily observed, central bankers lifting interest rates will not increase the supply of laid-up truck drivers or delivery of containers stuck in ports.

So the current increases in prices are not representative of real inflation caused by higher wages chasing higher costs : median wages' growth is not causing inflation.

Nominal Wage Tracker | Economic Policy Institute (epi.org)

Despite the incomplete nature of the recovery, influential voices are already calling for the Federal Reserve to guard against inflation by raising interest rates to slow the economy. The stakes in this debate are high. Macroeconomic policy (including monetary policy) that prioritized very low rates of inflation over low rates of unemployment is a key reason why real wages have stagnated for the vast majority of American workers in recent decades (as we have shown through our Raising America’s Pay initiative). Widespread wage growth will not occur over the coming years if the Federal Reserve prematurely slows the recovery in the name of fighting prospective inflation.

Despite the incomplete nature of the recovery, influential voices are already calling for the Federal Reserve to guard against inflation by raising interest rates to slow the economy. The stakes in this debate are high. Macroeconomic policy (including monetary policy) that prioritized very low rates of inflation over low rates of unemployment is a key reason why real wages have stagnated for the vast majority of American workers in recent decades (as we have shown through our Raising America’s Pay initiative). Widespread wage growth will not occur over the coming years if the Federal Reserve prematurely slows the recovery in the name of fighting prospective inflation.

The following charts—which will be updated regularly when new data are released—help explain why the Fed should hold off on raising interest rates until nominal wages are growing at a much faster pace. Until nominal wages are rising by 3.5 to 4 percent, there is no threat that price inflation will begin to significantly exceed the Fed’s 2 percent inflation target. And it will take wage growth of at least 3.5 to 4 percent for workers to begin to reap the benefits of economic growth—and to achieve a genuine recovery from the Great Recession.
Updated January 8, 2021

NOMINAL WAGE TRACKER
Nominal wage growth has been far below target in the recovery Year-over-year change in private-sector nominal average hourly earnings, 2007–2022

Now undoubtedly the Fed should not have pumped money into the accounts of workers who did not need the support during the lock-downs, likely increasing demand in a supply constrained economy.

 

Interesting history re the creation of money as debt (originally regarded as sinful, by the world's religions):

 

It pumped ten times as much money into the brokerage accounts of the super-duper uber-rich, and ten times as much as that into the net worth of landowners.

 

Wide-ranging discussion between US MMT'er Steve Grumbine, with Australian economist Steve Keen, who is running for the Australian Senate elections (May 21st).