Richard Murphy: Zergatik DTM? Warren Mosler-ekiko eztabaida (2)

Sarrera gisa, ikus Richard Murphy: Zergatik DTM? Warren Mosler-ekiko eztabaida


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Stone Elworthy says:

February 24 2018 at 8:21 pm

I was struck by Warren’s answer to
R: what about countries who cannot borrow in their own currencies, as many cannot?

W: Example

I was thinking that I was being naive in thinking that pretty much any country can borrow in its own currency since Iceland does despite only having <400000 people and Botswana has started to despite being a third world country. Surely there must be a hitch though.

If Warren (and me I guess) are correct, then doesn’t that imply that all countries that currently borrow in currencies that aren’t their own could potentially reap the benefits of transitioning to borrowing only in their own local currency? That could be a permanent and dramatic solution to the problem that got Jubilee 2000 so much support a couple of decades ago. Just imagine if countries such as Haiti were not burdened by catastrophic USD-denominated government debts. Ann Pettifor was at the helm of Jubilee 2000. She is now an MMT economist (that is what Simon Wren-Lewis described her as anyway). Could there be a campaign a bit like Jubilee 2000 but with the aim of re-denominating the debts of poor countries into their own local currencies? If that were to create prosperous trading partners then doing that might even be the easiest way for rich countries to improve the rich countries’ economies. Imagine if every country like Haiti had an economy like that of say Singapore (as an example of another small tropical island).


Charles Adams says:

February 24 2018 at 8:21 pm

And it seems people dislike inflation more than they dislike unemployment?”

Or may be people that are employed do not suffer enough if others are unemployed?

Is there is a tyranny of the majority (or perhaps an elite minority) happening here?

warren mosler says:

February 24 2018 at 11:31 pm

Yes, and not to forget close analysis shows states with their own currency necessarily spend first and then do what’s called borrowing. Again, the funds to pay taxes or buy state bonds come only from the state, all of which means that, operationally, there isn’t a borrowing imperative for spending.

Yes, I tend to agree with the tyranny of the majority narrative.




Stephen Ferguson says:

February 25 2018 at 9:31 am

A socialist government would…provide public spending for every worthy cause. Trade union pressure…continuous wage increases”

MMT doesn’t equate to ‘spend, spend, spend’. Quite the contrary. It tells us that the limit to spending is the available real resources priced in £s.

Please see this great little 6 minute ‘MMT Basics’ cartoon…

PS One other thing to keep in mind. There is no ‘normal’ gov. spending vs ‘printing press’ spending. There is ONLY the latter, which is used for ALL gov. spending. Every single last penny.

Richard Murphy says:

February 25 2018 at 9:56 am


warren mosler says:

February 25 2018 at 10:35 am

A few things.

1. Either you believe in representative government with an informed electorate or you don’t.

2. Studies have failed to show that inflation per se slows real growth. It does have (serious) distributional issues which can be addressed in ways apart from fighting inflation, which does slow real growth.

3. What we call inflation- a continuous increase in the price level- are better thought of as one time events that require continuous application of policy to sustain the inflation. That is, inflation isn’t something that, once begun, automatically spirals out of control as many narratives suggest.


Richard Murphy: Zergatik DTM? Warren Mosler-ekiko eztabaida | Heterodoxia, diru teoria modernoa eta finantza ingeniaritza says:

February 25 2018 at 6:01 am

[…] Why MMT? A discussion with Warren Mosler […]

James says:

February 25 2018 at 7:01 am

The thing I always find hard to explain when trying to convince people of MMT goes back to money created by private banks. Yes they do so under licence, but in practice they do create a fair amount of money out of thin air in a way that is hard to reconcile with the notion that “only governments create money”.
This relates to the “self-made man/woman” trope: I have a brilliant idea for a unique product and start a business with a loan from the bank. I use that loan to invest in equipment, employees, marketing etc. and my innovative new product enjoys huge success. I pay back the loan but in the meantime have created employment for thousands of people in the company and down the supply chain, all of whom are having a multiplier effect on their local communities. The people buying the product are using money they have earned – maybe by working for other businesses funded by bank loans. That’s suddenly a lot of new money sloshing around that is outside government control. The self-made person says “what do you mean my tax is simply paying back money originally created by government? I created this by myself.”
Any neat rebuttals most welcome.

Stone Elworthy says:

February 25 2018 at 8:18 am

James, I thought it was the case that the private sector can use private sector credit to coordinate its activity just as you describe and on top of that the government can use the “outside money” system to pay for stuff with no revenue constraint for the government. The two things can go along in parallel and the government is not making the likes of your “self made man” pay except in the sense the government competes for labour and other real resources. The tax that your “self made man” is paying is just channeling money back to the government that came to his customers from some government spending at some point (assuming the government isn’t running a fiscal surplus).

-no doubt my take will be corrected by people more knowledgeable.

Richard Murphy says:

February 25 2018 at 10:10 am

You have pretty much got it

Nothing in MMT says the private sector should not operate

I can see no way it requires that private banks stop creating money. It does require their regulation when doing so.

warren mosler says:

February 25 2018 at 10:45 am

Yes, commercial bank loans (any bank purchases in fact) create commercial bank deposits (liabilities), just as central bank purchases (think of loans as purchased assets) create central bank liabilities (actual cash and the various types of central bank deposits). And central bank deposits are the source of tax payment, while commercial bank deposits are the source of the private commercial bank loan repayments as you discussed.

So I suggest the now educated ‘self made person’ will understand this?



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