re: The economy is just broken

It's simple math, KK

I read a piece yesterday about how completely insane people are gaining prominence in monetary theory. I don't think is going to end well. Most of this is behind a paywall, but here are some gems.

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Kelton is sure deficits are fake, part of an age-old political fraud that cons the public into believing national debt is the reason politicians don’t pay for social programs. When talking about MMT, Kelton transforms — I mean this as a compliment — into a master persuader in the tradition of Kashpirovsky or the Amazing Kreskin. If Marcia Clark possessed a fraction of Kelton’s self-assurance, O.J. would have died in prison.

Watch in this clip from the film as the penny drops for audience members as Kelton explains that if you turn the graph of government deficits upside down, the story changes. “Just as a six becomes a nine, when we view it from a different angle, a government deficit becomes a financial surplus,” she says. Not only are deficits not bad, they’re good, because every dollar the government owes is someone else’s asset. Therefore, we can change scary headlines about deficits into awesome ones about surpluses:

That was easy, wasn’t it? Or was it? I saw Finding the Money and all I can say is, Run. I spent nearly ten years listening to people who in previous eras would have been wandering pantless in asylums insist the solution to all of earth’s problems could be graphed on a napkin. “Okay, if you put a thousand junk mortgages in a box, shake it up ten times, tap the lid and yell Abracazam!, 23% will be AAA-rated when you open the box again.” Banks sold this dream to pension funds, insurance companies, hedge funds, each other, and finally themselves. When it went kablooey Wall Street ran to the Fed and successfully demanded to be fully compensated for losses caused by its own defective products, arguing society had an obligation to bail out its delusions.

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As Kelton writes in The Deficit Myth:

Once we accept that… federal deficits are actually good for the economy, we can pursue fiscal policies that prioritize human need and public interest. We have nothing to lose but our self-imposed constraints.

When I first read this, I thought: from Greenspan to Marx, in the same generation? No middle option, those are the choices? Importantly, MMT isn’t just meant to be a solution to a finance problem. It talks a lot about increasing government “responsibility” for problems like ending inequality, by fiat if necessary. The post-2008 economy created a deservedly hated quasi-private oligarchy of market-immune greedheads, but MMT wants to replace them with a somehow even scarier Committee of Economic Deciders. Professor Randall Wray from my alma mater, Bard College, says in Finding the Money that MMT doesn’t want to tax the rich because we need money. Rather, “we need to tax the rich people because they’re too rich,” adding: “You have to decide what is too rich, what threatens democracy, and you remove that and then you leave the rest.”

What? Five minutes ago MMT was a fringe theory proposing perhaps-too-optimistic solutions. Now it’s zoomed past finance questions to creating a fully reorganized economy that operates according to arbitrary social priorities, and puts the state in charge of deciding what is “too rich,” because reasons. This casual mindset of total societal overhaul makes Lloyd Blankfein seem like a nickel-and-dimer by contrast, and all of it’s predicated on the idea that endlessly printing money works.

I first started to worry MMT proponents weren’t completely sure of themselves on that front when Kelton gave the TED talk featured in the movie, and said:

Whenever Congress and the president agree to spend more… the Federal Reserve works with the rest of the financial system to get that money into our accounts. Everything’s done electronically, so there’s no physical printing of money involved.

When you argue that MMT or QE or the normal money-creation process isn’t money “printing” because “there’s no physical printing of money involved,” it sets off the same BS alarm as “liquidity.” Whatever you call it, MMT is printing money, and no matter how sure you might think you are that it will work, you aren’t, and can’t be. Sure, our leaders have been doing it, printing $4 trillion through multiple rounds of QE and $5.5 trillion more in the CARES Act, and sure, that last spree only inspired about 20% inflation so far. Still, any economist who says with a straight face he or she is sure this experiment won’t end with your kids using dollars as toilet paper is lying.

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LINK

Even the theory behind MMT is supposed to respect inflation, but the zealots ignore it.

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Boomer meme [engaged]

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So what exactly was the point of QE and ZIRP, if not to inflate asset prices?

We just injected those trillions and cheap credit into the economy for a laugh?

Slight correction…the money is broken.

Read “Broken Money” by Lyn Alden

SFP voted for Biden and will again in November. what do you think?

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Economy wrecked going forward.

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Obama, Sanders, Pelosi and the rest of the communists are smiling.

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Happy with their homes rising in value but unhappy when other stuff is also increasing in price

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really stupid point.

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I have a 2017 crew cab F150 XLT. 7 years ago I paid 32k for it. The same truck is 50k now. That's pretty crazy to me. Damn near 60% increase in 7 years.

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Exactly this. I went truck shopping in 2017 and low $30s was the going rate for a new F150 XLT, even with 4x4. They stickered for like $40ish I think but nobody paid sticker. Salesman knocked off $8k before I even asked.

I went truck shopping again in 2021 and the prices were up to the crazy level we see now and dealers were not coming off the sticker. This was during the supply chain problems and inventory was low, so I passed on buying anything.

What’s crazy to me is those nutty 2021 prices apparently still haven’t fallen at all. How tf do people afford these vehicles? And why are they even willing to pay these prices?