A rebuttal to Krugman's recent NYT piece, "What are Taxes For?" and his seignorage objection to MMT.
http://bilbo.economicoutlook.net/blog/?p=14238&utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economicoutlook%2FFYvo+%28billy+blog%29 On 22-Apr-11, at 6:53 AM, Doug Henwood wrote: > > On Apr 22, 2011, at 9:33 AM, Max Sawicky wrote: > >> Re: the SS 1%, the thing people miss is that it never jumps on you >> all at once. >> It builds up imperceptibly over the next 30 years. >> >> http://www.socialsecurity.gov/OACT/TR/2010/VI_OASDHI_GDP.html#159076 >> >> (Table VI.F4) >> >> So the adjustment for any year to year period is much less than a >> percent of GDP. > > Yes, I know this stuff very well - been writing about it for 15 > years. But you see the circus in Washington now. Could you imagine > what a fight over something like the equivalent of $140 billion a > year would look like? > >> As for MMT, I understand it as boiling down to the point that a >> sovereign nation cannot default on debts in its own currency, so >> the issue is really the inflationary threat from monetizing the >> debt and the Fed's ability to deal with it when and to the extent >> appropriate. > > What's modern or even theoretical about that? Marx wrote in the > Grundrisse: "The notes with which it [the central bank] discounts > the bills of exchange of this public are at present nothing more > than drafts on gold and silver. In our hypothetical case, they would > be drafts on the nation's stock of products and on its directly > employable labour force: the former is limited, the latter can be > increased only within very positive limits and in certain amounts of > time. The printing press, on the other hand, is inexhaustible and > works like a stroke of magic." Money is valuable because it's a > claim on goods and services (including labor). If you print money in > excess of that, then you've got a problem. MMT seems to be an effort > to evade those constraints - that for a gov to spend money it has to > take it from someone or it's just playing inflationary games. > > I don't get how the Fed could print money to pay off Treasury paper > and then "deal with" the inflationary consequences - wouldn't that > be undoing what it had just done? > > Doug > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
