Regarding your points about inflation, again, you’re broadly correct, and while you’re bringing up important nuance that I didn’t include in my previous comment, it just doesn’t change the overall picture. Yes, inflation is complicated. Yes, there is not a direct correlation between money printing and inflation. It does depend heavily on how that money is spent and where. These are all excellent points and I’m glad you’re raising them. But it’s not “spreading disinformation” to discuss a subject in broad terms. What you’re describing as “monetarism” is just acknowledging the basic fact that MMT is not a license to spend infinite money. As you yourself noted, it very much matters how and where that money is spent. If the US government was accruing it’s current level of debt through careful, thoughtful spending on programs that would serve to build individual wealth, the concerns would be very different. But the reality is that they’re not.
I’m a huge defender of government spending. Austerity is a cancer that needs to be rooted out wherever it arises. I have no compunctions about that. Governments should spend more on behalf of the public. But that doesn’t mean that we simply wave off any concerns whatsoever about budget deficits. Even MMT maintains that taxation is required in order to control the amount of money in circulation. If unlimited spending with no downside were possible under MMT, then why would there be any need for taxes at all?
Government spending is good, but it has to be done right. What’s happening in the US right now is not any form of sane fiscal policy, and it is going to lead to disaster if it continues.
shit okay I was wrong about the primary/secondary market thing. Turns out there’s quite a few countries who do things differently from what I said. I’ll edit my comment, thanks.
The reason I had a little hissy fit at your comment last night is that you absolutely did say some things that are wrong.
Yes, there is not a direct correlation between money printing and inflation
I’m glad we agree on this now but your previous comment was in direct opposition to this.
The other issue is that you still implied that the US would run out of people who buy their bonds, which just doesn’t make sense. Just like how European banks can use bonds as collateral at the ECB, US banks can use the Standing Repo Facility to ensure they remain just as liquid after buying bonds. This doesn’t protect from a scenario where the bond markets break down so bad that nobody, not even those banks, wants to buy bonds anymore, but that scenario is frankly ridiculous. In a world where even US banks (who don’t exist without the US) think the entire US state will fail, the funding for said failed state is the last problem on the list lol
I agree that what the US does both with spending and taxes is pretty bad. But I have to push back when you say that the problem is the deficit itself, cuz it ain’t
A chunk of your argument here basically rests on the idea that a total confidence collapse in the US bond market - something I depicted as an in extremis example of the costs of unchecked issuance - literally cannot happen. First of all, that’s an assumption, not a fact, and I think we just established that it’s better to avoid making too many of those.
Second, regardless of whether that extreme possibility can occur, along the road to getting there you can still end up with a lack of confidence pushing yields higher and higher, which in turn requires ever increasing amounts of currency printing to service those yields, which further pushes yields higher and so on. Even if you’re somehow right that the US bond market can never ever seize up like it has in Russia, you can still end up in a money printing spiral.
Which brings us back to the core question of what possible downsides there are to printing infinite money. Here you have, apparently and bizarrely, presumed that my acknowledgement that the connection between currency issuance and inflation is not simple or direct as an agreement that no connection exists at all. I’m not aware of any theory of economics which supports this assertion.
Under MMT - which appears to be what you’re relying on - taxation is necessary as a deflationary measure, because it is the act of removing currency from circulation. In order for that to be true, it must follow that putting currency into circulation is, to a greater or lesser degree depending on circumstance, an inflationary measure. Otherwise you have a scale that can only ever tip one way.
Yes, I literally said this in the comment you replied to.
You might want to try doing a little less assuming there bud. In the US, treasury auctions are open to anyone.
Regarding your points about inflation, again, you’re broadly correct, and while you’re bringing up important nuance that I didn’t include in my previous comment, it just doesn’t change the overall picture. Yes, inflation is complicated. Yes, there is not a direct correlation between money printing and inflation. It does depend heavily on how that money is spent and where. These are all excellent points and I’m glad you’re raising them. But it’s not “spreading disinformation” to discuss a subject in broad terms. What you’re describing as “monetarism” is just acknowledging the basic fact that MMT is not a license to spend infinite money. As you yourself noted, it very much matters how and where that money is spent. If the US government was accruing it’s current level of debt through careful, thoughtful spending on programs that would serve to build individual wealth, the concerns would be very different. But the reality is that they’re not.
I’m a huge defender of government spending. Austerity is a cancer that needs to be rooted out wherever it arises. I have no compunctions about that. Governments should spend more on behalf of the public. But that doesn’t mean that we simply wave off any concerns whatsoever about budget deficits. Even MMT maintains that taxation is required in order to control the amount of money in circulation. If unlimited spending with no downside were possible under MMT, then why would there be any need for taxes at all?
Government spending is good, but it has to be done right. What’s happening in the US right now is not any form of sane fiscal policy, and it is going to lead to disaster if it continues.
shit okay I was wrong about the primary/secondary market thing. Turns out there’s quite a few countries who do things differently from what I said. I’ll edit my comment, thanks.
The reason I had a little hissy fit at your comment last night is that you absolutely did say some things that are wrong.
I’m glad we agree on this now but your previous comment was in direct opposition to this.
The other issue is that you still implied that the US would run out of people who buy their bonds, which just doesn’t make sense. Just like how European banks can use bonds as collateral at the ECB, US banks can use the Standing Repo Facility to ensure they remain just as liquid after buying bonds. This doesn’t protect from a scenario where the bond markets break down so bad that nobody, not even those banks, wants to buy bonds anymore, but that scenario is frankly ridiculous. In a world where even US banks (who don’t exist without the US) think the entire US state will fail, the funding for said failed state is the last problem on the list lol
I agree that what the US does both with spending and taxes is pretty bad. But I have to push back when you say that the problem is the deficit itself, cuz it ain’t
A chunk of your argument here basically rests on the idea that a total confidence collapse in the US bond market - something I depicted as an in extremis example of the costs of unchecked issuance - literally cannot happen. First of all, that’s an assumption, not a fact, and I think we just established that it’s better to avoid making too many of those.
Second, regardless of whether that extreme possibility can occur, along the road to getting there you can still end up with a lack of confidence pushing yields higher and higher, which in turn requires ever increasing amounts of currency printing to service those yields, which further pushes yields higher and so on. Even if you’re somehow right that the US bond market can never ever seize up like it has in Russia, you can still end up in a money printing spiral.
Which brings us back to the core question of what possible downsides there are to printing infinite money. Here you have, apparently and bizarrely, presumed that my acknowledgement that the connection between currency issuance and inflation is not simple or direct as an agreement that no connection exists at all. I’m not aware of any theory of economics which supports this assertion.
Under MMT - which appears to be what you’re relying on - taxation is necessary as a deflationary measure, because it is the act of removing currency from circulation. In order for that to be true, it must follow that putting currency into circulation is, to a greater or lesser degree depending on circumstance, an inflationary measure. Otherwise you have a scale that can only ever tip one way.