So MMT is terrible because it prints money and will be a catastrophe, but measures like QE are fine because it prints money to bail out the financial sector but isn't that large a catastrophe?
By comparison, MMT is basically telling the government to use quantitative easing to pay for everything. When you really dig down into it, the proponents of MMT know exactly how deceptive the scheme really is. They fully understand that it's allowing the government to pay for whatever it wants by printing money and letting the populace lose their savings due to larger inflation. And it fails to address immediate shortcomings: namely the fact that people will stop accepting payment in dollars if the government starts rampantly increasing inflation.
MMT doesn't say to ignore inflation - it thinks inflation is a key measure to keep an eye on just like the current system - it just says that taxes and debt bonds should be used as independent control parameters from deficit.
In theory, yes. In practice, not at all. Recessions are exigent circumstances, and no one was under the impression that the government would continue increasing the supply of money to pay for arbitrary things. Not to mention, the bulk of this quantatitive easing took place during two years were we saw deflation - so increasing the money supply was something the government would have likely done anyway.
By comparison, if the government announced that starting in 2020 it would start paying for everything by printing more money then the first thing that will happen is that smart, wealthy, people will just move their assets into things other than dollars. Like resources futures, which are independent of inflation.
The people who actually take on the burden of taxation are people who don't have the means or know-how to manage their assets. So the result is probably that poor and middle class people are even worse off.
This is just underlining my question. If the congress were operating with an MMT view of the world, they could have injected money into beneficial social program without handwringing over deficits, avoided QE. Regular people would have more wealth in their hands, and less money would be running around the stock market inflating assets. We would have a healthier economy today.
> By comparison, if the government announced that starting in 2020 it would start paying for everything by printing more money
This isn't what MMT says to do, it keeps taxation as a control parameter, it just wouldn't be singularly obsessed about the budget deficit.
Avoiding bank runs and the collapse of financial institutions is a pretty massive social benefit, even if it does turn into "bailing out wall street" memes.
> This isn't what MMT says to do, it keeps taxation as a control parameter, it just wouldn't be singularly obsessed about the budget deficit.
The whole premise over MMT as compared to standard government revenue streams is to reduce or substantially eliminate dependency on taxation by having the government print the money it needs. As pointed out earlier, if MMT simply refers to any amount of increase in the money supply then governments already have been practicing MMT for decades.
Again, simply look at what the proponents of MMT are promising. Universal service and government provided jobs for everyone that wants one. Peel off the veneer of the whole premise of inflation vs. taxation and it's really just a means of trying to let the government spend way more money by obfuscating revenue streams.
In the immediate crash, I agree, but in the years after as QE kept being needed to stabilize the system, there were other choices. There could have been a different program to inject money directly to the people who took out mortgages, requiring lenders to take a principal write down at the same time. This would have left more wealth in peoples hands, instead of funneling more wealth and assets into bank hands. And in large part it was fear of deficits that prevented consideration of these options.
The argument isn't to "government spend way more money", it's to make a more balanced consideration of how we actually use the power of currency for beneficial purposes in the long term.
"Compared to what I see as the inevitable “dual death spirals of MMT”, letting all those banksters fry in 2008 looks a lot more palatable in retrospect. David Stockman’s Great Deformation shows how the economy would have fully recovered by 2010 or 2011 instead of being where we are now: trapped at the Zero bound and headed toward democratic socialism and MMT."