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Comment by rhacker | Hacker News Reader

Any mirrors? This seems to be a good topic as MMT keeps coming up.

Newb question here: People that "advocate MMT" are basically saying it's fine that our deficit keeps rising because geopolitics and inflation/tax control?

And the people disturbed by that actually want our existing tax structure to start making headway against the debt instead of increasing it?

And secondary question to this, is MMT a mostly left theory (because we need to pay for the free stuff)?

I'm not trying to cause arguments I just want to make sure I got how people see this issue.

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No, MMT is pretty much how the monetary system operates in modern fiat currency economies where the government both prints and taxes in a currency they control. The essential insight is that taxes & spending are not joined at the hip - the only real constraint on total expenditure in a fiat economy is inflation.

It’s not a particularly leftist idea - the right has tacitly treated government spending in this way for decades. It was Dick Cheney who said “deficits don’t matter” after all.

The author of this article is confused: hyperinflations are a symptom of collapsing economies, not a cause in and of themselves. Having external debts that you can’t default on in a situation where your economy is shrinking is what drives hyperinflation. Look at every major hyperinflation (Weimar Germany, Zimbabwe etc etc) and you’ll see those are the drivers of hyperinflation.

Not at all. Another way of looking at money is that money represents value. It's a way of abstracting everything against each other. And let's ignore that that abstraction breaks as soon as you're talking even medium amounts of money, because we can.

The total amount of money commands a fixed set of resources. Increasing the amount of money in circulation does not matter at all for reality. It's just an abstraction. An accounting fiction. If the government spends, there's someone else not using those same resources the government's now using.

Even the Soviets didn't control 100% of the money supply. I once read that it was about 99.6%.

And in both the Weimar and the Zimbabwe (and Venezuela) examples, it is very much the case that the government made the economy collapse, not the other way around. So yes, it is definitely possible to cause hyperinflation through government spending.

Weimar Germany had to pay reparations which were not denominated in Marks. Zimbabwe had to import food, which had to be paid for in $.

Neither had an economy that was capable (at the time) of sustaining these payments. Hyperinflation was the inevitable result.

Since this comment is made essentially 3 times, let me just ask the obvious question. Yes my comment gives the impression that the government just decides to overspend. The thing that matter is THAT the government overspent, why does not factor in meaningfully. Nor how, nor the historical context. Zimbabwe overspent by willfully destroying it's industry and agriculture for racial justice, talk about finding an original way to overspend. That's akin to quitting your 100k a year job and not changing apartments.

Do you seriously think it matters whether it was a choice to overspend or not ? In Weimar Germany's case it was not a choice and arguably it was not really a choice in Zimbabwe either. In Venezuela I think it may have been a choice.

I find a lot of people are obsessed with this justice thing, in various context. With guilt. As if some all powerful deity is just about to descend and decide if you've been good or bad, despite being atheists. And for guilt, of course choice matters. But being entirely innocent and a sac is worth one sac. So is being 100% guilty and a sac. If I gave you a choice of being a worker in Venezuela, Zimbabwe or Wiemar Germany what do you base your choice on ? I would base my choice on in which case I would be able to change my situation the easiest, so I'd pick Venezuela out of those options, because I think my odds of successfully working my way out of that situation is the highest, and that I think Venezuela is more "guilty" than Zimbabwe and more than Weimar Germany just doesn't factor into it.

What you’re missing is that in all these cases, some sort of series economic fallout was inevitable. The German economy was going to be forced into crisis & deep, unending depression by war reparations that it couldn’t afford to pay, Zimbabwe was going to collapse due to inability to pay for food imports.

The governments in question could have chosen not to print money. All that would have done would be to alter the distribution & order of the collapse. Its occurrence was inevitably either way.

Obviously the Zimbabwean experience was caused by awful choices made by the government. But these were not 'spending' choices. They were policy choices that in turn led to the collapse of the Zimbabwean economy.

“Justice” has nothing to do with any of this. Economics does: Hyperinflation is a result, not a cause.

> What you’re missing is that in all these cases, some sort of series economic fallout was inevitable. The German economy was going to be forced into crisis & deep, unending depression by war reparations that it couldn’t afford to pay, Zimbabwe was going to collapse due to inability to pay for food imports.

No ! That's EXACTLY my point. There was a serious problem (self-inflicted or otherwise) and monetary policy, whichever one was chosen, was just not going to resolve it.

Just like TODAY monetary policy choice are NOT going to save us from the impact of, say, free healthcare, or massive economic efforts to "fight" climate change, or ...

We should choose to implement (or not) those policies assuming that the cost for those projects is a very real cost that will have to be paid, one way or another. It will be paid in real resources that individuals, meaning you and me and everyone, won't have access to anymore.

If some policy costs 1.5 billion dollars you should judge that policy on the basis it's going to cost you 1 less coffee at starbucks per month, or some other 5$ worth of resources. Because that is true for government expenditure regardless of where the money actually comes from.

And I would still argue that Zimbabwe, and for that matter Germany, got into the issues they got into because of their ideas of "justice". Racial justice in Zimbabwe's case. Imperialism in Germany's case (which they of course considered just at that time, and it's just a fact of life that justice changes over time). But you're right too, these were not monetary policy choices.

>That's akin to quitting your 100k a year job and not changing apartments.

It's akin to being in tens of thousands in medical debt, losing your job at walmart because you tried to punch a customer and being told that the only real problem with your finances is that you didn't rein in your spending after you lost your job.

Zimbabwe was destined for hyperinflation even if they had a budget surplus, meanwhile Japan had the biggest deficit in the world and still got deflation. MMT is mostly just not being in denial about that. There's no moral component to it.

Zimbabwe suffered economic collapse because it destroyed its farmland and had no economically productive industries left. Venezuela suffered economic collapse because its industrial base was rendered non-competitive and destroyed.

In neither case was the hyperinflation caused by "spending just a bit too much" - it was a side effect of killing economically productive industries and attempts to pay off externally denominated debts.

> The total amount of money commands a fixed set of resources. Increasing the amount of money in circulation does not matter at all for reality. It's just an abstraction. An accounting fiction. If the government spends, there's someone else not using those same resources the government's now using.

You’re completely ignoring the velocity of money. This kind of confusion of stocks and flows is endemic in online macroeconomic discourse sadly. (Some have said that it’s endemic in the economics profession too.)

There’s no left or right in these discussions.

Sometimes it seems that way because of rhetoric, but at the end of the day we need inflation, as without it the incentive to add value grind away.

https://medium.com/@markjeftovic/the-disturbing-rise-of-mode...

Yes, it seems to be mostly supported by the left in the Sanders/Cortez camps. It’s very convenient to not have to pay for anything when proposing monumental social programs.

They both support tax increases. Perhaps not enough to cover the full bill when it comes due, but it's wrong to say they don't intend to do anything to pay for it. They tend to cover their proposed spending increases better than republicans try to cover their tax cuts.

Not the proposals from Cortez. They aren’t even close to balanced. The tax increases for the rich seem to be more vindictive than any attempt to balance the budget.

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