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Comment by comte7092 | Hacker News Reader

Keep in mind that this forum is very competent when it comes to software discussions, while tending to overstate its economic knowledge.

To your question: what it comes down to is that the fed is charged with managing inflation and unemployment. Regardless of the effectiveness of their tools, they are required to do what they are able to do. With that in mind, it’s possible that there is a better course of action.

Personally I find the arguments of MMT to be strong. This forum has charactered the theory as an excuse for profligate spending, however, the actual proponents simply state that budget deficit are ok so long as inflation is under control. Therefore, the theory would posit that the actual resolution to this would be to shrink the deficit spend in order to properly tame inflation.

Take that for what you will.

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Politicians have a long track record of picking out the conclusions they like from an economic theory and doing some combination of ignoring the preconditions, being unaware of the preconditions, and being too mathematically illiterate to understand the concept of preconditions. I'll leave the exact balance as an exercise for the reader.

If our governments ever ran true Keynesianism, they didn't do it for long before they started spending more when Keynesianism said they should spend more and spending more when Keynesianism said they should spend less, and whatever the academic merits of MMT it has in practice simply removed whatever faint limits the old theories imposed on our politicians because it has been translated to them as "MMT says the government can spend whatever it likes forever, especially if it has the reserve currency, and nothing bad is even possible, let alone going to happen".

In a sane world economists would recognize that explaining new theories to politicians is just handing a lit match to a toddler, but, well, you live in the world you live in, you know, not the world you wish you lived in.

A lit match is a bit of an understatement, more like a flamethrower that only works when aimed at lower and middle class.

MMT has never gained mainstream acceptance amount politicians, outside of a handful of left wingers. Your argument lacks empirical evidence.

Politicians spend because it’s popular, they cut taxes because it’s popular. In reality they don’t need a theory to justify their behavior. The budget deficit has been ballooning for decades before MMT even became a faint part of the public consciousness.

It’s ridiculous to assert that academics are somehow responsible for the behavior of politicians. What matter is that they develop theories that are correct and true.

I don't think they were claiming that academics are responsible for politicians behavior, rather that politicians often use academic work with little to no understanding of it and/or as an excuse to give their predetermined conclusion (increase spending) "expert backing."

This is correct. Economic theories are merely one of a portfolio of reasons to spend lots of money, and not anywhere near the most important ones.

Though I would submit that they do have some pretty significant impacts in a couple of particular places, at the Treasury and the Fed. In Congress, of course, it's probably all but irrelevant except as which fig leaf some more sophisticated ones may reach for.

If I handed a lit match to a toddler, I’d consider myself responsible for what happened next.

I don't think people think they're responsible, exactly, it's just a very convenient way to justify what they're doing.

My education is in economics and finance. I just happen to have also programmed for a long, long time. The first thing I would say is that economics is as slippery as nearly any other social science. So no one really knows what will and will not work in macroeconomics because even when they try there could be many convoluting factors to make a reasonable assessment of what actually happened.

>Personally I find the arguments of MMT to be strong. This forum has charactered the theory as an excuse for profligate spending, however, the actual proponents simply state that budget deficit are ok so long as inflation is under control. Therefore, the theory would posit that the actual resolution to this would be to shrink the deficit spend in order to properly tame inflation.

My problem with MMT is the same problem I have with all political economic schemes in the US ... it goes to those that already have it. We already know one thing that does seem to work in a lot of places -- if you have a prosperous middle class, your economy starts booming for everyone! This makes plenty of sense. If wealthy people get money they buy financial or hard assets. If anyone else gets money they tend to (or have to) spend it. It is that churn of money between people that makes an economy really work out. I fear that MMT would just be a debit card for the wealthy with a veneer of helping the middle class or poor. We got a bit of an example with the Covid loans and hand outs. Nearly all of that money ended up in the hands of the rich ... even the money that was given directly to the poor, it just took a few months.

mhuffman says >"My problem with MMT is the same problem I have with all political economic schemes in the US"<

With "...all political economic schemes..."?

Then obviously the problem is not with MMT but with something else. Are are suggesting that the rich are the problem? Are you also suggesting that the elimination of the rich is the solution?

In either case please clearly state so. You might also suggest how to eliminate the rich and thereby achieve a better world.

>Then obviously the problem is not with MMT but with something else.

Correct, I clearly stated what I thought it was.

>Are are suggesting that the rich are the problem?

Not at all! I am claiming that the govt. officials that have their hands on the ability to disperse "free" money are very easily swayed by lobbyists and influence from those with lots of money or power.

>Are you also suggesting that the elimination of the rich is the solution?

Not at all! I am saying that the rich already have money so there is no need to give the bulk of any new created money to them.

>In either case please clearly state so.

I hope the above is clear enough, if not, just let me know. I can go on about this in great depth!

>You might also suggest how to eliminate the rich and thereby achieve a better world.

I would not and never have suggested any such thing. This is your mis-reading of something I wrote, or your misunderstanding, or (hopefully not) you being willfully disingenuous. In fact, from some perspectives, I might be considered rich!

Curious what arguments you find strong or predictions you’ve seen validated. It seems like MMT is whatever Stephanie Kelton hops on a podcast and says it is that day. Feels like more of a political movement than an economic theory with models and such.

Yeah maybe we need to leave these sort of high level discussions to experts and the media... Ordinary people don't have any business discussing these issues because they don't have the expertise and the credentials

The best thing about economics credentials in the US is that the process to earn them isn't ideologically gated

No, just the hiring process

Sarcasm, the degree process is gated too.

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