Aside from the debt it's compounded by the assumption that everything stays the same....nay not assumption, requirement.

One of the problems is that we are talking about global finance....unless you're Japan or China the bounds of loyalty towards a nation don't interfere with the bottom line....Trump tried to reintroduce that with inducements but the elites hated him for it.

Essentially they want the ability to move their money where it's most profitable to be. Now while America remains the centrepoint the truth is that via a collection of bad ideology and competition that centre has been moving for decades now.

Once that reaches a critical mass the western economies are only going to travel one way, which is in relative terms less wealthy than they are now.....Bless, all the egalitarians and leftists with two cars and nice houses are going to face the reality of their beliefs.

Once the elites learned that they could separate their wealth from their location....essentially they became disconnected from the wealth of their nation and became the disloyal fecks they are today.

The officer no longer blows the whistle and goes over the top with the lads.....they blow the whistle and sit back in the trenches eating your tin of bully beef while taking pot shots at you.

Edited by Stirlingsays (26 Feb 2021 2.23pm)

Aside from the debt it's compounded by the assumption that everything stays the same....nay not assumption, requirement.

One of the problems is that we are talking about global finance....unless you're Japan or China the bounds of loyalty towards a nation don't interfere with the bottom line....Trump tried to reintroduce that with inducements but the elites hated him for it.

Essentially they want the ability to move their money where it's most profitable to be. Now while America remains the centrepoint the truth is that via a collection of bad ideology and competition that centre has been moving for decades now.

Once that reaches a critical mass the western economies are only going to travel one way, which is in relative terms less wealthy than they are now.....Bless, all the egalitarians and leftists with two cars and nice houses are going to face the reality of their beliefs.

Once the elites learned that they could separate their wealth from their location....essentially they became disconnected from the wealth of their nation and became the disloyal fecks they are today.

The officer no longer blows the whistle and goes over the top with the lads.....they blow the whistle and sit back in the trenches eating your tin of bully beef while taking pot shots at you.

Edited by Stirlingsays (26 Feb 2021 2.23pm)

I have to agree with you it is fascinating.

Let's just say that I hope this view that the plates can be kept in the air without consequence proves correct because I'd much rather be wrong about it.

The shift in the balance of power though is down to western elite's shift in worldview rather than economics...short termism over the long....money over national loyalty.

Edited by Stirlingsays (26 Feb 2021 3.30pm)

Yep fair. Short-termism is the standard these days, I feel partly driven by the immediacy and transient nature of information and methods of delivery (eg. social networks).

This excerpt from the reference was a source of great amusement.

'If natural scientists disagreed to the same extent as economists, some physicists would argue that an untethered bowling ball might float off a tower into the clouds.'

There is no right or wrong in economics, just schools of thought. Fascinating really. What I suspect is you go far if you just go along with the trendy current theory. A bit like all academic subjects these days.

Be warned, this reply is long and to most probably yawn inducing. But a subject of fascination to me due to it's inherent complexity, and currently unsolvable nature.

1. Sort of. Really bonds and inflation and actual 'stuff' are the big watch outs with MMT rather than GDP, debt or deficit – if you can't sell bonds inflation quickly runs out of control. If you can't trade 'stuff' anymore than any system is screwed. To be clear I'm not advocating for MMT, just explaining why according to MMT theorists and therefore to those who run most sovereign western economies, it's a bit of a red herring. MMT is literally built around the principle of 'deficit and debt is irrelevant as I can always print more money'. One thing I certainly can advocate for is that government debt and deficit should not be thought of in simple 'household' terms.

Quoting from 'The Deficit myth'...

"The essence of MMT is, “The federal government shouldn’t try to manage its budget ‘like a family sitting around the dinner table.’ We don’t need to tighten our belts with shared sacrifice and fiscal restraint … citizens should never be forced to suffer harsh austerity on the grounds that the government lacks the ability to pay for health care or pay benefits to retirees or the disabled.”

"Thus, when we analyze MMT, we analyze it through the effect on real goods and services. Printing an extra trillion of a fiat currency does not directly increase or decrease real wealth. Rather, the impact of monetary policy is measured by the change in the total amount of goods and services, and the division of those real assets among different people."

But, ultimately the summary makes sense to me...

"The answer is that we do not know if MMT is correct. There is no consensus within economics on the impact of additional government deficit spending paid for by the creation of money... Consider what other fields would look like if they suffered similar gaps in consensus. For example, Aristotle argued that heavy objects fall faster than lighter objects. Many years later Galileo disagreed with Aristotle’s theory. In his famous Leaning Tower of Pisa experiment, Galileo found support for his theory that the falling speed is the same for different masses.

When the objects are dropped in a vacuum, physicists now know that Galileo was right and Aristotle was wrong on this topic. Even during the period of dispute, however, both scientific theories agreed on the direction that an object would move. If natural scientists disagreed to the same extent as economists, some physicists would argue that an untethered bowling ball might float off a tower into the clouds.

The secret shame of economics is that very little work focuses on the important issues of fiscal and monetary policy. Perhaps because these issues are so challenging, most economist have given up. Instead of working on fiscal and monetary policy, the field focuses on esoteric minutia.

Without validated theories of the impact of MMT, we can make only weak inferences based on historical outcomes. It appears nearly certain that it is possible to print and spend so much that the real economy grinds to a halt. The relevant question is how much is too much and where are we today in this range of effects?

Japan has followed MMT for longer than the US. The Japanese stock market is 50% below its level in 1989. The population of Japan is aging and shrinking. Decades of MMT in Japan correlate with stagnation and decline. Did MMT cause these Japanese problems? Again, no one knows, but still we wonder.

In conclusion, what can we say about MMT? Money creates wealth only via its impact on real goods and services. When too much money is created, it decreases overall wealth by inhibiting economic cooperation. Economic theory is silent on whether the world has created the Goldilocks’ scenario of just the right amount of money, or too little or too much."

...like everything economic it's a massive experiment and no one knows whether it's the right approach or the wrong one because it's too hard to decipher. Too many non-monetary inputs and outcomes. So it's not as simplistic as saying 'we should spend within our means'. That could actually result in more inequality, worse performance, living standards etc. because it inhibits the positive effects of said expenditure.

In short, it's more complex than saying 'the debt/deficit is high, therefore bad', or 'the debt/deficit is low, therefore good'. But it's the easiest thing to say, hence why most people say it. Discovering that actually it's not that simple and essentially unknowable would be destabilising to most I'd imagine, so they'd rather not think about it. That state of mind applies to a lot of things really. People would rather think there is certainty even if in reality there is none. See religion etc.

2. Agreed