How should the US handle its debt?

[The Artist formerly known as Sappho]

US govt is not broke, it will never run out of dollars. It can pay o/seas creditors just by crediting their accounts.

MMT warns of Zimbabwe style hyperinflation should there be a collapse in production and taxation... such as they have now. Therefore, now is not the right time to be putting the printing press into overdrive.

It needs to create some big projects to put Americans to work, creating the money to pay the workers.

MMT argues that by doing what you claim, the currency becomes pegged to the market value of unskilled labour. MMT does not say if this is a good or bad thing. What do you think Monk? Oh wait, you don't have a fucking clue.

More interesting is that it stands in contrast to Keynesian Economics. I do believe it was you who was praising the hilt out of Swan for his application of Keynesian theory. So know I have to ask, was Swan an ass for not using MMT, since Australia's fiat currency is applicable to MMT? Or was he the Keynesian hero as you claimed him to be?

Like I said, you haven't got a clue what you are on about.

[Jovial Monk]

I mentioned the danger of inflation—so they need to chose good productive projects to invest in. MMT is all about getting idle labor put to work. I mentioned the interstate highways in the US, very productive investments they were.

Keynesianism and MMT are not contrasting or opposing schools of economic thought.

Yes, no one can argue that the Rudd/Henry/Swan etc stimulus saved us from prolonged recession and sustained high unemployment.

[Leftwinger]

MMT is simply a description of how modern monetary systems actually function Wile E.

The days when money was backed by a physical commodity - gold - are gone in history. We use fiat money systems today. "Fiat" is Latin for "let it be done", in Biblical reference to divine creation. The $USD (and our dollar and the currencies of many other countries) are essentially an abstract concept - an idea. Like points in a game of ten-pin bowls. It does exist - just not in the normal, physical sense and is manifest mainly as accounting entries on ledgers and computer memories (also as intrinsically worthless tokens - bits of plastic and metal). The US government is the monopoly issuer of the fiat currency called the US dollar. It comes from nowhere else. Net new $USD enter the system when the US government spends more than it recieves through taxation - that is, when it runs a deficit.

The monopoly issuer of a non-convertable, floating fiat currency can never be constrained for spending in their own currency of issue. The US government can never "run out" of $USD to spend. They can never be forced into insolvency in their own currency of issue. They may for strange ideological reasons, choose to claim they are about to/have run out - but if they ever do, it will have been a choice.

Apart from the origin and nature of the thing we choose to call "money" (MMT would not use that word since it is a very broad term, instead referring to it as "financial assets"), the most important insights are the sectoral balances. The "flows of financial assets" moving between the government sector, the private sector and the foreign sector. It is not appreciated by the public at large that if the total government sector budget is in surplus, then the total private sectors balance must be in deficit, and vice versa. The only way that the private sector can be in surplus overall if the government is attempting to run a surplus is for there to be a very large and sustained external surplus. This is not an opinion or a theory or a political stance of any kind - it is a basic fact of accounting at the national level.

So if we aspire for the government to be in surplus, it means that we also aspire for the private sector overall to be in deficit - running down savings, liquidating assets and most importantly - racking up more and more private debt.

[The Artist formerly known as Sappho]

I mentioned the danger of inflation—so they need to chose good productive projects to invest in. MMT is all about getting idle labor put to work. I mentioned the intestate highways in the US, very productive investments they were.

Keynesianism and MMT are not contrasting or opposing schools of economic thought.

Yes, no one can argue that the Rudd/Henry/Swan etc stimulus saved us from prolonged recession and sustained high unemployment.

Now that's a lot of words that say nothing.

1. MMT discourages the printing of money where it is that the economy is deflating and unemployment is high, because it causes inflation. Essentially, it is saying that the economy must fix itself because MMT can't do it for it.

2. MMT argues that Keynesian theory and MMT are contrasting views.

3. You say nothing about the idea of currency being pegged to unskilled labour. Is it good or bad.

[The Artist formerly known as Sappho]

MMT is simply a description of how modern monetary systems actually function Wile E.

Yes I know. In truth I know all about MMT from Sennex and have discussed same with Sennex on The Daily Wire forum some time ago.

I'm now engaging Monk in debate on MMT, but it seems that he does not understand the theory which he is promoting as a solution. Most underwhelming it is, but since there is no other action on this forum, I'm stuck with this and him.

[Leftwinger]

MMT discourages the printing of money where it is that the economy is deflating and unemployment is high, because it causes inflation. Essentially, it is saying that the economy must fix itself because MMT can't do it for it.

Not sure what you mean here. Government never spends by "printing money", it spends by crediting bank accounts. And government spending is going to have difficulty causing inflation when the private sector is withdrawing it's spending. Do you see any evidence of galloping inflation or hyperinflation as a result of stimulus packages?

MMT argues that Keynesian theory and MMT are contrasting views.

I would say that MMT is at least partly based on the insights of both Keynes and Marx.

You say nothing about the idea of currency being pegged to unskilled labour.

Not sure of what you mean here.

[Jovial Monk]

Of course the question still is, why don’t governments use MMT as a source of funding?

MMT could be used to pay the foreign debt the US faces, like Swan could have used that instead of raising funds on the global money markets. Inertia is probably a good enough explanation—MMT could be too radical for Treasury?

Re pegging to unskilled labor—might be better than the foundations of quicksand that the $US is based on ATM and any Keynesian spending would involve more than unskilled labor, or do you envisage armies of navvies with wheelbarrows, picks and shovels?

[Jovial Monk]

I remember reading about bilbo and his Job Guarantee. That was a while back. Might have forgotten some details but didn’t sound opposed to keyneseniasm.

[Leftwinger]

I'm still trying to work out what Wile E means by currency being pegged to unskilled labour. I take it he's referring in some way to the job gaurantee but I can't be sure.

[Jovial Monk]

Dunno.