FYI, Modern Money seems to be working its way into popular culture. The spouse called my attention to a novel by Lee Child, “A Wanted Man,” ( a Jack Reacher novel) in which the worthlessness of money is explained on pp.402-403. The novel twist is that non-existent nuclear waste was being used as a “reserve” by Islamic terrorist/banksters.
I guess this is the point in time I have to acknowledge that MMT has technically the right answers but is politically insignificant (we will have austerity in the US one way or the other and the thoughts of the “thinkers” as Stephanie calls them will go unheard while everybody else is going over the cliff). So why is that ? Is it because the concepts are to complicated ? I don’t think so. Is it because the concepts are not yet part of public knowledge ? Perhaps. Is it because these concepts are directed against the interests of a certain group of people ? Sure enough. But what I try to understand is what exactly are these interests as opposed to debt-free money creation by the money issuer. What I crasp is that there is competition between money creation by private banks and money creation of the public in as far the last one is interest-free. So the banks (and other “investors”) have a strong interest to cut the possibility for the government to finance itself without paying interest to the banks (as it has been implemented in the Euro-zone). They also may need “save havens” to “invest” their money. But what’s all about that issue of debt-ceiling or debt ratios ? Coming from the interest argument why is the financial sector so opposed to ever climbing debt ratios if this brings more and more inerest payments to them ? Do they really believe governement debt is harmful to the ecomnomy (part of them does, I’m sure, but what’s about the rest of them) ? Or are debt ratios simply a means to dismantle the government (e.g. social security in the deliberations about the “grand bargain”) ? I really try to understand the economic-political reasons for opposing the MMT concept and historically you may find some answers in “the secret of Oz” a documentary you can find on you-tube dealing with the foundation conflict of the US between the gold standard and free money creation. I really hope my questions aren’t too naive, but I think there have to be reasons for ignoring MMT rooted in economic interest rather than in intellectual denial.
my – untechnical- guess would be that the financial sector loves to get interest free money that it can invest in interest bearing assets. “for all practical purposes”: meaning that the government could borrow at 0 interest from the FED instead of the banks if there wasn’t a debt-ceiling preventing all new borrowing interest free or not ?
in your presentation it’s just a problem of academic discussion. Once a relevant number of economists has understood they will inform politicians accordingly and everthing will be fine. Are you aware of the fact that no small part of economists is actually paid for the standpoints they hold ? There is no such thing as a free academic discourse in a world ruled by financial interest and I can hardly believe that you would defend such a notion. Didn’t it pass your mind that people just don’t listen to MMT because they perceive they are very comfortable with the way things are ? So if you want to argue with the people in power (and they are not nobel laureats or politicians but the ones that pay their opinions) you must analyze why they perceive the actual application of the financial system as being in their favor. Perhaps a full application of MMT would also be in their favor or even more but how can you argue about that if you don’t know what kind of interest ties them down (if only in their own eyes) to the actual system ? In short: MMT provides clues to problems some people might not like to be solved, because they make good profits on them. I’m sure these people would do everything to prevent MMT from being applied just because they understand its mechanism.
Just to try to save this discussion I reformulate my initial question: Who financially or politcally benefits from the debt ceiling and how ?