MMT is based upon such preposterous foundations and its adherents are so morally challenged that average people will probably not believe what it is that is actually being proposed.
Dan Kervick, a blogger at New Economics Perspectives, points to an article by Gavyn Davis today in the Financial Times as "Further evidence that core insights of MMT are penetrating the mainstream".
The "money quote" from Davis:
It is now widely recognised that a central bank cannot become insolvent in the same way that a private company can. Even if it incurs losses on its assets which more than completely eliminate its equity, it can never find itself in a position where it is unable to settle its debts, at least in its own domestic currency. Most of the liabilities of a central bank come in one of two forms: banknotes, and commercial banks’ deposits at the central bank. It is impossible for the private sector to force the central bank to exchange these assets for any other asset (like gold, for instance), and in any event the central bank can create more of each of them at will. Hence it can never become illiquid.
It cannot become illiquid because it can keep printing funny money to "repay" its debts without really repaying its debts. Austrians have been complaining for decades that the fiat money system allows (and basically mandates) this type of fraud in the form of a hidden default through repayment of debt with diluted funny money. To the mind of the morally challenged MMTer, this is cause for celebration and it is this wondrous feature of our modern world which no one but them understands.
you are confusing operational realities with causes for celebration.
ReplyDeletealso, any and all payments booked by the Fed are via debiting and crediting accounts on it's books. You can call crediting accounts 'printing money' and debiting accounts 'unprinting money' if it makes it easier for you.
www.moslereconomics.com