Föhrenbergkreis Finanzwirtschaft

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Posts Tagged ‘MMT’

Warnung vor gefährlichen Schuldenexperimenten

Posted by hkarner - 14. Juni 2019

Günther Strobl, 12. Juni 2019, 06:00 derstandard.at

Eine Wirtschaftstheorie besagt, dass Schulden in eigener Währung kein Problem sind. Italien will den Beweis antreten. Ökonom Lars Feld warnt

Mit Schulden macht man keine Experimente, das sei brandgefährlich. Schulden seien in wirtschaftlich schlechten Zeiten mitunter nicht zu vermeiden, sollten aber in Zeiten wirtschaftlicher Prosperität, wenn auch die Steuereinnahmen sprudeln, umso energischer abgebaut werden. Auf dass Platz für geld- und fiskalpolitische Maßnahmen geschaffen wird, wenn die nächste Krise kommt. Das ist, verkürzt gesagt, das Credo von Lars Feld. Und es ist das Mantra der Mainstream-Ökonomie, auch wenn sich die vorgeschlagenen Rezepte für Krisenländer in der Vergangenheit oft als wenig tauglich herausgestellt haben. Der 53-Jährige, der Professor für Wirtschaftspolitik an der Universität Freiburg und einer von fünf Wirtschaftsweisen in Deutschland ist, sieht sich neuerdings mit einer Strömung in den Wirtschaftswissenschaften konfrontiert, die eine glatte Antithese zu allen bisher verkündeten „Wahrheiten“ darstellt. Modern Monetary Theory (MMT) heißt die Richtung. Ihre Kernidee: Defizite sind nicht zwingend schlecht.  Regierungen sollten die Vollbeschäftigung im Auge behalten, die Wirtschaft durch mehr Staatsausgaben und Steuern lenken und auf diese Weise die Notenbanken entlasten. Verschuldung löse, sofern sie in eigener Währung erfolge, auch keine Inflation aus, wie dies am Beispiel der bereits lange Zeit hochverschuldeten Industrienation Japan gezeigt werden könne.

Schulden als Heilsbringer

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Economists are rethinking fiscal policy

Posted by hkarner - 18. Mai 2019

Date: 16-05-2019
Source: The Economist

But not as radically as is sometimes claimed

Every so often a right-leaning economist raises the alarm about the apparently parlous state of America’s public finances. The subject gripped Washington in the early 2010s but has since been mostly disregarded. At 78% of gdp, America’s net public debt is high, if not yet huge. Thanks to President Donald Trump’s tax cuts, the federal deficit will exceed 4% of gdp this year, a level that is more typical after economic slumps than in the benign conditions seen today, with unemployment at 3.6%. What is more, unless taxes go up or spending on pensions and health care for the elderly is contained, public debt will rise to 92% of gdp in 2029, the highest since 1947, and go on rising for decades more, according to official projections.

Such warnings have fallen on deaf ears not just in Washington, but on Wall Street too. Financial markets, hungry for dollar-denominated safe assets, betray no concern about America’s debts. The risk of a crisis is not the only theoretical downside to public borrowing, but the others are looking unconvincing. For example, the argument that debt is crowding out private investment is hard to sustain when firms are awash with cash and can borrow at extremely low rates. Den Rest des Beitrags lesen »

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Der Vater der neuen Geldtheorie hat eine einfache Lösung für alle Probleme

Posted by hkarner - 16. Mai 2019

Eric Frey, 15. Mai 2019, 09:42 derstandard.at

Die Modern Monetary Theory des Ex-Fondsmanagers Warren Mosler verspricht Vollbeschäftigung und stabile Preise und begeistert Amerikas Linke

Viele sprechen in den USA von einer neuen politischen Ära: Mit dem Linksruck bei den Demokraten sind der Begriff Sozialismus und Ideen für eine progressive Sozial- und Klimapolitik plötzlich populär geworden. Und als Begleitung taucht in politischen Debatten immer öfter eine neue Wirtschaftstheorie auf, die verspricht, dass all diese Pläne und Programme auch leicht zu finanzieren seien: die Modern Monetary Theory (MMT). Ihr geistiger Vater ist der Ökonom, Erfinder und ehemalige Fondsmanager Warren Mosler, der derzeit in Wien ist. Er geht seit gut 25 Jahren mit der Idee hausieren, dass die Mainstream-Ökonomen weder das Geldwesen noch die Budgetpolitik oder den Arbeitsmarkt verstünden – weil alles ganz anders sei, als es in den Lehrbüchern stehe. Würden die USA oder die Eurozone seine Ideen in die Praxis umsetzen, dann gäbe es keine Arbeitslosigkeit, keine Inflation und genügend Geld, um eine radikale Wende in der Klimapolitik zu finanzieren, versichert Mosler dem STANDARD bei einem Gespräch in Wien.

Zuerst Staatsausgaben, dann Steuern

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Is modern monetary theory nutty or essential?

Posted by hkarner - 14. März 2019

Date: 13-03-2019
Source: The Economist: Free exchange

Some eminent economists think the former

“MODERN MONETARY THEORY” sounds like the subject of a lecture destined to put undergraduates to sleep. But among macroeconomists MMT is far from soporific. Stephanie Kelton, a leading MMT scholar at Stony Brook University, has advised Bernie Sanders, a senator and presidential candidate. Congresswoman Alexandria Ocasio-Cortez, a young flag-bearer of the American left, cites MMT when asked how she plans to pay for a Green New Deal. As MMT’s political stock has risen, so has the temperature of debate about it. Paul Krugman, a Nobel prizewinner and newspaper columnist, recently complained that its devotees engage in “Calvinball” (a game in the comic strip “Calvin and Hobbes” in which players may change the rules on a whim). Larry Summers, a former treasury secretary now at Harvard University, recently called MMT the new “voodoo economics”, an insult formerly reserved for the notion that tax cuts pay for themselves. These arguments are loud, sprawling and difficult to weigh up. They also speak volumes about macroeconomics.

MMT has its roots in deep doctrinal fissures. In the decades after the Depression economists argued, sometimes bitterly, over how to build on the ideas of John Maynard Keynes, macroeconomics’ founding intellect. In the end, a mathematised, American strain of Keynesianism became dominant, while other variants were lumped into the category of “post-Keynesianism”: an eclectic mix of ideas consigned to the heterodox fringe. In the 1990s a number of like-minded thinkers drew on post-Keynesian ideas in fleshing out the perspective embodied in MMT. Den Rest des Beitrags lesen »

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Modern Monetary Madness

Posted by hkarner - 18. Februar 2019

By John Mauldin

February 15, 2019

Modern Monetary Madness
Pet Economists
Can This Really Be a Thing?
Sound Bite Economics
Do Deficits Matter?
Strategic Investment and Life Planning

More than 10 years ago some Australian readers begin regaling me with the ideas of economist Bill Mitchell of the University of Newcastle in New South Wales. He was teaching about something he called (and he coined the term) Modern Monetary Theory. I looked into it and fairly quickly dismissed it as silly. Actually printing money as an economic policy? Get serious.

MMT is a revival of an early 1900s idea called chartalism. Now it is influencing the thinking of new socialist-like movements in the US and other places and cited by politicians. MMT is increasingly appearing in mainstream media like this sobering Financial Times article. Since it is increasingly discussed in more public venues, you should know more about it and that will be today’s topic.

Modern Monetary Madness

Essentially, MMT espouses that the public through the government owns the process of money creation, and that in addition to borrowing and taxing, should simply issue currency as payment for its obligations. This is not the sleight-of-hand that quantitative easing was. This is direct monetization in lieu of borrowing. Den Rest des Beitrags lesen »

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Richard Murphy – Modern Monetary Theory and tax havens

Posted by hkarner - 9. März 2018

We at BRAVE NEW EUROPE have been highlighting Modern Monetary Theory. Here is another excellent article by Richard Murphy, this time in conjunction with tax avoidance

Richard Murphy is Professor of Practice in International Political Economy, City University of London. He campaigns on issues of tax avoidance and tax evasion, as well as blogging at Tax Research UK

Cross posted from Tax Research UK

A few days ago a commentator asked on the blog:

I am not an economist so hopefully my ignorance can be forgiven. I find myself confused by your oft repeated view that governments spend before taxing, and tax merely removes inflationary pressures from the economy, and your criticism of secrecy regimes for preventing governments from collecting tax due. If governments don’t need the tax in order to spend, and companies and individuals are removing the tax which should be due from the economy, doesn’t this have the same anti-inflationary effect as if they were paying tax? Am I just being to simple or is there a bit in the argument I’m missing?

Clearly there is a moral argument (with which I completely agree) against secrecy regimes and the inappropriateness of comparing government finances with a private households also makes complete sense, but there seems, from my imperfect understanding, to be a paradox here?

It’s  a good question and one that has been worth waiting to answer. I apologise to the commentator in question for the time it has taken me to do so.

If we look at MMT  What it says is that there is no reason for a government to raise tax to pay for its spending. In fact, that spending must  come before tax can be paid, because if that spending had not taken place the currency in which the tax was due would not have been created to let that tax payment happen. Tax, then, in MMT  has two  obvious and immediate functions out of the six reasons to tax which I have identified.  These are:

  1. Reclaiming the money the government has spent into the economy. As already noted, it may appear that tax revenue is being used to pay for government services supplied but that is not true: government spending always comes out of funds the government borrows from its central bank. Tax, in that case, reclaims the money spent to prevent excessive inflation. The amount reclaimed is that which is considered sufficient to leave the desired rate of inflation in the economy.
  2. Ratifying the value of money. Because a government requires that tax be paid using the currency that it creates (simply because that’s the currency it bills in) that currency has for all practical purposes to be used in the economy for which it is responsible, assuming that tax forms a significant part of people’s total liabilities. The payment of tax does, therefore, give a currency its value in exchange and as a result passes control of an economy to the government that charges that tax. This makes tax an absolutely fundamental component in macroeconomic policy.

But these are not the only reasons to tax. One of my criticisms of MMT,  and over time I have had them, just as Steve Keen has had,  is that the other four reasons to tax are, too often, ignored by those who promote MMT. Those other four reasons are: Den Rest des Beitrags lesen »

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By Jove, He’s Got It: Krugman (Finally) Adopts MMT (And so does Summers)

Posted by hkarner - 6. Mai 2013

Author: L. Randall Wray · May 6th, 2013 · RGE EconoMonitor

As you know, Paul Krugman has been inching inexorably toward MMT (Modern Money Theory). The last stumbling block has been those Vigilantes. Krugman and Brad DeLong have argued that we don’t need to worry about them, now, in the depths of a liquidity trap. And now that we know that the magic 90% debt ratio of Rogoff and Reinhart was a figment of their poor empirical work, Krugman knows that there’s no trade-off of rising debt for low economic growth.

The sticking point has been “crowding out”—the idea that once we get beyond the liquidity trap and return to a more “normal” ISLM world, government deficits will push up interest rates. And that will then reduce private investment, which tends to lower economic growth. Higher interest rates plus lower growth means the government’s deficit and debt ratios grow beyond “sustainable” levels. Den Rest des Beitrags lesen »

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Debt Sustainability, Growth, Interest Rates, and Inflation: Some Charts for Discussion and Some Inconvenient Truths for MMT

Posted by hkarner - 29. Januar 2013

dolan-1

Author: Ed Dolan · January 28th, 2013 · RGE EconoMonitor

In a series of posts[1] [2] [3] [4] [5] over the last couple of months, fellow Economonitor blogger L. Randall Wray and I have been exploring the conditions under which the government’s debt can be said to be sustainable. Wray writes from the point of view of Modern Monetary Theory (MMT), while I adopt a more eclectic and skeptical approach.

A pivotal issue in our discussion turns out to be whether the central bank can or should hold the nominal rate of interest on government debt, R, below the rate of growth of nominal GDP, G. (We could frame the discussion in real terms instead by subtracting the rate of inflation, ΔP, from both sides; it makes no difference.) If R is held below G, then essentially any level of the government’s budget deficit is “mathematically sustainable,” a term we have been using to mean that the debt-to-GDP ratio does not grow without limit over time. On the other hand, if R exceeds G, the budget balance must show a primary surplus, on average over the business cycle, to achieve mathematical sustainability of the debt. (See the first of the posts referenced above for a detailed discussion of the conditions for mathematical sustainability.) Den Rest des Beitrags lesen »

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