I will just start by saying that I found your post very encouraging because for the first time, as is illustrated above, you aren't disputing the mechanics of how our money system actually works. Rather it is concerns accountability in implementing such understanding. Which is fine. The inverse is continuing to deceive people into accepting false premises such as the government being financially constrained by tax receipts the same way a household is constrained by income statements.Seiffert82 wrote: ↑March 2, 2021, 3:06 pm The MMT theory is obviously building momentum in some quarters, but there are still a lot of hairs on implementing something like this, including putting adequate controls or limits in place, as well as implementing a guaranteed employment program to manage wage growth and to control inflation.
Central banks can already create money, within the existing policy framework so we're already half way there. However, the principle of government managing debt and maintaining a budget balance sheet inherently keeps them accountable to the general public. Once you take those controls and expectations away I wouldn't trust any flavour of government to act responsibly in managing our resources.
Thats a good question and whilst the point at which you activate inflation is not an exact science, full employment is understood as a good gauge at which supply capacity is at its ceiling. If you keep deficit spending and it cannot be absorbed by an increase in supply then you may trigger inflationary pressures.Seiffert82 wrote: ↑March 2, 2021, 3:06 pm Why stop at full employment though?
If you're running with this flavour of economics then we may as well create enough money to build every homeless person a house, build national infrastructure for electric vehicles, kit out the Defence force with state of the art capability and give everyone a $10,000 stimulus bonus on the eve of the next election.
But here is the thing - you posed the last part there facetiously but you inadvertently stumbled upon another good point. If we are at full employment and yet you want to build every homeless person a house - who is going to build the houses? Who is going to work to increase the building supplies? Who is going to build the national infrastructure for electric vehicles? Who is going to build the state of the art capability?
See that shortage of people there because everyone is already working? That is a real resource constraint. You have just created 1 of 2 scenarios whereby a government's desire to spend is limited - and it has nothing to do with the fact the deficit is at x billion dollars.
The other is of course, inflation. And depositing 10k in everyones account whilst almost everyone is working and earning decent wages sounds like an inflation risk in the making.
This last part though is just not correct and completely ignores the theory of chartalism, which to me is fully grounded in reality.Seiffert82 wrote: ↑March 2, 2021, 3:06 pm MMT is clearly one form of economic theory, but to me it completely ignores the most basic of economic principles in that money is just a vehicle to exchange goods and services of equal value.