52/ Ok, I think I get it. MMT says that a deficit isn’t a sign of government overspending, inflation is. (And here they are clearly talking about the overheated economy inflation) So as long as the spending doesn’t cause inflation, it doesn’t matter if you run with a deficit even over a longer period (she mentioned decades).

So basically she is sort of saying that deficits aren’t real because taxes aren’t real.

This is more like the water in a radiator system (my analogy). You can add in water or remove water, but the system isn’t the water. And adding water (money) only becomes a problem when the pressure in the system gets too high and water starts spilling out somewhere.

Basically, money isn’t “real”. It’s… just water in a radiator system in a building. The building and the radiators and the people living there are the real things.

62/ I feel so smart when I read news articles that agree with me 🤓 🤣
“And an interest rate increase will not help, he believes. - The higher the interest rate goes, the more landlords have to raise the rent, and then the interest rate increase is inflationary. It does not have the same effect as in the housing market, where prices fall if interest rates rise. The interest rate is not a good weapon to deal with this kind of inflation. It makes matters worse, he says.”
https://e24.no/norsk-oekonomi/i/93zl4d/uenige-om-leieprisene-det-gjoer-vondt-verre

https://social.vivaldi.net/@Patricia/112720508129615142

65/ After spending ages on inflation, I’m apparently breezing through chapter 3 “The National Debt (That Isn’t)”

Basically, in the same way tax isn’t real (in that it is just a mechanism to remove money from the economy and/or create demand for the currency. MMT says that the deficit isn’t real. Very clear that it is the US they are talking about. To generalize to more countries she picked the UK and I would’ve preferred another more “normal” country.

67/ To be fair, I think that issue is pervasive in the whole field. They are not able to separate ideology from models of the economy. And then they infuse in morality and destiny and Right and Wrong in these models until it’s more mythology than science.

And I don’t mind ideology. I have a great helping myself. But when you’re already in a non rigorous field, mixing opinions into “models” makes the whole thing even less serious.

A complex system is what it is. You find out the shape of it empirically. You can form hypotheses, design experiments and test. You don’t sit in a corner and Devine It. You might have a famous “shower thought” but then you test.

And seriously, these people (economists) don’t test ANYTHING.

68/ I really thought I’d be more convinced by leftist economists. But they are methodically all very similar. And it is the methodology I have issue with in this whole… project(?).

This field has imo structural issues and they aren’t fixed by the practitioner being less of an ass.

The problem is they believe in these simplistic models and that is standing in the way of developing the kind of tooling, discipline and humility needed when working with complex systems imo.

75/ Chapter 5: “‘Winning’ at trade” is interesting, but doesn’t really go into the depth I’d like (but I guess after reading 4 Econ books in a row I’m not the target readership). The chapter is very “political” and idealistic rather than descriptive, but that was a tendency we saw earlier too. The basic idea is that a trade deficit isn’t a bad thing. She goes on to envisage a world economy that is more… equitable? It argues for developing countries to focus more inward, and diversifying their economies, perhaps making them less vulnerable to the global markets. It argues against losing control over one’s own currency (its MMT, so obviously). It makes clear that the dollar gives the US an outsized influence and leverage over the rest of the world.

She criticizes both democrats and republicans, but seems to have a soft spot for Bernie Sanders. He hired her to work at the Capitol, so I guess that makes sense.

The MMT premise seems to be that you don’t have to “have the money” to fund guaranteed full employment or “entitlement programs”, because the control over the currency means that the government always “has the money” to pay.

76/ The “winning vs losing” at trade is explicitly directed at Donald Trump. But she spends a lot of time emphasizing that American workers have lost jobs (“well paid union jobs” comes up several times) when production moved offshore.

It feels to me like she is arguing for a midpoint, a more protectionist approach, but not measuring in trade deficit/surplus, but instead in… standard of living?

She gets slightly into the topics of “The Shock Doctrine” in that the international trade organizations and the world bank became dominated by extremist (my word) capitalist forces.

79/ But the book is supposed to not just be a work of ideology, but provide a way through this mess we’re in, in the aftermath 🤞of a global economy dominated by extremist capitalism.

And that premise is based on this currency “trick”, and there I am not yet convinced tbh.

84/ Ok, chapter 4 “Their red ink, is our black ink”. I think it was Keen in one of his podcast episodes who said something that I hadn’t considered. From memory: as a country’s economy grows, whatever that means, the money supply would need to grow too.

Looking at population growth alone that makes sense to me. And that means that my mental model of a fixed “amount of money we have” isn’t correct. It would, at least over longer periods of time, need to be elastic in some way. And I can’t see how that could be a global zero sum game either, since many countries that were poor a century ago, and are still poor today, often still have a “bigger” economy than they did a century earlier.