Powell Trashed MMT, But Wall Street Sees Room for U.S. to Try It

nooby_mcnoob said:
That is slack in the economy and the government will create more money to employ them. Win-win situation. If they don't want to work, they will be forced to work.
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The first draft of the green new deal, controversially, gave the right not to work if you didn't fancy it.
 
nooby_mcnoob said:
That is slack in the economy and the government will create more money to employ them. Win-win situation. If they don't want to work, they will be forced to work.
More...
The first part is in agreement with MMT, however note that MMT economists point out, and in my opinion they are correct on this point, that when an economy is operating below full employment the direct economic cost of putting unemployed resources to work is zero! This is a point often missed by politicians.

With regard to your second point, I would mention that in the U.S. there is on-going debate on the proper role of welfare and the social safety net. One approach is do introduce what may be termed workfare where in order to receive social benefits one must work. What MMT economists propose is not "workfare" however. MMT economists are addressig specifically those who are ready, able, and willing to work but unable to locate employment in the current market. These would be the workers the government would employ in an ELR program at a basic public sector wage, "BPSW", which, importantly, would be a living wage . ELR, according to them, is not a substitute for current public sector employment. Participation in ELR employment would be strictly voluntary, but unemployment compensation would not be there for those who voluntarily choose not to be employed. The BPSW would replace the statutory minimum wage. ELR is not intended as a permanent job for anyone. Rather the idea is to maintain a labor buffer force from which the private sector could hire. The size of the buffer would vary with economic conditions. A goal of basic public sector employment is to prepare workers for private sector employment, and as such, job training would be an important component.

Here is what Randall Wray said in 1998 on this topic" ("Understanding Modern Money" L. Randall Wray, pg. 128 (1998).
In 1996, for example, the government spent about $50 billion on unemployment compensation, $15 billion of AFDC, and more than $20 billion of food stamps; in addition, state governments spent on programs that provided assistance to the poor. ... The ELR could eliminate potentially all of the unemployment compensation and at least some of the other social spending (particularly on the assumption that the BPSW is a 'living' wage). ​

The ELR would eliminate all involuntary unemployment. The ELR would not eliminate the need for a social safety net for those unable to work.

To fully understand and appreciate these MMT proposals from the late 1990s, one has to understand the relationship of deficit government spending to both desired net nominal saving and actual net nominal saving. This requires more explanation and study than I am inclined to get into here .
 
The two MMT guys in this thread:

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piezoe said:
an economy is operating below full employment
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I don't think the democratic socialists want to wait for unemployment to go up. Inflation was meant to pick up at 5% unemployment but the US is now at 4%.
 
Piezoe,
Great 1st post in this thread.
MMT is a totally new term to me and it has Powells and OCZ at the ends of spectrum.
Adaption and acceptance of a sound theory (really?) can change the narrative going forward,
shelving the QE label for MMT.
Slack is prevalent, structural, increasing but I can't label it well. Kinda like the Matrix to me.
This all seems to bode very well for asset vs. debt gatherers going forward and, what seems to me more of the same of the last ten years.
Momentum, inertia , political survival, seem to favor MMT as well.
 
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