Getting into the nitty-gritty of monetary OR fiscal policy, and monetary AND fiscal policy that highlights the differences of monetarism, MMT and MR. Definitely worth thinking about, and Mike has not a good job in setting forth the issues from the MR vantage.
3 Big Reasons Monetary Realism Matters
Cullen Roche comment on Mike post at Pragmatic Capitalism, An Interesting Wager…
I focus on Mike's post here.
My own view is that monetarism is biased toward economic rent-seeking, hence, favors the accumulation of wealth based on economic rents, and that MR shares this bias, probably because MR contributors Mike Sanskwoski, Cullen Roche, and JHK are in the financial sector, which is largely based on rent-seeking as presently operated. At least that is the way it would seem.
For example, Mike accepts the view that "real estate collateral is fairly valued now" based on historical data wrt to the Core Logic HPI and per capita income. Notice that this is based on per capita income, which has nothing to do with income distribution. Housing experts that I read, like Dr. Housing Bubble, say that housing prices are too high in relation to income distribution. Housing prices in general need to be much lower to be generally affordable at current income levels.
What has happened is that the government — chiefly the Fed and agencies, but extending to the WH — have kept housing prices higher than they would be to prevent the banking sector from insolvency without offering relief to underwater homeowners in servicing debts. The result is housing price manipulation by keeping bank RE inventory off the market or bundling sales to large investors who will rent and then flip.
This involves a huge transfer of economic rent to the wealthy and well-connected through government picking winners and losers.
A similar argument can be made about the financial sector in general. In supporting housing, the Fed admittedly made financial assets higher in value that they would otherwise have been.
The economic issues could have been addressed equitably through fiscal policy, while applying existing law to the financial sector instead of allowing rampant crime and corruption to continue and even proliferate, as Bill Black, Janet Tavakoli, and others have documented.
On one hand, MMT economists (Wray and Mitchell) and MMT allies (UMKC profs Black and Hudson) have been in the forefront of the red flag wavers. On the other, MR is silent about this. One wonders what their stance is.
I don't want to start a big kerfuffle over this, and I regret if anyone's feathers are ruffled. I don't mean this personally in any way, and I realize that I am stepping on friends' toes here. But this issue is bigger than personal feelings. It threatens to take the whole system down, in my view.
My sense is that some career-bias at MR may be entering in here, resulting in the ability to see, let alone address, some huge issues, which if not resolved with lead to the mother of all crashes in the not-so-distant future due to persistence of crony capitalism, corruption and capture. Much of this can be traced to rent-seeking behavior replacing productive contribution abetting by government though capture, e.g., the revolving door and lobbies.
While I don't think that this all there is at issue among monetarism, MMT, and MR, it is a big one. The other big one is the issue of resolving the trifecta of growth wrt production and productivity minus economic rent, employment and price stability. This is the thrust of the MMT policy position, which claims to harmonize the trifecta at full use of available human resources. As far as I understand it, the TC rule is similar to monetarist rules in that it comes it a couple of percentage points higher in unemployment.
So I think that the bet the Brad DeLong proposes needs to be very carefully specified wrt economic criteria.
Moreover, I am not very satisfied with employment measures in terms of "jobs." The present push is toward global equalization of wages for most workers. This is also an issue that needs to be addressed head on, because it is socially and politically important as well as economically. That is to say, the push is on by the elite for a neoliberal world market with the workers of the world competing equally with each other. This is resulting in a fundamental restructuring of social and political relations in the developed world, putting the US, UK, and the EZ in social, political and economic turmoil.