An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
This is interesting he has this at the end of the post:
"Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics: 1. Federal Deficits – Net Imports = Net Private Savings 2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports"
So he is saying that a smaller federal deficit will not allow growth in gdp, and then he defines gdp via an equation where the equation does not include the deficit...
Spending and taxation are two entirely different things. Spending is someone's income and so all government spending is expansive over private spending.
Taxation withdraws saving. Taxation is used to adjust to changing saving desire.
MMT = Spend on what is needed and desired, and tax relative to changing saving desire to run a full employment budget.
The purpose of the fiscal balance is to adjust for the desire to net save by the private sector that is not provided by the trade balance.
I love brother RMM. But not his UMKC bashing. Dr. K is working her tail off marketing MMT. And note UMKC is a school, not a public advocacy group, as much as some of us see the economics department as the last bastion of hope for the progressive republic left standing.
Also, seems like for-profit lobbying firms can charge more from clients seeking gov't funding with the deficit myths in place.
5 comments:
This is interesting he has this at the end of the post:
"Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports"
So he is saying that a smaller federal deficit will not allow growth in gdp, and then he defines gdp via an equation where the equation does not include the deficit...
???????
Federal Spending = Deficit + Taxes.
He certainly understands that its the Deficit part which is stimulative.
Charles,
Then I guess they should raise taxes every time they want to increase Federal Spending and this will magically happen?
rsp,
Spending and taxation are two entirely different things. Spending is someone's income and so all government spending is expansive over private spending.
Taxation withdraws saving. Taxation is used to adjust to changing saving desire.
MMT = Spend on what is needed and desired, and tax relative to changing saving desire to run a full employment budget.
The purpose of the fiscal balance is to adjust for the desire to net save by the private sector that is not provided by the trade balance.
I love brother RMM. But not his UMKC bashing. Dr. K is working her tail off marketing MMT. And note UMKC is a school, not a public advocacy group, as much as some of us see the economics department as the last bastion of hope for the progressive republic left standing.
Also, seems like for-profit lobbying firms can charge more from clients seeking gov't funding with the deficit myths in place.
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