Home > Main > Is MMT moving to being accepted as Self-Evident?

Is MMT moving to being accepted as Self-Evident?

July 26, 2011

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.

Arthur Schopenhauer

We’ve had so many people start to engage with MMT over the last few weeks.  But this blog post in the FT takes the cake:

“The point here is that based on the tax and spend model, paying a tax of $1 is the equivalent of seeing $1′s worth of tax canceled by the Fed as agent for the Treasury. The national debt goes down by $1.

Or as Cook puts it:

It’s exactly as though an obsolete $1 note is torn up or burnt. Or another way of looking at it is that it is what happens when a Frequent Flyer Mile is redeemed against a flight.

Because the money everyone is paid is nothing more than a tax credit, there’s only one problem. It comes about when the number of tax credits issued outnumbers the total redeemable wealth of the nation (i.e. the tangible common equity of the nation is fully eroded). That’s clearly not the case in the United States.”

This is very close to MMT, in the financial times, being openly discussed.   It’s also known as the fiscal theory of the price level for some people, but MMT is more elegant.  It talks about the tax credits directly.

I pointed out a few months ago that MMT was moving to violently opposed. Yves said that MMT might be moving past the first of Ghandi’s three stages.

I think we’re moving past those stages pretty quickly. This strange little article in the FT – posted by one of their brightest stars – is a sign that we’re moving beyond that, to the self-evident stage.

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  1. Tom Hickey
    July 26, 2011 at 12:38 pm

    Chris Cook, Treasury look-alikes

    Some differences with Warren.

  2. TC
    July 26, 2011 at 12:48 pm

    Oh no doubt about it – there are differences. But it’s massively closer to MMT than any mainstream views on money.

    Plus, it’s accepting that:

    1. taxes drive money demand as self-evident
    2. Treasury and Fed are agents of the same entity as self-evident
    3. Treasury can spend without borrowing as self-evident

    These things were not considered to be self-evident as recently as a 12 months ago.

    • Tom Hickey
      July 26, 2011 at 12:59 pm

      Yes, I have been following the gang of 8 on “creditary economics” for some time, and Chris has it basically right. I would be great if we were arguing with people like him instead of the coconut crowd.

      • wh10
        July 27, 2011 at 3:26 am

        Where are the disagreements?

      • wh10
        July 27, 2011 at 3:26 am

        Where are the disagreements?

  3. July 26, 2011 at 7:15 pm

    Perhaps a proposal can be put to Chris Cook whether in article or video form about a bi-weekly or engagement on MMT/FTPL with other MMTers (thinking the professionals)

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