tag:blogger.com,1999:blog-6476989946886057900.post161824581817761613..comments2022-11-09T08:34:43.240-08:00Comments on <small> <i> the </i> </small> Mechanical Money <small> <i> blog </i> </small>: Suggestions to Enhance the Modern Monetary Theory (MMT)Roger Sparkshttp://www.blogger.com/profile/01734503500078064208noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6476989946886057900.post-3376579090865352832014-12-22T07:11:32.801-08:002014-12-22T07:11:32.801-08:00Brian,
Thanks for taking a look at the post.
Equ...Brian,<br /><br />Thanks for taking a look at the post.<br /><br />Equation (3) spans 'time'. It can be applied no-matter whether the time period is one year or 50 years. <br /><br />The 'B' term is <i> borrowing </i> . <br /><br />Over 100 years (for example), the borrowing would include borrowing gold and giving notes as evidence of borrowing. In the current time period, government is borrowing notes and giving bonds as evidence of borrowing. Notes have become so common that they are used as the daily currency.<br /><br />Currently, government can be described as borrowing it's own debt. That concept is behind the charge that QE is ineffective. The charge is that QE only has influence on the liquidity of the money supply.<br /><br />On the other hand, we could also look at equation (3) and say that the money supply (which is government debt) is currently rapidly increasing because government still has a large annual deficit. In my view, this is fiscal policy in action.<br /><br />Thanks for your comments.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-6476989946886057900.post-8512263909506951962014-12-22T06:46:25.692-08:002014-12-22T06:46:25.692-08:00This comment has been removed by the author.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-6476989946886057900.post-84368227463877086622014-12-21T17:53:36.229-08:002014-12-21T17:53:36.229-08:00The Modern Monetary Theory description looks like:...The Modern Monetary Theory description looks like:<br /><br />L(t+1) = L(t) + D(t),<br /><br />where L is the level of government liabilities, and D is the fiscal deficit.<br /><br />These liabilities are then divided up, with bonds being issued to keep interest rates near a target rate. <br /><br />As a result, MMT does not attach too much importance to the distinction between money and government debt. It was more of a mainstream worry whether governments "fund" spending with taxes, money creation or bonds.<br /><br />I am unsure about your points about the switch from paying taxes in gold. In practice, most countries had debt-based private currencies, and they were absorbed by the state. There were mechanisms to convert debts into gold, such as coin issuance. At this point, the historical steps we arrived at fiat currencies are somewhat moot.<br />Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.com