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Trump is just gonna throw another trillion or two on the pile as a bribe..lol (lemmy.world)
submitted 2 months ago by to c/politicalmemes@lemmy.world
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[–] 5 points 2 months ago (11 children)

Modern Monetary Theory is here to show why this is largely a myth. Let's lay it out.

  1. The US has the ability to print USD. This is currency sovereignty.
  2. That debt is largely debt to itself (inter government obligations)
  3. If we can always create the money needed for any debts, we can never default on this debt.
  4. Taxes should be seen through the lense of a deflationary mechanism instead of a way to actually acquire USD.

Thus, the national debt is fairly meaningless and is intentionally used by conservatives as a way to advocate for spending cuts that would help average Americans.

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  • [–] 2 points 2 months ago

    Fortunately we're not at risk of a deflationary spiral

    But fr the debt is still obligation to the future, it's delayed inflation. It's totally fine to be in debt for important things and things that are economic investments, taking on debt for a high speed rail line for example would be wise. But taking on debt to avoid taxes or cutting services is just committing to an inflationary spiral

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  • [–] 2 points 2 months ago* (2 children)

    This is only true as long as the USD remains the world's reserve currency.

    Something that has not been a sure thing lately.

    Modern Monetary Theory is great... If you're the world's superpower, and your money runs everything.

    Unfortunately, we are actively dismantling this status for quite literally no reason.

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  • [–] 2 points 2 months ago

    This is true as long as the debt is in USD, superpower or not.

    Does the superpower status mean countries are coerced into using US currency like the Petro dollar system? Yes, but that's secondary.

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  • [–] 1 point 2 months ago* (last edited 2 months ago) (2 children)

    You need to continue to think this through.

    If taxes are a deflationary mechanism because they remove money from circulation, then that would imply that the opposite is also true; that putting too much money into circulation is, broadly, an inflationary mechanism.

    There's a lot of nuance I'm skipping over there, but that's exactly my point. You're taking a very basic, very one dimensional view of MMT and treating it as a license to spend infinite money, when that's not actually what the theory says at all.

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  • [–] 1 point 2 months ago (1 child)

    I'm actually not. I'm saying that if you have the ability to print your own money, it is impossible to default on debt owed in that currency. It's not a license to print money, it's an understanding of a logical conclusion.

    This large number is waved around to justify austerity for the poor and without a shred of irony advocate for tax cuts (mostly for the wealthy). I'm just demonstrating why it isn't the boogeyman it's made out to be.

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  • [–] 3 points 2 months ago*

    You're correct that you cannot default, but that doesn't remove the problem, it just changes its shape. There are still plenty of bad things that can happen if you're spending far more than you're taxing.

    And yes, you're absolutely right to say that national debt isn't the bogeyman that conservatives and neoliberals make it out to be. Austerity is a plague and we shouldn't ever embrace that kind of idiotic thinking. I'm the first guy to shove Mark Blyth down the throat of every moronic con and neolib who acts like government debt is a credit card.

    But that doesn't mean that you should reflexively apply that defense of debt and spending in every circumstance without exception. The rate at which the US is accumulating debt, without anything to show for it, is a very real problem that shouldn't simply be handwaved away. These things are not black and white. Details matter.

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  • [–] [S] 1 point 2 months ago (3 children)

    If you think printing money is a solution to the problem then you're just as dumb as the administration

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  • [–] 2 points 2 months ago (1 child)

    Who gets hurt first and the most from inflation? The working class

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  • [–] 1 point 1 month ago

    Well... Not exactly.

    Inflation is not ontologically evil. The problem is that we have this Bizarro world version of inflation where everything keeps getting more expensive, unless it's an hour of our labor.

    In a world where wages rise in line with costs, inflation actually benefits workers, because generally speaking our debt to savings ratio is much higher. Inflation reduces the comparative size of your debts. If you buy a house for $500,000 today, and then over the next ten years your income doubles, in effect the price of your house has halved. Ditto cars, student loans, medical debt, etc.

    The problem is not the inflation itself, but the suppression of wages. That's what's actually killing us.

    NB: This does not imply that inflation is ontologically good either. Just that, under the right conditions, it can be beneficial.

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