The economic future of the NBA

[Quirk]

What if there is significant inflow/outflow from foreign investment?

I'm not an economist either, so the identities help me reason about these questions without getting bamboozled by opinion pieces. The monetary economy is a closed economy, because only the state can create money, money created by banks etc is always balanced, as each credit has a debit, only the state can add money to a bank account, without needing a compensating negative entry in another, so only the state can change the net,

Since foreigners can not create net dollars, they would need to acquire dollars from somewhere, so if investment goes up relative to savings due to foreign inflows, this means that imports have gone up relative to exports, and the sectors still balance, because they have to, a surplus can only exist in any sector when a deficit exists in another.

[Primer]

Morgan Stanley is skeptical that MMT principles can actually work over the long term...

https://www.morganstanley.com/im/pub...ytheory_en.pdf

MMT isn't a policy framework. It's just an accurate description of how a fiat currency works. That statement is like saying Chemistry principles won't work over the long term.

[Joey]

This thread smells an awful lot like a Politics thread ... tread carefully folks! Lol

[golden]

As mentioned, understanding the identities involved will reduce your dependency on opinion pieces.

Neither morgan stanly, nor anyone else can deny (g-t)+(s-i)+(x-m)=0, any more than if I try to tell my bank that if I deposit 100 euros and then withdraw a 100 euros my balance should be higher.

National accounting is made up of those three sectors, which are always, in realty, even if not in opinion, in balance.

Again, I’m not an economist, but I would imagine that’s a over-simplified equation to describe a closed economy. What if there is significant inflow/outflow from foreign investment? There must be other assumptions & sensitivities where the equation breaks down.

[Quirk]

Morgan Stanley is skeptical that MMT principles can actually work over the long term...

https://www.morganstanley.com/im/pub...ytheory_en.pdf

As mentioned, understanding the identities involved will reduce your dependency on opinion pieces.

Neither morgan stanly, nor anyone else can deny (g-t)+(s-i)+(x-m)=0, any more than if I try to tell my bank that if I deposit 100 euros and then withdraw a 100 euros my balance should be higher.

National accounting is made up of those three sectors, which are always, in realty, even if not in opinion, in balance.

[golden]

Morgan Stanley is skeptical that MMT principles can actually work over the long term...

https://www.morganstanley.com/im/pub...ytheory_en.pdf

[Quirk]

As mentioned above, the reason that dedollarzation is happening is because of political use of the dollar, confiscating reserves and imposing sanctions, not any issue with "Debt."

[Quirk]

Understanding macro would tell you that "printing" money (there is no printing), to buy US weapons for foreign countries would raise G and X not T (see the post about the identity above). Of course the wages and profits from making the weapons would tend to increase S, so some increase in T and I would be expected, but that would be the same if the weapons where purchased without "printing" anything.

Choosing to understanding macroeconomic identities will save you a lot of time, but I suppose most will prefer to read nonsense from npr, etc

Reasoning about national accounting using only two variables in one sector would be like trying to understand the outcome of a basketball game only knowing the points scored by one team.

[Kagemusha]

That entire quote has it all wrong. Pretending the USA has to borrow its US$ from someone else or they can't fund the military. That's so clearly wrong. Ukraine needs $150B, done here you go. Israel needs $50B in weapons. Done here you go. We didn't borrow it or tax it from citizens just hit the keyboard and it's done because it's US$s and USA can make as much as they want whenever they want. It's never borrowing anything from anyone.

You know they will have to recoup that amount somehow.
Guess from where.. the taxpayers.

https://www.npr.org/transcripts/1197958571

[meductic]

[Quirk]

(g-t)+(i-s)+(x-m)=0

https://lmgpthat.com/render.html?sea...X-M)%20%3D%200

https://gpttfy.com/?q=(G-T)%20%2B%20...X-M)%20%3D%200

[Primer]

Thx, you’re doing a great job explaining it. But I’m definitely having a hard time getting my head around the idea that there is zero downside to massive debt and just printing money to offset it.

There’s this article which describes who holds the debt and the potential repercussions of running up a massive one.

.


https://www.cfr.org/backgrounder/us-...l-debt-dilemma

That entire quote has it all wrong. Pretending the USA has to borrow its US$ from someone else or they can't fund the military. That's so clearly wrong. Ukraine needs $150B, done here you go. Israel needs $50B in weapons. Done here you go. We didn't borrow it or tax it from citizens just hit the keyboard and it's done because it's US$s and USA can make as much as they want whenever they want. It's never borrowing anything from anyone.

[Primer]

My goodness. Modern Money Theory... deficits don't matter. To paraphrase Larry Saunders, who if anything is centre left, what is good about MMT is not new and what is new about MMT is not good. That domestic debt is not as egregious as foreign debt is absolutely true. But domestic debt still matters.

Never said deficits don't matter. Just they are WAY down the list of stuff that actually matters. Like if you were trying to lose weight and instead of counting calories you were focused on sodium content.

Here is a relevant example where it would matter. If the USA decides we want to give every family $10K per year for child care. If they don't pair that with massively building out the amount of day cares available, it will cause massive child care inflation because they added a ton of demand (the $10K) but didn't increase the supply of child care. If they do pair it with building out productive capacity then prices stay the same but more people get the service. Everyone wins because now there are a ton more jobs created in child care and all kids are getting great child care. If for some reason the country didn't have enough people to staff more day cares then this child care payment would be a failure as it would just drive up prices and not add any more service capacity.

Producitve capacity is the real constraint, "debt" isn't.

[Primer]

"Instead of getting their interest over 10 years USA could just mark up their account to the amount they would make with the interest and that's it. Everyone would be quite happy because they would get their interest payments early. They just may be upset they can't move their new money back into an interest bearing treasury account."
How can you write this. If people are upset that they can't move their money that devalues that investment. Therefore going forward the government would have to offer more in the future return of that investment to raise the same amount of cash... bingo, inflation.

They can move the money. In my example if we wanted to stop issuing treasuries they just wouldn't be able to buy more treasuries. They would still have all their money in their reserve account which doesn't earn interest and is accessible whenever they want for whatever they want.

[meductic]

"Instead of getting their interest over 10 years USA could just mark up their account to the amount they would make with the interest and that's it. Everyone would be quite happy because they would get their interest payments early. They just may be upset they can't move their new money back into an interest bearing treasury account."
How can you write this. If people are upset that they can't move their money that devalues that investment. Therefore going forward the government would have to offer more in the future return of that investment to raise the same amount of cash... bingo, inflation.