Stay at home orders are a joke, here's why

I am indeed quite familiar with MMT. I have a similar view on it to a Universal Basic Income.

On paper, I prefer both MMT and a UBI to status quo monetary and entitlement policy. The problem for me is that it creates a heavy incentive for governments to increase their spending and the value of the UBI.

Not that the status quo is any better. What politician wouldn't like to increase spending and decrease taxes simultaneously? None that I know of.

It's also important to remember that monetary policy is at the end of the day constrained by the productivity of the population. Monetary theory is tailored to encourage people to engage in productive activities at a higher rate with financial inventives.

A benefit in the current situation would be that you are heavily incentivised to consume under MMT.

Still, I think we should basically reset to pre-COVID policy once this is over and move forward from there. History shows we don't make great long term choices in a crisis. A year later if we decide with a clear head that these measures are needed then so be it.

 

Re the UBI: in the future maybe, when machines are producing most goods and services, and people are able to work out for themselves how to creatively engage with the community, a living wage UBI might be a good idea.

But in the meantime there is plenty of socially useful work needing to be done, alongside profit-driven participation in the market economy, hence the above poverty Job Guarantee of MMT which observes both the right and responsibility to participate in the nation's wellbeing.

MMT explains that the limit faced by government is resources and knowhow, not money. So regardless of "heavy incentive", resources and knowhow ARE the limit to government spending.

Yes, so you seem to recognise the dilemma.....but in fact governments don't need taxation in order to spend (since currency-issuing governments can issue their own currency (money); rather, governments only need taxation as a tool to restrain, if necessary, private sector consumption, to restrain excess demand on available resources (aka inflation).

The "productivity of the nation" also includes caring for people and the environment.
Wealth creation in profit driven (incentivised) markets is only one aspect of national well being, and the proper balance between private and public wealth creation can be obtained via government using its currency-issuing capacity - alongside the creation of money in private banks when banks write loans for credit worthy customers - to maximise the efficient use of the nation's productive capacity.
As you know, the market by itself by no means guarantees - and hardly ever achieves - socially acceptable outcomes for most, certainly not all people.

No; in fact the JG in MMT offers a living wage only, certainly not an incentive to increase discretionary spending/consumption. The incentive is still to look to the private sector for higher reward than a living wage.

Here's the problem. Governments around the globe will be much more heavily in debt, after this pandemic has passed - debt which will have to be paid back to people who lent the money to these governments.....

ie people without money (ordinary citizens living pay-check to pay-check) are forced to pay money to people with money (bond holders), for the foreseeable future. That's why the world's 10 richest people own as much wealth as the bottom 3.5 billion - and it's getting worse.

PS: sorry, I cannot concur that "you are quite familiar with MMT".

 

I don't think we're going to get to that point. The exaggerated death toll numbers the White House gave of 240,000 is beginning to look like it will be nowhere close, with some saying they're already considering when to reopen the country, to return to a state of "normalcy." The entire reason we have the stimulus checks is to keep businesses and employees from going bankrupt, so in a way we are printing money like crazy.

 

I can't speak to any of that, since it applies to America. We have a surplus, so we'll probably draw from that. Incidentally, my country is one of the three which experts predict will survive the economic fallout relatively unscathed.

 

I know you don't understand anything about macroeconomics….but you must be deaf if you haven't noticed the cacophony re "how are we going to repay the (recue package) debt" ...from all the MSM talking heads in OZ.

https://www.abc.net.au/news/2020-04-06/is-capitalism-dying-or-just-in-isolation-coronavirus/12123874

Is capitalism dying or just in isolation during the coronavirus pandemic?
By business editor Ian Verrender
Updated Mon at 7:02am

After reports began circulating that organised bands of hoarders, possibly even crime syndicates, were plundering regional supermarkets in search of toilet paper and other essentials, [home affairs minister Dutton] took to the radio waves.

"We do have some people I think that are profiteering," he told 2GB's Ray Hadley a fortnight ago, during one of his regular spots.

He went on: "They're hoarding, not for their own consumption, I think they're either sending some of the products overseas or they're selling it in a black market arrangement in Australia."

For many, his comments made perfect sense. In a time of crisis, as vast numbers of Australians faced unemployment and businesses large and small across the globe faced either drastically reduced revenue or total shutdown, the idea of profiteering from human misery seemed abhorrent.

There's just one problem. Our entire system of economic production and social organisation is structured around profiteering.
Seeking out gaps in the market and exploiting price anomalies are the everyday activities of anyone involved in any kind of trade, from shopkeepers and grocery wholesalers to money market high-flyers who trade synthetic derivatives of complex financial instruments.

As a free-market economy, successive governments of all persuasions for the past half-century have embraced the idea that government should not run commercial enterprise. They've preached privatisation, asset recycling and the fundamental belief that free trade and minimal government intervention will maximise wealth and lift society as a whole.

But it is a philosophy now being questioned, and not just here. For while the theory of free trade, and the mathematical formulae that underpin it, still hold true, many economists over the years jettisoned an equally important concept on the other side of the ledger.

They forgot about distribution. They stopped thinking about how the spoils are divided. They looked on without a care as the wealthy became insanely rich while working class living standards across the developed world declined.

In the space of a few months, as a health pandemic has gripped the world, all our preconceived notions of economic management are being questioned.

Community suddenly has replaced competition as our primary motivating force.
The Morrison Government, in the space of a few weeks, has thrown a large part of its ideology out the window.

The Reserve Bank cuts interest rates to a record low and announces a quantitative easing program for the first time in its history to help prevent a coronavirus-driven recession.

It's been forced to recognise that survival is more important than surpluses, that markets don't always operate efficiently and in the best interests of society and that, occasionally, government intervention in the economy on a grand scale is vital.

This time last year, the Coalition labelled the Opposition's election campaign pitch to lower the cost of childcare while increasing childcare workers' wages as "communism" and "economic vandalism".

Last week, it offered free childcare to anyone who wanted it.

For years, it has steadfastly refused to increase unemployment benefits. One of the first actions it took, as the health crisis unfolded, was to almost double the benefit. At this stage, however, it is temporary.

"Debt the biggest threat to capitalism"

Sometimes, wisdom emanates from the most unlikely of places.

For several years now, Macquarie Group managing director and the group head of Asia Pacific, Viktor Shvets, has been warning clients that conventional capitalism is dead and that it will be replaced by some form of communism.

Viktor has never been one for niceties. Back in the 1980s, the then-stockbroking analyst ran the numbers on one of the nation's entrepreneurial powerhouses, the Adsteam group run by John Spalvins. He concluded it was a debt-laden house of cards that would collapse at the first hint of trouble.

For an industry that was all about selling stocks and prided itself on sycophancy, Viktor's no-holds-barred approach to research left his contemporaries reeling and his superiors scrambling. Adsteam, by the way, which then owned David Jones and Petersville Sleigh, did indeed collapse, shortly after the 1987 share market crash. Viktor was right.
His argument now is compelling. Financial market liberalisation has seen debt levels explode, at a national, corporate and personal level. Central banks have injected so much cash into the global financial system, in an effort to keep it afloat, that traditional business cycles have halted.

Past excesses, rather than being cleared, merely have been added to. And all the while, wealth has become ever more concentrated at the top.

The dotcom crash was solved by adding ever more debt. So too was the global financial crisis. Now we have the COVID-19 health crisis that has shut down the global economy.
.........
"Australia relatively unscathed"?

Maybe, but Oz is particularly dependent on overseas economies....and btw the surplus you mentioned never actually eventuated, it was projected to be achieved this year.
IOW there is NO surplus from which you can "probably draw from".

Frydenberg has been forced to postpone the budget update until Oct (he expected to be able annjounce a small surplus of $5 billion in May - peanuts cf with the size of the rescue package debt).... you can be sure the longed-for surplus which did not actually happen, WILL NOT happen for years to come.

In the meantime, MMT might rescue us all from the misery of the insane neoliberal government surplus dogma.

 

You are not suppose to feel the illness suddenly. It's not flu.

 

They warn about the severity of the disease, which had killed more that 17K people up to know in the U.S alone.
It's better to be prepared for such a grim situation than to think complacently that "everything is rosy, we are so good"

 

My point that Dr. Fauci was exaggerating all along was solidified when our "peak" hit only 60,000 people, and there was (as expected realistically) no Pearl Harbor moment.

 

How could he know that was the peak?

 

We were hearing the jargon that somehow we were going to witness a "Pearl Harbor" moment, even Fauci himself talked about this time of this month being the peak of the virus.