Wednesday , August 5 2020
Home / Robert Murphy /MMT Disputes

MMT Disputes

Summary:
Regarding my recent review of Kelton’s MMT book, Transformer here in the comments writes: I just realized that the disconnect is that Bob is interpreting the phrase ‘how many dollars the federal government has added to people’s pockets without subtracting (taxing) them away’ in a way different to what (I think) Kelton intended.I believe that Kelton intends it to mean ‘net dollars created via deficits at any point in the past irrespective if they were subsequently swapped for bonds’ .But Bob interprets it as “dollars currently in existence’ . That is why Bob talks about ‘the outstanding Treasury securities [] sitting on the Fed’s balance sheet’ as that would indeed match that definition. Yes, that’s exactly what’s going on. I have two defenses of my

Topics:
Robert Murphy considers the following as important:

This could be interesting, too:

SchiffGold writes Peter Schiff and Johnny Bravo: The End of the Dollar Standard

Robert Murphy writes BMS ep 131: Rohan Grey Deep Dive on MMT and Trillion Dollar Platinum Coin

Scott Sumner writes Monetary economics: The three heresies

Robert Murphy writes BMS ep 128: Narration of My MMT Review

Regarding my recent review of Kelton’s MMT book, Transformer here in the comments writes:

I just realized that the disconnect is that Bob is interpreting the phrase ‘how many dollars the federal government has added to people’s pockets without subtracting (taxing) them away’ in a way different to what (I think) Kelton intended.

I believe that Kelton intends it to mean ‘net dollars created via deficits at any point in the past irrespective if they were subsequently swapped for bonds’ .

But Bob interprets it as “dollars currently in existence’ . That is why Bob talks about ‘the outstanding Treasury securities [] sitting on the Fed’s balance sheet’ as that would indeed match that definition.

Yes, that’s exactly what’s going on. I have two defenses of my interpretation of what I originally took Kelton to be saying.

  1. Under the more moderate approach, we could say the same thing about a corporation as we’re saying about the US Treasury. E.g. “the current stock of debt owed by Google indicates how many dollars Google spent into The-Rest-of-the-World over and above how many dollars Google withdrew from The-Rest-of-the-World.” The accounting works the same way, at least ex post.

2. Just in terms of plain English, Kelton’s formulation is very confusing. I’m trying to think of a good analogy from a non-financial context. Does this help? “The amount of toast produced by the cook is a record of how many pieces of bread the cook put into the toaster without taking them out.”

Robert Murphy
Christian, Austrian economist, and libertarian theorist. Research Prof at Texas Tech and author of *Choice*. Paul Krugman's worst nightmare.

Leave a Reply

Your email address will not be published. Required fields are marked *