Doesn't MMT actually prescribe the exact opposite? One central "layman's" understanding I have about MMT (and honestly happy to be corrected if I'm wrong) is that, for countries that control their own currency, you don't really have to care much about deficits and debt in low inflation environments. You only have to worry about them in as much as they relate to inflation.
Well, inflation is currently sky-fucking high, so right now is when MMT would say you do have to worry about deficits and debt.
Yeah, having a quick read of the article, nothing in this has anything to do with MMT, apart from the fact that MMT is a theoretical framework of how economies work (including in the models both a banking system, and the interactions between Government, domestic and international sectors, that all actually follows accounting rules) that can help understand why what happened was bad...
Inflation wasn’t terrible in Korea and has likely already passed its peak. The decision to default on the bonds was clearly about servicing the debt and the impact of debt payments on the government’s ability to create a budget.
It's unlikely that this politician explicitly believes in MMT, but the belief that you can somehow wish debt away in in-line with MMT. And of course, any philosophy exists within the zeitgeist of the times. After the GFC, a lot of people in the world started to believe that money is somehow imaginary.
> the belief that you can somehow wish debt away in in-line with MMT
The belief that you can wish debt away is rooted in the Keynesianism/Reaganomics of the past five decades. MMT basically just accepts the realpolitik that the enormous handouts to the financial industry will never be stopped, and says that we might as well use some of the new money deliberately. From my economically conservative Austrian perspective, at least MMT appears intellectually honest. MMT also corrects/shortens the feedback path from monetary creation to price inflation, rather than relying on the roundabout feedback path that has created this ever-growing asset bubble.
It would be more appropriate to say that Keynesians understand the system well enough to say that it is impossible to get rid of debt without negative interest rates so the only way out is to have slow burning inflation and the most effective way to generate inflation is not via the central bank but by government spending.
I advocate replacing slow burning inflation with negative interest on cash. When that is done, debts can be repaid.
I think you'd be surprised the degree to which many far right politicians would be supportive of some versions of MMT.
MMT is attractive to essentially all politicians. It says you can spend without consequences. You don't have to spend that on a welfare state although many MMT advocates take this line. You could just as easy spend it on the military or surveillance.
Really? I thought it said that money exists because a government prints it, so a government cannot default on a debt denominated in its currency unless it chooses to, and that inflation is a second order effect resulting from the money supply increasing faster than the pool of goods and services it's chasing.
What you tend to see is some MMT proponents use this argument to state that government deficits aren't a problem, since they can't default on their debt. But the debt can still be a problem, not because a government indebted in its own currency can't default, but because it still has second order effects...
But we have seen that countries who did more QE had even less inflation like Japan. The reason for that is that interest rates hit zero and therefore debt does not grow from interest which means less inflation is needed to erode debts.
The second order effects that limit money creation are highly fluid but the fact that governments with their own currency cannot default is set in stone.
I think that was always the main argument against MMT prescription "spend like there is no tomorrow if the inflation is low". Politicians and population love only this part and will ignore/fight the other one.
Far right doesn't mean reagan ist anymore. MMT is quite popular among populists, probably because they hate the elite and MMT is pretty explicitly about elite economists being wrong.
