MMT learning update

MMTers would say that if a government expands its expenditure or deficit to the direction of infinity, it will reach the equilibrium, meaning it will stop at some point because it will cause inflation, people will change their behaviour, and The authority will change policy:

1. Inflation eliminates people from spending, reducing surpluses in the private sector. This naturally decreases the government deficit.
2. People’s behaviour changes if there is more money than enough because people would stop spending.
3. The government would change its policy to reduce its deficit when it thinks the policy is enough.

MMT is theoretically sound, but it ethically might become wrong because human beings will spend money. Therefore, it might be rational to think that there would be corruption.

An important question about MMT

MMT does not increase any actual assets or resources in the real economy.

How does it affect the actual economy?

It is not a problem for the U.S. government to give money to random or targeted people, but the problem is whether or not the system has enough ability to provide products to people who have increased demands due to given money.

About the influence of MMT on the real economy, by increasing demands for money, the demand will create jobs which possibly can boost productivity. Also, the needs possibly lead to enhanced efficiency of, for example, digging up resources and planting and cutting processes of wood. Therefore, in theory, eventually, it will increase tangible assets to some extent.

If given money increases people’s demands, it all makes sense. However, if it isn’t the case, MMT is merely an empty theory.

Another thing I want to write about here.

Another aspect of this is that while capitalism focuses on boosting the economy’s efficiency, MMT focuses on causing everyone’s happiness with abundant resources. MMT seems to put less importance on efficiency. If it is the case, MMT will likely be followed by a correction, recession or even depression because they mean to fix inefficiency in the economy.

I will research MMT further in the future. Stay tuned until I write a paper, an E-book or a lengthy article on MMT.