fbonetti's comments

That's hilariously accurate.

You’ve got it backwards when it comes to residential real estate. More people become renters during a recession. Vacancies reduced dramatically after 2008.

https://fred.stlouisfed.org/series/RRVRUSQ156N

You also seem to be arguing that centrals banks don't create new money, which is an odd assertion, especially for a proponent of MMT. From the article you posted:

> "QE involves a shift in the focus of monetary policy to the quantity of money: the central bank purchases a quantity of assets, financed by the creation of broad money and a corresponding increase in the amount of central bank reserves. The sellers of the assets will be left holding the newly created deposits in place of government bonds."

> "QE has a direct effect on the quantities of both base and broad money because of the way in which the Bank carries out its asset purchases. The policy aims to buy assets, government bonds, mainly from non-bank financial companies, such as pension funds or insurance companies. Consider, for example, the purchase of £1 billion of government bonds from a pension fund. One way in which the Bank could carry out the purchase would be to print £1 billion of banknotes and swap these directly with the pension fund. But transacting in such large quantities of banknotes is impractical. These sorts of transactions are therefore carried out using electronic forms of money."

> My question is: if a government deficit is adding money to the economy, what a government surplus is doing? That's the meaning of "taxes destroy money".

It's rare for the federal government to run a surplus, but it did have one for four years straight in 1998, 1999, 2000, and 2001[1]. During that that time, the monetary base increased 32%[2] and the M2 money supply increase 23%[3].

No matter how you look at it, despite the government running a surplus, the money supply continued to increase. How do you square that with your claim that surpluses remove money from the economy?

[1] https://fred.stlouisfed.org/series/FYFSD

[2] https://fred.stlouisfed.org/series/BOGMBASEW

[3] https://fred.stlouisfed.org/series/BOGMBASE

> But if there's a fall in aggregate demand at a given price level, there are _fewer_ dollars chasing the same number of goods for a period of time. So if government spending is greater than taxation for that given period, it doesn't necessarily cause inflation.

I actually completely agree, but with a caveat. It may not cause inflation in terms of this years price level being higher than last years price level, but it will cause a decline in the purchasing power of the dollar. For example, let's say in the absence of intervention the price level would fall by 2%, but with intervention the price level would stay the same. That's still a 2% decline in purchasing power.

> The "monetary base" increases because of the way they define the monetary base.

The monetary base is defined as the sum of all currency (including coin) plus bank deposits. It increases or decreases completely at the Fed's discretion, because the Fed has the unique ability to create reserves. This isn't some semantic trickery.

> So, what you are saying is that government deficits are inflationary because they add money to the economy, but, on the other hand, government surplus don't retire money from the economy?

Honestly I don't know what point you're trying to make, or what deficits or surpluses have to do with anything. A deficit or surplus is merely the delta between total revenues and an arbitrarily defined budget.

Inflation is caused by additional dollars chasing the same number of goods. Printing money does not create goods and services - it merely decreases the value of each dollar relative to everything else. If I had a machine that could create an unlimited amount of gold at zero cost, the price of gold would approach zero if I made and sold enough of it. I don't know why you would think dollars would be any different.

> Yes, but the assets the Fed buy (when practicing QE) are in the accounts of the commercial banks in the Fed. After buying them, those assets are not there anymore, and, instead there is money (1). And money is basically a government bond that pay 0% interest.

Yes, the bank exchanges an asset (like a treasury) in exchange for reserves (base money). The question you need to ask yourself is, where did those reserves come from? Another question you need to ask is, when Fed engages in QE, why does the monetary base increase?

> A good aspect of MMT is that it explains how the Treasury spending more than it takes in in taxes means more money is created into the economy than is deleted out of the economy. This is the more important thing to focus on.

This is one of the most absurd claims of the supposedly "descriptive" MMT. Taxation does not delete money from the economy. When the federal government collects taxes, it doesn't take that money and burn it in a giant pit. It turns around and immediately spends that money.

Yes, the federal government does not need your tax dollars. Yes, they technically have the ability to print an infinite amount of dollars. But that doesn't support the claim that taxation removes money from the economy.

> Some of the MMT professors also do a good job explaining how QE (quantitative easing) doesn't create new net financial assets into the system, it just shifts around assets in accounts at the Fed.

This is completely false. The Fed creates new reserves (base money) in order to buy assets.

https://fred.stlouisfed.org/series/BOGMBASE

Buy the stuff the Fed is propping up - stocks and real estate.

Adults are capable of deciding risk/reward factors when selecting a job. There are many jobs that are well known for being grueling, and yet people still sign up to take those jobs because they value the compensation more than other considerations.

The thrust of ABC is that artificially cheap credit, induced by the central bank, causes malinvestment. Interest rates are signals of risk. When you artificially lower interest rates, people take on more debt than they normally would and invest in capital improvements that only make sense in a low interest rate environment. When the central bank attempts to raise those interest rates to the natural level, or there’s a large change in consumer preferences that causes a drop in aggregate demand, all of those over leveraged business fail en masse, which results in layoffs, reduced production, and falling asset prices. It has nothing to do with inventory.

The Fed artificially lowered the interbank rate to zero percent for ~7 years after 2008, bought other treasuries across the yield curve, and bought trillions in mortgage backed securities. This created an environment that disincentivized saving and encouraged borrowing for both individuals and businesses alike. The market growth over the past 10 years was completely fueled by this artificially cheap credit. The economy was already extremely fragile before the coronavirus hit due to how over leveraged everyone was.

If you aren't happy with Amazon, Facebook, Google, Apple, etc, you can choose not to be a customer of them. You can't opt out of paying taxes.

You can have these services without sacrificing privacy, but you have to pay a monthly subscription fee. Here's one example:

https://mewe.com/

> people simply value the utility they gain out of these tools higher than privacy.

Exactly. I bet if Facebook offered a paid, ad-free version of their service, 99.9% of people would not use it. The monetary value of Facebook is $0 for most people.

Don't use Elm at your startup. It's been dead for a long time. Pick something that has a huge community behind it, like React.

I think people have already taken the good parts of Elm and implemented those ideas in other frameworks. Redux was inspired by the Elm, for example. I personally like using React, Redux, and Typescript. It's nowhere near the purity of Elm, but it's good enough.

Thanks, I'll take a look at this paper.

I don't disagree with you that the government is unconstrained in regards to how much it can spend. The government doesn't need to tax or sell bonds at all. It can just print money and force everyone at gun point to use it.

But you still haven't provided an argument as to why you believe taxation destroys money. Taxation merely transfers dollars from one entity to another. It doesn't change the amount of base money in existence.

> The effect of taxation is precisely the same as that of destroying money

No it's not. The effect of taxation is the same as theft. The thief gains and the victim loses, but the overall purchasing power of the dollar is unchanged. Destroying money would increase the purchasing power of the dollar.

> On the other side of the transaction, for the government, as you recognize, taxation presents no increase in buying power.

Taxation is one of three ways the government can earn revenue (taxation, selling bonds, or printing money), so yes it does increase buying power.

> To directly compare the two scenarios - taxation and burning money - private entities can no longer use the money and government can still spend as much as it wants subject to self imposed limitations. There is no functional difference.

Those two aren't comparable. Burning money would mean that nobody can spend that money. Money gained through taxation can still be spent (and is spent).

If the government collected taxes but never spent that money, I would concede that the net effect is the same as destroying money. But that clearly doesn't happen. The government DOES spend the money it garners through taxation. So the claim that taxation destroys money doesn't make any sense.

You're missing the point of the example. Substitute tomatoes with something with a long shelf life, like Spam. It doesn't matter. The point is that the people utilize leverage (loans) in order to fund investments that will yield a return greater than the interest rate paid on the loan. People don't use leverage to buy milk, cigarettes, and gasoline, which are the types of goods tracked in the Consumer Price Index (CPI). They use leverage to buy assets. So when people say that inflation has been low despite the unprecedented amount of money printed over the last 10 years, they're only looking consumer goods and not assets.