The Game is Rigged: Modern Monetary Theory & The Great Reset

a reply to: xpert11

Great contribution xpert, I am not as privy to Australia/New Zealand's history in all of this so thanks for those details and helping connect the dots to other historical events/transitions.

a reply to: cenpuppie

Great post, I appreciate you taking the time to thoughtfully reply and your advice to "don't study only that" is sound advice.

a reply to: FamCore

John Maynard Keynes was one of the biggest influencers of modern economists.

Keynesian economists generally argue that aggregate demand is volatile and unstable and that, consequently, a market economy often experiences inefficient macroeconomic outcomes—in the forms of recession, when demand is low, and inflation, when demand is high. Further, they argue that these unsettling cycles can be mitigated by economic policy responses coordinated between government and central banking. In particular, fiscal policy actions (taken by the government) and monetary policy actions (taken by the central bank), can help stabilize economic output over the business cycle.[6] Keynesian economists generally advocate a market economy – predominantly private sector, but with an active role for government intervention during recessions and depressions.[7]

Basically, by offering cheap debt and flooding the economy with capital (i.e. stimulus), the thinking is that a market economy can be jolted out of a recessionary/contraction period by putting more money into the system. With more disposable income, consumers will increase their purchases, creating more demand which in turn boosts the production side. In recent years, with programs like Quantative Easing after 2008 and now the COVID payouts, we see that the only tool in the toolbox is "printing money".

This is obviously inflating a huge debt bubble, and that's all fine and dandy when interest rates are kept low. Should interest rates spike, and the debt is no longer essentially free, that is when we will see a major problem, and massive correction in the equity markets.

I haven't spent time investigating this MMT, but what it seems like to me on the surface, is that economists have done hand waving and swept under the carpet the delicate and risky proposition of unwinding the debut bubble created from quantitative easing, but not wrecking the economy in the process.

"Heck, why worry about bubbles? No need to try to deflate them in a careful manner. Just keep printing money, and when the bubble pops, what's the worse that can happen? A few years of economic hardship for the plebes (during which time more and more assets and wealth are scooped up and consolidated by those with free capital, cashing in on fire sale prices). With the full force of the US military at our beck & call, WHO CARES"

This has always been the detraction of Keynesian economics: government intervention in a slumping economy is merely delaying the inevitable by artificially inflating market forces, meanwhile, there is no exit strategy or methodology for disengaging the printing of more money when it's no longer needed. Looks like the MMT folks have solved that conundrum: just don't ever disengage the government from printing more money, ever.

a reply to: SleeperHasAwakened

I think your synopsis is on the money... the problem is that "Stimulus" programs like this are akin to trying to fill a sieve with water and carrying it over a distance to try to go and fill up a bath tub... the currency units ON PAPER that are part of these enormous spending bills do NOT result in all of those dollars going into the economy, in fact only a small percentage will end up "stimulating" and the rest will go overseas and into the pockets of our parasitic politicians and their constituents.

I'm preaching to the choir here but why the hell don't more American Citizens recognize the ineffectiveness of government? It is maddening

a reply to: SleeperHasAwakened

Keynes never had to consider that people spending stimulus money on consumer goods imported from China. One wonders why anybody would want to boost Chinese domestic production. Low interests rates penalise savers. In New Zealand, the OCR is 0.25% [!] Another aspect of New Zealand's economy comes to mind and considers the economic effects of the following question.

If people didn't face maddening living/housing costs, and they saved enough money for retirement?

The increasingly online retail sector would take a hit. The tax system would require an overhaul, for reduced spending equates to less revenue from GST.

The key to implementing the free market reforms was the relationship between Prime Ministers and Treasurer/Minister of Finance. In Australia, Paul Keating served as Treasurer in the Hawke Government. Across the Tasman, Roger Douglas was the Minister of Finance for a time. On the flip side, John Howard served as Treasurer under Fraser. Keating and Howard undertook stepping stones to becoming Prime Ministers of Australia. Notable, neither Kevin Rudd and Julia Gillard served as Treasurer, before taking the top job. Yet the Rudd - Gillard axis destroyed the ALP at the federal government level.

The Covid-19 Pandemic economic downturn re-enforces my belief that in echoes of the 1970s, the current set of financial tools are outdated. In the very least, New Zealand is setting economic growth too low to meet our infrastructure requirements, restructuring the country around the economic square. Infrastructure, security and education sit at the bottom of the square. Economic growth shapes the top of the square.

The first problem is that the government has no interest in freeing people from the debt/slavery trap. In New Zealand, the cost of living is a tax, if not a form of oppression. Shifting investments from low profit existing rental properties and consumer spending to infrastructure, including new housing, is the goal. Arguable, education reform is the toughest nut to crack. Providing they are not sidelined, the union movement will avoid outright opposition to construction projects. Nevertheless, the teacher unions who ensured the axing of charter schools proved that self-interest wins out over education quality.

A separate stock exchange free from speculation and deals with tech startups and infrastructure is the forum for investments. For numerous reasons, New Zealand withdraws from One Belt, One Road and bans China, Russia, and Iran from the market place. An agreement among New Zealand's partners and allies ensures that profits are only taxed once. Outside of New Zealand, the proposal for fast rail between Melbourne and Sydney, Australia is an excellent candidate for this economic model.

The U.S. joining the new trade/tax agreement furthers Australia's ability to diversify trade away from China. The U.S. and NZ's economic ties are also deepened, without congress removing agricultural subsidies and tariffs.

Efforts to drive innovation in New Zealand rely on successive governments taking the place of venture capitalism. The money spent on that lunacy is needed to rebuild the NZDF for the 21 century. Until New Zealand students no longer lag behind international competitors in maths and science, innovation will remain stifled.

a reply to: FamCore

The climate change doomsday cult intends to turn New Zealand into the South Pacific's basket case. Putting aside banning the import of combustion engines cars by 2032, the ideas on the table are insane.

In economic terms, the people behind the Climate Change Commission belong in an asylum. Planting new forestry en mass requires the type of government subsidies that existed before 1984. Before the economic reforms of the 1980s, the New Zealand government paid farmers to make use of unproductive land. Returning to the past's failed economic policies and not tacking the problems in front of us is a recipe for disaster.

Tackling the rest of the sickness is too far away from the topic of this thread.

originally posted by: FamCore
To expand on the MMT roadmap (in the US at least), the grand plan is to merge the Balance Sheets of the Federal Reserve and the US Treasury, and having US citizens have their own "account" directly tied to the Federal Reserve where there will be "digital-only dollars" and complete control & visibility for TPTB to observe & tax every single transaction of yours.

Excellent post, thanks, and it brought to mind something I've been thinking about...

Something definitely is coming, either this (what you described), or some other kind of reset, but something... is... coming.

Whatever it is, I'm of the opinion it will involve some kind of quantum crypto currency.

But more importantly, I'm betting it will be something that is not bitcoin. That means, when whatever is coming, arrives, bitcoin will crash to zero almost overnight.

Thinking about this makes me think of the day I almost put $1,000 into bitcoin back when it was .00001$ per coin. Now I see another (opposite) opportunity - I just wish I knew how to safely short bitcoin - or had enough insider info to be able to pinpoint within a few weeks/months when the fateful day will arrive.

a reply to: FamCore

The outcome is the same they might call it "Modern Monetary Theory" but it's still an excuse to print like there is no tomorrow simply because that's all they can do at the end of a cycle. Just keep kicking the can until the loans are called in. They have been kicking this can for so long it seems like they can do it forever. It will end just like everything else. The only way out is to exchange Fiat for Silver or Gold, which at the moment is the gift that keeps on giving, the suppression of the metals below their true value has never happened before but it seems to be essential for keeping the world as we know it chugging along. Either way all con jobs end, when the return isn't worth the effort.

US can continue printing whilst USD remains the world reserve currency because that printing is exported to the remainder of world as inflation. Countries that have tried to exit the world reserve currency run the risk of economic sanctions and/or military action (You are either with us or against us). With petro dollar an important facit in maintaining economic supremacy.

We have seen increasing, asymptotic, parabolic credit creation kicked up a notch every year.

In 1980 global debt was around 10 trillion. In 2019 it was 255 trillion. That is a staggering 2500% increase.

And yet since 1980 prices have "only" increased 214% (according to official figures anyway...I am sure it is much higher but not 25 times higher like debt).

If they can jack up credit to 25 times it's old size and just see prices double or even quadruple over the same period, it means the connection between money creation and price inflation is weaker than we think.

Maybe there is something to MMT after all...