On Nov 24, 2012, at 10:26 PM, Doug Henwood wrote:
>
> On Nov 24, 2012, at 10:14 PM, Shane Mage <shmage at pipeline.com> wrote:
>
>>> No he's not talking about that at all. The passage from Marx is
>>> about short-term cyclical stuff, not structural deficits of close
>>> to 10% of GDP. This is MMT la-la land, where you can just print
>>> money without bad consequences. The U.S. government is running a
>>> deficit of something like $1 trillion a year. This will shrink as
>>> the economy recovers, assuming it does, but it's still facing
>>> years of vast deficits. The Fed could print the money if it wanted
>>> to, but at some point it'd end up like a Latin American country in
>>> the 1970s with a 1,000% inflation rate. We're nowhere near that
>>> now, of course, but you can't do that shit forever. When half your
>>> deficit is financed from abroad, you actually do have to worry
>>> about what your creditors think.
>>
>> This is just Austrianism. Why should financing socially desirable
>> expenditure without regard to debt or deficits lead to that
>> inflationary nightmare when the political authority can tighten
>> money (through the Fed's overnight rate target) and constrict
>> demand (through taxation) whenever the economy reaches a state of
>> overcapacity? Meawwhile, as long as the economy is deeply under
>> capacity, deficit-financed demand necessarily raises real incomes
>> without pressure on costs and prices.
>
> This is just poor reading comprehension. "At some point." Can't do
> it indefinitely.
Not unless the economy remains indefinitely under capacity. Otherwise, no reason to do it *indefinitely.* So that "some point" simply doesn't exist.
Shane Mage
"Thunderbolt steers all things." Herakleitos of Ephesos, fr. 64