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MMT on massive derivative growth.

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  • Strongly Liberal Democrat
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    Steven Weber considers the huge derivative market an advantage. He gives a definition of derivatives and their purpose with pre 2000 conditions. If he is representative of MMT then MMT has a problem in ascribing a positive influence to a market that caused severe financial problems.
  • Strongly Liberal Democrat
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    Big falacies : Huge cash reserves and saving.

    Referring to companies having huge piles of cash. I asked the owner of a multi-million dollar company where his huge piles of cash are stored. Not one of his safe havens was described as a huge reinforced concrete and steel vault. All of his cash was in various institutions.

    Savings is a false way of telling the public that somebody else is investing your money for you. Who sponsors all the add extolling the virtues of saving. How many savers put their money in the safety of a bank realise that somebody is investing that money in the stock market. How many people realize that the banking system is based on the majority of money is not accessible. It is based on the customer using only the interest. How many people know that the huge derivative market is cutting down on the value of interest by using inflation to service the fees of the derivative market.

    Does the MMT address any of the real influences on an economy ? MMT and other theories are unemployment and low wage related. The financial system could not handle lower classes with higher incomes because that would put a demand on cash. That cash is already leveraged bytthe speculative market that needs positive balance sheets and credit to continue the unproductive economy. Putting more people to work at better pay would crash the system because their is no money to pay them. The only short term recourse is injecting money in the economy until inflation caused explodes. Reality of derivatives is continued stagnate or lowering of wages.

  • Strongly Liberal Democrat
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    Dallas, TX
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    I don't know who Steven Weber is or what you are talking about.

    Have you even read Warren Mosler's book?

    moslereconomics.com/wp-content/powerpoi...

  • Strongly Liberal Democrat
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    I have not read the book. Steven Weber was referenced in an article I was reading about MMT. I have been back tracking to find that article. In what I have read it says MMT looks at tax cuts as favorable to increase employment. Is that correct?
  • Strongly Liberal Democrat
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    Carlitos Wrote:

    I don't know who Steven Weber is or what you are talking about.

    Have you even read Warren Mosler's book?

    moslereconomics.com/wp-content/powerpoi...

    This link won't open for me. Is Moslereconomics.com the sight for Warren Mosler that references PMC?
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    Apologies for dredging up an old thread. I would consider myself well versed in MMT and I just thought it might be helpful to point something out.

    I don't know who Steven Weber is, but whatever Mr Weber advocates with respect to derivatives isn't a policy position supported by MMT. I say this because MMT is a descriptive explanation of the economy. People take that descriptive understanding and apply prescriptions based upon their understanding.

    So MMT doesn't advocate policy positions, rather people who claim to understand it do.

    I hope the distinction I'm trying to make is clear.
  • Strongly Liberal Democrat
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    Thanks for the answer. I am looking to see what the MMT description or assessment of derivatives might be. I believe in their post 2001 form that they are useless for an economy and actually destroy the essence of an economy by not only slowing the velocity of money but actually stagnating huge sums of money. Money that is vitally needed to facilitate an economy. Derivatives are investments about and not in the functions of an economy . I was hoping to find a meaningful descriptions of derivatives. Traditional economists falsely rely on the pre 2001 functions and benefits of derivatives. This is not as much of an old thread as it is a desperately needed thread.

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    I'm just not sure you can talk about a class of fiscal instruments in terms of a macro economic theory like MMT. I think the best we can do is discuss the effects of derivatives on the larger economy (as you've kind of done already) and draw inferences.

    With that said, MMT as I've come to know it is about understanding money as a tool of economic policy rather than a thing-in-itself. Financial transactions that generate wealth great wealth for the few without employing a proportional amount of labor and/or resources would mostly likely lead to (and has lead to) income disparity. Gross excess wealth in turn is often used to purchase influence, again in much greater in quantity than the number of people it represents and is corrosive to Democracy.

    If we had 8 players in a game of monopoly and I were the banker (not playing the game) and my job was to keep the game going as long as possible, I would give benefits to those at the bottom, and I would take more from those at the top. If you believe that one of the jobs of government is to help people rise up, the reality is that income disparity is one of the problems you have to deal with. Of course I have grossly oversimplified, but I think you get the gist of what I'm saying.
  • Strongly Liberal Democrat
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    Uncommon Cents, wow. Thank you for contributing to this site.
  • Strongly Liberal Democrat
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    Uncommon Cents Wrote: I'm just not sure you can talk about a class of fiscal instruments in terms of a macro economic theory like MMT. I think the best we can do is discuss the effects of derivatives on the larger economy (as you've kind of done already) and draw inferences.

    With that said, MMT as I've come to know it is about understanding money as a tool of economic policy rather than a thing-in-itself. Financial transactions that generate wealth great wealth for the few without employing a proportional amount of labor and/or resources would mostly likely lead to (and has lead to) income disparity. Gross excess wealth in turn is often used to purchase influence, again in much greater in quantity than the number of people it represents and is corrosive to Democracy.

    If we had 8 players in a game of monopoly and I were the banker (not playing the game) and my job was to keep the game going as long as possible, I would give benefits to those at the bottom, and I would take more from those at the top. If you believe that one of the jobs of government is to help people rise up, the reality is that income disparity is one of the problems you have to deal with. Of course I have grossly oversimplified, but I think you get the gist of what I'm saying.

    Again I think derivatives are the lead into total collapse and chaos. That is my view from my perspective. The view from the top is totally different. Having no use or satisfaction from gazing upon a huge factory that provides a livlihood and future for multitudes the collapse and chaos presented by derivatives is the end game. They, and they will be a significantly smaller number, will collect the last contribution from the last remaining 401k and the game will be over. Derivatives are simply a fee and the collection of fees has no liability. No different than the return on money spent to see a movie. Derivatives are the most descriptive example of what the stock market does and it is something that I have been challenging and criticising for half a century. And for that same time period all I have heard is: you don't understand, you don't get it, you don't know what you are talking about , you don't......... And all that time the only change has been in the speed with which they collect the fees. The simplest explanation to contradict the way big money operates is to compare the way the NFL or any major spectacle operates to the operation of big money. The spectator events do everything to maintain continuity. Big money and especially now with derivatives had and has no interest involving minutia to collect fees. They simply want it all and want it now. Caring nothing about collateral damage they charge toward the end. Post 2001 derivatives resulting from definition of the CFMA are a parasitic plague. And again I thank you for your time.

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    Haha....Thanks!

    Looking forward to posting quite a bit about economics. I really enjoy it and I think it's the lynch-pin in a successful society. I believe this because virtually anything worth doing can better be accomplished when people understand the real constraints of the system of economics the US operates.

    Energy, global climate change, infrustructure, unemployment, immigration, and a zillion other issues can't be adequately addressed unless we understand, as a nation, how to deploy labor and resources relative to our fiscal and monetary policy.
  • Strongly Liberal Democrat
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    Pensacola, FL
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    Uncommon cents, What you say below about monopoly is exactly what I have been saying for many years execpt I use professional spectator sports to analogize my point. Their object is to stay in business and that is done with rules to level the playing field. Without a level playing field one team could buy all the best players and win all the games. Then spectators would lose interest and then comes business failure. Professional sports is the handbook to run an economy and a country. A tried and proven way.

    Excerpt from uncommon cents: "If we had 8 players in a game of monopoly and I were the banker (not playing the game) and my job was to keep the game going as long as possible, I would give benefits to those at the bottom, and I would take more from those at the top."

    Professional sports is the perfect explanation for the need and success of regulations.

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    Interesting analogy. I like it. I'll give that some thought!
  • Strongly Liberal Democrat
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    I use that example when trying to explain to the group that parrots right wing talk stars advocating deregulation and mistrust of government. Typically they don't have much to say because contradicting one of their manifestos with one of their reasons for living not coming from the pulpit or radio is not rationable.
  • Strongly Liberal Democrat
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    "Uncommon Cents Wrote: Interesting analogy. I like it. I'll give that some thought!"

    Have you given any thought to regulating the economy to being a continuous institution rather than focused on an end?