On Thu, 2 Oct 2014 13:11:43 -0400, "Jim Wilkins"
wrote:

"Ed Huntress" wrote in message
.. .

...
National debt is one of the strangest aspects of the whole thing.
There is no way to sort it out by common sense because common sense
has proven to be wrong, time after time. Common sense is based on
experience and we have little experience with the amounts of debt
that
we're talking about here. It's like the old story about personal
debt:
If you owe the bank $10,000, you have a problem. If you owe the bank
$10 million, the bank has a problem....
--
Ed Huntress

Do you agree with this?
http://en.wikipedia.org/wiki/Modern_Monetary_Theory

It seems a logical and well written explanation to me, though I don't
know enough to find flaws in its speculations.

I'm not sure anyone can judge the theory about how money is controlled
(circuitism is a competing theory, and there are others). Most of the
theories that underlie all of these systems are over my head.

However, this modern version of "chartalism" does explain the
*mechanisms* by which money is created, as do other modern theories.
They all seem to agree that it's really a system of credit. Between
chartalism and circuitism, as well as others, there are disagreements
about *whose* credit is controlling the system. And where they
substantially differ, it seems to me, is in explaining what keeps it
under control.

But the basic thing that most of us have to learn is what money really
represents today. Adam Smith might argue that it's always been the
same thing, but I'm not qualified to get into that. The fact is that
when we went from the last remnants of "metalism" to outright fiat
money, very little changed in terms of how the economy functions.

So, obviously, gold or silver are not important. Providing liquidity
for growth is important. Avoiding deflation, and limiting inflation to
low levels, are important -- but the latter sometimes seems
disconnected from economic activity and growth. Deflation, however, is
an economy-killer, as most economists would agree.

So the MMT as desribed doesn't disagree with other theories in that
regard -- at least, those of the last 80 years or so. I can't judge
its veracity beyond that.

--
Ed Huntress