Larry summers IS the bastardization of modern monetary theory. He “questions Trumps motives” because Trump is the first politician in his life that does not agree with the largest wealth transfer in human history that Summer oversaw during his time in the Obama administration (I wrote on this in my stack about the size of the government)…
Larry summers IS the bastardization of modern monetary theory. He “questions Trumps motives” because Trump is the first politician in his life that does not agree with the largest wealth transfer in human history that Summer oversaw during his time in the Obama administration (I wrote on this in my stack about the size of the government) and the new largest wealth transfer in human history that he’s helping guide now
Imagine how good it has to feel to know you’ve disagreed with every decision Summers has ever made - it’s the key to sleeping well at night.
I hate calling it "Modern Monetary Theory," because what they're practicing isn't really MMT. Instead I refer to it as "bastardized modern monetary theory," or "BMMT."
We practiced true MMT during WWI, and part of the American people learned an amazing lesson from what they accomplished. We kind of practiced true MMT during WWII, but learned all the wrong lessons. In the 1970's, and then REALLY in the late 90's, we transformed to BMMT and the rest, as they say, is history.
The Keynesian economic theory of unadulterated investment in means of production has some very serious merit. Like many quality theories (Nudge theory being my favorite example of a great theory bastardized to manipulate people), once it was placed in the hands of government it was completely corrupted to be used purely for manipulation of power and personal gain. But we shouldn't trash the theory because the people overseeing its implementation are corrupt and incompetent (sort of like how we shouldn't throw out the theory of Christianity because the Vatican is corrupt as all get up).
Said very simply, we took a theory based on investment in the means of production (education, literal production capacity threshold increases, supply chain investments, etc...) and decided that it was way easier to print money and buy sh*t then it was to invest in building it and wait for the return on that investment.
Summers actually says it very well in that interview - they "don't like slow and steady growth." Which is the only sustainable kind. So instead they print money, buy tons of sh*t from China, and call it economic growth. It isn't economic growth, it's buying more stuff.
And that was the destruction of the US economy. Pre and Post WWI we actually used MMT - we INVESTED very heavily in the means of production - factories, labor investments, educational investments, infrastructure investments, etc... Now, I don't believe we should even have a 16th amendment, so I still think the free market would have better adapted to all these things than the government did, but post WWI it was still the free market making the vast majority of these investments and the government was simply paying for the transition to military production and then back to consumer production, which seems at least reasonable. Today? Today we have it ALL wrong, and we're going to pay for it. But people like Summers, who created it, will be too wealthy to care.
Well said, we need to increase supply (means of production) to tame inflation but our government prefers printing and buying stuff from other countries. All backwards.
Totally agree. The biggest thing Trump got right about the economy was understanding how broken it was. He realized that by simply walking and chewing gum at the same time (deregulate to significantly boost the short term economy and incentivize domestic investment to stimulate the long term economy) he could fundamentally alter the US economy. And it worked.
I wrote a whole stack on how much easier BIG problems are to solve than small problems, because even minor solutions look amazing when the problem is large enough and Trump realized that. Obama and Summers had so badly murdered the fundamentals of our economy it took only minor tweaks to look like a savior.
The big D dems are so incompetent (or, more likely, so blinded by their own wealth) they're right back to destroying all the same underlying fundamentals not realizing how easy that will, once again, make it for the next R who walks into office.
Whether Trump, or DeSantis, or whomever, all that person will need to do is open domestic energy production, make miniscule personal tax code changes to invigorate spending, and reintroduce the same onshoring fiscal benefits Trump provided last time to increase investment in localized production (something as simple as extending depreciation schedules) and away the economy will go.
The real test will be education. As I covered in a separate Stack, the power of the US economy was in the diversity of its economy. If we want that bad, we need diversity of education. We need regional focuses on regional expertise. Whomever gets that right won't get the credit at the time, but whomever can undue the damage caused by "No Child Left Behind" will be the real hero, and while it will take time to appreciate (like it's taken time to realize how much damage Obamacare actually did - with premiums increasing almost 200% since that law was passed), people in the know will view that person as possibly having saved generations of Americans.
Larry summers IS the bastardization of modern monetary theory. He “questions Trumps motives” because Trump is the first politician in his life that does not agree with the largest wealth transfer in human history that Summer oversaw during his time in the Obama administration (I wrote on this in my stack about the size of the government) and the new largest wealth transfer in human history that he’s helping guide now
Imagine how good it has to feel to know you’ve disagreed with every decision Summers has ever made - it’s the key to sleeping well at night.
MMT is on display today and is failing miserably.
I hate calling it "Modern Monetary Theory," because what they're practicing isn't really MMT. Instead I refer to it as "bastardized modern monetary theory," or "BMMT."
We practiced true MMT during WWI, and part of the American people learned an amazing lesson from what they accomplished. We kind of practiced true MMT during WWII, but learned all the wrong lessons. In the 1970's, and then REALLY in the late 90's, we transformed to BMMT and the rest, as they say, is history.
The Keynesian economic theory of unadulterated investment in means of production has some very serious merit. Like many quality theories (Nudge theory being my favorite example of a great theory bastardized to manipulate people), once it was placed in the hands of government it was completely corrupted to be used purely for manipulation of power and personal gain. But we shouldn't trash the theory because the people overseeing its implementation are corrupt and incompetent (sort of like how we shouldn't throw out the theory of Christianity because the Vatican is corrupt as all get up).
Said very simply, we took a theory based on investment in the means of production (education, literal production capacity threshold increases, supply chain investments, etc...) and decided that it was way easier to print money and buy sh*t then it was to invest in building it and wait for the return on that investment.
Summers actually says it very well in that interview - they "don't like slow and steady growth." Which is the only sustainable kind. So instead they print money, buy tons of sh*t from China, and call it economic growth. It isn't economic growth, it's buying more stuff.
And that was the destruction of the US economy. Pre and Post WWI we actually used MMT - we INVESTED very heavily in the means of production - factories, labor investments, educational investments, infrastructure investments, etc... Now, I don't believe we should even have a 16th amendment, so I still think the free market would have better adapted to all these things than the government did, but post WWI it was still the free market making the vast majority of these investments and the government was simply paying for the transition to military production and then back to consumer production, which seems at least reasonable. Today? Today we have it ALL wrong, and we're going to pay for it. But people like Summers, who created it, will be too wealthy to care.
Well said, we need to increase supply (means of production) to tame inflation but our government prefers printing and buying stuff from other countries. All backwards.
Totally agree. The biggest thing Trump got right about the economy was understanding how broken it was. He realized that by simply walking and chewing gum at the same time (deregulate to significantly boost the short term economy and incentivize domestic investment to stimulate the long term economy) he could fundamentally alter the US economy. And it worked.
I wrote a whole stack on how much easier BIG problems are to solve than small problems, because even minor solutions look amazing when the problem is large enough and Trump realized that. Obama and Summers had so badly murdered the fundamentals of our economy it took only minor tweaks to look like a savior.
The big D dems are so incompetent (or, more likely, so blinded by their own wealth) they're right back to destroying all the same underlying fundamentals not realizing how easy that will, once again, make it for the next R who walks into office.
Whether Trump, or DeSantis, or whomever, all that person will need to do is open domestic energy production, make miniscule personal tax code changes to invigorate spending, and reintroduce the same onshoring fiscal benefits Trump provided last time to increase investment in localized production (something as simple as extending depreciation schedules) and away the economy will go.
The real test will be education. As I covered in a separate Stack, the power of the US economy was in the diversity of its economy. If we want that bad, we need diversity of education. We need regional focuses on regional expertise. Whomever gets that right won't get the credit at the time, but whomever can undue the damage caused by "No Child Left Behind" will be the real hero, and while it will take time to appreciate (like it's taken time to realize how much damage Obamacare actually did - with premiums increasing almost 200% since that law was passed), people in the know will view that person as possibly having saved generations of Americans.