Wednesday, February 26, 2014

Mosler and his MMT

I did mention that we would again invariably discuss SOFV (suspension of fundamentals value) several posts ago, and my recent review of the work of Warren Mosler is impeccably timed to do so. In a nutshell, his Modern Monetary Theory is basically an outgrowth of Keynesianism for the Mensa class.

I think an argument can be made that our global central planners are acutely aware of MMT, may even be solidly convinced of its veracity, and are even testing its limits, in baby steps, so as to gradually convince the socio-political will of policy makers of it's sheer infallibility ... but only to the limits of their natural inclinations to resist it (before inching their way further forward to prove it's merits, in measured doses, as a counter-balance to collapse).

Then there is another camp that believes that MMT is the great socio-economic experiment that will ruin the separation of class, destroy all the underpinnings of generational wealth, and create a Utopia where wealth Giants will live in a world of equality, happy to break bread with the little people, as we all dance merrily in fields of poppy.

True, human beings will either eventually evolve into more altruistic beings, or we will destroy ourselves altogether. But no one reading this today will ever live to see the former, nor (hopefully) the latter.

And of course Mosler cannot explain why political will cannot be bent toward this "proven defeat" of Austrian economics. It is not a matter of obtuseness, but rather one of human conditioning. And yet, SOFV is clearly an example of MMT in practice. In fact, SOFV is Mosler's actual proof that indeed "The War is Over".

Think about it. What makes something "fundamental" after all? Fundamentals are what we accept as an incontrovertible norm, whereas Mosler questions the very nature of what is fundamental in the most basic cognitive sense.

And so, the central banks now taper, if for no other reason than to yield to the perception that indeed fundamentals cannot be suspended forever, and indeed we must yield to that thinking embedded in all of us that we must "pay the piper". Or else? Afterall, isn't that why "it isn't working anymore"??

But perhaps you should read up on some of the more interesting empirical arguments of MMT before drawing your own conclusions, and certainly before seeing Mosler and Kelton struggle so to answer the simple question posed, "Why doesn't the economic establishment embrace this theory?"

It is merely a matter of the deeply ingrained human condition of how we view wealth, and how we view the attainment of wealth, and how generational wealth owes its supremacy to the propagation of those traditional views, deeply intertwined among the roots of our own human nature and self-preservation instinct.

The answer to the question then, was already covered here, in the nature of being human.

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