efficient use of existing production platform ???

christy makes a point

" World War II.... nearly 10 million men of prime working age were drafted into the military, there was a huge skills gap between the jobs that needed to be done on the home front and the remaining work force. Yet businesses and workers found a way to get the job done. Factories simplified production methods and housewives learned to rivet."

"... demand is crucial ... jobs don’t go unfilled for long. If jobs were widely available today,
 unemployed workers would quickly find a way to acquire needed skills
 or move to where the jobs were located."

eaxactly madame exactly

gallant sir PK and the mmt windmills: "financeability matters too, even with fiat money"

"Let’s have a more or less concrete example.

 Suppose that at some future date — a date at which private demand for funds has revived, so that there are lending opportunities —

the US government has committed itself to spending equal to 27 percent of GDP,

 while the tax laws only lead to 17 percent of GDP in revenues.

 consider what happens in that case under two scenarios.

 In the first
, investors believe that the government will eventually raise revenue and/or cut spending,
 and are willing to lend enough to cover the deficit.

In the second,
for whatever reason, investors refuse to buy US bonds.

The second case poses no problem, say the MMTers, or at least no worse problem than the first
: the US government can simply issue money, crediting it to banks, to pay its bills.

But what happens next?

We’re assuming that there are lending opportunities out there,

 so the banks won’t leave their newly acquired reserves sitting idle;

 they’ll convert them into currency, which they lend to individuals.

 So the government indeed ends up financing itself by printing money,

 getting the private sector to accept pieces of green paper in return for goods and services.

 And I think the MMTers agree that this would lead to inflation;

I’m not clear on whether they realize that a deficit financed by money issue
 is more inflationary than a deficit financed by bond issue.

For it is.

 And in my hypothetical example, it would be quite likely that the money-financed deficit
 would lead to hyperinflation.


The point is that there are limits to the amount of real resources that you can extract through seigniorage.

 When people expect inflation, they become reluctant to hold cash,
 which drive prices up and means that the government has to print more money to extract a given amount of real resources, which means higher inflation, etc..

 Do the math, and it becomes clear that any attempt to extract too much from seigniorage

— more than a few percent of GDP, probably —

 leads to an infinite upward spiral in inflation.

In effect, the currency is destroyed.

 This would not happen, even with the same deficit, if the government can still sell bonds.


The point is that under normal, non-liquidity-trap conditions,
 the direct effects of the deficit on aggregate demand are by no means the whole story

 it matters whether the government can issue bonds or has to rely on the printing press.

 And while it may literally be true that a government with its own currency
 can’t go bankrupt, it can destroy that currency if it loses fiscal credibility.

Now, I am not predicting hyperinflation for the US

 — I am not Peter Schiff!

Most of our current deficit is cyclical, and even in the long run a modest return of political rationality would make the budget issue eminently solvable.

 But the MMT people are just wrong in believing that

 the only question you need to ask about the budget deficit
 is
whether it supplies the right amount of aggregate demand;

 financeability matters too, even with fiat money.

reminder: not re distribnution of wealth ....free distribution of wealth

the notion of redistribution suggests the wrong source

 the dollar equivalent of a producers  marginal/incremental  product
--as properly defined and calculated ---
 may belong to that  producer
 but hardly theequivalent of the  total product

the producers surplus belongs to society
the sunk costs of technology deserve their rightful appropriation
as the surplus of co operation does
and nature's bounty

in as much as society has produced it
what is the value of certain hours of production

the social dividend earned or unearned
  oughta come out of the producers surplus
 in fact oughta be all of the producers surplus

what is the value of a soft ware analyst's timte  on a desert island

dah tip ah dah ice boig

" we won’t always be in a liquidity trap. Someday private demand will be high enough that the Fed will have good reason to raise interest rates above zero, to limit inflation. And when that happens, deficits — and the perceived willingness of the government to raise enough revenue to cover its spending — will matter"
paul q kigman

pk laconia: approaching the trillion dollar gap

The Waste

with all this talk of stateless elites ..a corrective demarcation

".. if it is impossible. to toy in rude, simple fashion with the dream of a straightforward retreat from imperialism to “peaceful” capitalism, why not let these dreams, take the form of innocent speculation on “peaceful” “ultra-imperialism”? "

" Why not try to escape the acute problems that have been and are being posed by the present  epoch of imperialism  by dreaming up the possibility of it soon passing away and being followed by a relatively “peaceful” epoch of “ultra-imperialism” that will not require any “abrupt” tactics? "

" There is no doubt that the trend of development is towards a single world trust absorbing all enterprises without exception and all states without exception"

But

" this development proceeds in such circumstances, at such a pace, through such contradictions, conflicts and upheavals—not only economic but political, national, etc.—
that inevitably imperialism will burst and capitalism will be transformed into its opposite
 long before one world trust materialises,
 before the “ultra-imperialist”, world-wide amalgamation of national finance capitals takes place. "

V. Ilyin

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