The Question I Wanted to Ask


New Economic Perspectives has the post The Question I Wanted to Ask by “J.D. Alt”.

I recently attended a panel discussion called by Bernie Sanders—and moderated by Stephanie Kelton—to discuss the crisis in Greece.
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“Does it strike anyone as odd that the discussion today has been only about money? Is it important at all what the real resources are that Greeks have within their own borders? Is it rational for Greece to borrow money in order to buy things the Greek people already own by right—their own labor, their own agriculture, for example? Or is it the case that Greece is so lacking in her own resources that she has to buy most everything her citizens consume from other countries? And, if that’s true, isn’t at least part of the solution for Greece to intentionally and systematically become more self-sufficient? Isn’t it possible, in fact, that if every nation strived intentionally to become more self-sufficient in food and energy—go “off-grid” so-to-speak—that a great chunk of the anthropogenic CO2 (which is threatening our very survival) would be eliminated? Or is the globalization of capital a more important goal than the well-being of seven billion people?”

I am sure that all followers of Modern Money Theory (MMT) have this very question on their minds.

This “J.D. Alt” post and the ensuing Q & A raise so many interesting issues, that I want to write several blog posts of my own about those issues.

As long as we are on the headline title of the post, this is a good place to interject the question I would like to ask.

How does MMT account for the Mark-to-Market method of valuing just about everything? An example of what I am talking about is that when there is one trade of a stock on the stock market, everybody who owns any shares of that company assumes that their individual shares are suddenly worth that price.

Their behavior on how they spend or save their money is quite tightly correlated to how much they think they have. Mark-to-market is as fictitious as they come (although there aren’t necessarily any better measures), so here is a perfect example of “money” being created exogenously from all the sectors that MMT enumerates.

I have asked this before, but I have yet to receive an answer. In case you don’t recognize the relevance of the question, this is tightly tied to the idea of sector balances mentioned in several comments. The mark-to-market issue is the one fly in the ointment that seems to be ignored by MMT in its discussion of sector balances.

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