Cenk and Young Turks Team: Your Deficit Hawkery is Unrealistic and Stands in the Way of Progressive Change


New Economic Perspectives has the article in the form of an open letter Cenk and Young Turks Team: Your Deficit Hawkery is Unrealistic and Stands in the Way of Progressive Change.

There is one area, however, where your coverage of news and economics is quite misleading and creates a trap for the progressive movement that you are elsewhere seeking mightily to foster and strengthen. You have uncritically brought into your coverage some mainstream Democratic and “moderate” Republican economic ideas about federal deficits, federal debt and tax cuts. You might feel you are representing a “solid” position because this locates the Young Turks firmly in the Establishment echo chamber about debt and deficits, as well as seems to put you in a good position to lambaste hypocritical Republicans and Trump.

This whole letter starts off in a very promising way. I feel that when it descends into the weeds to justify the first part, it defeats itself with what I have come to realize is a flaw in the way MMT is explained.

Here is the critique that I posted.

When are MMT proponents going to wake up to the fact that sector balance argument depends on a static accounting balance of assets and liabilities? This static accounting has a loan which issues money right away to the borrower balanced exactly by a debt that must be paid back many years in the future. These two items do balance each other eventually, but in anything shorter than the life of the loan, there is economic activity resulting from the time difference.

The private sector is perfectly able to generate enough liquidity to keep the economy humming along during a boom. The private sector is completely incapable to generate this liquidity in a crash. This is so obvious that it tends to wipe out your argument about sector static balances in an instant. You think you are talking about flows without recognizing the static underpinnings of your argument.

Unless you are working with a dynamic model like Steve Keen’s Minsky computer program, you are deluding yourselves in how a dynamic economy really works.

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