To truly grow democracy (as against plutocracy) within an MMT framework, policies would need to redirect spending toward productive investments that broadly benefit society while implementing measures to curb financial speculation and asset-based wealth concentration. Without such reforms, MMT in practice risks perpetuating an asset-dominated economy that entrenches wealth in the hands of a few, sustaining a plutocratic structure that marginalizes the majority?
MMT is always in practice. How you apply it is what matters. So, I wouldn't call it MMT praxis as an ideological lens as it can be used for opposing ideologies as well.
At present Australia is grappling with high household debt levels and a Reserve Bank maintaining a high interest rate, citing underlying inflation concerns. And at the same time the economy is experiencing both fiscal and trade deficits. Please explain how MMT can help out ..
First we have a fiscal surplus and a small trade deficit.
Second you seem to be implying a fiscal deficit and trade deficit together is a bad thing. This is a neoclassical assumption known as the twin deficit hypothesis.
It assumes stable private sector savings and that the fiscal deficit affects the trade deficit dollar-for-dollar. The reality is more complex than that.
First, the private sector typically desires to net save (run a surplus). This is crucial for building wealth and avoiding bankruptcy. When we include this reality, we can see that government deficits are often necessary to support private-sector savings, especially when there's a trade deficit.
Second, during different business cycle phases, these balances shift naturally. For instance:
During expansions, government deficits tend to shrink due to automatic stabilisers (more tax revenue, less welfare spending)
Private sector behaviour changes with economic conditions
External (trade) balances respond to various factors including exchange rates and global economic conditions
Third, the relationship between these sectors is complex and involves multiple feedback loops. It's not a simple one-way causation as the Twin Deficits Hypothesis suggests.
The reality is that these balances are interdependent, and changes in one sector's balance will necessarily affect the others, but not in the simplistic way the Twin Deficits Hypothesis suggests.
To truly grow democracy (as against plutocracy) within an MMT framework, policies would need to redirect spending toward productive investments that broadly benefit society while implementing measures to curb financial speculation and asset-based wealth concentration. Without such reforms, MMT in practice risks perpetuating an asset-dominated economy that entrenches wealth in the hands of a few, sustaining a plutocratic structure that marginalizes the majority?
MMT is always in practice. How you apply it is what matters. So, I wouldn't call it MMT praxis as an ideological lens as it can be used for opposing ideologies as well.
At present Australia is grappling with high household debt levels and a Reserve Bank maintaining a high interest rate, citing underlying inflation concerns. And at the same time the economy is experiencing both fiscal and trade deficits. Please explain how MMT can help out ..
First we have a fiscal surplus and a small trade deficit.
Second you seem to be implying a fiscal deficit and trade deficit together is a bad thing. This is a neoclassical assumption known as the twin deficit hypothesis.
It assumes stable private sector savings and that the fiscal deficit affects the trade deficit dollar-for-dollar. The reality is more complex than that.
First, the private sector typically desires to net save (run a surplus). This is crucial for building wealth and avoiding bankruptcy. When we include this reality, we can see that government deficits are often necessary to support private-sector savings, especially when there's a trade deficit.
Second, during different business cycle phases, these balances shift naturally. For instance:
During expansions, government deficits tend to shrink due to automatic stabilisers (more tax revenue, less welfare spending)
Private sector behaviour changes with economic conditions
External (trade) balances respond to various factors including exchange rates and global economic conditions
Third, the relationship between these sectors is complex and involves multiple feedback loops. It's not a simple one-way causation as the Twin Deficits Hypothesis suggests.
The reality is that these balances are interdependent, and changes in one sector's balance will necessarily affect the others, but not in the simplistic way the Twin Deficits Hypothesis suggests.
The best way to remember this is that there are only three ways to put the private sector in surplus:
Run a government deficit & a current account (trade) surplus
Run a government deficit > current account (trade) deficit
Run a government surplus < current account (trade) surplus
and not to forget that distribution of the private sector surplus (wealth) matters.