A crazy idea to counter another crazy idea

[Goo For You]

This is simply brilliant. Krugman suggests minting a trillion dollar platinum coin to circumvent the debt ceiling, and Sumner agrees, calling the ceiling a "logical monstrosity". Notice the bipartisan consensus among top economics bloggers.

[I invented that]

Did Krugman really come up with this idea?
http://pragcap.com/lets-end-this-deb...a-1-oz-1t-coin

[I invented that]

My question is, if the debt is just nuisance paperwork why do we have to pay taxes? Are taxes really just punitive?

[Goo For You]

Did Krugman really come up with this idea?
http://pragcap.com/lets-end-this-deb...a-1-oz-1t-coin

Are you an MMT guy? That's pretty rad on a conservative-leaning board like this.

[Goo For You]

My question is, if the debt is just nuisance paperwork why do we have to pay taxes? Are taxes really just punitive?

Dude you just linked to a guy whose brand of economics believes in (literally) unlimited govt spending...

What am I missing here?

[BudBudha]

Are you an MMT guy? That's pretty rad on a conservative-leaning board like this.

English please

[I invented that]

Dude you just linked to a guy whose brand of economics believes in (literally) unlimited govt spending...

What am I missing here?

the absurdity

[Goo For You]

English please

Modern Monetary Theory. My apologies. It's a radical leftist school of economics propagated by the guy in the above poster's link. I'm not familiar with the specifics so this is probably a gross mischaracterization, but from what I gather, it argues that we can control the economy through clever govt accounting -- "fixing the books", as it were, to create full employment and so forth.

[Goo For You]

the absurdity

Oh ok. Usually when a person links to a post and says "this guy said it first" they agree with him.

[I invented that]

Modern Monetary Theory. My apologies. It's a radical leftist school of economics propagated by the guy in the above poster's link. I'm not familiar with the specifics so this is probably a gross mischaracterization, but from what I gather, it argues that we can control the economy through clever govt accounting -- "fixing the books", as it were, to create full employment and so forth.

hard to believe krugman was aware of such shenanigans

[I invented that]

Oh ok. Usually when a person links to a post and says "this guy said it first" they agree with him.

my point was, it's not krugman's idea and it's not shocking he would utter it.

[Goo For You]

Now that I know where you're coming from, allow me to reply:

My question is, if the debt is just nuisance paperwork why do we have to pay taxes? Are taxes really just punitive?

Debt (that is denominated in domestic currency) has implications regarding long-run productivity, but it simply doesn't pose a default risk. This is about as uncontroversial statement as there is in the whole of economics. It is pretty much a given that the next generation of textbooks will feature an anecdote about a time when politicians put a noose around the country's neck, and tried to kick the chair from under it.

[Goo For You]

hard to believe krugman was aware of such shenanigans

Krugman actually sides pretty adamantly against them. He's much closer to the right-wing Friedmanite camp.

[BudBudha]

Related topic

Are both of you bullish or bearish on Gold ?

[I invented that]

Now that I know where you're coming from, allow me to reply:



Debt (that is denominated in domestic currency) has implications regarding long-run productivity, but it simply doesn't pose a default risk. This is about as uncontroversial statement as there is in the whole of economics. It is pretty much a given that the next generation of textbooks will feature an anecdote about a time when politicians put a noose around the country's neck, and tried to kick the chair from under it.

do you believe increased debt has no serious or long term consequences?

[Goo For You]

Related topic

Are both of you bullish or bearish on Gold ?

Considering the amount of brainpower behind all those high frequency trading algorithms and what not, I seriously believe you pay a lot less rake by gambling at a casino.

do you believe increased debt has no serious or long term consequences?

Like I said, it affects productivity, but it's hard to say at what point it becomes an issue. I propose we go by empirical evidence: What do you see when you look at Japan, a country that has a debt to GDP ratio of 250%?

[Goo For You]

Oh and in the light of present knowledge, when talking about economic efficiency, punitive may well be the right word to describe the current tax regime for most people.

I know, this is all very counter-intuitive. However, I think that it's quite natural that having the world's foremost scholar running the world's best central bank changes the game compared to how things were done during the Cold War. In fact, it's not too long ago when right-wing folks fought hard to have these theories and policies implemented, and then praised them for bringing unprecedented stability and growth.

[I invented that]

Oh and in the light of present knowledge, when talking about economic efficiency, punitive may well be the right word to describe the current tax regime for most people.

I know, this is all very counter-intuitive. However, I think that it's quite natural that having the world's foremost scholar running the world's best central bank changes the game compared to how things were done during the Cold War. In fact, it's not too long ago when right-wing folks fought hard to have these theories and policies implemented, and then praised them for bringing unprecedented stability and growth.

so, the jury is still out.

[Goo For You]

so, the jury is still out.

My point was that something has changed, but that something is not the mainstream academic consensus.

[I invented that]

the final paragraph is a mouthful.

"We are living in weird economic times, where many of the usual rules don’t apply and there are big free lunches to be had. But not everything is a free lunch, even now. Sorry."