Comments on 3spoken: 'Functional Finance' and budget surpluses

Neil, I'm so glad I found this!! This was exac...

2012-01-11T22:56:48.557Z

Neil, I'm so glad I found this!! This was exactly what I was looking for - a Public Finance bridge to MMT.

Musgrave said "I don’t see why an increase in...

2010-11-09T18:08:39.210Z

Musgrave said "I don’t see why an increase in those funds would be spent PIRMARILY on investment."

If I understand MMT clearly enough, it isn't that an increase in private funds (decrease in public surplus) is spent PRIMARILY on investment, but ONLY on investment. To rephrase, the only way to have money not be taxed, even at low tax rates, is for someone not to spend it (invest). It may be counter-intuitive, but it does seem to logically make sense, at least from a certain point of view.

What I would like to know is how this tax assumption works with global trade. That is, how is the money still taxed by the issuing government when it is spent somewhere else?

Neil: good summary of FF above. But I don’t agree ...

2010-10-04T14:13:23.859+01:00

Neil: good summary of FF above. But I don’t agree that a surplus, because it withdraws funds from the private sector, discourages investment. Funds in the hands of the private sector are spent on BOTH consumption AND investment. And I don’t see why an increase in those funds would be spent PIRMARILY on investment.

Also, even if those funds WERE spent largely on investment that this is necessarily desirable. It would only be desirable is current investment spending was sub-optimum. I actually argue the opposite, namely that the amount of investment is currently excessive. See:

http://ralphanomics.blogspot.com/2010/09/flaw-in-maturity-transformation.html

I have it as an evolution - Keynesianism onto Func...

2010-09-27T18:44:50.688+01:00

I have it as an evolution - Keynesianism onto Functional Finance onto Modern Monetary Theory.

All relate to their era: Keynes to the Gold Standard monetary system. FF to Bretton Woods and MMT with a fully floating fiat currency.

Functional Finance is another name for Modern M...

2010-09-27T18:40:34.696+01:00
Functional Finance is another name for Modern Monetary Theory (MMT).

Neil, I think that Abba Lerner's FF is one of the building blocks for MMT along with others, e.g., Wynne Godely's SFC (Stock-Flow Consistency) and Hyman Minsky's work, as well as original contributions by MMT economists. So I am not sure that MMT can be equated with FF, even though it is an essential aspect of it.