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  1. Oct 2020
    1. looking to implement massive, costly programs including a national daycare system, pharmacare, affordable housing and green initiatives.

      Government spending is not a bad thing. In fact it is crucial to the economy. People's fear about deficits are overblow. Under the MMT framework, not all deficits are bad, it all depends on context. In fact in modern history, deficits and debt have always been part of the game. Government surpluses have been a rarity in Canada.

      Based on sector account balances, the government deficits are the private sectors surplus. Furthermore all new money created is through banks and government spending. If you balance budgets (decrease spending and increase revenues via taxation), you are essentially destroying money and slowing down the economy.

      The main driver of concern is inflation across the board. If government spending gets out of control, it starts buying up the resources from the rest of the private sector, therefore increasing prices. When this happens, spendingn needs to be ramped back. The chances of this happening in a recession/depression/world wide pandemic is very unlikely.

    2. Even Trudeau’s former top adviser, Gerald Butts, appears to have his doubts about MMT, recently posted the following on twitter: “I read The Deficit Myth this week. I dunno guys. I see why you want to believe in MMT, but it feels like snake oil to me. Things that sound too good to be true almost always are.”

      To each their own. A lot of the info from MMT is jarring, because it show the inner plumbing of government finance. It is nothing what we have been told. Many economists, central bankers and private investors have taken to MMT and agree with its description. They may disagree with some of the policies suggested by the MMT academics, but no one had identified that what they describe as false. This is not a strong argument against what MMT is saying. It is simply opinion.

    3. The National Post’s Jesse Snyder wrote an excellent piece recently about how the Canadian economy has been transformed in the past decade moving from a healthy three to five per cent trade surplus to an annual average deficit of negative two to three per cent. Over the same period, Canadian investments in assets abroad surpassed foreign direct investments by $804 billion.

      Once again trade deficits or surpluses are not the same as good of bad. Context is very much neccessary. Have a trade deficit can actually be a good thing. We actually get more "stuff" and other country's resources in exchange for what....wait for it...money (which is pretty much worthless). People get caught up in the accounting of money rather than the actual accounting of real resources. We get a ton of stuff on the cheap by having a trade deficit.

    4. It is expected that the Bank of Canada will end up controlling more than 56 per cent of our total government bond market by end of 2021, up from 29 per cent today, according to estimates from Ian Pollick, head of fixed income, currency and commodity research at Canadian Imperial Bank of Commerce, as cited by Bloomberg. If you think about that, it sounds an awful lot like Modern Monetary Theory (MMT) is now being tested in this country.

      This is the problem with most people who finally take the time to know how our government spend and their relationship with the central bank. Canada, the US, UK and Australis have been "doing" MMT for a very very long time. MMT only describes the process. MMT is not a prescription of how the world should be. It is very much describing how things are right now. A big chunk of the academic writings is providing insight on how government spending, accounting and financing actually work.

    5. While the NDP has been lobbying for a wealth tax, so far there have been few indications of tax hikes from the Liberal government.

      The problem with the lefts approach is that they assume you need taxes in order for the government to spend. Based on soverign currency issues with central banks, the operation is spend first, then tax, then "borrow". This also assumes that federal governments with soverign currencies have a limited quantity of dollars. This is not true. There is no need to tax the wealthy or anyone unless there is a larger purpose of creating greater equality (i.e. the wealthy get to powerful or start to buy up essential resources) or to slow down an overheated economy. In the main purpose of taxes is to remove money from the system when there is too much, which will cause inflation).