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  •  Most MMT folk support the broad Fed actions. (1+ / 0-)
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    TheMomCat

    The main disagreement MMT and Krugman have is that Krugman thinks banks make loans based upon their reserve standing at any one time.

    MMT says banks make loans first, and find reserves later.

    Given that The Fed Reserve acts as lender of last resort, MMT is obviously correct about this.

    But this is a small dispute.  

    Another dispute:  When you have a fiat currency, then it's impossible to be "saving for a rainy day" -- how do you save up an infinite supply of potential accounting marks?

    So, whereas Krugman still talks in terms of the fed gov "saving" in good times, MMT realizes this  makes no logical sense and thinks the deficit should always float against the real economy.

    And as the real economy comes close to, or reaches, full capacity then you stop creating new money.

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