The bit I don't get is where there can be An accurate (?) measure of the productive capacity of ... anything. So under MMT as Inunderstand it the idea is it's feasible to create money to level of productive capacity - via government purchase of that capacity to build roads and buy policing services etc.
Wartime economies get more "productive" because the government is able to divert resources to its needs (ie stop being a hairdresser and work in the arms factory) - thus increasing the productive capacity.
So, if the government wanted to (peacetime) redirect resources it would have to bid for services at a level that encouraged hairdressers to become munitions workers - and then create money to pay for that.
And they create money through (ok lots of pieces I don't get but I think it's QE ala Richard Werner).
This is typified by a thought exercise: if the government simply replace fiat money with a crypto fiat (ie all money is in bank of englands blockchain ledger ) then suddenly private banks cannot make loans becaus they cannot create money on that blockchain. But the bank of england could ... and this is equivalent of QE except much cleaner and more obvious.
But ... and we eventually get to my point ... if money creation is taken away from banks (regulation, 2008 crash, crypto) and in theory banks are close to the real world and able to judge if loaning money for a factory is a good idea - then how does one judge how much money should be created ?
I am dubious of "we measure inflation" because not just lag but the fairly common view of "prices go up while RPI stays flat"
And since money creation is tied to collateral, and collateral is basically land, land absorbs all money creation in end - which is where we see our land price issues - and essentially means money creation is rich get richer.
If we could break the link between collateral and increasing productive capacity there might be a flowering of equality.
Just in the first half of your comment, it reminds me of Diane Coyle's long standing argument that the GDP, and many productivity indexes, are just very sexist and not for any real reason other than our patriarchal government, and economics specifically.
This is the "if you paid for a housekeeper and nanny it's the same as paying your wife but it does not show up in statistics "
Yes - but it still does not get closer to measuring productivity. I mean we are all pretty much unproductive sitting in a damp field. It's infrastructure, organisation, trade and then low down the lost, skills that matter.
It would if the government printed money to pay women that were doing aforementioned unpaid work. Or paid in social security credits. It is not an unmeasurable thing, just ignored. And these skills and work do matter, it is just subsidized by money from other employment and often not very efficiently, even less fair.
The problem with land is that you can't produce it. Producers arbitrage the interest rate and the profit rate of manufacturing until the difference is almost zero. But you can't produce land so the cost of land goes up instead.
Wartime economies get more "productive" because the government is able to divert resources to its needs (ie stop being a hairdresser and work in the arms factory) - thus increasing the productive capacity.
So, if the government wanted to (peacetime) redirect resources it would have to bid for services at a level that encouraged hairdressers to become munitions workers - and then create money to pay for that.
And they create money through (ok lots of pieces I don't get but I think it's QE ala Richard Werner).
This is typified by a thought exercise: if the government simply replace fiat money with a crypto fiat (ie all money is in bank of englands blockchain ledger ) then suddenly private banks cannot make loans becaus they cannot create money on that blockchain. But the bank of england could ... and this is equivalent of QE except much cleaner and more obvious.
But ... and we eventually get to my point ... if money creation is taken away from banks (regulation, 2008 crash, crypto) and in theory banks are close to the real world and able to judge if loaning money for a factory is a good idea - then how does one judge how much money should be created ?
I am dubious of "we measure inflation" because not just lag but the fairly common view of "prices go up while RPI stays flat"
And since money creation is tied to collateral, and collateral is basically land, land absorbs all money creation in end - which is where we see our land price issues - and essentially means money creation is rich get richer.
If we could break the link between collateral and increasing productive capacity there might be a flowering of equality.
This is turning into a long ramble - apologies