tag:blogger.com,1999:blog-5908830827135060852.post2735173621260107635..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: Comments On Palley's MMT CritiqueBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5908830827135060852.post-633446236445402122020-11-06T01:17:32.790-05:002020-11-06T01:17:32.790-05:00Palley's critique is good for young MMT'er...Palley's critique is good for young MMT'ers to cut their teeth on. But it is painfully embarrassing. The exchange rate effects are the most interesting imo. That's because no one has a clue what causes the fluctuations, or rather they do know, but they do not know which factors dominate. I think MMT has it right that when you float you at least give the market a chance to work, and that's probably optimal given current international trade and currency speculation regimes. But this can never form an argument "against MMT" because MMT never says the foreign channel is not a real constraint. Import capacity is a real constraint, but it is not a financial constraint, that's the point. <br /><br />For example, if solar panels are for sale from Japan or China, the Myanmar government can purchase them with It's own currency with a FX swap, and that is never going to collapse their currency completely, it just never works like that. There will be trade-offs, but the trade-offs (possible depreciation if the purchase is huge) won't limit the capacity of Myanmar to purchase solar power plants with their own currency, and it will not limit Myanmar from being able to tax in It's own currency to control inflation. What is Myanmar stupidly doing instead? They are borrowing Yen or Yuan to get the solar power, borrowing a currency they do not issue. Madness, or at least risky. I hope they get away with it for their sake.Bijou Smithhttps://www.blogger.com/profile/01366468126680583410noreply@blogger.com