Question
1) Although the FED can heavily influence the behavior of financial institutions and individuals through the tools that it has at its disposal, what are
1) Although the FED can heavily influence the behavior of financial institutions and individuals through the "tools" that it has at its disposal, what are some things that prevent it from having more complete control as it pursues its goals?
2) In the chapter there is a section titled "Financial Market Development & Poverty"; from the point of view of central bank, why is it desirable for an economy to have a more developed banking system?
3. MMT is extremely popular with a lot of politicians and it is not hard to understand why. The theory practically says that there is no limit to government spending because the government can just simply create the money. It doesn't even have to increase taxes to spend more money. The majority of the population (they mostly know nothing about money and banking) loves the idea because they get things from government and they don't have to pay for it. The only thing to worry about, according to MMT proponents, is price levels (inflation).
With all that in mind, give me your thoughts on the following questions:
a. What has been your initial reaction to the idea of MMT (given what you know about how markets, money, and banking works)?
b. What are some key assumptions that proponents of MMT are making that make the theory unworkable? We can restate that by saying, assumptions that could cause some big problems down the road since the theory is essentially being implemented now.
c. This question is more of a review question, where does money come from? Why is it valuable? What do those currency units represent?
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