ahlam1399
03-07-2019, 07:01 PM
Larry Fink, the CEO of the world’s largest asset manager, doesn’t hold a very high opinion of a controversial economic theory that has steadily gained adherents since its emergence on the Wall Street landscape last fall.
Proponents of so-called Modern Monetary Theory, or MMT, argue that a government that borrows in its own currency doesn’t need to worry about running up a deficit (as long as inflation isn’t running out of control) because it controls the money printing press.
See: Trade deficit soars to 10-year high in 2018, foiling frenzied efforts by the Trump White House to reduce the gap (http://www.marketwatch.com/story/trade-deficit-soars-to-10-year-high-in-2018-foiling-trump-white-house-effort-to-rein-it-in-2019-03-06)
During an interview with Bloomberg News early Thursday, Fink, commenting on the legitimacy of MMT as a valid economic precept, had this to say:
‘That’s garbage.’
The BlackRock
BLK, -1.63% (http://www.marketwatch.com/investing/stock/blk)
CEO continued: “I’m a big believer that deficits do matter,†echoing comments made by Federal Reserve Chairman Jerome Powell, who was asked about MMT during congressional testimony last week.
Speaking bluntly last Tuesday (http://www.marketwatch.com/story/mmt-advocate-responds-to-powell-deficits-do-matter-but-not-how-you-think-2019-02-28), Powell described the idea of deficits not mattering for countries that can borrow in their own currencies as “just wrong.â€
“We’re going to have to either spend less or raise more revenue,†he said of the U.S.’s own budget deficit.
On Capitol Hill, Reps. Alexandria Ocasio-Cortez — a co-author of the Green New Deal — and others have been notable backers of MMT.
Stephanie Kelton, a former economics adviser to the 2016 Bernie Sanders presidential campaign and professor at Stony Brook University, has been credited with helping advance the radical theory (http://www.marketwatch.com/articles/stephanie-kelton-wantsyou-to-rethink-the-deficit-1536853788).
She’s offered a nuanced take on the relevance of deficits in well-developed economies, emphasizing the idea that deficits don’t matter in conventional ways of thinking: “The way we usually think about a deficit is that it is evidence of excessive spending. And that’s just wrong; evidence of excessive spending is inflation. So I would argue you don’t have a deficit problem or debt problem unless you have an inflation problem,†Kelton told CNBC recently (https://www.cnbc.com/video/2019/03/01/stephanie-kelton-explains-modern-monetary-theory.html?&qsearchterm=Stephanie%20Kelton).
Key Words: The battle for the Democratic Party’s political platform is under way (http://www.marketwatch.com/story/battle-has-begun-over-democrats-economic-agenda-2019-03-05)
Presently, the U.S. boasts $22 trillion in debt and a deficit that could hit $1 trillion this fiscal year, while U.S. interest rates are still low.
After a year of nearly 3% economic growth (http://www.marketwatch.com/story/trump-delivered-an-economic-sugar-high-that-is-about-to-wear-off-2019-02-28), the yield on the benchmark 10-year Treasury yield
TMUBMUSD10Y, -1.24% (http://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx)
stands at 2.68% as of early Thursday trade.
Barron’s on MarketWatch: Do budget deficits matter? Not to today’s political left or right (http://www.marketwatch.com/articles/do-u-s-budget-deficits-matter-not-to-todays-left-or-right-51551468212)
Benign rates and a Fed that has signaled a wait-and-see approach to further hiking interest rates have helped lift the stock markets in the early part of 2019. The Dow Jones Industrial Average
DJIA, -0.76% (http://www.marketwatch.com/investing/index/djia)
and the S&P 500
SPX, -0.69% (http://www.marketwatch.com/investing/index/spx)
have risen more than 10% thus far this year, and the Nasdaq Composite Index
COMP, -0.83% (http://www.marketwatch.com/investing/index/comp)
has enjoyed a year-to-date gain of 13.1%.
Against that backdrop, Fink appears relatively sanguine about the economy and the market. “I would almost call this a Goldilocks moment,†he told Bloomberg.
“I would say it’s a time for investors to be a little bit more relaxed,†Fink said.
Read on: Modern Monetary Theory is smoke and mirrors and nonsense, says Harvard economist Kenneth Rogoff (http://www.marketwatch.com/story/modern-monetary-theory-is-nonsense-just-more-voodoo-economics-2019-03-04)
Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here. (http://www.marketwatch.com/newsletters)
</p>
Source link (http://www.marketwatch.com/news/story.asp?guid=%7BFC618822-40D5-11E9-8BD1-BA7436273220%7D&siteid=rss&rss=1)
More (http://ahlam1399.i234.me:8888/m/2019/03/07/larry-fink-head-of-worlds-largest-asset-manager-labeled-modern-monetary-theory-garbage/)
Proponents of so-called Modern Monetary Theory, or MMT, argue that a government that borrows in its own currency doesn’t need to worry about running up a deficit (as long as inflation isn’t running out of control) because it controls the money printing press.
See: Trade deficit soars to 10-year high in 2018, foiling frenzied efforts by the Trump White House to reduce the gap (http://www.marketwatch.com/story/trade-deficit-soars-to-10-year-high-in-2018-foiling-trump-white-house-effort-to-rein-it-in-2019-03-06)
During an interview with Bloomberg News early Thursday, Fink, commenting on the legitimacy of MMT as a valid economic precept, had this to say:
‘That’s garbage.’
The BlackRock
BLK, -1.63% (http://www.marketwatch.com/investing/stock/blk)
CEO continued: “I’m a big believer that deficits do matter,†echoing comments made by Federal Reserve Chairman Jerome Powell, who was asked about MMT during congressional testimony last week.
Speaking bluntly last Tuesday (http://www.marketwatch.com/story/mmt-advocate-responds-to-powell-deficits-do-matter-but-not-how-you-think-2019-02-28), Powell described the idea of deficits not mattering for countries that can borrow in their own currencies as “just wrong.â€
“We’re going to have to either spend less or raise more revenue,†he said of the U.S.’s own budget deficit.
On Capitol Hill, Reps. Alexandria Ocasio-Cortez — a co-author of the Green New Deal — and others have been notable backers of MMT.
Stephanie Kelton, a former economics adviser to the 2016 Bernie Sanders presidential campaign and professor at Stony Brook University, has been credited with helping advance the radical theory (http://www.marketwatch.com/articles/stephanie-kelton-wantsyou-to-rethink-the-deficit-1536853788).
She’s offered a nuanced take on the relevance of deficits in well-developed economies, emphasizing the idea that deficits don’t matter in conventional ways of thinking: “The way we usually think about a deficit is that it is evidence of excessive spending. And that’s just wrong; evidence of excessive spending is inflation. So I would argue you don’t have a deficit problem or debt problem unless you have an inflation problem,†Kelton told CNBC recently (https://www.cnbc.com/video/2019/03/01/stephanie-kelton-explains-modern-monetary-theory.html?&qsearchterm=Stephanie%20Kelton).
Key Words: The battle for the Democratic Party’s political platform is under way (http://www.marketwatch.com/story/battle-has-begun-over-democrats-economic-agenda-2019-03-05)
Presently, the U.S. boasts $22 trillion in debt and a deficit that could hit $1 trillion this fiscal year, while U.S. interest rates are still low.
After a year of nearly 3% economic growth (http://www.marketwatch.com/story/trump-delivered-an-economic-sugar-high-that-is-about-to-wear-off-2019-02-28), the yield on the benchmark 10-year Treasury yield
TMUBMUSD10Y, -1.24% (http://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx)
stands at 2.68% as of early Thursday trade.
Barron’s on MarketWatch: Do budget deficits matter? Not to today’s political left or right (http://www.marketwatch.com/articles/do-u-s-budget-deficits-matter-not-to-todays-left-or-right-51551468212)
Benign rates and a Fed that has signaled a wait-and-see approach to further hiking interest rates have helped lift the stock markets in the early part of 2019. The Dow Jones Industrial Average
DJIA, -0.76% (http://www.marketwatch.com/investing/index/djia)
and the S&P 500
SPX, -0.69% (http://www.marketwatch.com/investing/index/spx)
have risen more than 10% thus far this year, and the Nasdaq Composite Index
COMP, -0.83% (http://www.marketwatch.com/investing/index/comp)
has enjoyed a year-to-date gain of 13.1%.
Against that backdrop, Fink appears relatively sanguine about the economy and the market. “I would almost call this a Goldilocks moment,†he told Bloomberg.
“I would say it’s a time for investors to be a little bit more relaxed,†Fink said.
Read on: Modern Monetary Theory is smoke and mirrors and nonsense, says Harvard economist Kenneth Rogoff (http://www.marketwatch.com/story/modern-monetary-theory-is-nonsense-just-more-voodoo-economics-2019-03-04)
Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here. (http://www.marketwatch.com/newsletters)
</p>
Source link (http://www.marketwatch.com/news/story.asp?guid=%7BFC618822-40D5-11E9-8BD1-BA7436273220%7D&siteid=rss&rss=1)
More (http://ahlam1399.i234.me:8888/m/2019/03/07/larry-fink-head-of-worlds-largest-asset-manager-labeled-modern-monetary-theory-garbage/)