Reference no: EM133206160 , Length: 2 Pages

Assignment:

Are These Really New Modern Monetary Theories?

"I don't think that the Modern Monetary Theory makes much sense for the 21st century and I don't believe that it is sustainable over time. From this theory, the government can spend the currency that they issue. This is a problem because the spending that the government does can lead to inflation in the economy when the economy is near full-employment. Also, our money is not based on anything tangible so the value of our money is based on what other countries are willing to pay to acquire it so to speak. Printing more money will make it become worthless as people will lose faith in its value, and this has happened before with the southern States during the Civil War, Germany during the 1930s, and Zimbabwe in the early 2000s. In each, the result was economic collapse."

Trump's Ideas on Trade.

"To suggest President Trump's thinking is the 1980's, and "transactions are a zero-sum game, producing a champion and a chump," are both wrong and demeaning. Yet, that is the goal of the article, just like the others in the WSJ. Successful people in business know that one-sided business deals are a recipe for failure. Both sides have to get something, or there is no deal. Yes, in real estate development lawsuits are common, and Trump was no different. Half were brought by him and half by others. But, that doesn't count the thousands of other deals where everybody won. In the 1980s, Trump may have formulated some concepts about global trade and that America seemed to lose in those transactions. At the time, he blamed it on the countries, such as Japan. Since then, like with most people, foundations lead to higher thinking. Now, he understands that is wasn't always the countries as much as American businesses themselves, who went there to avoid paying American salaries & taxes."

Is Fiscal Stimulus a Fantasy?

"After reading the article, I would have to agree with Professor Phelp's idea that monetary expansionary policies are quite counter-productive. If there is an increase in monetary policies, there is a risk that the labor force would be greatly decreased by that, this would only allow our society to produce well under its full potential. In his example, he says the labor force increased from 57.2% to 58.9%, but this was due to fiscal surpluses., which only shows how ineffective monetary expansionary policies are. My biggest takeaway is that an increase in government spending would be very counterproductive. Although it might improve and even help the economy expand and grow, it is just not sustainable for the future. It would mean that the government is borrowing more money in order to spend it and that is only increasing their debts. This only drives America into deeper deficits and will leave the economy in a problematic situation."