Catherine Cashmore chats with Warren Mosler on MMT, inflation, and property taxes!
The election is over and we now have an Albanese government to contend with.
I’ll be taking a look at what’s ahead for the market within the context of the current cycle.
Still, the election run-up was jam-packed with myths and fairly tales from all sides, regarding how the economy really works.
Readers that listened to the recent interviews I did with Dr Cameron Murray and Louis Christopher will already be able to pick through some of the BS spruiked by the mainstream.
‘We need to increase supply to lower property prices!’
‘We need to increase interest rates to control inflation.’
Both are well propagated myths that enable successive governments to wash their hands of any responsibility for what’s ahead.
Remember, the second half of the cycle is the most bullish phase. Nothing is going to change as we run to a peak in 2026.
Right now, you have a prime opportunity to take advantage of it. Don’t allow yourself to become distracted.
How can I be so confident? I’ll get into that more next week!
But for now, I want to bring you a chat I had the other day with American economist, hedge fund manager, politician, and entrepreneur Warren Mosler.
Warren is one of the founders and most prominent advocate of Modern Monetary Theory (MMT).
The term ‘theory’ is illusive. MMT gives ultimate clarity to the actual operations of money.
Among other things, it demonstrates how government deficits are stabilising and often necessary to maintain full employment, and why increasing the cash rate will increase inflation in the broader economy.
MMT flips on its head many of the falsehoods written in the old economic textbooks. (The ones the likes of Albanese would have gained their education from.)
That’s not to say it comes without opponents.
MMT has been attacked by monetarists for decades.
The criticisms, however, are frequently a distortion of what Warren and leading MMT advocates truly elucidate.
I first made contact Warren a few years ago.
MMT was starting to gain attention, and Warren has a unique ability to explain the underpinnings of his ideas in a way the average Joe can understand.
However, at that time, as far as I was aware, there was little discussion on how MMT would — or wouldn’t — affect the property market.
It mainly focused on the monetary side of the equation.
In this respect, MMT or no MMT, the cycle was fated to continue.
Therefore, it was a surprise when I came across a recent interview with Warren discussing the need to tax property (land) and remove all other taxation, akin to the ideas of Henry George.
Take a look below:
As I mentioned earlier, the discussion is going to assist you in gaining further clarity of how the economy actually works and maintain focus on the path ahead.
I hope you enjoy the chat as much as I did!
Warren is talking to us from his home in the Virgin Islands.
You can listen here.