Ritik Goyal

Monetary economics and MMT @ Goldman Sachs | Duke ‘22

[Ritik Goyal @rpgoyal_]

Thanks @StephanieKelton

[Stephanie Kelton @StephanieKelton]

Highly recommend this (high-level) conversation on where ⁦@rpgoyal_⁩ thinks markets and the economy are headed and why. ⁦ https://t.co/Mjr6t6PvLK

[Ritik Goyal @rpgoyal_]

@DannyDayan5 @MMTmacrotrader Does the increased spending of home owners definitely exceed the increased desire to save of prospective home owners?

[Ritik Goyal @rpgoyal_]

@DannyDayan5 @MMTmacrotrader If home prices go up 10% in a month, what happens to the spending of everyone trying to save for a home?

[Ritik Goyal @rpgoyal_]

@fallacyalarm @MMTmacrotrader A bank loan is an expansion of two parties’ balance sheets. A private credit loan only expands one party’s balance sheet.

Expansion = increase in amount of assets

Hence a private credit loan has about half the economic juice of a bank loan

Something, but not a bank loan

[Ritik Goyal @rpgoyal_]

Cmon man your reply to Doug was non responsive. Your initial claim “real rates aren’t high enough to ease demand” already assumes a ton of theory and ideology that I don’t think you grapple with or know that the extent to which heterodox schools disagree with it

Classic move to assert theory and then call someone else’s theory only theoretical

Your assertion that real rates cool demand assumes a fixed supply of savings that interest rates clear the market for. Under fiat regimes savings are limited by the willingness to invest, the willingness to invest is limited by bank credit extension and fiscal supply of net financial assets, both of which (and certainly the sum of which) are unbounded

Your assertion assumes the gold standard. So which is the theoretical position and which is the applicable position?

[Ritik Goyal @rpgoyal_]

That’s incorrect Mike and not supported empirically at all. Cutting rates punishes those who will buy assets in the future, but rewards those who already hold assets. The long term wealth inequality and capital/labor shares of income move one to one with rates.

A rate is just a flow divided by a stock, the labor class is income (flow) and the capital class is wealth (stock)

[Ritik Goyal @rpgoyal_]

@BobEUnlimited @AahanPrometheus @MikeBloomberg I need a shower

[Ritik Goyal @rpgoyal_]

@fejau_inc No left or right tails in the flow of funds

[Ritik Goyal @rpgoyal_]

@EPBResearch The United States circa 2008-2012

[Ritik Goyal @rpgoyal_]

@JGS952 Inflation itself is the macroeconomic stabilization! It’s the flow part of any stock flow ratio

[Ritik Goyal @rpgoyal_]

@chrisgpt “There’s no bubble, look how easily I was able to reduce some business’s profits from $500-$1000 to $0!”

Bubbles form and pop when the sources of profits shift too rapidly and/or disappear, not when the technology stops progressing

[Ritik Goyal @rpgoyal_]

Proper MMT would say it’s more inflationary the higher the rate is that everyone is paying on their borrowing. Whether that inflation is productive or not is a separate (and empirical) question.

IMO the sweet spot (growth-maximizing rate of inflation) is probably around 3-4% and potentially even higher in highly indebted economies. Inflation is a free lunch given to risk-takers in the form of extra cash flow they didn’t really expect/“deserve”. How much extra money/free lunch a risk-taker should receive is an ideological/empirical question again

[Ritik Goyal @rpgoyal_]

@cullenroche @RoKhanna “Why make it hostile to business or anyone for that matter” is fundamentally at odds with kalecki-levy

[Ritik Goyal @rpgoyal_]

Every asset pays the asset holder a return, the extra duration is matched by the extra income/premium paid by the asset to the asset holder for holding the duration

Remove the duration and in aggregate the private sector is taking less risk and receiving less return

When the curve is inverted you could argue QE is stimulative purely from an income perspective; but QE only happens during steep curves

The private sector cannot net take more or less risk by net buying/selling existing risk assets, every buyer has a seller. The private sector cannot net move only net take risk by creating new risk assets

But remove duration -> remove risk -> remove income -> remove solvency -> uncertain if less duration leads to more risk taking

[Ritik Goyal @rpgoyal_]

People said similar things about the stimmies and what we got was the first transfer of wealth share towards the bottom 90% in 40 years. Their wealth share went from 29% to 33% from 2019 to 2025.

Wealth effect, spending multiplier, velocity of money concepts are all supercharged when a small amount of money is evenly distributed to those whose net worth rises by a factor of infinity when they receive $250

[Ritik Goyal @rpgoyal_]

@JesusFerna7026 @themountaingoa1 @tblrj Careful, the godley stuff is arguably part of the “MMT Corpus” that has less useful info in its entirety than one page of the Marxian text

[Ritik Goyal @rpgoyal_]

@cullenroche @profplum99 Except self-judged quality of life is never a function of how good things are, but rather how good things have become.

The best time to be born was when the growth rate in your preferred wellbeing metric was the highest. It’s certainly not the highest today

[Ritik Goyal @rpgoyal_]

@BobEUnlimited George Soros has entered the chat

[Ritik Goyal @rpgoyal_]

@textureMonkey What software program is this?

[Ritik Goyal @rpgoyal_]

@MaxfieldOnBanks The most prosperous generation of US growth was the 50s-60s. All on the back of the 40s deficits, which produced a private debt jubilee. Private debt is what harms future generations.

[Ritik Goyal @rpgoyal_]

@JamesYo43532848 Hi James, do you have a manuscript available with all of these writings? Thanks