by Summary:
Hat tip to Andrew Anderson for pointing out this excellent statement by MMT scholars on mainstream reaction to recent MMT publicity. For two decades we and our like-minded colleagues have been putting forward the idea that a monetarily sovereign country like the United States with debts denominated in its own currency and a floating exchange rate cannot “go broke”. We have been writing about this and all the myriad implications this has for macroeconomics under what has come to be known as Modern Monetary Theory. Excitingly, last month representative Alexandria Ocasio-Cortez brought attention to our views when she said that MMT should be “part of the conversation". This set the economics and finance media ablaze with renewed commentary. In a major step forward, the broad consensus of
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Hat tip to Andrew Anderson for pointing out this excellent statement by MMT scholars on mainstream reaction to recent MMT publicity.Hat tip to Andrew Anderson for pointing out this excellent statement by MMT scholars on mainstream reaction to recent MMT publicity. For two decades we and our like-minded colleagues have been putting forward the idea that a monetarily sovereign country like the United States with debts denominated in its own currency and a floating exchange rate cannot “go broke”. We have been writing about this and all the myriad implications this has for macroeconomics under what has come to be known as Modern Monetary Theory. Excitingly, last month representative Alexandria Ocasio-Cortez brought attention to our views when she said that MMT should be “part of the conversation". This set the economics and finance media ablaze with renewed commentary. In a major step forward, the broad consensus of
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
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For two decades we and our like-minded colleagues have been putting forward the idea that a monetarily sovereign country like the United States with debts denominated in its own currency and a floating exchange rate cannot “go broke”. We have been writing about this and all the myriad implications this has for macroeconomics under what has come to be known as Modern Monetary Theory.
Excitingly, last month representative Alexandria Ocasio-Cortez brought attention to our views when she said that MMT should be “part of the conversation". This set the economics and finance media ablaze with renewed commentary. In a major step forward, the broad consensus of these pieces in a series of outlets has been to agree with my colleagues and I that the only limit on government spending is inflation. The acceptance of this crucial tenet of MMT is very welcome and new. It was not too many years ago that throughout the economics press it was commonplace to present MMT as a wild new theory and speak in worried uncertain terms about the possibility that bond markets would refuse to buy US treasury securities, causing a debt crisis. We are thrilled to move past this stage in the public macroeconomic debate.
Unfortunately, while the press has been willing to agree with this major proposition, it has not been willing to follow its implications.Apparently, the common response is that MMT is politically unrealistic in thinking that governments will be able to raise taxes to control inflation. I personally encountered this response many many times over Kevin Drum's blog. I responded that MMT proposes automatic fiscal stabilizers (income tax, welfare benefits, job guarantee) as opposed ad hoc tax increases. Fullwiler, Grey, and Tankus discuss this and many other options and considerations in a comprehensive explanation of how MMT is politically realistic in its approach to inflation.
https://ftalphaville.ft.com/2019/03/01/1551434402000/An-MMT-response-on-what-causes-inflation/