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New Economic Perspectives

Modern Monetary Theory is On the March

By William K. Black February 18, 2019     Bloomington, MN Modern Monetary Theory (MMT) continues to advance rapidly.  We are past the first phase of reaction (first they ignore you), deeply into the second phase (then they attack you), and expanding the ranks of the third phase (then you win).  We are very early in the third phase, winning with increasing numbers of people, but still a minority view. One of the proofs of MMT’s advances is a nearly respectable treatment by the Wall Street...

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“What You Need To Know About The $22 Trillion National Debt”: The Alternative SHORT Interview

Steven Rattner’s opinion piece in the New York Times and Furman’s interview on National Public Radio are perfect examples of the ideas that MMT want to debunk. Deficits are not normal; deficits crowd out private investment; the public debt is a burden on our grandchildren; our ability to respond to societal problems is limited by the fact that the US government does not have enough money to confront them. Below is an alternative interview to the Furman’s interview that reviews these...

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“What You Need To Know About The $22 Trillion National Debt”: The Alternative Interview

Steven Rattner’s opinion piece in the New York Times and Furman’s interview on National Public Radio are perfect examples of the ideas that MMT want to debunk. Deficits are not normal; deficits crowd out private investment; the public debt is a burden on our grandchildren; our ability to respond to societal problems is limited by the fact that the US government does not have enough money to confront them. Below is an alternative interview to the Furman’s interview that reviews these...

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ZEN and the Art of the Federal Reserve System

By J.D. ALT I know nothing about motorcycles, and not much more about the U.S. Federal Reserve system—yet I feel compelled to dismantle, pick apart, and understand the latter for the simple reason that it seems to be a machine I’ve been riding on (and vaguely writing essays about) for some time now. So, it stands to reason I shouldn’t be ignorant of it. Not that I would get much help in this effort from American economists. Indeed, they seem intent on keeping the mechanism under wraps—as...

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An American Budget

By J.D. ALT Let’s imagine pulling together a group of enlightened economic planners to create an American budget for, say, the years 2020-2024. What might they come up with? To begin with, how might they even go about thinking about how to create an American budget? It’s not so obvious as, for example, the way the Congressional Budget Office might go about it. The CBO would begin by tallying up how much money America’s government will have to spend in the years 2020-2024. Then they’d...

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AOC# and MMT Spook the AEI

William K. Black January 17, 2019     Bloomington, MN AOC# drives Republicans berserk.  Booing her, and only her, at the ceremony admitting the members of Congress, raging at her for dancing – yes dancing – in a college video, and attacking her for having a nickname (“Sandy”) in high school demonstrate the degree of derangement and the pathetic ammunition they have found in their failing efforts to discredit her.  MMT has become an indirect beneficiary of this derangement.  AOC# has...

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MMT’s Opening

By J.D. ALT I recently read in the WSJ that Modern Monetary Theory is defined as the proposition that the federal government can borrow as much money as it needs so long as the interest rate it pays is less than the growth rate of the GDP. The short article, by Desmond Lachman, went on to argue why this was a dangerously false premise. Thus, MMT got shot with two bullets in one paragraph: first by defining it in a way that negates its most fundamental principle (that the federal...

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Trump’s Version of ‘Let Them Eat Cake’

By William K. Black January 14, 2019     Bloomington, MN Queen Marie-Antoinette of France was libeled by the claim that when she was told that her starving peasants could no longer find bread to eat, she responded “then let them eat cake.”  (If you want to get precise she supposedly said let them eat ‘brioche.”)  There is no evidence she said any such thing. Trump, however, really said the modern equivalent.  His remarks, despite being made in response to a question about his empathy for...

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