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Two problems with Modern Monetary Theory

Summary:
I spend quite a bit of time (more than I should) engaged in Twitter debates with advocates of Modern Monetary Theory (MMT). Some are generally sensible, while others are convinced they have learned a deep secret which enables us to have whatever we want without paying for it. Unfortunately, the sensible ones (Meaningful Monetary Theory) don’t do the hard work of correcting the others (Magical Monetary Theory) A couple of tweets referring to the latter group (followed by the usual long and confused set of responses) A striking feature of #MMT discussion is that it starts from a presumption of failure. Always supposed to be lots of unemployed resources that can be mobilised by fiscal policy . When MMT advocates (or anyone else) start suggesting rationing and forced saving are

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I spend quite a bit of time (more than I should) engaged in Twitter debates with advocates of Modern Monetary Theory (MMT). Some are generally sensible, while others are convinced they have learned a deep secret which enables us to have whatever we want without paying for it. Unfortunately, the sensible ones (Meaningful Monetary Theory) don’t do the hard work of correcting the others (Magical Monetary Theory)

A couple of tweets referring to the latter group (followed by the usual long and confused set of responses)

A striking feature of #MMT discussion is that it starts from a presumption of failure. Always supposed to be lots of unemployed resources that can be mobilised by fiscal policy .

When MMT advocates (or anyone else) start suggesting rationing and forced saving are preferable/sensible alternatives to taxation, I don’t think it’s unfair to call them anti-tax. These are really bad ideas, and should be repudiated.

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John Quiggin
He is an Australian economist, a Professor and an Australian Research Council Laureate Fellow at the University of Queensland, and a former member of the Board of the Climate Change Authority of the Australian Government.

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