by Robert Shiller’s straw man critique of MMT M.M.T. is sometimes invoked to justify reckless government borrowing for marginally good causes, without raising taxes. Well, here’s a spoiler alert: Though increased spending on infrastructure, education, social welfare and the environment may be wise, and rising deficits may make sense some of the time, we really cannot borrow ceaselessly without risking real harm … It seems that modern monetary theory is not so much a recipe for disaster as it is a not entirely original series of ideas that are not well defined or well integrated, and whose implications have been exaggerated … Still, I think the modern monetary theorists have a point: We should not react automatically against new expenditures that increase
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Lars Pålsson Syll considers the following as important: Economics
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Robert Shiller’s straw man critique of MMT
M.M.T. is sometimes invoked to justify reckless government borrowing for marginally good causes, without raising taxes. Well, here’s a spoiler alert: Though increased spending on infrastructure, education, social welfare and the environment may be wise, and rising deficits may make sense some of the time, we really cannot borrow ceaselessly without risking real harm …
It seems that modern monetary theory is not so much a recipe for disaster as it is a not entirely original series of ideas that are not well defined or well integrated, and whose implications have been exaggerated …
Still, I think the modern monetary theorists have a point: We should not react automatically against new expenditures that increase the deficit. There do appear to be some urgent needs that might justify more debt for a while. But acknowledging this does not require a revolution in economic theory, and it does not license unlimited spending or carelessly adding debt upon debt.
Although in general more positive towards MMT than Krugman, Rogoff, Summers et consortes, Shiller here to a large extent sets up a bunch of straw men that are easy to knock down. It is obvious that Shiller unfortunately hasn’t really taken enough time to inform himself of even the essentials of the theory he is criticizing. One would expect more of a ‘Nobel prize’ winning economist.