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James K. Galbraith – Is there a better model to explain economics in the Trump era?

Summary:
The mainstream economists are running scared, as more and more academics look into MMT and see that it is viable. If neoclassical and Austrian School economists shout loud enough together they are hoping it will go away, but it's a good working model ready to be tried, and then people will find out that they didn't understand economics, despite their prestigious awards and acclamation, and that they had wrecked our economy.MMT is built on the work of John Maynard Keynes and Hyman Minsky. A core insight is that money in “modern States” — meaning, as Keynes wrote, for the “past four thousand years at least” – is defined by government. Money is created (mostly) by public spending and bank loans. Money is not something “out there” that the government must borrow from the public in order to

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The mainstream economists are running scared, as more and more academics look into MMT and see that it is viable. If neoclassical and Austrian School economists shout loud enough together they are hoping it will go away, but it's a good working model ready to be tried, and then people will find out that they didn't understand economics, despite their prestigious awards and acclamation, and that they had wrecked our economy.

MMT is built on the work of John Maynard Keynes and Hyman Minsky. A core insight is that money in “modern States” — meaning, as Keynes wrote, for the “past four thousand years at least” – is defined by government. Money is created (mostly) by public spending and bank loans. Money is not something “out there” that the government must borrow from the public in order to function. It is created as government functions; only afterward, those who take payment may then trade the cash for a bond.

MMT is about the way the world actually works. It explains why big deficits do not drive up interest rates or “crowd out” private investment, and why big governments in big countries don’t go bankrupt.


Boston Globe

James K. Galbraith - Is there a better model to explain economics in the Trump era?

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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