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Martin Farreh – Turning the economic tide: could a radical monetary theory fix Australia’s woes?

Summary:
Bill Mitchell, the leading Australian proponent of modern monetary theory, argues that governments should abandon their obsession with budget surpluses It looks like some countries might be gearing to try MMT as the MSM is continuously warming to the idea.  Even sceptics admit that the crisis proved to some extent that MMT might work. The independent Australian economist Saul Eslake says that the key tenet of the central bank effectively writing cheques for the government has to an extent already happened in Japan after years of quantitative easing, the money creation scheme seen in many countries after the GFC. “The evidence of the last 10 years can support the idea. Despite fears about quantitative easing leading to a collapse of the US dollar or runaway inflation, this has not

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Bill Mitchell, the leading Australian proponent of modern monetary theory, argues that governments should abandon their obsession with budget surpluses


It looks like some countries might be gearing to try MMT as the MSM is continuously warming to the idea. 

Even sceptics admit that the crisis proved to some extent that MMT might work. The independent Australian economist Saul Eslake says that the key tenet of the central bank effectively writing cheques for the government has to an extent already happened in Japan after years of quantitative easing, the money creation scheme seen in many countries after the GFC.
“The evidence of the last 10 years can support the idea. Despite fears about quantitative easing leading to a collapse of the US dollar or runaway inflation, this has not happened. The problem is that inflation is too low across the western world.
“The country that has come closest is Japan, where government holds debt equal to about 100% of GDP.”

Mitchell notes that what has happened in Japan has confounded mainstream economists. Despite decades of money creation, the country has a stable economy with low inflation and low unemployment. “The Bank of Japan BOJ says we are not a MMT laboratory but it makes me laugh,” he says. “Mainstream economists can’t explain any of it but MMT can explain all of it.”

The Guardian

Martin Farreh - Turning the economic tide: could a radical monetary theory fix Australia’s woes?
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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