by Mervyn King trashes MMT.If you can’t explain something, try an abbreviation. The latest in economics is MMT — Modern Monetary Theory or, in other words, a magic money tree. It’s a simple idea. It costs almost nothing to print money: the cost of printing banknotes is negligible compared with their face value, and even lower when the Bank of England creates money electronically through its so-called ‘quantitative easing’ programme (QE). That money could be given to the public — either directly or indirectly via the government — to enable people to spend more, so raising output and employment. We are all better off.Why didn’t we think of this before? Well, of course we did. From Roman emperors through Henry VIII and the Weimar Republic to present-day Zimbabwe and Venezuela, rulers have shown
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Mervyn King trashes MMT.
If you can’t explain something, try an abbreviation. The latest in economics is MMT — Modern Monetary Theory or, in other words, a magic money tree. It’s a simple idea. It costs almost nothing to print money: the cost of printing banknotes is negligible compared with their face value, and even lower when the Bank of England creates money electronically through its so-called ‘quantitative easing’ programme (QE). That money could be given to the public — either directly or indirectly via the government — to enable people to spend more, so raising output and employment. We are all better off.No kidding. He actually wrote that. It goes downhill from there. Bizarre.Why didn’t we think of this before? Well, of course we did. From Roman emperors through Henry VIII and the Weimar Republic to present-day Zimbabwe and Venezuela, rulers have shown all those clever central bankers struggling to get inflation up to their 2 per cent target how to do it. Unfortunately, they didn’t stop at 2 per cent but ended up in hyperinflations in which prices doubled in a day — equivalent to annual percentage inflation in the many trillions. Needless to say, in such situations the economy tends to collapse. As my wife says when I praise the quality of a bottle of wine and suggest some more, ‘Moderation in all things’....
The Spectator
The ideological bankruptcy of modern monetary theory
Mervyn King