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Challenges to the strong golden rule: MMT and bond market paranoia — Simon Wren-Lewis

Summary:
SWL is still caught in the monetarist fallacy. MMT has two arguments against the golden rule, which I will call reasonable and unreasonable. The unreasonable argument is that interest rate increases do not reduce aggregate demand and inflation, and therefore fiscal policy has to play the macro stabilisation role at all times. It is an unreasonable claim because it contradicts the large amount of evidence that higher interest rates do reduce aggregate demand and inflation, evidence that you will find in the academic economic literature.Those who watch Mike Norman's YouTube channel, which is MMT-based financial analysis, will find evidence presented that contradicts this.Mainly MacroChallenges to the strong golden rule: MMT and bond market paranoiaSimon Wren-Lewis | Emeritus Professor of

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SWL is still caught in the monetarist fallacy. 
MMT has two arguments against the golden rule, which I will call reasonable and unreasonable. The unreasonable argument is that interest rate increases do not reduce aggregate demand and inflation, and therefore fiscal policy has to play the macro stabilisation role at all times. It is an unreasonable claim because it contradicts the large amount of evidence that higher interest rates do reduce aggregate demand and inflation, evidence that you will find in the academic economic literature.
Those who watch Mike Norman's YouTube channel, which is MMT-based financial analysis, will find evidence presented that contradicts this.

Mainly Macro
Challenges to the strong golden rule: MMT and bond market paranoia
Simon Wren-Lewis | Emeritus Professor of Economics, Oxford University
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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