by For the record. From an Austrian economist.AbstractThis paper analyzes the debt monetization proposals of Modern Monetary Theory from an Austrian structure of production perspective. It shows that this policy raises societal time preferences and reduces the number of higher order stages in the economy, leading to a higher interest rate, lower economic growth, and increased prices of consumer goods. In order to demonstrate this, it goes back to the basics and investigates the nature of government spending and how it differs from investment. I argue that Murray Rothbard, a staunch critic of Keynesian economics who would have also fiercely opposed MMT had he lived to see its rise, was correct to classify government expenditures as unproductive consumption that detract from genuine
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Robert Vienneau writes Austrian Capital Theory And Triple-Switching In The Corn-Tractor Model
Mike Norman writes The Accursed Tariffs — NeilW
Mike Norman writes IRS has agreed to share migrants’ tax information with ICE
Mike Norman writes Trump’s “Liberation Day”: Another PR Gag, or Global Reorientation Turning Point? — Simplicius
For the record. From an Austrian economist.
Abstract"I argue that Murray Rothbard, a staunch critic of Keynesian economics who would have also fiercely opposed MMT had he lived to see its rise, was correct to classify government expenditures as unproductive consumption that detract from genuine marketplace economic output."This paper analyzes the debt monetization proposals of Modern Monetary Theory from an Austrian structure of production perspective. It shows that this policy raises societal time preferences and reduces the number of higher order stages in the economy, leading to a higher interest rate, lower economic growth, and increased prices of consumer goods. In order to demonstrate this, it goes back to the basics and investigates the nature of government spending and how it differs from investment. I argue that Murray Rothbard, a staunch critic of Keynesian economics who would have also fiercely opposed MMT had he lived to see its rise, was correct to classify government expenditures as unproductive consumption that detract from genuine marketplace economic output. I then defend Rothbard’s position by explaining the very serious concerns some economists had in the 1930s and 1940s regarding how to measure government’s contribution to aggregate production statistics. Armed with a proper understanding of government’s antithetical nature to investment, the chapter is then able to explain why MMT’s proposal to expand the money supply to finance government spending shortens the production structure.
Patrick Newman, Assistant Teaching Professor of Economics, University of Tampa