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Tag Archives: MMT

Stephanie Kelton — Modern Monetary Theory Is Not a Recipe for Doom

In this post, Stephanie Kelton takes on Paul Krugman. She appears to agree with Paul Krugman's assumption that monetary policy that is built on raising interest rates to address inflation is not backwards. Actually, central bank interest rate setting is a form of price setting, the policy rate being a variable that sets the cost of borrowing (price of money). Higher interest rates are also inflationary to the degree that increase the income of holders of securities, as Warren Mosler has...

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Bill Mitchell — Talking of elephants–plain old, garden variety fiscal policy

If there were two lessons that can be taken from the GFC among others then we should know, once and for all, that, first, monetary policy (in all its glorious forms these days) is not a very effective tool for influencing the level of economic activity nor the price level, and, second, that fiscal policy is very effective in manipulating total spending and activity. Of course, those lessons provided the evidence that turned macroeconomics on its head because for several decades, as the...

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Richard Murphy — Fisking Martin Wolf on modern monetary theory

I suspect Wolf chose to get this wrong, deliberately. His narrative does not work if he noted correctly what MMT said. But his real disagreement is that whilst MMT is correct (subject to his own misconceptions) he thinks the policy implications are wrong. Nice smackdown, if a smackdown can be considered nice.Richard Murphy concludes: Wolf has conceded MMT is right. Now he needs to accept the consequences. Including that democracy by and for the people should prevail. To this I would add...

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Martin Wolf — States create useful money, but abuse it

Useful critique of MMT. Martin Wolf at least took the time to read Randy Wary's Modern Money Theory. His areas of agreement with MMT are mostly factual, whereas his criticisms appear to be mostly opinion. In addition, he is unaware of what some of the other MMT economists have written about his areas of concern. Most seriously, his solution is more technocracy, which ignores the agency problem. But worth a read. Financial TimesStates create useful money, but abuse it Martin Wolf

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Antony P. Mueller — The Neo-Marxist Roots of Modern Monetary Theory

The post is interesting from the POV of history of economics. Antony P. Mueller points out how MMT owes more to Kalecki than to Keynes. His criticism of MMT goes astray in assuming the conventional economic view of debt-financed fiscal deficits crowding out private sector productive investment. MMT shows how this assumption is erroneous in that the net spending after taxes injects the exact amount of bond issuance in offset. It's the spending that funds Treasury security issuance.  In...

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Darren Williams — «How Populism Affects Our Business»

Most important, after a 40-year period in which capital has won out decisively over labor, there is much likelihood that global economic policy is to shift back in a much less business-friendly direction. Not only will that weigh on economic growth, but it’s also likely to push inflation higher. And that’s something markets are not currently prepared for. FinenewsDarren Williams: «How Populism Affects Our Business» Darren Williams | Global Economic Research Group for Fixed Income

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Rajrishi Singhal — Opinion | India’s ailing economy needs a green pill for revival

GND and MMT make it to India.LiveMint (India)Opinion | India's ailing economy needs a green pill for revival Rajrishi Singhal | consulting editor of MintCritical article on MMT but well-researched and worth reading. Modern monetary theory has provided hope that the current economic problems can be solved if we look at things in a "new" light. Blinded by this hope, the fact that this theory is not "new" and has failed in the past has remained hidden. Business Today (India) Ravi Saraogi, CFA...

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