Tag Archives: MMT

On April 11, 2019, IMF boss Madame Lagarde gave a press conference to open the 2019 Spring Meetings. The Transcript – includes the Madame waxing lyrical about Modern Monetary Theory (MMT). And you might have confused the press conference for a stand-up comedy routine except you would have to be ‘in the know’ to laugh. But the significant aspect of the conference came when a question from Japan focused on MMT. In attempting to put down our work, Madame Lagarde actually admitted that a...

Worthwhile article on MMT owing to the questions it poses. Not that MMT economists haven't addressed some of these questions. But I believe that some are still hanging. It also observes that an MMT-based world run on functional finance would look quite different from the conventional world of "sound money," especially with a Green New Deal in the offing to address the emerging challenges of global inequality of distribution and the threat of climate change. What does this imply socially,...

This article explains the ISLM view of MMT in some detail without being overly wonkish for general accessibility. While it is sympathetic to MMT, it is still wrong, but instructively so. Assumptions die hard.Notice the assumptions about the effect of changes in "money supply" based on money supply being settlement balances in the payments system ("bank reserves balances", abbreviated as "rb").The effect of such changes in conventional economics is based upon assuming that changes in the...

I was sent two papers by Thomas Palley the other day. I have known him for decades. He continually disappoints. He has become one of those self-styled Post Keynesians who are trying to destroy the credibility of Modern Monetary Theory (MMT) for reasons that are not entirely clear although I know things I won’t write here. He thinks that if he drops a reference to Michał Kalecki, the Polish Marxist economist, into a paper, it qualifies one as being Post Keynesian. But, the reality is that...

SummaryThe US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income. Dollars added to the economy by the federal government allow the private sector to post a $147 billion surplus and add to its stock of net financial assets. Private credit growth was again flat and added less than $1.8 billion to the money supply. A big drop from the January contribution of over $70B. Further, income flows from the national government impact investment markets...

Most of the financial "professionals" writing on (against) MMT are clueless about both MMT and also the basics of finance in institutional arrangments. They think that the world is still on the gold standard, for example, likely because they strongly believe that it ought to be. But beyond that, also clueless about how the accounting works at the macro level. A very few do understand MMT, however. Paul McCulley of Pimco and James Montier of GMO, for example. Here is another voice to...

The main lesson I want to draw from this post is (excluding being autarkic/poor or being in a monetary union):  If a country wants to maintain a fixed exchange rate, the country must accumulate a lot of foreign reserves to be sovereign (or maybe some capital controls?)  If a country wants to have floating exchange rates, it must convince its trading partners (or its trading partners’ trading partners) to hold its national currency as foreign reserves. losinterestMonetary Sovereignty...

See my comment there.Lars P. Syll’s BlogDoes MMT — really — ignore expectations?Lars P. Syll | Professor, Malmo University

Much of the critique that Palley delivers was also waged against Abba Lerner’s ‘functional finance’ approach — on which much of MMT is based — back in the 1940s and 1950s. Even if some of today’s ‘Keynesian’ economists do not understand Lerner, there once was one who certainly did: I recently read an interesting article on deficit budgeting … His argument is impeccable. John Maynard Keynes (CW XXVII:320) Lars P. Syll’s BlogThomas Palley claims MMT fails to provide plausible...

Thoughtful reflection on historical precedent. These observations are particularly useful because they point to an intellectually rigorous way in which debates over the wisdom of the Green New Deal and the usefulness of MMT might be resolved: by examining more carefully the political and economic history of the 1970s. Was the high inflation of that decade a consequence of excessive money growth, engineered by the Fed to relieve budgetary pressures—the source of the “anguish” in Burns’...