Tag Archives: MMT

On Warren Mosler's website his economic views have been bearish for something like the last four years. I cannot understand this.Not only was the deficit (something he talks about all the time) last year the highest in 6 years (both nominally and as a percent of GDP), but this year it will be even higher. In fact, it's already three-fourth's of last year's total and we're not even halfway through the fiscal year. Shouldn't he be bullish?Moreover, government spending is going to break another...

More proof we are ruled by morons.  The battle line is drawn, with the ruling elite and neoclassical economists at the center and the flanks occupied by Austrians and Libertarians on the right and clueless progressives on the left, with corporate media in the background, facing off with the MMT economists at the center flanked by MMT advocates, backed by a public that agrees with genuine progressive goals. Now it is a battle for hearts and minds. Quartz Actually, deficits do matter,...

It is Wednesday and despite being on the other side of the Planet than usual (in Helsinki at present) I am still not intending to write a detailed blog post today. I am quite busy here – teaching MMT to graduate students and other things. But I wanted to follow up on a few details I didn’t have time to write about yesterday concerning the role that NAIRU estimates play in maintaining the ideological dominance of neoliberalism. And some more details about the Textbook launch in London on...

This is a good historical backgrounder and it should be read for that reason alone. But Michael Roberts also brings up other issues that follow upon this history that are relevant to the current debate, at least some of which that have been brought up previously in the comments here. Highly recommended. As Maria Ivanova has shown, there remains a blind belief that the crisis-prone nature of the latter can be managed by means of ‘money artistry’, that is, by the manipulation of money,...

Another rant from Tim Worstall. If we can't get the rich to pay for all this democratic socialism the Left would give us these days, then how are we going to pay for it? Up pops that other current bright idea, modern monetary theory: We just print the money and go spend it. It is actually true that nobody has ever had socialism paid for by the rich, so it's good to have an alternative idea out there. It's even true that modern monetary theory works, in theory.The only problem is when we...

I was poring over the Federal Reserve minutes from Feb. 21, and as I was rolling my eyes and looking around my den for something to throw, I was reminded of the comments from then-Fed chairman Ben Bernanke years ago when he was asked if the Fed was "monetizing debt." The reply was "No."Yet here we are, years later, and the new mantra is now "Modern Monetary Theory," which says central banks and sovereign treasury departments can print any amount of money they so desire over any extended...

The echo chamber. One school of thought that’s been the focus of strenuous debate, known as Modern Monetary Theory (MMT), holds that worries about increases in public debt are misplaced, and that the federal government can easily take on much larger spending in some key areas without raising revenues through higher taxes. But at least one progressive policy wonk has his doubts about that increasingly popular approach. Matt Bruenig of the People's Policy Project accuses MMT supporters of...

If Modern Monetary Theory (MMT) were implemented, foreign exchange markets would have their say about it, that is if we still had floating exchange rates. FACT: No matter how much money the Fed prints, or what they do with their balance sheet, you cannot spend more money than you make. You can make up a shortfall with debt, but after a while, creditors will have had it with you. Governments have always found the temptation to borrow, overspend, and tamper with the value of their...

By J.D. ALT Whenever I get frustrated—which is quite often these days—I vent some steam (and feel somewhat better) simply by imagining a response that Bernie Sanders, Elizabeth Warren, or Alexandria Ocasio-Cortez might give to some conservative pundit when they say, “Yes, but that’s going to increase deficit spending beyond anything imaginable!” REPLY: “Excuse me, Anderson, I don’t use the term ‘deficit spending’ because it suggests or implies something which is demonstrably not true. It...

It is great that Paul Krugman is spending so much time trying to understand MMT, but I don't think he has escaped from his old ideas sufficiently yet to grapple with these new ones.  Professor Krugman assumes an inverse relationship between aggregate demand and interest rates which is stable enough to be useful. In other words, he assumes a reasonably stable and downward sloping IS curve.  No such relationship can be assumed.Fiscal policy is effective because it adds to or subtracts from...