Tag Archives: MMT

I wrote this in June. In the light of my blog on modern monetary theory today and the comment I made in it that the government must act as the borrower of last resort I think it appropriate to republish it. I do so knowing it contradicts modern monetary theory. Political judgement and the needs of financial markets suggests that doing so is appropriate for the reasons I note. Modern monetary theory is not, in other words, the answer in all cases: it can just inform the process in which a...

How little the two Eastern European countries that we have focused on can be compared with Western countries can be seen very clearly in the development of unemployment (Graph 1). Following the major crisis of 2008/2009, the unemployment rate in Romania hardly rose at all. In Bulgaria it increased significantly, but despite weak economic development after 2013 it is falling at an astonishing rate, almost to the relatively low Romanian level.For Romania, this can only mean that unemployment...

The following is mostly intended as background for a possible post (or posts) on quantity effects of a job guarantee in which the standard income-expenditure model is taken as a base. It is desirable to work from as simple a starting point as possible as the exercise can complicate pretty quickly. To minimize unnecessary complications, the base model will be presented in highly abbreviated form. This will not cause anything important to be lost because it is always possible to switch back...

Eric Lonergan has recently written a post about the fiscal rules debate that has cropped up around the U.K. Labour Party's adoption of such a rule. As usual, his post covers a lot of territory -- if I were to attempt to cover all the points he raised when following my preferred writing style, it would be a 10 part article. Meanwhile, I am supposed to be working on finishing off my breakeven inflation book, as well as dealing with other projects. As a result, I just want to respond to a...

Funny (and sad) satirical post from Bill today.I have concluded that the "debate" has now degenerated to the point it is now longer worth the time to keep up and comment. Bill's post captures the essence of it regarding MMT but this syndrome has also affected almost all other areas of interest.The crazy is now the "reality."Bill Mitchell – billy blogCorbyn more scary than BrexitBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at...

No, this won’t be on the table until 2021 at the earliest. But the party’s candidates need to offer some solutions. Bloomberg OpinionThe Democrats’ Options for Repealing the Trump Tax Cut Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

The starting point of MMT is that our thinking about money is conditioned by the view that money is based on gold, which leads us to ignore the radical differences between gold-backed money and “fiat” money, which comes into existence by government decree, and does not require any backing. With a gold-backed currency, the concept of a government deficit makes sense – the government must have gold, in order to spend it. However, with a fiat currency, a deficit must always be self-imposed;...

Frances Coppola’s concerns about fixed versus floating exchange rates for developing countries is presumably interesting to some, but it tells us little about the validity of MMT...  Bond Economics The Myth Of The Myth Of Monetary SovereigntyBrian Romanchuk

Good article on MMT. It's essentially a short lecture by Stephanie Kelton. She is very articulate. CFO‘The Federal Government Does Not Need Revenue’ David McCann

How many countries can really claim to have full monetary sovereignty? The simplistic answer is "any country which issues its own currency, has free movement of capital and a floating exchange rate." I have seen this trotted out MANY times, particularly by non-economists of the MMT persuasion. It is, unfortunately, wrong.  This is a more complex definition from a prominent MMT economist: 1. Issues its own currency exclusively 2. Requires all taxes and related obligations to be...