Modern Monetary Theory , once a relatively obscure branch of macroeconomics, has recently gained star status. It is riding high in the popular press in the U.S. and has been endorsed by many in the left wing of the Democratic party as a way of financing massive spending programs such as the “Green New Deal” and “Medicare for All.
MMT is wrong that inflation is related only to excess demand for total output. Financing spending by printing money expands the economy’s money stock. While the short-run relationship between money and total spending can be fairly loose, the long-run relationship is incontrovertible: a higher stock of money sooner or later means higher prices, even if taxes are fine-tuned to keep a lid on spending.
MMT also holds that deficits financed by printing money will keep interest rates low. The reasoning is that if the money supply increases relative to the demand for money, the cost of holding money must fall. Then, as long as economic growth exceeds the interest rate, the cost of servicing the debt has to go down as a fraction of GDP. But this view is also naive in the extreme. Nominal interest rates contain two components: the real rate of return and expected inflation.
Finally, MMT assumes that the central bank and the government work together, with the bank agreeing to finance the government’s deficits via the use of the printing press. Central bank independence, widely thought to be a necessary prerequisite for sound money and the control of inflation, goes right out the window.
fpcomment This article is cranial fecal Crap
fpcomment No doubt some academic with no real experience, all theory to practical...sad
fpcomment Do you think you could actually cite some of the literature instead of making up your own version of MMT
fpcomment MMT pretends that Gov't can print value for a currency and can pay for everything for a vote. Reality is Gov't cannot print value for a currency only the private sector can do that. That's why Venezuela ended up with millions of starving Billionaires.
fpcomment And idiotic representation of mmt
fpcomment Haha intellectual fraud post. Your time is done hacks.
fpcomment MMT doesn't assert that at all. Have you read the material? Where's the citation?
fpcomment Hey, this is not what MMT says.
fpcomment Excellent article. There different ways MMT harms us. One is the massive bubble that is created. MMT is popular in part because it allows politicians to justify massive pandering spending.
fpcomment But budgets balance themselves right Crime Minister?
fpcomment This article is irresponsible fear mongering and advances a false narrative. MMT is observational, not theoretical. QE increased money supply by trillions of dollars with no inflation. Fiscal spending tied directly to economic growth will not cause inflation.
fpcomment 【smartest solution】The smartest solution for state running Ponzi Scheme, and all of political coup and elite coup love the theory very much. They steal your money quietly and in name of the beauty.
fpcomment Unsurprisingly an extremely bad and wrong take. Well done.
fpcomment *unless it goes directly to banks, then we have trillions for that
fpcomment It is time people learned how our money system really works, need to educate others and question polticians when given opportunity. Powerful look to control narrative ,this needs to be stopped, truth must b told before US finds itself in debt in a currency it can not create.
fpcomment MMT is accurate description of fiat system. Fiat is a tool that can unleash resources a country has --- misinformation just shows how much wealthy establishment (elite) do not want avg citizens to know that our country does not borrow or tax to pay for funding.
fpcomment Uh, this is not what MMT says. Hire me to write a primer if you want some credibility on the issue.
fpcomment I'd love to read just ONE 'critique' of MMT that actually cites the work of MMT academics and THEN says what they disagree with instead of making up their own version of what MMT says and telling everyone why it's so wrong.
fpcomment Sounds like a 'deficits only matter when someone I disagree politically is in power' kind of argument
fpcomment Wow this is a monstrously stupid article .
fpcomment DevilsAdvocate Central Banks have conjured over $10 trillion dollars out of nothing since the global economic crisis for the benefit of the banks and those (the 1%) who are bank-adjacent. MMT for them, monetizing their bad assets has driven wealth inequality to extreme levels.
acoyne fpcomment I agree with the article but trying to educate a “voting public” on basic macroeconomic theory and monetary policy is a difficult proposition. I fear MMT could gain some traction...
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