Saturday, March 19, 2011

MMT Invades Forbes

Prof. John T. Harvey has a column under Leadership at Forbes (3.18.11) entitled The Big Danger In Cutting The Deficit that sets forth the basics of MMT without mentioning MMT. (h/t Mario)

Like Bill Mitchell's article at The Nation, it is concise, precise, and accessible. However, The Nation is a progressive venue, whereas Forbes occupies the other end of the spectrum. Quite a spread in only a matter of days. Word is getting out on many fronts as editors notice and pick up on the growing momentum.

Prof. Harvey's column is a good one to pass on to MMT skeptics in that he anticipates the common objections voiced by neoliberals and conservatives, as well as progressives with neoliberal tendencies. The piece is well argued, and anyone who is open can readily absorb the policy message, regardless of their persuasion. The comments I saw there are positive, at least so far.


Matt Franko said...

Harvey states: " The idea that we need to borrow to finance federal budget deficits is a fiction or, as Paul Samuelson called it, a myth. "

Perhaps he got that Samuelson disclosure here.

This may show again how the Web is a powerful medium of information exchange, facilitates unprecedented levels of cooperative policy analysis ... and perhaps can be the "game changer" that will ultimately lead to success and policy break-throughs by MMT advocates.

It IS different this time.

Mike Norman said...

I am AMAZED that Forbes published this article because the magazine's ideology is totally opposite of what Harvey writes.

Anonymous said...

Matt, that's exactly where I got it. I've known Randy for 20+ years and have been a huge fan of his work (and just saw him a couple of weeks ago when I went to UMKC to present a paper).

Indeed, cross fertilization at work!

Mike, thanks for posting those links to my page!

John T. Harvey

rvm said...
This comment has been removed by the author.
rvm said...

It is great article, only one thing I don't get. From the article:

"The primary tool by which our central bank introduces new money into the economy is the purchase of government debt from the public. "

I don't think this would be new money in the economy because it was new when government first spent it.

Letsgetitdone said...

Hi Tom,

Thanks for this.

John, I really loved that article, and was very glad to see MMT cracking Forbes. But also thought there was at least one mistake in it. You said:

"Second, if China were to suddenly want to "cash out," which for a variety of reasons it is exceedingly unlikely to do, we could easily pay it back with the dollars that we are legally permitted to create. It was already explained above why this is not inflationary, besides which the new money would be in China. And if it caused the dollar to depreciate (which is far from a certainty), then that would increase our exports and decrease our imports--one of the many reasons China would be reluctant to do it!"

First, the Chinese can't "cash out" all at once. They have to do so as the bonds come due. And second, the dollars provided to the Chinese to redeem the bonds will remain in the USD currency zone, and won't go to China.

Tom, do you agree?

Anonymous said...

rvm and Letsgetitdone, I wouldn't disagree, but I was really having to simplify to keep the explanation this short. Hence, I figured I'd focus primarily on attacking the most pervasive and damaging myths. There's lots more I would have like to have said and clarified, but felt lucky they let me get away with this many words!

John T. Harvey

Letsgetitdone said...

Thanks, John. All of us are lucky that you got to say what you said. Thanks again.