Some ideas seem too good to be true. Like this one. It comes from a 13-year-old listener named Amy. She says she knows the government has trouble finding enough money to pay for stuff like schools and hospitals. And she wondered if it has considered just printing more money. She asked us: Can the government do that? Just make more money to pay for stuff?
Fiscal hawks say, 'no way!' We'd have crazy inflation! But there's a group of economists that says, 'yes, we can create way more money, without disaster. And pay for lots of stuff we want.' They are the proponents of what's called Modern Monetary Theory, or MMT. Their ideas are getting out there, they have the memes to prove it.
Today, we try to understand a school of thought that is flipping economic theory on its head. If you buy it, the whole idea of government spending, taxes, the nature of money changes, and, according to the theory, all we have to do is just open our eyes. It's a bit like staring at those optical illusions: First you see the faces, then, suddenly it's the goblet.Shifting the frame.
NPR — Planet Money
Episode 866: Modern Monetary Theory
Sandy Helm and Alex Goldmark
4 comments:
Wow.
Never thought that MMT would ever reach Planet Money.
This is a historical moment, in my view.
No matter what they say. They probably say or imply all that known bullshit (that MMT is wrong and dangerous because it would bring the inflation apocalypse to us), but I will listen to the podcast anyway and record it in my mind as an historical moment that I did not think would happen so fast...
Surprisingly it was fair, and they even called Stephanie Kelton to talk about MMT. It was superficial, it didn’t explain much the taxes drive money thing, but well, a historical moment nonetheless.
I guess that it was so superficial that it was hard to understand what MMT is about and its difference to mainstream economics. Some people will probably assume that is all the same, and that MMT has nothing new to add, maybe that was the only issue. Better than I thought (I thought that they would pose it as a ridicule idea and that even a 13 years old knew better)
Some things that need changing to maximize fiscal bang for the buck:
ON THE SUPPLY SIDE:
The Central Bank should be forbidden from creating fiat for private interests such as banks and asset owners. However, this is not to rule out equal fiat distributions to all citizens since those would not violate equal protection under the law.
ON THE DEMAND SIDE TO INCREASE DOMESTIC DEMAND:
Individual citizens should be allowed to use fiat via inherently risk-free accounts at the Central Bank itself alongside those of the banks and all other privileges for the banks responsibly abolished.
ON THE DEMAND SIDE TO DECREASE FOREIGN DEMAND (to reduce the trade deficit):
Overt Monetary Finance instead of sovereign debt issuance.
Good interview, Kelton always does a wonderful job hitting the right level of detail for her audience/format without dumbing down.
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