Richard Murphy — FT Alphaville on modern monetary theory – just ‘a different way of looking at fiscal policy’

WHat MMT actually says is simply, as the FT notes:

a different way of looking at fiscal policy, a way of describing what the real-world constraints on spending look like.

Much of the rest can be taken or left, at will. Because it is not MMT....

Richard Murphy curiously proclaims that he understand MMT better than the MMT founders and limits the scope and scale of MMT based on his preferences.

In reality, MMT is:

1. An operational and institutional description of modern monetary systems, with emphasis on the presently existing floating rate system that replaced the previous fixed rate system.

2. A macroeconomic theory that offers causal explanation based on stock-flow consistent modeling.

3. An approach to political economy that forms the basis for policy research and policy formulation.

See the extensive work of Warren Mosler, Randy Wray and Bill Michell, as well as the work of economists that later joined the MMT team, in particular Stephanie Kelton, Pavlina Tcherneva, and Scott Fullwiler, as well as their response to views such as Richard Murphy's.

Tax Research
FT Alphaville on modern monetary theory – just ‘a different way of looking at fiscal policy’
Richard Murphy