Bill Black — Modern Monetary Theory is On the March

Modern Monetary Theory (MMT) continues to advance rapidly. We are past the first phase of reaction (first they ignore you), deeply into the second phase (then they attack you), and expanding the ranks of the third phase (then you win). We are very early in the third phase, winning with increasing numbers of people, but still a minority view.

One of the proofs of MMT’s advances is a nearly respectable treatment by the Wall Street Journal as the feature of a news article. The other major proof is the pathetic efforts of MMT critics quoted in the article to attack MMT. The article, implicitly, admits that MMT scholars have repeatedly proved correct in their predictions that the existing and projected U.S. fiscal budget deficits would not trigger damaging shortages of real resources that will cause damaging levels of inflation. The article, implicitly, admits that nations with fully sovereign currencies are vastly less vulnerable to economic injury from budget deficits.

The article implicitly admits that MMT opponents’ predictions have failed and that reality has repeatedly falsified their archaic monetary theories that described nations living under the gold standard and therefore lacked a fully sovereign currency.…

When the WSJ throws in the towel, you are winning. That means that the debate is going to shift toward the political and specifically toward fiscal policy, now that affordability is out of the way.

New Economic Perspectives
Modern Monetary Theory is On the March
William K. Black | Associate Professor of Economics and Law, UMKC