Edward Harrison — Hippie punching the MMT crowd

So, you have to tune out all of this MMT hippie-punching. That’s politics. Now, you don’t have to agree 100% with the MMT framework. The real question is, first and foremost, what parts of MMT make sense as a descriptive framework. That means understanding the framework and ignoring the policy prescriptions, where all of the vitriol is focused.

One basic thing that works for me: Chartalism

In March, I tried to show you where MMT dovetails with the economics of six economists of repute. I called my piece “MMT for Dummies” – even though it was actually a relatively dense piece. But, the point was to get away from the policy prescriptions and focus on the descriptive side by distilling MMT down into recognized precursors....

I don't think it is quite the case that all the vitriol is focused on the policy formulation. A lot is, to be sure. But there is also a lot of focus on the basic idea of chartalism, that the government is the monopoly provider of its currency, which gives it monopoly power if it chooses to use it.

Critics know this now that MMT has let the cat out of the bag, and some probably knew it prior to MMT telling them in the sense that the Post-Bretton Woods institutional arrangements were designed to either give the impression that a gold standard is still in place, or to constrain government to act as if it were instead of using its actual power in the public interest.

This is key to neoliberalism, which is a political theory based on economics that seeks both to enable rent extraction and to justify rent-seeking behavior, since economic rent is the primary way that capitalism transfers wealth from the productive classes to the ownership class that produces nothing of real value.

The "mortal sin" of MMT as neo-chartalism is to blow away the smoke and reveal the mirrors that create the illusion of a gold standard where one no longer exists. "Fiscal rectitude," "fiscal discipline," "fiscal responsibility" and "fiscal austerity," as well as "expansionary fiscal austerity," are all code words for acting as-if constrained by a gold standard.

This is the basis for all the hyperventilating over inflation, hyperinflation, currency debasement, and the like. The basic idea is that if a currency sovereign is not on the gold standard, it must nevertheless act as it it were in order to maintain the value of the currency, which is the basis for wealth accumulation.

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Hippie punching the MMT crowd
Edward Harrison