Thursday, November 21, 2019

Congress Gets a Lesson in MMT Even as Deficit Nears $1 Trillion — Katia Dmitrieva

Less noncommittal about MMT.
“Federal deficits and debt are not so scary. Neither is on an unsustainable path," was the opening salvo from Randall Wray, a professor at Bard College and one of the leading advocates of Modern Monetary Theory. The emerging school of thought says countries like the U.S., which borrow in their own currency, can pursue growth through deficit-spending so long as prices are under control.
Wray’s paper for the committee argued that MMT has never said deficits or debt don’t matter. But he said that they’re best viewed as outcomes of policies aimed at lifting the economy, rather than goals in themselves. When economists and lawmakers push for debt-reduction, he said, “MMT cautions that what we might be reducing is economic growth." 
MMT has won converts, but there’s been a backlash too -- with heavyweights from Federal Reserve Chair Jerome Powell to billionaire Warren Buffett denouncing it.
MMT on Trial?
As debate raged over MMT earlier this year, Republicans called for a hearing to condemn it as dangerous. Before Wednesday’s session, GOP lawmakers on the budget committee said they expected the doctrine to be a “central theme.”
They called MMT “a convenient theory” for politicians determined to spend trillions, and quoted Democrat-leaning economists including Paul Krugman and Larry Summers slamming the doctrine....

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