JFK was an MMTer..! — Ralph Musgrave

Here is the full section to which Ralph refers. 

James Tobin's report of a conversation with JFK:

APPENDIX A 

NOTE 1

I had left the Council of Economic Advisors to return to Yale as of August 1, 1962. Later, in the fall, I was in Washingtonconsulting for the Council. Walter Heller was kind enough to ask for an appointment for me to see JFK, and the president was kind enough to grant it. I guess it was only the second or third time I had an interview with the president by myself. This was a memorable one. The president was extremely cordial, informal, and friendly, calling me “Jim”, a practice he had acquired only late in my service on the CEA. After joshing me about the leisure and high income of the academic life to which I had returned, he wanted to talk about economics, economic theory indeed. He wanted to ask me some questions, but it turned out he wanted to give his own answers to them too and see if I agreed, almost as if he were showing how well he had learned his lessons.So he did most of the talking, and my own interventions were largely to confirm that his own answers to his questions were right. There were two subjects; the budget deficit and gold. On the first, he said, “Is there any economic limit to the deficit? I know of course about the political limits. People say you can't increase the national debt too fast or too much. We're always answering that the debt isn't growing relative to national income. But is there any economic limit on the size of the debt in relation to national income? There isn't, is there? That's just a political answer, isn't it? Well, what is the limit?” I said the only limit is really inflation. He grabbed at that. “That's right, isn't it? The deficit can be any size, the debt can be any size, provided they don't cause inflation. Everything else is just talk.” We had a similar conversation about gold and the balance of payments: “Why do we worry about a deficit in the balance of payments? It's only because we might lose gold, that so?And what do we care about gold? It isn't worth anything, in itself, is it?” I assured him it was not, that its value derived wholly from the willingness of nations, especially the U.S., to transform gold into their currencies. “We could, if we wanted to, run the world without gold? And wouldn't that be more sensible? Wasn't it just the irrational prejudices of bankers that kept us tied to gold? We don't have any real national, or international, interest in it, do we?”

I don't claim these to be exact quotations, but this was the gist of the conversation. He spent more than half an hour from a busy day on this conversation, and he was obviously having a good time. Obviously too, he and I both recognized that the talk was an academic one, divorced from the day to day policy decisions where he realized so keenly that the political and ideological myths from which he was showing his intellectual liberation were so constraining and compelling. I was extremely gratified, of course, because there were points he had certainly not understood in 1961 and points I had tried persistently to make orally and in writing for almost two years. Maybe he was just showing that he understood my points, without indicating that he agreed with them. But that was definitely not the tone of the conversation. Rather it was that he understood them and accepted them but that he was, as I well knew, hemmed in. His next appointment was kept waiting, and when Ken O'Donnell finally made him break our interview off, he said good-bye in a most cordial and friendly way.

Ralphomics
JFK was an MMTer..!

Ralph Musgrave