Bill Mitchell, the leading Australian proponent of modern monetary theory, argues that governments should abandon their obsession with budget surpluses
It looks like some countries might be gearing to try MMT, as the MSM is continuously warming to the idea.
Even sceptics admit that the crisis proved to some extent that MMT might work. The independent Australian economist Saul Eslake says that the key tenet of the central bank effectively writing cheques for the government has to an extent already happened in Japan after years of quantitative easing, the money creation scheme seen in many countries after the GFC.
“The evidence of the last 10 years can support the idea. Despite fears about quantitative easing leading to a collapse of the US dollar or runaway inflation, this has not happened. The problem is that inflation is too low across the western world.
“The country that has come closest is Japan, where government holds debt equal to about 100% of GDP.”
Mitchell notes that what has happened in Japan has confounded mainstream economists. Despite decades of money creation, the country has a stable economy with low inflation and low unemployment. “The Bank of Japan BOJ says we are not a MMT laboratory but it makes me laugh,” he says. “Mainstream economists can’t explain any of it but MMT can explain all of it.”
The Guardian
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