Tuesday, January 28, 2020

James Weir - Why you need to know about modern monetary theory

Inexplicable problems require a whole new kind of economic thinking - and MMT is more logical than you probably think it is.

Conventional economics has struggled to explain much of what’s happening in the world today. How can we have record low inflation and interest rates at the same time? How can some governments continue to increase their deficits and yet their bond yields go down and currencies go up? How on earth can you justify negative bond yields?

There is one school of economic thought that purports to have some of the answers, and has been talking about the inevitability of declining interest rates and inflation for years. Modern monetary theory (MMT) uses iron-clad rules of accounting to offer not just plausible but logical explanations for many conundrums that leave orthodox economists scratching their heads.

Financial Review

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