Modern monetary theory, COVID-19 and the economy — Stephen Hail

THE COVID-19 PANDEMIC is obviously the biggest global emergency of its kind for more than a century. The social and economic impacts are without precedent and some will be long-lasting. Its lessons will be profound. Some of them will take years to unravel. Others are clear to many, and should be clear to all, even now.

One of these lessons is that in countries like ours, the limitations on the ability of the government to engage in very large amounts of spending to support people, organisations and the economy are entirely political. They are not financial. Governments with very high levels of what is commonly regarded as "national debt" have not been and will not be constrained by that debt.

Those currency-issuing institutions described below as "monetary sovereigns" simply gain the necessary political approval for additional spending and are then able to do it. The spending is self-financing. It does not have to be funded. That is not the way modern monetary systems work....

IndependentAustralian
Modern monetary theory, COVID-19 and the economy

Stephen Hail | Lecturer in economics in the School of Economics at the University of Adelaide and a research scholar at the Global Institute for Sustainable Prosperity