Modern Monetary Muddle — Michael Edesess

This is an excellent review and critique of Stephanie Kelton's The Deficit Myth. Michael Edesess lowers the boom in the first paragraph and then proceeds to explain it. Short and to the point, with quotes from many prominent MMT critics.

The debate over the much-touted and much-criticized modern monetary theory (MMT) is the murkiest I have ever been involved with, short of secondary school debates about the existence of God. But I finally see it clearly. Incredible as it may sound to nearly all observers - once they learn what MMT says - its basic economic tenets are agreed to by most knowledgeable economists. The dispute is not really over its core economic model; it is over fears of its perceived political implications.

Exactly, and this generates the perceived need for a "noble lie."

It's basically a distrust of democracy that has nothing to do with money & banking, finance or economics. 

econointersect
Modern Monetary Muddle

Michael Edesess, AdvisorPerspectives.com

See also

The criticism that David Glasner makes applies to a popularized version of MMT such as is presented in The Deficit Myth. Spending and taxation are not a binary as seem to be claimed, nor are inflation rate and employment rate. He is right that it is more complicated than this. 

However, his critique betrays ignorance of the body of MMT literature where the issues he raised are addressed in detail. 

I don't see this as a weakness in The Deficit Myth as a popular introduction to MMT. It does not pretend to be a sequel The General Theory of Employment, Interest and Money. And even the later has been criticized for being too informal and "popular."

But some MMT economist(s) should address this in terms of translating theory into fiscal policy as a guideline for government spending relative to balancing available real resource, and employment in particular, with price stability. 

This could be done in an academic paper or popular book based on simply providing documentation to existing literature that has addressed it, pulling it all together for reference. 

How should the US Congress conduct fiscal policy to optimize the trifecta of growth, employment and price stability using tools available to it? What would the role of the central bank and monetary policy be? Many such questions suggest themselves. They are also implicit in the post by Michael Edesess linked to above.

There is legitimate concern on over how to handle the purse strings once the deficit myth is debunked. One answer would be in terms of fiscal rules, which MMT economists eshew. Another is a "theory of inflation" complete with model. One doesn't exist yet, not for lack of trying.

The MMT answer is heavily dependent on automatic stabilization such as is already in place. The MMT JG would need to be added to this.

But inflation results from many different factors, both from the demand and supply sides. MMT economists have examined these factors, too.

Uneasy Money
What’s Right and not so Right with Modern Monetary Theory
David Glasner | Economist at the Federal Trade Commission

Also

Weak.

The Sydney Morning Herald
What is Modern Monetary Theory and is it THE answer?

Jessica Irvine