Tuesday, July 7, 2020
Modern monetary theory: the rise of economists who say huge government debt is not a problem — John Whittaker
Another economist offers a weak criticism of MMT.
The lack of affordability argument based on government as a big firm or household has been tossed in the trashing. The rebuttal is so obvious not one wants to touch it anymore.
The pivot is to eventual inflation looming — some day. Like MMT economists have ignored that.
The Conversation John Whittaker | Senior Teaching Fellow in Economics, Lancaster University
Subscribe to:
Post Comments (Atom)
4 comments:
Serious boldness deficit?
“ The lack of affordability argument based on government as a big firm or household has been tossed in the trash”
Maybe in your cloud cuckoo fantasy world...
This guy is a Prof in the liberal side of the academe wtf do you think he is teaching his students?
Ran across this.
Krugman has caught up to some degree but no mention of source of his changed view. Plus his treatment is in terms of actually printing notes rather than crediting accounts here. But it's not totally wrong and this is an intro so he is simplifying the presentation. The important point is that he acknowledges that governments that issue their own fiat currency can create money "whenever they feel like it."
"Fiat money has two major advantages over commodity-backed money. First, it is even more of a “waggon-way through the air”—creating it doesn’t use up any real resources beyond the paper it’s printed on. Second, the supply of money can be adjusted based on the needs of the economy, instead of being determined by the amount of gold and silver prospectors happen to discover.
Fiat money, though, poses some risks. In this chapter’s opening story, we described one such risk—counterfeiting. Counterfeiters usurp a privilege of the U.S. government, which has the sole legal right to print dollar bills. And the benefit that counterfeiters get by exchanging fake bills for real goods and services comes at the expense of the U.S. federal government, which covers a small but nontrivial part of its own expenses by issuing new currency to meet a growing demand for money.
The larger risk is that governments that can create money whenever they feel like it will be tempted to abuse the privilege. In Chapter 16 we’ll learn how governments sometimes rely too heavily on printing money to pay their bills, leading to high inflation." — Krugman and Wells, Macroeconomics (2015), p. 423.
Want to see Krugman 'evolve', put a Democrat in the White House.
Post a Comment