MMs, MMTers, Larry Summers, young tweeters, and politicians — Scott Sumner

Scott Sumner still doesn't get MMT. It is a bit more nuanced than he thinks, it appears. This is not entirely his fault in that MMT economists present a simplified model for popular consumption and that is unlikely to satisfy economists. Similarly for the MMT-based macro textbook, which is aimed at undergraduates and beginning grad students. But this doesn't excuse conventional economists that have read the popularized MMT literature and blogs and still have questions, in that they need to dig deeper into the professional literature.

But for an economist to really grasp MMT, background in Keynes, Post Keynesianism, and institutional economics, finance, and accounting are needed, since MMT builds on this foundation. Conventional economists don't have this background and lacking it, they approach MMT on terms of conventional economics, which heterodox economists view as flawed. So it is unsurprising that MMT doesn't fit those models. In addition to "Chicago School economics," this affliction includes New Keynesianism. So it is unsurprising that neither Scott Sumner nor Paul Krugman get it yet. But I am rooting for them to do so.

The Money Illusion
MMs, MMTers, Larry Summers, young tweeters, and politicians

Scott Sumner | Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center at George Mason University