Bill Mitchell — The monetary and fiscal normality of Wolfgang Schäuble – stagnation and entrenched unemployment

I have been working on an article that will come out in the press soon on inflationary pressures. It is obvious that characters like Larry Summers and Olivia Blanchard are trying to stay at the centre of the debate by issuing various lurid threats about the likelihood of an inflation outbreak in the US and elsewhere. Last week, the Financial Times published an article (June 3, 2021) by the former German Finance Minister and now President of the Bundestag, Wolfgang Schäuble – Europe’s social peace requires a return to fiscal discipline. I was initially confronted with the juxtaposition of this author, who bullied all and sundry during to the GFC to ensure an austerity mindset was maintained at great cost to the millions who were deliberately forced to endure unemployment, with the photo of John Maynard Keynes under the title of the article. The title didn’t seem to match the picture. My first impressions were correct. Lessons have not been learned.

Now that the debate has switched to inflation and away from fiscal sustainability (except for the dodos), it is important to get the MMT position on inflation clear. Most of what I am reading in the "news" is woefully simplistic and amounts to a straw man. Happy to see that Bill is on this. 

I would also like to see more on MMT relative to global economics in terms of the the world system, which includes finance and economics but is not limited to them. There are many factors operative that influence each other and the system as a whole causally, in particular asymmetries and externalities that are often ignored in model-construction, e.g., for tractability. Simplification is expected but oversimplification vitiates the conclusions owing to narrowing of scope and failing to include significant factors. 

This is hardly a new idea. It is found in the classical economists, Marx, Keynes, and the institutionalist, environmental, ecological, evolutionary, and complexity economics, and it has been investigated by economic sociologists as well. Conventional economists largely ignore this input.

Bill Mitchell – billy blog
The monetary and fiscal normality of Wolfgang Schäuble – stagnation and entrenched unemployment
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia