Stephanie Kelton — My Unpublished Letter to the Editor of the NYT

I submitted the following Letter to the Editor in response to Annie Lowrey’s July 4 article on Warren Mosler and MMT. The Times chose not to run it. So I will.

Thank you for alerting your readers to the growing impact of the anti-austerity branch of economics known as MMT. More than a decade ago, Warren Mosler challenged the economics profession, insisting that the U.S. would be a far more prosperous nation if we stopped basing our fiscal and monetary policies on macroeconomic theories that were designed for a country whose currency was still tied to gold. I was among the first wave of academic economists to reach agreement on this point. Now hundreds of articles, book chapters and conference presentations later, the ideas have spread well beyond the ivory towers. Tens of thousands of professionals in finance, business, government, etc., many of them formerly self-proclaimed deficit hawks, now champion Warren’s insight that our fears about debt and deficits are based on a failure to understand how modern money works–and that it’s holding all of us back.

New Economic Perspective
My Unpublished Letter to the Editor of the NYT
Stephanie Kelton | Associate Professor of Economics, UMKC

Bill Mitchell — In a few minutes you do not learn much

Bill responds to the quote attributed to Mark Thoma in the NYT article on MMT, "They're just nuts," by taking Professor Thoma apart.

As I recall, Greg attempted to set up a debate between Bill and Mark Thoma some time ago, to which Bill agreed. Mark Thomas refused to debate, as I remember saying that he would not debate with someone that rejected the money multiplier, i.e., the basis of monetary policy in the minds of monetarists. Looks like subsequent events have settled that, with the Fed having exploded HPM only to see itself still fighting disinflation that threatens to be slip into deflation.

BTW, I learned in the comments at Bill's that Annie Lowrey is the wife of Ezra Klein, for what it's worth — he a political and economic columnist with the Washington Post and she with the New York Times. Talk about a bully pulpit.

Bill Mitchell – billy blog
In a few minutes you do not learn much
Bill Mitchell

My comment at Bill's:

The NYT coverage was a huge coup for MMT, even through it was “fair and balanced” in the sense of Faux News. Regardless, its millions of $ worth of free PR.

Of course, those who objected legitimately were right to do so. That provides the opportunity to set the record straight and garner even more free PR. 

So huge net positive for MMT and more evidence that the last mile is closing. Keep up the good work and don’t relax the pressure.

Bill Black — Revealed Biases: Why MMT Critics Continue to Rely on Strawman Arguments

Economists of nearly every flavor believe in the concept of “revealed preferences.” What matters is not what people say they will do in a hypothetical situation, but what they actually do. Their actions speak more credibly than their words. In this column I announce a related concept: “revealed biases.”

Guess what's coming. Ouch. Bill has mastered the art of the smack down.

New Economic Perspectives
Revealed Biases: Why MMT Critics Continue to Rely on Strawman Arguments
William K Black | Associate Professor of Economics and Law at the University of Missouri – Kansas City

See also Randy Wray, Bill Black Blasts Lazy Critics of MMT at Economonitor

Randy quotes the best of Bill's smack downs and comments himself.

Marshall Auerback — The New York Times, Intellectual Fashion, and Modern Monetary Theory

With regard to the spread of new ideas it is said that first they are ignored, then they are ridiculed, and then the new ideas win. If one is to judge from the new piece in the New York Times on "Modern Monetary Theory" (aka "MMT") then we're clearly in stage 2, which marks progress of a sort.

Several years ago, the "heretical" views expressed by the likes of Warren Mosler, Randy Wray, Bill Mitchell, Stephanie Kelton, Pavlina Tcherneva, and a host of others, wouldn’t have been seen anywhere near the Times. That said, the piece is rife with factual errors (for a good summary read this) but at least begins to challenge many of the prevailing misconceptions that dominate our current policy discourse.

INET Blog
The New York Times, Intellectual Fashion, and Modern Monetary Theory
Marshall Auerback

Stephanie Kelton — The Buzz Over MMT

The blogosphere and Twittershpere are buzzing over today’s NYT article on Warren Mosler and the proponents of Modern Money (or Monetary) Theory (MMT). This isn’t the first time MMT has been featured by a high-profile mainstream media outlet (see here, here, here) and, as usual, there are some editorial inaccuracies.

Warren has responded to the mistakes that affect him personally, and Randy Wray followed with some quick thoughts of his own. I spent close to 30 minutes on the phone with the journalist who wrote the latest NYT piece, so let me offer a further correction of (and for) the record. I was quoted as saying....

New Economic Perspectives
The Buzz Over MMT
Stephanie Kelton | Assistant Professor of Economics, UMKC

Randy Wray — Warren Mosler & MMT: Deficit Lovers?

While this is a mostly good piece on Warren, Lowrey gets enough of it wrong to call into question her ability as a reporter. Yes, Warren designed and built a yacht, and he designed and built great race cars (even if his first model was called one of the fifty worst cars ever–for its unorthodox looks, not for its performance). It is also true that Modern Money Theory has taken off in the blogosphere, where it has picked up tens of thousands of followers. And Warren just completed a whirlwind speaking tour in Italy that attracted hundreds of listeners even in small towns. (Try that, any other American economist!)

The rest of her piece is filled with bias and mistakes...

Economonitor
Warren Mosler & MMT: Deficit Lovers?
L. Randall Wray | Professor of Economics, UMKC

Bonus: Randy explains the real interest rate.

Dean Baker — Reconciling Modern Monetary Theory with the Wisdom of Mark Thoma

The NYT had a brief discussion of Modern Monetary Theory (MMT) today in the context of a profile of Warren Mosler, one of its major proponents. The profile includes a dismissive comment from Mark Thoma, a professor at the University of Oregon and the creator of the blog, The Economist's View....

CEPR
Reconciling Modern Monetary Theory with the Wisdom of Mark Thoma
Dean Baker
(h/t Andy Blatchford on FB)

Stephanie Kelton comments:

Thanks, Dean. It is possible that Mark was taken out of context. The quote attributed to me wasn't remotely close to anything I actually said. The notion that MMT has no academic footprint is laughable. There are literally hundreds of articles in peer-reviewed journals, books, chapters in edited volumes, etc. This was a(nother) deliberate attempt to cast MMT as a kooky Internet phenomenon. Anyone else wonder why the NYT would send a reporter and a photographer all the way to St. Croix (yes, they physically went there) for a story about a silly little Internet theory? I suspect they know it's much more than that.
On a different point: MMT supports tax increases and/or spending cuts to address demand-pull inflation. No different from, say, Abba Lerner or Marriner Eccles.
The real point of departure for MMTers and textbook Keynesians is, I think, very much bound up in the loanable funds theory of the interest rate (the former rejecting and the latter accepting it). From that follow all sorts of differences re: fiscal sustainability. Scott Fullwiler has written brilliantly on this.

In other words, they just made shit up.

"First they ignore you, then they attack you, then you win." — paraphrase of M. K. Gandhi. Gandhi actually said, "First they ignore you. Then they ridicule you. And then they attack you and want to burn you. And then they build monuments to you." Wikiquote