Is It Time for MMT To Become Mainstream to Save Us from the Second Global Financial Crisis of the Millennium?

By L. Randall Wray

Some of you will remember that MMT got its first huge mainstream exposure through a Washington Post article written by Dylan Matthews.  He’s just written another excellent story, this time about Stephanie Kelton going to Washington. Finally, there might be an alternative to the deficit hawk and timid deficit dove lovefest!

As Dylan says: “For years, the main disagreement between Democratic and Republican budget negotiators was about how to balance the budget — what to cut, what to tax, how fast to implement it — but not whether to balance it. Even most liberal economists agree that, in the medium-run, it’s better to have less government debt rather than more. Kelton denies that premise. She thinks that, in many cases, government surpluses are actively destructive and balancing the budget is very dangerous. For example, Kelton thinks the Clinton surpluses are nothing to brag about and they actually inflicted economic damage lasting over a decade.”

Yep, there’s no daylight between a Bush or a Clinton.

Isn’t it pretty funny that if the mainstream Dems get their way, we will get a Bush or a Clinton this time around (again!). Yep, it will be a legacy hire either way, and it makes no difference which one wins–both will do their damnest to limit budget deficits even as the economy falls into the second Global Financial Crisis of this millennium.

There’s now a choice, folks. Just Say No!

9 Responses to Is It Time for MMT To Become Mainstream to Save Us from the Second Global Financial Crisis of the Millennium?

  1. Also hope’s there’s pressure from the right (Grover Norquist, where are you?) to cut federal payroll, income, and corporate taxes on the 99%. Have always felt this would force the corporations, who benefit the most from federal spending, to back #MMT and the deficits.

    Have always loved Warren Mosler’s ideas for health care, Medical/Dental debt card. http://moslereconomics.com/2009/03/02/mosler-health-care-proposal/

    It gets rid of employer and individual mandates, so it’s an ideal vehicle to carry the #MMT ideas in policy format.

  2. “Yep, there’s no daylight between a Bush or a Clinton.”

    Long, long ago WSJ called them Remocrats and Depublicans.

    But Bush (W) and Reagan increased deficits when needed most. Romney wanted a 20% tax cut across the board. When both parties want to cut spending, you gotta like the one who cuts taxes better than the one who raises them.

  3. NO to budget deficit cutting obsessions, YES to MMT going mainstream!

  4. YES! And I’m happy to see that Dylan posted MMT responses to the assertion that Canada and Australia ran trade surpluses to no detriment – Hellooo?!!! Trade Surplus Much?!!

  5. What worries me even more than the Second Global Financial Crisis of the Millennium is the Climate Crisis which threatens to end the human race. Please view: youtu.be/8EqaCWFow4g.

  6. Steven Greenberg

    Yeah, Bernie Sanders. Now if Bernie and Stephanie can turn Elizabeth Warren into an MMTer, we’ll know we are really making progress. As a constituent of Warren’s, I have tried to use what little influence I have to get Warren thinking about MMT.

  7. Guy Forrester

    I have one doubt, can pay all the debt? The payment of interest to the bank destroys money?

    Here it is argued that the payment of interest destroys deposits:

    http://www.itk.ntnu.no/ansatte/Andresen_Trond/econ/bank-m-creation.pdf

    If this is so, it means that the liabilities of the banks you pay the debt are lower than the debt (since the interests are not created).

    Is that correct?

    • Interest doesn’t destroy deposits, it moves them around. Specifically, from the borrowers to the lenders. To a currency issuer, like the federal gov’t, that translates into *potential* inflation, just like any other net spending (ie. net of taxes and other income). Interest on federal bonds is a social transfer program that effectively provides incredibly secure income to bondholders. That isn’t an entirely undesirable outcome since pension funds are a major holder of federal bonds. Controlling that *potential* inflation becomes the game, and that game is won by supplying an increasing amount of goods and services to mop up the spending, and that is done by keeping people productively employed.

  8. Further to Canada, household indebtedness went through the roof during the surplus period, causing much hand-wringing in government circles and the press. In response, the current Conservative government has created a variety of new tax-free savings vehicles while aggressively pursuing a balanced budget through spending cuts. Suffice to say it hasn’t worked.
    Much ink continues to be spilled on how to address high household indebtedness. The government and punditocracy’s best theory is that it’s low interest rates. Nothing for it, since the government doesn’t want to raise them and throw the economy into recession during an election year.
    High drama! But pointing to Canadian experience to show that government surpluses don’t do what MMTers stay they do looks to me like playing on most Americans’ ignorance about Canada.