By Scott Fullwiler
Clive Crook has an interesting article in Bloomberg that I wanted to quickly touch on as it relates to a number of things that have been central to MMT for years. Crook’s piece does a good job discussing the current realities of the macroeconomic policy mix in the next recession; it also provides a clear example for illustrating differences between MMT and most other economists with regard to how they view the macroeconomic policy mix.
Crook points out that so-called “unconventional” monetary policy operations aren’t unconventional anymore. We’ve had nearly 7 years of ZIRP and various forms of QE in the US alone, not to mention about 17 years in Japan. According to most, thanks to monetary policy, “The world avoided another Great Depression. Yet even in the U.S., this is a seriously sub-par recovery; growth in Europe and Japan has been worse still.” Worse still, Crook says, “Now imagine a big new financial shock. It’s quite possible that all three economies would fall back into recession. What then?”