Policy Aspects of MMT
By Eric Tymoigne and L. Randall Wray
[Part I] [Part II] [Part III] [Part IV] [Part V] [Part VI]
From the theoretical framework discussed in the 5 previous installments, MMT draws specific policy conclusions about fiscal, monetary and financial policy. In this final post we address the policy implications.
In line with Keynes and Minsky, MMT recognizes that unemployment, arbitrary distribution of income, price instability and financial instability are central problems of market economies that require some government involvement for resolution.
By L. Randall Wray
Sorry for the interruption of the blog. Originally I had planned 52 blogs, one-year’s-worth, although along the way I added a few so that we would have run about 13 months. Here’s why: the blogs came from a book manuscript, the Modern Money Primer. The idea was that you would not only be a test audience, but that your questions and comments would allow me to revise the manuscript as we went along. And that worked. I think the manuscript was much improved because of this blog. You helped write the book.
By Payam Sharifi
The author is currently pursuing his Ph.D. in Economics and Public Administration at the University of Missouri – Kansas City
One of the most common observations I make as I frequent the comments section of MMT blogs are the arguments in objection to it. When one mentions “keystrokes”, these posters immediately think of Weimar Germany and machines printing money and throwing them out into the streets (via helicopter or otherwise). After these commentators understand (through the help of other posters) that MMT notes that inflation is the only possible constraint to the issuer of a sovereign currency, they typically have their “gotcha” moment. Quantitative Easing (QE), they note, has been responsible for higher commodity prices and hence, MMT’ers are a bunch of crazy fanatics who want to turn the nation and the world into Weimar (or Zimbabwe). The even larger implication is that enacting goals for the public purpose is not something the government should be involved with. The view that QE is responsible for higher commodity prices is not entirely without merit, but not for reasons typically ascribed to it. By understanding the institutional aspects that MMT describes, one will understand not only the real transmission mechanism but also some other problems and solutions associated with higher energy prices. This post makes an outline of these issues.
By L. Randall Wray
There have been many job creation programs implemented around the world, some of which were narrowly targeted while others were broad-based. The American New Deal included several moderately inclusive programs such as the Civilian Conservation Corp and the Works Progress Administration. Sweden developed broad based employment programs that virtually guaranteed access to jobs.