Tag Archives: Modern Monetary Theory

William K. Black
March 13, 2019      Bloomington, MN

Third article in a series on MMT[1]

I urge readers to review Scott Fullwiler’s brief paper on the theoretical and predictive successes of MMT scholars on a topic of enormous theoretical and practical importance.  You do not need economics training to understand it.  Fullwiler reports the results of two “natural experiments.”  In this context, this means an unplanned experiment.  The twin experiments were:

1. What would happen if orthodox scholars tested the predictive strength of MMT?
2. How would Paul Krugman react to an orthodox scholar’s demonstration of the predictive accuracy of key MMT insights – if Krugman did not know that the orthodox scholar’s work was verifying key MMT predictions?

Fullwiler’s paper answers both questions.  The orthodox scholar, unknowingly, confirmed the predictive strength of many of MMT’s most important insights.  Krugman praised De Grauwe’s findings as “seminal.”  Krugman had no idea he was praising the predictive successes of MMT scholars because Krugman had never read MMT scholars’ work.  Fullwiler’s paper shows that a series of MMT scholars made De Grauwe’s point more than a decade before De Grauwe published his “seminal” contribution in an orthodox journal.  Stephanie Kelton was one of the MMT scholars who demonstrated precedence, making Krugman’s use of the word “seminal” as a descriptor even more unintentionally humorous.

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William K. Black
March 11, 2019     Bloomington, MN

First Article in a Series

The massive, coordinated assault on Modern Monetary Theory (MMT) scholars by the most elite forces of orthodoxy represents a watershed moment in economics, but we must not lose sight that the real attack is actually on progressives, particularly the newly elected progressive members of Congress plus Elizabeth Warren, and Bernie Sanders.  Even that statement is incomplete, for it is the combination of the rise of these progressive elected officials, the 2020 presidential election (and nomination battle), and the exceptional embrace of progressive policies by the general public and Democratic Party candidates for the presidential nomination that prompted the coordinated and personalized assault of overwhelmingly neoliberal economists on MMT scholars.  This first column in a series provides an overview of why the progressives’ embrace of MMT spurred the terrified assault on MMT by orthodox economists.  That desperate assault reveals how much orthodox economists fear the voters’ increasing embrace of the progressive core policy issues on the environment, health care, and restoring the rule of law to the markets.  Later articles in this series will flesh out that overview.

The polls showing enormous public support for the key progressive initiatives terrify the neoliberals.  Sanders’ 2016 policy initiatives have transformed the Democratic Party candidates’ policy proposals for 2020.  Imitation is the sincerest form of flattery.  Warren’s policy proposals are having a similar effect.  Polls show broad support for the Green New Deal, Medicare for All, a jobs guaranty program, a tax system that would reverse the current race to plutocracy, a campaign to reduce gun slaughter and massacres, the restoration of the rule of law (including antitrust laws) to business (particularly banking and Silicon Valley), and a meaningful minimum wage.

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By William K. Black
February 18, 2019     Bloomington, MN

Modern Monetary Theory (MMT) continues to advance rapidly.  We are past the first phase of reaction (first they ignore you), deeply into the second phase (then they attack you), and expanding the ranks of the third phase (then you win).  We are very early in the third phase, winning with increasing numbers of people, but still a minority view.

One of the proofs of MMT’s advances is a nearly respectable treatment by the Wall Street Journal as the feature of a news article.  The other major proof is the pathetic efforts of MMT critics quoted in the article to attack MMT.  The article, implicitly, admits that MMT scholars have repeatedly proved correct in their predictions that the existing and projected U.S. fiscal budget deficits would not trigger damaging shortages of real resources that will cause damaging levels of inflation.  The article, implicitly, admits that nations with fully sovereign currencies are vastly less vulnerable to economic injury from budget deficits.

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