More MMT follies (Sympathy for Krugman)

by | Mar 2, 2019

More MMT follies (Sympathy for Krugman)

by | Mar 2, 2019

Paul Krugman must be pulling his hair out about now. He recently complained that it was almost impossible to figure out what MMTers were advocating, and then tried to pin them down with some very specific questions:

Are MMTers claiming, as Kelton seems to, that there is only one deficit level consistent with full employment, that there is no ability to substitute monetary for fiscal policy? Are they claiming that expansionary fiscal policy actually reduces interest rates? Yes or no answers, please, with explanations of how you got these answers and why the straightforward framework I laid out above is wrong.

Today, Stephanie Kelton responded as follows:

Quick responses first, followed by explanations behind my thinking.

#1: Is there only one right deficit level? Answer: No. The right deficit depends on private behavior, which changes. MMT would set public spending always to the level required to achieve full employment, and then accept whatever deficit may result.

Read the rest at econlib.org.

Our Books

Shop books published by the Libertarian Institute.

Podcasts

scotthortonshow logosq

coi banner sq2@0.5x

liberty weekly thumbnail

Don't Tread on Anyone Logo

313x0w (1)

313x0w (1)

313x0w (1)

Our Books

Recent Articles

Recent

The ‘Fake China Threat’ Vindicated

The ‘Fake China Threat’ Vindicated

For several years and in a variety of works at the Libertarian and Mises Institutes, I have argued that Washington’s bipartisan consensus about Beijing as an aggressive, revisionist challenger to U.S. global supremacy was deeply misguided. Far from seeking global...

read more

Mass Production Equals Mass Consumption

[R]elative shares in national income have remained substantially constant over the last hundred years. This, however, is true only if we measure them in money. Measured in real terms, relative shares have substantially changed in favor of the lower income groups. This...

read more

Pin It on Pinterest

Share This