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.

libetarian institute longsleeve shirt

Our Books

cb0cb1ef 3fcb 417d 80d8 4eef7bbd8290

Recent Articles

Recent

The Unpopular Truth About Foreign Aid

The Unpopular Truth About Foreign Aid

Editor's note: This article is taken from Libertarian Institute Managing Editor Keith Knight's opening statement from a June 28 debate on Zerohedge with Mike Benz and Cenk Uygur.  When I say American foreign aid, I am generally referring to resources given or lent by...

read more
The Ruse of a Trump-Netanyahu Falling Out

The Ruse of a Trump-Netanyahu Falling Out

Despite dramatic headlines about President Donald Trump’s clashes with Israeli Prime Minister Benjamin Netanyahu, the reality is that U.S.-Israel relations remain as robust as ever. To understand why these headlines don’t reflect a true break, one need only consider...

read more

Pin It on Pinterest

Share This