Tuesday, 4 June 2019
Silly article published by the Adam Smith Institute on MMT.
The article is entitled “Stop trying to use monetary policy for your ideological whims” and is by Joakim Book. I left a less than flattering comment after the article as follows.
Joakim Book’s article is nonsense, like many other recent articles on MMT. MMT does not advocate, to quote Joakim Book’s first paragraph, that “worrying about the deficit or government spending is unnecessary”: that is MMTers have repeated till they are blue in the face that inflation puts a limit to the size of the deficit.
What MMT however DOES CLAIM, which is a bit different to the conventional wisdom, is that the size of the deficit and debt PER SE are irrelevant. I.e. MMT says (much as Keynes said) that the deficit should simply be whatever brings full employment without excess inflation. That’s in stark contrast to the ludicrous George Osborne policy on deficits which consisted of repeatedly promising to abolish the deficit in about three years’ time, only to find he COULDN’T reduce it: a policy being copied by the Labour Party incidentally.
In contrast to the above technical point about deficits, MMTers (like Keynes) do tend to be left of centre and do advocate a number of types of public spending increase, like the Green New Deal, which Joachim Book mentions. However it’s not just left of centre people who claim something needs to be done about climate change: plenty of right of centre people think likewise. Indeed, a large majority of scientists agree that we need to do something, and fast.
Joakim Book then displays his ignorance of this whole subject even more starkly when he claims that Positive Money’s “agenda has always been more narrowly focused on advocating for “a fair, democratic and sustainable economy” – predominantly through the use of monetary reform along MMT lines.”
Well the big problem there is that MMTers do not have much to say on the subject of “monetary reform”!!!! Joakim Book might as well have accused the Archbishop of Canterbury of having strong views on the design of Formula One racing cars!!!
It’s true that Warren Mosler (founder of MMT) does have views on bank reform. But that’s hardly surprising given that he runs a bank. But apart from about one article by Mosler on that subject, MMTers are pretty well silent on “monetary reform”.