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Is Modern Monetary Theory a good idea?

byMilan_Griffes2mo16th Apr 20199 comments

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https://www.vox.com/future-perfect/2019/4/16/18251646/modern-monetary-theory-new-moment-explained

I don't know very much about this, but it seems like MMT is getting enough cultural / political purchase that it could end up having a big impact.

Either a big positive impact or a big negative impact, depending on how sensible it is.

Does anyone with MMT expertise have a take?

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The IGM Economic Experts Panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs they assembled a panel of expert economists. They had something on Modern Monetary Theory recently:

http://www.igmchicago.org/surveys/modern-monetary-theory

Of interest might also be the comments and further links that the economists cite to backup their opinions.

It makes sense as a different way to conceptualise the government's budget constraint - limited by inflation (or the maximum sustainable level of seignorage) rather than an ability to borrow per se.

I just think analysing matters that way won't show that the government can spend a significant amount more than it does today, without higher taxes. There isn't lots of latent productive potential in the economy right now that could be unleashed, if only there were more spending. If that's correct, that makes it a much less interesting idea.