The Political Alchemy Called Modern Monetary Theory

The assumption that government will fix the economy and increase our standard of living beyond what entrepreneurs can do is unbearably naïve.

The new kid on the economics block is something called modern monetary theory. The name is new, but the «theory» is not.

Proponents adamantly claim that it is both new and a theory of economics. To make it appear this way, they dress the ideas in unusual-sounding jargon and use rhetorical tricks. For example, instead of presenting actual arguments or responding to direct questions, they present a circular flow of deepities. To top it off, they, at least in my humble experience, usually lack fundamental economic literacy. This can make rebutting their nonsensical claims a challenge and, as a result, debates with this crowd typically go nowhere.

In order to figure out what exactly they are claiming—beyond the deepities—I decided to acquaint myself with the prominent proponents. I read «founder» Warren Mosler’s so-called white paper on MMT, but it’s not very helpful: there is little by way of theoretical explanation, other than redefining if not obscuring the meaning of common concepts in economics. Mosler also seems overly eager to move from explanation to instead argue for his preferred policies.

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