Howard Reed has a knack for getting to the core of critical economic issues. He has written this as a comment on the blog this morning, referring to the very poor New Statesman article on modern monetary theory:
The elephant in the room — which isn't mentioned at all in the article — is that MMT explodes false constraints on govt spending based on the “handbag economics” which post-2010 UK governments have claimed to be operating under (i.e. “the govt MUST live within its means”, “the deficit on current account MUST be balanced within 5 years”, etc.) Of course, while Osborne, Hammond etc have been saying “we need to balance the budget” they've simultaneously been giving huge amounts of money away to middle-to-high income taxpayers and corporations through income tax and corp tax cuts, so it was always garbage even on its own terms. But it provides a convenient cover for cutting public spending. MMT has the great merit that it exposes all this “balanced budget” stuff for the eyewash that it is, and I wish the article had been upfront about that. There is (somewhere) a full employment resource constraint and that's where inflation, etc. comes in, but that's quite different from the fake constraints that the UK Government's been peddling for the last decade
I agree.
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Constant attempts by media sycophants to rubbish MMT will ultimately fail.
They will fail because eventually a critical mass of people will cotton-on that what is being described is exactly the system that got us where we are. A wealthy and powerful elite has used this system of fiat money to hoard the worlds money to its own advantage.
Gradually the media rubbishing will fall into the cracks that open-up in their own lies and misrepresentations. Most of them don’t even realise they are doing it….they just recycle the BS.
A bit like cow farts but more noxious.
Would love to see you in conversation with Grace Blakeley, the new “rising star of the left” can it be arranged?
We know each other
Great piece, thanks Richard.
This is interesting because recently there seems to be a shift in attitude to MMT in the main stream. Clearly the more that people learn about MMT, the more it makes sense. Back in the day, monetarism caught on because it was couched in a simple way which people could grasp quickly. For example, ‘Every housewife knows that you have to budget.’ This was a hugely political staomade around the late 1970’s to justify the move toward ‘free markets’. Now with MMT, we can argue why this is wrong.. The first step is always to show why taxes do not pay for public spending. Then borrowing, ie Why would you borrow if you are allowed to create money ? Clearly the more we talk about MMT the more people see the austerity lie. As my son said the other day, when I explained that part of the Government debt was the money in his pocket because all coins & UK bank notes must have been spent by the Government first, so the debt is simply Government spent currency that hasn’t been collected back in as tax, ‘Oh yes, when you explain, it makes sense.’
Quite so