What the Staggers is missing on modern monetary theory

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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.