{"id":75263,"date":"2024-04-29T07:54:21","date_gmt":"2024-04-29T06:54:21","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=75263"},"modified":"2024-04-29T07:54:21","modified_gmt":"2024-04-29T06:54:21","slug":"it-really-is-time-that-politicians-took-note-of-modern-monetary-theory","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2024\/04\/29\/it-really-is-time-that-politicians-took-note-of-modern-monetary-theory\/","title":{"rendered":"It really is time that politicians took note of modern monetary theory"},"content":{"rendered":"

The Guardian has an editorial this morning<\/a> that I recommend reading in full, but which I will discuss here nonetheless.<\/p>\n

Of most note in their introduction is the observation that:<\/p>\n

Jeremy\u00a0Rudd of the US Federal Reserve writes scornfully in his latest book, A Practical Guide to Macroeconomics, that economists\u2019 role today is to justify \u201cwhat elite interests want to do anyway: deregulate, pay fewer taxes, keep wages as low as possible\u201d.<\/p><\/blockquote>\n

There is, I think, considerable truth in that assertion.<\/p>\n

What, however, they go on to say is that:<\/p>\n

One school of thought attempting to rewrite the textbooks is called\u00a0modern monetary theory<\/a>, whose face is\u00a0Stephanie Kelton<\/a>, a former economic adviser to Bernie Sanders. She argues that there is no financial constraint on government spending; money can be created and invested so long as there is capacity in the economy to absorb the cash. If not, inflation will follow. This shouldn\u2019t be controversial. John\u00a0Maynard Keynes said as much in his 1940 book,\u00a0How to Pay for the War<\/a>. The theory is not just about deficits: a strong exporting nation should pursue fiscal surpluses \u2013 an insight attributed to\u00a0Prof Kelton\u2019s\u00a0tutor<\/a>\u00a0and ex-Treasury adviser\u00a0Wynne Godley<\/a>.<\/p><\/blockquote>\n

That is spot-on, including the suggestion that inflation is one of the core concerns of MMT, which those macroeconomists who serve elite interests, always seek to deny.<\/p>\n

As they also note:<\/p>\n

Her current argument that rising US interest rates might be\u00a0inflationary\u00a0finds her agreeing with her sharpest critic,\u00a0Larry Summers<\/a>. Such challenges should be welcome in Britain. The US debates have produced an industrial policy powered by government\u00a0deficits\u00a0\u2013 and the world\u2019s\u00a0fastest growing advanced economy.<\/p><\/blockquote>\n

That argument that the raising of interest rates has, itself, caused inflation is something that will be familiar to readers of this blog because I have rehearsed it here on several occasions.<\/p>\n

As the Guardian then notes, all current mainstream political and economic opinion does appear to be aligned against such thinking at present. But as they also noted, one voice has suggested<\/a> that this should automatically mean that the outliers should be listed to, when saying:<\/p>\n

The history of British policymaking in the last hundred years has taught us that on all the other occasions when major economic misjudgements were made, broad-based political, media, financial and popular opinion was in favour of the decision at the time, and the dissenting voices of economists were silenced or ignored.<\/p><\/blockquote>\n

Ed Balls said that in 2010. But he's mainstream now, serving the interests of the elite with an agenda that will tick all their boxes.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Guardian has an editorial this morning that I recommend reading in full, but which I will discuss here nonetheless. Of most note in their
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,174,106],"tags":[],"class_list":["post-75263","post","type-post","status-publish","format-standard","hentry","category-economics","category-modern-monetary-theory","category-politics"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/75263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=75263"}],"version-history":[{"count":1,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/75263\/revisions"}],"predecessor-version":[{"id":75264,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/75263\/revisions\/75264"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=75263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=75263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=75263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}