The doctrine behind MMT was smart but not completely right

Well, it looks as if policy debates over the next couple of years will be at least somewhat affected by the doctrine of Modern Monetary Theory

The good news is that MMT seems to be pretty much the same thing as Abba Lerner’s “functional finance” doctrine from 1943.

His argument was that countries that (a) rely on fiat money they control and (b) don’t borrow in someone else’s currency don’t face any debt constraints, because they can always print money to service their debt. What they face, instead, is an inflation constraint.                                                                                                                                                
What about debt? A lot depends on whether the interest rate is higher or lower than the economy’s sustainable growth rate. 

Paul Krugman NYT Feb. 12, 2019


Head of world’s largest hedge fund says adoption of unorthodox monetary policy is ‘inevitable’

Ray Dalio, founder of Bridgewater Associates, says that unconventional monetary policies may be required as traditional policy stumbles.





Kommentarer

Populära inlägg i den här bloggen

Niklas Ekdal, bunkergängets apologet

Röd Öppning - Red Opening

Tickande bomben i Heimstaden AB