With governments searching for ways to manage the unprecedented economic fallout of the COVID-19 pandemic, the policy agenda implied by Modern Monetary Theory has become all the more appealing. Yet, insofar as MMT ignores the demand for money, it is a risky guide for policymakers.
NEW YORK – Modern Monetary Theory (MMT) offers a dangerous half-truth that has become particularly seductive now that governments are desperate for tools with which to keep their economies afloat. A recent statement by MMT proponent Stephanie Kelton to the Financial Times is a case in point. Referring to the United Kingdom’s current Conservative government, she argues that, “They’re going to have massive deficits. And it’s fine.”
NEW YORK – Modern Monetary Theory (MMT) offers a dangerous half-truth that has become particularly seductive now that governments are desperate for tools with which to keep their economies afloat. A recent statement by MMT proponent Stephanie Kelton to the Financial Times is a case in point. Referring to the United Kingdom’s current Conservative government, she argues that, “They’re going to have massive deficits. And it’s fine.”