MMT is no longer limited to books and journals. It's being used to support policy proposals and is both lauded and attacked in the popular press. The latter has accelerated of late, particularly as spearheaded by several prominent economists. I argue, however, that they are missing the point.
And altered economic conditions have led to the development of new economic ideas that reflect a significant break with previous orthodoxy.
“Fringe economists:” no comment. However, yes there is such a thing as a free lunch, as Dr. Summers’ own school of thought states. In economic orthodoxy, if you are operating inside the production possibility frontier , then you can produce more without giving up anything. However, economic orthodoxy simply assumes that the economy will rush to full employment and this will not become an issue. See #1.
A valid idea — that traditional fiscal-policy taboos need to be rethought in an era of low real interest rates has been stretched by fringe economists into ludicrous claims that massive spending on job guarantees can be financed by central banks without any burden on the economy. . Spending money can, but printing it cannot. And don’t forget that the private sector can create money, too.
This demonstrates a fundamental misunderstanding. The desire to use the government’s ability to fund social programs has absolutely nothing to do with inflation and interest rates being low. See #5 and #13.
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