- Most academics couldn't write clear English if their lives depended on it. A few can though. Paul Krugman has long set the standard, and now noted US economist Stephanie Kelton has joined him. It's been a long time since I've read a technical non-fiction title as exceptionally well written as this one. The prose is lucid and the organisation of the ideas highly logical.
- Modern Monetary Theory is revolutionising the way we understand how economies actually work, but only if those economies have their own currency untethered to any other. Countries like the US, the UK, Japan, China, Australia and Canada belong in that group.
- These economies need not be fearful of debt or deficits under any circumstances. They can create or print or 'borrow' funds as needed without limits or obligations.
- This book is as much about fiscal policy as it is about monetary policy. Kelton outlines in detail a revolutionary tax/expenditure dynamic that completely turns upside down the way these fundamental elements of economic reality are usually understood by conservative and progressive governments world wide. Our traditional obsession with deficits and surpluses, with taxing and spending, with austerity and extravagance, 'are all wrong'.
- According to MMT fiscal surpluses suck money out of the economy, and fiscal deficits do the opposite. While ever there is unemployment or underemployment, even at relatively low levels, governments need to run deficits to stimulate growth and productivity by boosting demand. Deficit spending re-energises the economy to the maximum extent necessary, before inflation kicks in.
- The national debt poses no financial burden whatsoever, provided inflation is under control. And that will be the case while ever there are resources in the economy, such as labour, skills and services, that are under-utilised.
- Each chapter addresses a range of current economic policy 'myths'. The chapter on inflation is excellent, as are the chapters on the role of governments in managing the economy, the notion of 'crowding out' the private sector, trade, social security, and whether future generations will suffer. The notion that our children will have to 'pay for it' is absurd.
- Kelton repeats over and over again ‘The national debt poses no financial burden whatsoever’. The sustainability of the debt is dependent on inflation remaining under control. Nothing else. Profoundly wrong thinking is expertly and passionately demolished.
- A key idea of MMT proponents is that the government should directly fund employment for those without work. This ‘job guarantee’ will automatically kick in when anybody can't find work for any reason. The work would be productive and needed, and suitable to the worker's skill and experience level.
- Is all this divorced from the real world? Are Kelton and her MMT colleagues indulging in an unforgivable naïvety?
- No.
No comments:
Post a Comment