Modern Monetary Theory (MMT)

The Macro Tourist - blogisti Kevin Muir on tänä keväänä kirjoittanut MMT:stä pari hyvää juttua. Ne kannattaa käydä lukemassa.

MMT saattaa olla toteuttamiskelpoinen väline niille valtioille, joilla on valuuttavarantostatus (USA) . Se ei missään nimessä ole toimiva väline niille talouksille, joilla tätä statusta ei ole.

Oaktree Capitalin Howard Marks on myös uusimmassa memossaan kommentoinut teemaa:

A new entrant in this area is receiving a lot of attention: Modern Monetary Theory (“MMT”). One of 
its components is the belief that government deficits currently are too small, and in any event not a bad thing:

Tax revenues are not what finance the government’s expenditures, argues Stephanie 
Kelton, an economist at Stony Brook University and one of the most influential 
modern monetary theorists. What actually happens in a country that controls its own 
currency, she says, is that the government first decides what it’s going to spend. In 
the United States, Congress agrees on a budget. Then government agencies start 
handing out dollars to the public to pay for those tanks, earth movers and salaries.
Afterward, it takes a portion back in the form of taxes. If the government takes back 
less than it gave out, there will be a deficit. . . . 

Ms. Kelton . . . points out that every dollar the government spends translates into a 
dollar of income for someone else. So a deficit in the public sector simultaneously
produces a surplus outside the government. . . . (The New York Times, April 7, 2019)

Thus, according to MMT, deficits are benign – not a sign of profligacy – and merely an indication that the government has put more money into the economy than it has taken out in taxes. MMT is modern in that it has moved past the old-fashioned concept of balancing spending and revenues, opening the door for bigger deficits.

Does Ms. Kelton think deficits don’t matter? No, the Times article goes on:

Of course they matter, she said. . . . They can be too big, especially if they are not 
used to increase the nation’s productive capacity, or if there is a shortage of labor, 
raw materials and factories.

In this connection, we should note that Ms. Kelton served as an economic adviser to Bernie Sanders in 2016. Thus it may be reasonable to suspect that MMT is largely a rationale for governments to give away more free stuff, expanding their deficits. Sometimes it can be hard to separate economic opinions from political leanings.

This relaxed view of deficits reminds me of a hypothetical consumer who has a credit card with no
credit limit. He can spend whatever he wants without having to worry about paying off the balance. 

In theory, this could work (although it’s challenging to figure out what’s in it for the card issuer). 
But at a minimum it doesn’t allow for unforeseen developments. I believe here, as elsewhere, the 
workings of economics are too uncertain for a perpetual motion machine like MMT to be relied 
upon. In other words, Modern Monetary Theory is just that: a theory. What if it’s wrong?

. . . when the University of Chicago’s Booth School of Business asked top scholars 
about a couple of [MMT’s] claims, they split between the 28 percent who disagreed 
and the 72 percent who strongly disagreed. (ibid.)