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Jessie’s Wrong about MMT

February 15, 2011

I am working on a long response to these three posts about MMT over at Jessie’s place.  Before I list them, I ‘ll make a few comments:

  1. He mistakes certainty in the math for religious fervor.  We’re not faith based in the MMT community, we’re math and empirically based.  (G-T) = (S-I) + (N-X)   This equation is true, and is not up for dispute.  We’re just taking 150 years of national accounting seriously, and applying it to the real world.  The conclusions that follow from taking this equation seriously are both disturbing and massively useful.
  2. He hasn’t bothered to read even the basics of MMT.  How do I know?  He quotes Alan Greenspan as being part of the MMT community because Greenspan was in charge of a fiat currency.  It’s like critiquing Austrian economics through the actions and words of Greenspan.  A critique like this would not be fair to Austrian Economics even in the smallest degree, and neither is a critique of MMT that uses Greenspan as a supporter or MMT theorist.
  3. He doesn’t understand that the knowledge of the explicit dangers of fiat currencies is a powerful tool for good.  He wants to ban fiat currencies because they sometimes end in tears. This would be like banning cars because they sometimes kill people. Understanding exactly how and why a Zimbabwe happens is a powerful tool, and understanding how and why a Japan happens is also a powerful tool.   MMT describes the path to hyperinflation and deflation with more precision and detail than any other monetary theory out there.
  4. He thinks the banks and MMT are in cahoots.  This is a laughable contention at best, and a downright evil misrepresentation of MMT at worst.  Every MMT person out there comes out against the banks. Read Randall Wray, or ponder Mosler’s famous contention “the financial sector is a lot more trouble that it is worth.”  MMT helps to destroy the biggest banks, because it takes away the “mystery power” they are given over the economy right now.

These are some of the errors he makes.  I haven’t finished the post yet, but I will be going paragraph through his posts, so I can be fair to his misguided ideas about MMT.

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