Last week. I posted about modern monetary theory (MMT) and how it challenges conventional wisdom regarding deficits. In her recent book titled The Deficit Myth , Author Stephanie Kelton – Professor of Economics and Public Policy at Stony Brook University – explores the tenets of the theory and its implications to government spending. Progressive agendas aimed at solving the challenges of education, healthcare, climate change and others look at modern monetary theory as a possible solution. In contrast to borrowing money or raising taxes, the monetisation of government expenditure (its financing by the central bank’s creation of money) is costless, in that the government does not have to pay interest on cash.
The attention garnered by MMT has drawn its share of critics. In the interest of understanding both sides of this debate, I read a book titled Modern Monetary Theory and its Critics. The book is a series of essays edited by Edward Fullbrook and Jamie Morgan. As the authors state: in the wake of the decade of fiscal austerity following the Global Financial Crisis, and the apparent exhaustion of standard monetary policy strategies and the ever-increasing income disparity, interest in MMT has grown beyond academia. The skeptics provide a different point of view. As we search for answers to our pressing issues and strive to think differently, it’s prudent that we keep an open mind to these new ways of thinking, while at the same time, understanding their limitations. I recommend the book, which I have added to my Book Library.