Given the world in which we are forced to live, the proposed Senate resolution is probably the best indication that MMT is correct. Even Alice in Wonderland would be taken aback.
(And, good for John Harvey in his response!)
I always figured I'd end up before a firing squad, but never imagined it would be over a textbook.
The publisher just told us they sold out the first printing and are rushing the second to try to sell some more books before the US bans it. So, better get your copy quick.
I changed the header as we seem to have left public choice behind. Altho maybe not. I do plan to respond to Anne and also to the discussion of internal developments of neoclassicalism.
Congratulations, Randy, that you guys made them feel so defensive that they craft such ridiculous resolutions.
Don’ forget, we will teach 40 Chinese PhD students on MMT (you) and institutionalism (me) at the Jilin Pluralist Summer School in mid-July.
Well here you go. For all the MMT haters. There is now actually a Senate Resolution to condemn it. And FIVE, yes, count them FIVE have already signed on. That's practically unanimous, I think. Write your senator.
Pasted and attached. LOL.
116TH CONGRESS 1ST SESSION S. RES. ll
Recognizing the duty of the Senate to condemn Modern Monetary Theory and recognizing that the implementation of Modern Monetary Theory would lead to higher deficits and higher inflation.
IN THE SENATE OF THE UNITED STATES
llllllllll Mr. PERDUE (for himself, Mr. BRAUN, Ms. ERNST, Mr. MORAN, and Mr. TILLIS) submitted the following resolution; which was referred to the Committee on llllllllll
RESOLUTION Recognizing the duty of the Senate to condemn Modern Monetary Theory and recognizing that the implementation of Modern Monetary Theory would lead to higher deficits and higher inflation.
Whereas noted economists from across the political spectrum have warned that the implementation of Modern Monetary Theory (referred to in this preamble as ‘‘MMT’’) would pose a clear danger to the economy of the United States; Whereas, on March 4, 2019, former Secretary of the Treasury Lawrence H. Summers said that— (1) MMT is fallacious at multiple levels; (2) past a certain point, MMT leads to hyperinflation; and
(3) a policy of relying on a central bank to finance government deficits, as advocated by MMT theorists, would likely result in a collapsing exchange rate; Whereas, on February 26, 2019, Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, said: ‘‘The idea that deficits don’t matter for countries that can borrow in their own currency I think is just wrong’’; Whereas, on March 25, 2019, Janet Yellen, former Chair of the Board of Governors of the Federal Reserve System, disagreed with those individuals promoting MMT who suggest that ‘‘you don’t have to worry about interest-rate payments because the central bank can buy the debt’’, stating: ‘‘That’s a very wrong-minded theory because that’s how you get hyper-inflation’’; Whereas the March 2019 report entitled ‘‘How Reliable is Modern Monetary Theory as a Guide to Policy?’’ by Scott Sumner and Patrick Horan of the Mercatus Center at George Mason University found that— (1) MMT— (A) has a flawed model of inflation, which overestimates the importance of economic slack; (B) overestimates the revenue that can be earned from the creation of money; (C) overestimates the potency of fiscal policy, while underestimating the effectiveness of monetary policy; (D) overestimates the ability of fiscal authorities to control inflation; and (E) contains too few safeguards against the risks of excessive public debt; and (2) an MMT agenda of having fiscal authorities manage monetary policy would run the risk of—
(A) very high debts; (B) very high inflation; or (C) very high debts and very high inflation, each of which may be very harmful to the broader economy; Whereas the January 2019 report entitled ‘‘Modern Monetary Theory and Policy’’ by Stan Veuger of the American Enterprise Institute warned that ‘‘hyperinflation becomes a real risk’’ when a government attempts to pay for massive spending by printing money; and Whereas the September 2018 report entitled ‘‘On Empty Purses and MMT Rhetoric’’ by George Selgin of the Cato Institute warned that— (1) when it comes to the ability of Congress to rely on the Treasury to cover expenditures, Congress is, in 1 crucial respect, more constrained than an ordinary household or business is when that household or business relies on a bank to cover expenditures because, if Congress is to avoid running out of money, Congress cannot write checks in amounts exceeding the balances in the general account of the Treasury; and (2) MMT theorists succeed in turning otherwise banal truths about the workings of contemporary monetary systems into novel policy pronouncements that, although tantalizing, are false: Now, therefore, be it Resolved, That the Senate— 1 (1) realizes that deficits are unsustainable, irre-2 sponsible, and dangerous; and 3 (2) recognizes— 4
(A) that the implementation of Modern 1 Monetary Theory would lead to higher deficits 2 and higher inflation; and 3 (B) the duty of the Senate to condemn 4 Modern Monetary Theory
L. Randall Wray
Senior Scholar, Levy Economics Institute
Co-editor Journal of Post Keynesian Economics
ISSN 0160-3477 (Print), 1557-7821 (Online)
New Book: Why Minsky Matters: An Introduction to the work of a maverick economist, Princeton University Press http://press.princeton.edu/titles/10575.html
New Book: Modern Money Theory: a primer on macroeconomics for sovereign monetary systems, Palgrave Macmillan http://www.palgrave.com/page/detail/modern-money-theory-l-randall-wray/?isb=9781137539908
Please make note of my new email address as I will be transitioning all email to: