Pragmatic Capitalism

Capital for Living a More Practical Life

5 Big Macro Myths

James Montier of GMO wrote a wonderful piece earlier this week that I am just getting around to posting.  Pragcap readers will really enjoy it as it covers a lot of ground that I’ve been harping on for years now.  James discusses 5 big macro myths that just won’t die including:

  • Myth 1: Governments are like households
  • Myth 2: Printing money to finance budget deficits is inflationary
  • Myth 3: Budget deficits/high debt lead to high interest rates
  • Myth 4: Budget deficits are unsustainable
  • Myth 5: Debt is a burden on future generations

James, like myself, uses a Post-Keynesian framework for understanding the world so regulars here should understand everything he’s talking about.  You’ll also find some version of all of these myths on my “Biggest Myths in Economics” page, but I highly recommend reading the piece from Montier.  I hope you enjoy and pass it around.  Now you know that Cullen Roche isn’t some weird monetary crank spreading these weird ideas – there are legitimately smart economists spreading these ideas as well!

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