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Learn To Love Trillion-Dollar Deficits


This chick is getting annoying.  She has stopped growing.


Has anyone managed to engage with her to try and debrainwash?


Having read Cullen's stuff for ten years, I tend to agree with you - Kelton has stopped growing her knowledge on how our system works.  Cullen has written a critique of MMT - wonder if anyone has tried to mail a copy to her?

James Charles has reacted to this post.
James Charles

I cobbled the below together.  Anyone feel free to take them and improve upon.  Maybe eventually turn it into an excellent FAQ like this one: http://econfaculty.gmu.edu/bcaplan/anarfaq.htm

Objections to Modern Monetary Hypothesis (it has not been proven a Theory)

1. Jacking up tax rates to reign-in inflation is politically untenable to politicians and their constituents.

2. Changes in tax policy affect the economy with a lag.  Politicians would be eternally behind the cuve.

3. Tax policy is a blunt instrument at best, not one of finesse.  How much to raise taxes by?  Where to apply?

4. The slippery slope is not just high inflation from non-productive government spending, but a catastrophobic loss-of-faith currency crisis.

5. Gresham's Law would nullify the store-of-value from requiring government currency to be used for paying taxes in case of #4.

6. Debt issuance -- as opposed to direct currency creation -- is trackable and accountable to politics and the ballot box.

7. #1 would worsen conditions into stagflation due to #4.


Kelton is one of the few reasonable MMT people. But honestly, the whole theory is pretty stupid when you think about it. It all amounts to a very simple premise:

Rich countries can spend a lot of money because they control their own printing press. 

This isn't new or helpful and the only people who really find it useful are amateurs who think that the government has to behave like a household.

Based on the interview I posted, she seems more nuanced.  But trying to pass off MMT as merely descriptive instead of proscriptive belies the turmoil in that area, unless she has a virtual lock on what the T is in MMT by being the leading proponent.  Technically, I have no problem with what she is saying.  Realistically, we're not setup to think in terms of managing and constraining inflation off of fixed exchange rates, either ideologically or operationally.  If MMT helps herald a change in that, it will hopefully be for the better.


I agree that Kelton's story is a tired one - but probably not for the reasons you give.  Debt issuance certainly feeds the capitalist system very efficiently, but not in terms of public purpose spending or even "productive" spending.  Leverage, almost by definition, leads to and has lead to the hockey-stick wealth inequality we are experiencing.  Capitalism is sucking the life blood out of its own customers.

Well, that sounds more like the typical failing of government to allocate resources properly (or constrain resources), undoubtedly hobbled by deficit hawks paranoid about hyperinflation, not capitalism per se.  But lets be honest, capitalism is still largely working under the Scroogish Friedman-style shareholder model, not the more progressive stakeholders.  Gotta let that BabyBoomer+ generation continue to retire out of the workforce (and die off) before we'll see a real seachange instead of all the greenwashing and virture signaling going on.

I'm really not all that concerned about capitalism, but I am concerned about the state-capitalism that just got implemented yesterday.  We are heading into Venzeuela and China at warp speed.  MMT won't have the proper check and balances when put into greedy political hands.


The MMT people have become more like a cult as they've gotten a wider audience. It's becoming increasingly clear that they don't care about describing the system correctly. Their goal is to convince people that we need a Job Guarantee and they will deceive people however they can to make us think that.

I have no idea if a JG is a good or bad idea. But I am 100% certain that their description is wrong and misleading.

How are resources allocated?

“Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens

Martin Gilens and Benjamin I. Page

Each of four theoretical traditions in the study of American politics—which can be characterized as theories of Majoritarian Electoral Democracy, Economic-Elite Domination, and two types of interest-group pluralism, Majoritarian Pluralism and Biased Pluralism—offers different predictions about which sets of actors have how much influence over public policy: average citizens; economic elites; and organized interest groups, mass-based or business-oriented. A great deal of empirical research speaks to the policy influence of one or another set of actors, but until recently it has not been possible to test these contrasting theoretical predictions against each other within a single statistical model. We report on an effort to do so, using a unique data set that includes measures of the key variables for 1,779 policy issues. Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic-Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism. “


By the plutocrats?


"Debt issuance certainly feeds the capitalist system very efficiently, but not in terms of public purpose spending or even "productive" spending."

Here: https://eprints.soton.ac.uk/339271/1/Werner_IRFA_QTC_2012.pdf

is someone who offers evidence that the 'right' type of credit creation is the key to a 'superior economic performance'?

“Economies that manage to focus credit creation on productive and sustainable use – i.e. not for consumption and asset transactions – are likely to achieve superior economic performance (high nominal GDP growth and comparatively low inflation, without asset price cycles and with financial system stability). As the World Bank (1993) indicated, and others have also found (Patrick, 1962; Wade, 1990; Werner, 2000a, b; Werner, 2003), at the heart of the East Asian economic miracle has been a process of guiding credit towards productive use and suppressing unproductive and unsustainable (hence systemically risky) use of credit. . . . “

Also: https://eprints.soton.ac.uk/36569/1/KK_97_Disaggregated_Credit.pdf