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Saturday, June 20, 2020

Keynesian Macroeconomics Out of Control

Macroeconomics has become so far removed from reality that its practitioners cannot understand what is happening in the real economy. Never has this been more obvious than today. While they claim to be economically literate, macroeconomists are in thrall to their paymasters; a combination of government, quasi-government and financial institutions with a vested interest in not looking too closely at the full consequences of government economic and monetary policies. 

From this neo-Keynesian macro world, the latest spinoff is modern monetary theory, which is little more than a logical extension of Keynesianism —justifying intervention by the state and the use of fiat currency being expanded limitlessly. MMT is the end of the line for arguments based on macroeconomic fallacies that have their origin in Keynes.

Stephanie Kelton’s book, The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy was released on Tuesday (9 June):

“Stephanie Kelton’s brilliant exploration of MMT dramatically changes our understanding of how we can deal with crucial issues ranging from poverty and inequality to creating jobs, expanding health care coverage, climate change, and building resilient infrastructure.”

That is the first sentence of Amazon’s sales pitch. If these claims are true, the world’s economic problems are easily solved. But we must put aside the marketing hyperbole and look at MMT seriously...

- Source, James Turk's Goldmoney