Modern Monetary Theory « Financial Reality

A blogger, who I read regularly, reported that faculty from University of Missouri at Kansas City (UMKC) was running seminars for Italians upset by austerity pushing the so-called “Modern Monetary Theory” (MMT). Which, like a certain “empire¹,” is neither modern or a theory. It is not modern because it was originally developed in 1895, when it was called “chartalism,” and it is not a theory because it has never been subjected to any kind of validation or falsification and there is no evidence that it works in practice. Therefore it is only a hypothesis.

Anyway, muttering aside, it does serve as a distillation of the idiocy purveyed by so-called economists. Basically, chartalism holds that government should simply print whatever money it wishes to spend, which spending is to include providing a job for anyone that wants one. Taxation is simply a method of slowing demand when necessary to control inflation. Government bonds are simply a way to manage liquidity and interest rates.

via Modern Monetary Theory « Financial Reality.

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