Dear Editor
Modern Monetary Whatnow?
In January’s Chronicle Michael Rodber responded to my December article Inequality in a Just World. He correctly identified Modern Monetary Theory (MMT) as the economic framework for the article and expressed a wish to debate matters and summarise these debates in future Chronicles. I
have discussed this with both Michael and the editor (Stephen), and we have, regretfully, agreed that the Chronicle is not really a good forum for economic debate. So, for clarification, MMT provides a description of the macro-economy that reverses the familiar narrative. It explains that our government can’t run out of money because it literally creates it. If that’s wrong, someone needs to credibly explain where money comes from, or how the government can possibly run out of it, or stand as the lender of last resort underpinning our banking and financial system.
As Professor Kelton explains, money may not grow on trees but it doesn’t grow on rich people either. According to MMT the true limits in our economy depend on the human and physical resources within it, not money, and those resources can often benefit from being invested in. Taxpayers, then, depend on money the government creates (not vice versa).
The Mainstream Narrative
The mainstream narrative is considered both wrong and damaging. It may persuade us that the government needs to cut spending, even if it increases inequality, harms the vulnerable, hollows out public services, makes many of us poorer, and damages businesses that depend on people to spend money to buy the goods and services those businesses wish to sell. Further still, it may encourage the view that, if someone, somewhere, can’t make money from combatting climate change, then we can’t afford not to burn the planet. If MMT is right this matters. It is promoted by eminent professors around the globe and in multiple forums and formats, many freely available online. People offer many possible reasons why none of this is ever discussed in the mainstream media, including simple ignorance, misunderstanding (e.g. MMT does not say you can print money without limit), and vested interests, too many to discuss here. But, if readers would like to investigate further, then, if you are able, I suggest you Google BBC Why we need to debunk the ‘deficit myth’ or type the following in the YouTube search bar:
- Top 10 things Stephanie Kelton wants you to know about the economy. Prof S Kelton
- Why do governments issue bonds when they don’t need to? Prof Murphy
- Is the UK heading into VERY dark times? Prof Keen
Larry Dolan
