For those who like their economics plain and simple, this introduction to Modern Monetary Theory [MMT] will be horrifying. However, if you begin by acknowledging the central mystery of money – how pieces of paper or pixels on a screen can be traded for tangible stuff – it really isn’t any more preposterous.
Prompted by the failure of modern macroeconomics to explain contradictory economic conditions like low unemployment, low interest rates, gigantic federal deficits, and low inflation, this new school of economic thought offers something badly needed to guide future policy decisions: explanations that match up well with economic data. With the change of administration, hibernating fiscal conservatives will doubtless be appalled by debt piled up when they were carefully not looking, and push for what could be the exactly wrong policies. Considering MMT may mitigate the worst mistakes.
Stephanie Kelton’s introduction is not great writing or fully explanatory, but it is the best guide to real-world fiscal and monetary policy today I have read. Get the dead-tree version of “The Deficit Myth,” dog-ear and scribble notes in it. And like those magic pictures back in the 90s, if you concentrate you may finally get it.
