"The Upside-Down World of Modern Monetary Theory" - Murphy

Wednesday, May 11, 2011
"Modern Monetary Theory (MMT) is a hip economic/financial paradigm apparently sweeping a world unsatisfied with mainstream economics. Over the past year, I have been hearing a growing number of people refer to MMT: either fans who think it blows up my Austrian views, or foes who think it deserves a full-scale critique. MMT's underground popularity derives from its seeming mathematical rigor, its disagreement with the obviously flawed doctrines of standard neo-Keynesian orthodoxy, and its underlying message of hope that the perceived constraints on government deficit spending are an illusion. The MMT proponents tell us that fiat monetary systems have removed the shackles associated with the gold standard, and that our economic recovery is limited only by our failure to understand how modern money and banking work. After my admittedly brief exploration, I have concluded that the MMT worldview doesn't live up to its promises. However, as an Austrian economist I know how annoying it is when "big guns" in the economics profession reject my own position as nonsense without even taking the time to spell out what is supposedly wrong with the Misesian approach. Therefore, in the present post I'll try to fairly summarize a major plank in MMT thought and show why it is misleading at best, and downright false at worst." Read more. "The Upside-Down World of Modern Monetary Theory" Robert Murphy The Market Oracle, May 9, 2011. Image by Idea go / FreeDigitalPhotos.net.

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