Josh Barro: Modern Monetary Theory Doesn’t Make Single-payer Any Easier: "The government is not constrained by its ability to obtain dollars, but the economy is constrained by real limits on productive capacity. If the government prints and spends money when the economy is at or near full employment, MMT counsels (correctly) that this will lead to inflation, and prescribes deficit-reducing tax increases to reduce aggregate demand and thereby control inflation...
....See how we have ended up back where we started? Whether you take a Keynesian view or an MMT view, if the government spends more, it’s likely going to need to tax more, sooner or later.... I believe Kelton is correct that both economists and economic policymakers have been too focused on the risks of high deficits relative to low ones, and too focused on the risk of inflation versus the risk of unemployment. That is, while policymakers know we should run deficits in recessions, when the recession is really big they don’t run them large enough for long enough....
“I have a certain sympathy for MMT; I think they are more correct than the people who are trying to revive Bowles-Simpson,” says Furman, referring to a proposal from early this decade to sharply reduce federal budget deficits. “Those people may have the right model and the wrong parameters. MMT may have the wrong model, but it may get you the same thing as the right model if you have the right parameters”...
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