I would not have called MMT "nonsense economics". Thus I think Jonathan Portes needs to put a choke collar on Prospect's headline writers. It is very much the case that MMT done right focuses attention on the inflation constraint rather than the financiers-are-scared-the-debt-is-too-high constraint, and that would seem to me to be a healthy thing. However, I do worry about multiple equilibria—and jumps between equilibria: Jonathan Portes: Nonsense Economics: The Rise of Modern Monetary Theory: "Under MMT, fiscal policy is the main tool. This may well make sense when interest rates are at or close to zero. But that... was explicitly recognised by government policy during and immediately after the 2008 financial crisis.... It’s an integral part of Labour’s fiscal rule.... It also means that MMT—at least the credible version—does not mean there is no limit to deficits, just a different one, dictated by the potential impact on inflation.... So in the end I... find... MMT... frustrating... [as] a mixture of the tautological, the obvious and the tendentious.... The claim that that MMT means that a future government can dodge hard choices about how to pay for decent public services is just plain nonsense...
#noted
