Why Martin Wolf Is Wrong on Modern Monetary Theory (MMT)


Naked Capitalism has the article Why Martin Wolf Is Wrong on Modern Monetary Theory (MMT). I thought it was a very good article, until I got close to the end.

I do not understand how we get to the conclusion

The result is we need to sweep away the central bank and the independence it has that is this impediment to progress.

I don’t see the central banks as an impediment to progress. I see that central banks only have monetary tools. Those tools are not enough to do the job. The government spending for things like the GND are using fiscal policy tools. The impediment to progress is the part of government that refuses to make use of its fiscal tools.

Back in the 1930s and 1940s, John Maynard Keynes explained exactly why monetary tools are not enough to stimulate an economy out of a deep recession or depression. Just because the word money or monetary is in MMT is no reason to forget that monetary policy is only half of the set of economic tools that must be applied to run an economy.

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