Wednesday, February 22, 2012
John Carney on Dylan Matthews on MMT
Good read. John gets it that the fundamental issue is the desired size of government, which involves the requisite expenditure to achieve. Tax policy then adjusts effective demand appropriate for maintaining that level, relative to changing conditions. This is the MMT position.
The "right" size of government is a political question. How to achieve it economically is a matter of economic policy. A correct view of economics shows the relevant policy options for doing so.
With this understanding, the country can have an intelligent political debate without bringing in "junk economics" (Michael Hudson) to justify political choices. Then the debate can be on the merits, with voters deciding what kind of country they want to live in and future they wish to create, based on realistic alternatives and opportunity cost, taking trade-offs into consideration.
Read it at CNBC NetNet
Modern Monetary Theory’s Big Weekend: The Problem with Surpluses
by John Carney | Senior Editor