DOES ANYONE KNOW WHAT MODERN MONETARY THEORY IS?

As many regular readers know by now, I had a rather public falling out with MMT earlier this year leading to the creation of Modern Monetary Realism.  This was in large part due to disagreements over the Job Guarantee and the fact that many MMT founders said you can’t have MMT without the Job Guarantee (JG).  Specifically, Bill Mitchell said the JG was “central” to MMT.  Pavlina Tcherneva then wrote a piece at the MMT website asking if the JG was “crucial to MMT” in which she said:

“The JG is not just an afterthought to MMT but a crucial component that has so far offered the most coherent counter-cyclical economic stabilizing mechanism.”

It became clear that MMT was a macroeconomic theory that offered comprehensive solutions to price stability and full employment with the JG being the “most important policy proposal” (Wray’s words) in achieving this.  If you believe in unemployment buffer stocks you weren’t working under the theoretical framework that has come to be known as MMT.  So you can see how some of us find it odd that Randall Wray, an MMT founder, wrote a piece yesterday directly contradicting the comments of his founding colleagues saying:

“So, can we have MMT without a JG? Certainly!”

What makes this comment even more bizarre is that Wray wrote a piece earlier this year confirming that Mitchell’s comments were right and that price anchor (JG) was something we “need”:

“Bill’s post led to a bit of a scuffle over what is actually in MMT—with Cullen arguing that the Job Guarantee cannot be a component, while Bill insisted that it mustbe. Warren has sided with Bill and written very persuasive comments arguingthat we need the price anchor.”

So earlier this year MMT included the JG and this fellow named Cullen was wrong.  But the MMT of today doesn’t include the JG and this fellow named Cullen appears to have been right?  So the obvious question is – does anyone actually know what Modern Monetary Theory is?

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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