MMT or Modern Money Theory is the rage of some progressive economists of late. Several of my readers have asked what is my view of it? The following is a brief statement in that regard, in reply to a comment by a reader on this blog today. I will provide a thorough follow up critique of the notion in the very near future.
My Preliminary Statement on Modern Money Theory (MMT) to my readers:
My Reply to a Reader: “I will soon provide my critique of MMT (Modern MoneyTheory) that is the latest rage of some progressives in economics. Briefly here, its problem is that it’s essentially a restatement of 18th-19th century classical economics, which focused almost solely on money supply and understood little about money demand and money velocity–largely due to the fact classical economists in the 18th-19th century could estimate money supply but had no way to estimate money demand and therefore paid little attention to it. This disregard and poor understanding of money demand is still a major characteristic of the economics profession today, including the central bank. MMT is thus a throwback theory, to the 19th century and before, adapted to justify fiscal stimulus in the 21st. It is an attempt to turn to monetary policy, restated, as a counter to fiscal austerity policies which have accompanied capitalist policy makers’ elevation of monetary policy as primary in the 21st century. (The exception of course is defense-war spending fiscal policy and business-investor tax cutting fiscal policy). Proponents of MMT attempt to turn monetary policy by capitalist policy makers against itself. MMT is Quantitative Easing, QE, turned on its head. It is an attempt to invert the ideology of QE (the purpose of which is to subsidize capital incomes), and use ‘inverted QE’ (i.e. MMT) to redirect liquidity (money) creation by central banks or their equivalent into government spending to boost household incomes. That is contrary to traditional QE that directs money creation and excess liquidity into subsidizing and expanding capital incomes. MMT is therefore, in a sense, an ‘ideological adaptation’ of the economic ideology that is QE’. Much more on all this later. First I must finish the concluding chapters of my next forthcoming book, ‘The Scourge of Neoliberalism’ (of which QE is a key monetary policy and ideological justification for subsidizing capital incomes). I promise readers thereafter a thorough critique of MMT (as well as its related ideological creations, QE and its economic cousin, public banking).” Dr. Rasmus 4-7-19
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
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