There’s Much Ruin in a Nation: An Analysis of Modern Monetary Theory

Mark Skousen ()
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Mark Skousen: Chapman University

Atlantic Economic Journal, 2020, vol. 48, issue 1, No 2, 21 pages

Abstract: Abstract This paper analyzes the first macroeconomic textbook based on modern monetary theory (MMT) written by Mitchell, Watts and Wray. MMT is a heterodox theory that a government need not worry about budget and monetary constraints and excessive inflation until a country achieves its goals of full employment, first-class healthcare for all citizens, and other desirable policies. Their textbook, Macroeconomics, leaves out major sections that are standard in macroeconomic textbooks, such as AS-AD analysis and economic growth theory. I argue that MMT is a dangerous theory that can lead to a bloated government, runaway inflation, and slow growth. Furthermore, MMT is unnecessary given that many advanced economies have moved in the opposite direction and achieved full-employment growth without adopting MMT, such as Sweden, Canada, Singapore, and Chile.

Keywords: Modern monetary theory; Heterodox economics; Deficits and national debt; Inflation; B50; E52; E62; H61; H63; P51 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s11293-020-09651-9

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