For the last 40 years or so the world has been subjected to an economic model that rips the heart out of humanity and turns everyone against each other. This model is known as neo liberalism.
However, there is a new model in town which seeks to replace it with a much more long term and kinder approach.
Modern money theory (MMT) is an economic model that has become part of mainstream economic thinking since the 1990’s. It aims to bring about policies that promote financial stability and the attainment of full employment.
Economists and political theorists across the planet are increasingly turning to MMT as a solution to the boom bust inequality dependent economics of neo liberalism.
Even before the multi trillion stimulus of multiple governments in response to Covid-19 there has been an increasing openness to a new model that creates much greater stability and creates an holistic approach in which individuals and the state are united in creating universal responses to major planetary problems. From climate change to disease to huge inequalities MMT is being seen by an increasing number as the most rational solution we have.
As reported in DW.com
‘The first example is the US. Because even though government debt is extremely high, inflation has not picked up. In February, it even dropped to its lowest level since September 2016. The proportion of voters, who see the reduction of the government deficit as the top priority, is also steadily declining.
The second example comes from the fifth most stable economy on the planet, that of Japan where the central bank has been experimenting with elements of MMT for some years now. With the help of the central bank printing presses, the government wants to put the highly indebted, demographically shrinking country on a sustainable growth path.
The Bank of Japan has therefore been buying mountains of securities that make quantitative easing programs elsewhere look small. Still inflation has remained historically low. How long the central bank can continue with its purchase program without losing credibility remains to be seen. It’s an exciting experiment that may pave the way for MMT — or it may bury the theory forever.’
As this fantastic short video explains very straightforwardly, MMT has to be taken seriously. This is especially the case now because those who support the old burnt out models will try to make capital out of the very high government spending that will be used to control current and future populations.
This is not about ‘right’ or ‘left’ anymore. This is about what makes sense for all of us not just the extremely wealthy.
For a much more detailed analysis of Modern Monetary Theory these are great places to begin:
http://neweconomicperspectives.org/modern-monetary-theory-primer.html
However, remember that those who seek to undermine this theory are either economically illiterate OR they have their own agenda to hoodwink us. Do not trust them.
We must learn and investigate for ourselves.
Jason Cridland
Nice to see the MMT school of economics being mentioned, but some correction is in order…
Near all of MMT is not some new ‘system’ we need to introduce, but is merely *correctly* describing the facts of the system we have already, and Government’s unique capacity to act in the public purpose, at *zero cost* to anyone.
Rather than the ‘fake news’ that the mainstream of economics and media has spread for decades, that UK Gov is financially just like any household or business – a currency *user* – MMT points out the monetary system existing *fact* that Gov is the (sole) currency *issuer* in the system. UK Gov already issues ££s, free gratis, in every act of spending, right now. That is functional, technical reality, underneath the fraud and misinformation to paint it otherwise. (Taxes later delete some the prior issued Gov money.)
And that means that *everything* written in the mainstream macro economics policy paradigm is complete intellectual fraud and dangerously wrong. All of it.
The *macro economics* thinking of public policy needs to begin with the monetary system facts, and Gov’s unique role in it, which is not remotely like the big ‘household’ nonsense routinely used by mass media.
‘Austerity’ policy, for some purpose of ‘saving’ Gov or ‘taxpayers’ money is fraudulent by definition, and in the last decade has caused 10s of thousands of premature deaths in the UK alone.
MMT shows the *facts*, and points how they should be used to inform economics policy formation.
And MMT also prescribes one no-brainer policy that both enhances macro economic stability, and provides a simple tool for Gov to significantly enforce minimum living standards in society.
I refer to the ‘Job Guarantee’ (JG) public sector ‘buffer stock’ employment scheme, available to any who want a job (voluntarily), as a fixed wage alternative to the less useful and lower income option of unemployment ‘buffer stock’, which is the only option right now for the unemployed. (JG employees are administered by local authorities doing work for local non-profits in their community.)
A modern economy inherently produces fluctuations in labour market demand for ‘normal’ employment, at a far faster rate than Govs could possibly react on to on a bespoke macro policy basis.
MMT simply states that, a priori, a ‘buffer stock’ of employed labour is both economically more efficient, and socially more cohesive, than an unemployed buffer stock, doing nothing (or worse).
MMT is the *how* we form ‘solution’ policies that respect the monetary system facts, and avoid the ‘fallacy of composition’ and other failures of mainstream macro economics frauds, to deliver solutions that can be sustained with ‘full employment and price stability’.
It’s the *how* you drive the car, noting how its controls actually work (rather than some ignorant fiction), not where you want to drive.
But yes, most MMT advocates are drawn to it by the inescapable fact that we *can* use MMT knowledge to form Gov policies to both address social ills, and the impending climate and ecological collapse, infinitely better than present sick joke passed off as Gov economics policy discourse in the mainstream.