MMT – fail

The Washington Post article on Modern Monetary Theory is getting a bit of air play on blogs – even Mankiw picked it up.

Amusingly, given the superior tone that these folks adopt in their interviews, there are a number of school boy errors.

Jamie Galbraith, for one, makes the reserve howler:

“It seemed clear to me that . . . flooding the economy with money by buying up government bonds . . . is not going to change anybody’s behavior,” Galbraith says. “They would just end up with cash reserves which would sit idle in the banking system, and that is exactly what in fact happened.”

Joe Gagnon (the Fed’s QE1 guy) slams them as clueless – saying they “have no idea how quantitative easing works”.

Perhaps if these folks demonstrated knowlege of old fashioned monetary policy, their Modern Monetary Theory might be taken more seriously.

Advertisements
This entry was posted in Uncategorized. Bookmark the permalink.

3 Responses to MMT – fail

  1. Manny says:

    yesterday i was actually wondering what ur thoughts were on mmt.

  2. BK says:

    Ricardo are you going to post something more detailed on your thoughts re MMT? Would be very interesting

please comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s