Stephanie Kelton on How MMT Won the Fiscal Policy Debate
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 18 March 2021
⏱️ 56 minutes
🧾️ Download transcript
Summary
In a sense, Modern Monetary Theory has won. This is not because policy measures are necessarily in line with what MMT adherents would prescribe. Rather, the debate over economic policy, in particular fiscal policy, is happening on MMT terms. MMTers argue that the constraint on government spending is inflation and real resources -- not credit risk -- and that's exactly how even the critics of the stimulus bill have attacked it, that it will be inflationary. So how has the debate around fiscal policy changed so much over the last several years? Much of the credit goes to Stephanie Kelton, the MMT economist and author of the best-selling book The Deficit Myth. On this episode, we talk about their success.
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| 0:00.0 | Adlots is brought to you by Apollo. When it comes to building and financing stronger businesses, |
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| 0:30.0 | Hello and welcome to another episode of the Adlots Podcast. I'm Joe Wyzenthal. |
| 1:00.5 | And I'm Tracy Allowit. Tracy, you don't know what I was just thinking about. You don't troll me |
| 1:06.1 | about MMT anymore these days. Remember that when you used to do that? Yes. All roads led back to MMT for, |
| 1:14.8 | well, I mean, to some extent they still do for the past year or so. We've been talking a lot about |
| 1:19.4 | the shift from monetary policy to the school stimulus and that's a big component of MMT. |
| 1:27.1 | Yeah, you said every episode, you're like, Joe, why are you gonna bring up MMT? But I guess we haven't |
| 1:32.9 | really done that explicitly in a long time. And so you stopped. You stopped joking about that |
| 1:38.8 | with me. But today, we aren't gonna have to joke because that's actually literally what we're gonna |
| 1:43.9 | be talking about. It is an MMT episode. Yeah. And, you know, I think one of the things that's |
| 1:50.6 | really striking to me, and I'll just say this, is that on some extent, to some extent, I really |
| 1:55.2 | think that MMT has completely won the debate. And by that, I mean, we have this big fiscal expansion |
| 2:03.1 | happening in the US and deficits by historical measures are very high. And there are certainly people |
| 2:08.7 | who are like upset about it or angry about it, but it really feels like the entire debate is like |
| 2:14.2 | essentially happening on MMT terms or MMT language. So you're right. We definitely don't hear |
| 2:24.7 | many mentions of bond vigilantes anymore. We don't hear people talking about, you know, |
| 2:30.6 | how are we gonna fund social programs? The deficit is so large that sort of thing. Like, that seems |
| 2:35.4 | a little bit old-fashioned now in many respects. I do wonder, I do wonder how much MMT can take |
| 2:44.2 | credit for that versus the fact that we've just had such an unusual economic crisis, you know, |
| 2:50.4 | this big exogenous shock, basically. So people are able to use that as an excuse to overwrite those |
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