In my last post I wrote about “why recessions caused by demand deficiency when inflation is below target are such a scandalous waste. It is a problem that can be easily solved, with lots of winners and no losers. The only reason that this is not obvious to more people is that we have created an institutional divorce between monetary and fiscal policy that obscures that truth.” I suspect I often write stuff that is meaningful to me as a write it but appears obtuse to readers. So this post spells out what I meant.Mainly Macro
On the Stupidity of Demand Deficient Stagnation
Simon Wren-Lewis | Professor of Economics, Oxford University
My comment there:
Props for crediting MMT.
As you say, this is not innovation in macroeconomics or politics. At the time of the Great Depression, New Deal and WWII, it was advised by Fed chair Marriner Eccles and FRBNY director and then chair Beardsley Ruml, for instance.
As Paul Krugman has noted, what was known previously has been forgotten. MMT economists admit that most of their contribution has been weaving various existing thread together, for example, Wynne Godley's SFC macro modeling using sectoral balances, Abba Lerner's function finance, and Hyman Minsky's analysis of financial instability, as well as his proposal for an employer of last resort-job guarantee similar the the WPA and CCC of the New Deal, which was later the inspiration for the Peace Corps created by JFK.
BTW, as you may have heard, MMT economist Stephanie Kelton has just been hired as chief economist for the minority of the US Senate budget committee, and she is taken a two year leave of absence from the University of Missouri at Kansas City. Hopefully, she can get the ball rolling on some of this in the US Congress.