Modern monetary theory- a resurrection of a failed idea

Modern monetary theory- a resurrection of a failed idea

Modern monetary theory has provided hope that the current economic problems can be solved if we look at things in a "new" light. Blinded by this hope, the fact that this theory is not "new" and has failed in the past has remained hidden.

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MMT proposes that a State which issues its own currency cannot go bankrupt or default as it can always print currency to settle all obligations.MMT proposes that a State which issues its own currency cannot go bankrupt or default as it can always print currency to settle all obligations.
Ravi Saraogi
  • May 26, 2019,
  • Updated May 26, 2019 8:33 AM IST

Desperate times call for desperate measures. Policymakers in the developed world have been left gasping amidst the ruins of slow economic growth, high youth unemployment and rising income inequality. Such conditions are usually the perfect breeding ground for heterodox economic ideas.

The contemporary avatar of such an idea is the sensational modern monetary theory (MMT). In the frenzy of hope that this theory will provide the panacea for all ills, the conspicuous fact has been overlooked that MMT is not modern but a resurrection of an old failed idea.

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Desperate times call for desperate measures. Policymakers in the developed world have been left gasping amidst the ruins of slow economic growth, high youth unemployment and rising income inequality. Such conditions are usually the perfect breeding ground for heterodox economic ideas.

The contemporary avatar of such an idea is the sensational modern monetary theory (MMT). In the frenzy of hope that this theory will provide the panacea for all ills, the conspicuous fact has been overlooked that MMT is not modern but a resurrection of an old failed idea.

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