Modern Monetary Madness

By John Mauldin

February 15, 2019

Modern Monetary Madness
Pet Economists
Can This Really Be a Thing?
Sound Bite Economics
Do Deficits Matter?
Strategic Investment and Life Planning

More than 10 years ago some Australian readers begin regaling me with the ideas of economist Bill Mitchell of the University of Newcastle in New South Wales. He was teaching about something he called (and he coined the term) Modern Monetary Theory. I looked into it and fairly quickly dismissed it as silly. Actually printing money as an economic policy? Get serious.

MMT is a revival of an early 1900s idea called chartalism. Now it is influencing the thinking of new socialist-like movements in the US and other places and cited by politicians. MMT is increasingly appearing in mainstream media like this sobering Financial Times article. Since it is increasingly discussed in more public venues, you should know more about it and that will be today’s topic.

Essentially, MMT espouses that the public through the government owns the process of money creation, and that in addition to borrowing and taxing, should simply issue currency as payment for its obligations. This is not the sleight-of-hand that quantitative easing was. This is direct monetization in lieu of borrowing.

A Very Greek Brexit?

Feb 14, 2019 George Papaconstantinou, Project Syndicate

George Papaconstantinou, a former finance minister of Greece who negotiated the country’s first bailout, is the author of Game Over – The Inside Story of the Greek Crisis.

Unlike the United Kingdom, Greece is one of the European Union’s smaller economies, notorious for its weak institutions and economy, and a net recipient of EU funds. And yet the Grexit near-exit from the EU in 2015 offers important lessons for the final stage of Brexit negotiations.

ATHENS – As the Brexit train lurches forward with no clear direction, it is useful to look back at another dramatic episode in European Union politics for possible guidance: the Grexit that never happened. Although almost everyone during the euro crisis between 2010 and 2015 was convinced that Greece would have to leave the eurozone, if not the EU, the country remains a member of both.

The Future of the Liberal Order Is Conservative

Date: 16-02-2019
Source: Foreign Affairs By Jennifer Lind and William C. Wohlforth

A Strategy to Save the System

The liberal world order is in peril. Seventy-five years after the United States helped found it, this global system of alliances, institutions, and norms is under attack like never before. From within, the order is contending with growing populism, nationalism, and authoritarianism. Externally, it faces mounting pressure from a pugnacious Russia and a rising China. At stake is the survival of not just the order itself but also the unprecedented economic prosperity and peace it has nurtured.

The order is clearly worth saving, but the question is how. Keep calm and carry on, some of its defenders argue; today’s difficulties will pass, and the order is resilient enough to survive them. Others appreciate the gravity of the crisis but insist that the best response is to vigorously reaffirm the order’s virtues and confront its external challengers. Bold Churchillian moves—sending more American troops to Syria, offering Ukraine more help to kick out pro-Russian forces—would help make the liberal international order great again. Only by doubling down on the norms and institutions that made the liberal world order so successful, they say, can that order be saved.