A documentary on Modern Monetary Theory is touring Australia. Gareth Hutchens asks what we should make of it.
Well, one of its famous advocates, the economics professor Stephanie Kelton, is currently touring Australia with a new documentary on the topic.
, and the other question is about the policy proposalsAnd obviously, you can want to know if their description of the monetary system is correct without caring one bit about their policy proposals.To answer that, you might ask an economist who's had little personal experience of how the system works from the inside , or you might ask someone who's had decades of experience working inside the system, in the nuts and bolts of it.
"The main idea behind MMT is a central bank like the RBA can create as much of its own currency as it wants. This means the federal government's budget is merely an accounting entry. The government can spend more than it drains via taxes, without needing to borrow from the financial sector."The simplest and cheapest is for the RBA to give money to the federal government. After all, it can create whatever it wants. This is a step too far for some, including the RBA governor.
"If the value of the money it creates collapses through irresponsible policy driving up inflation, that's a separate issue," he said.The documentary is like similar films on economic topics such as The Big Short, Margin Call, Too Big to Fail, Enron, and The Corporation. Part of MMT's ambition, as I understand it, is to make it impossible for those types of arguments to be used anymore.
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