James Montier: MMT could be worth a try

MMT is doing a better job of providing insights into the functioning of the modern economy than conventional neoclassical economics, says James Moniter of GMO.

James Montier, investment strategist,GMO

Critics of modern monetary theory (MMT) condemn it as "madness, nonsense, mess, garbage, and even voodoo", says James Montier, the independent-minded investment strategist at US asset manager GMO, in a research note. But what if they are wrong? In Montier's view, core MMT principles such as "money is a creature of the state" and that "loans create deposits" mean that this new, controversial branch of economics is doing a better job of providing insights into the functioning of the modern economy than conventional neoclassical economics. And its focus on sensible objectives for fiscal policy, physical constraints on the rate of economic growth and the role of excess private debt in creating economic instability offer "a much more accurate and insightful framework" than the "broken orthodoxy" its opponents are defending.

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