I finished reading “The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy” a bit ago. I wrote some screed on reddit that was pretty upvoted about it, kind of made me consider recording some book reviews or something on youtube.
The book was written in a way that it’s easy to understand, though it talks down to the reader in some sense. There’s some lines in the book that are supposed to be personal anecdotes, but they come across as made up bullshit. The most repeated one is that this guy who is at the foundation of MMT would “pay” his children in his business cards for the chores they would do. Maybe it happened, maybe it didn’t, but it sounds so fake and I feel it detracts from the point it’s trying to make. There was another personal anecdote from the author herself about her kid, and I forget the specifics, but she made it sound like a four year old is arriving at her adult professional career economists conclusions just naturally on their own.
Earlier in this thread when I mentioned this was my next book I was wondering if the book would land. It kinda did not, but it did accomplish some things. For one, I feel like I understand what people are talking about when they mention MMT now. I can participate relatively accurately in a conversation about it. I can explain it in a relatively simple capacity. But if this book was supposed to convince me that MMT is the “correct” theory, it failed.
I’m not saying we can’t attempt a lot of the things this book layed out as options. Deficit spending, jobs programs, reframing how we view or talk about the national debt, etc. I could see all of that being practical and possibly how we dig ourselves out of our current several simultaneous cataclysms. It’s one of those things where all of those sound at least worthy enough to take into consideration as possibilities. But in spite of all of that, the author seems to take a leap of faith into the one-true-way of MMT that I would not. In one of the last chapters, she even has a line specifically calling out that it’s not just faith in MMT, but she really doesn’t ground that statement with a complete argument.
What I mostly took from the whole thing is that MMT is a bit of a framing device. Having also read several other books recently with great historical insights into other ways economists have attempted to frame the world and the economy, this seems like yet another perfectly valid way to potentially consider things. Whether it’s Marx, Keynes, Milton Friedman, precious metal standards, mercantilism, etc. they all purport to describe the economy and the proof of their efficacy is in the accuracy of the results they end up producing. It’s a way of framing the conversation and the moving parts in such a way that is friendly to essentially “printing money” at some level that doesn’t devolve into currency debasement or massive inflation.
But wait, in intro macro economics we specifically learned that printing money is inflation! And yeah… kind of. We also learned that fractional reserve banking creates money. Or maybe someone grew up to think that we should all move to an actual limited resource like crypto-currencies or back to gold. Or all money is just a reflection of labor. All of these conceptions make some sense as a way to think about this stuff, and framing it any of these particular ways gives us different sort of predictions. And as I said above, we measure the accuracy of these from the accuracy of the predictions we would make with them.
In some sense a lot of what this book is arguing for already happens: massive federal deficits which result in not so much real inflation at the moment. When does the house of cards come tumbling down? I have no idea. Could be tomorrow. Could be that it never happens. And would it be preferable that we spend these dollars on infrastructure, medical care for all, renewable energy, etc. instead of buying stocks, corporate bonds, equities, etc. to prop up the stock market, the largest corporations, and banks? Quite possibly. I’m at least open to the idea of trying it. But also, similar to the notion that the powers that be are already doing some of these things, there’s no guarantee that anything we were to implement would be free of corruption and misuse of the various forms we already know.
Maybe I feel this way about it because I read a lot of philosophy books and what I come back with from those is similar. Here is a novel way to think about the world or ethics or nature, how interesting what conclusions we could draw from this! I had one guy go on a tirade that I didn’t understand anything in the book, which lead me to finding the MMT subreddit, which seems a little bit too “true believer”-ie to me. You can encounter the same thing with some marxists or whatever else where they have been converted by the gospel of some conception and all others are flawed. I’m not so totally converted by peoples gnosis. Because I’m used to there being multiple complex potentially conflicting ideologies, I, personally didn’t stumble into some “epiphany” of the “magic” of MMT.
I did find some chunks of the book factually interesting. We all kinda know that government debt is treasuries and bonds and a few other things, or that we pay money into social security with the anticipation in theory that we would get something back out of it in retirement, but this book provided some higher level detail than I had encountered. I appreciated those parts quite a bit. It’s baby talk, but her analogy to treasuries as yellow dollars and regular dollars as green dollars brought something pretty complicated down to a super simple level that made some of the other extensions easier to understand. And similarly bringing up a section on Greenspan, SSI, and how the government funds it was really good at simplifying it down to a couple basic heuristics. It got me interested enough to go pull up the spreadsheet of how social security treasuries are divided up at the moment and had me think about a couple other ways to rephrase that topic to argue different angles. I kinda doubt her story that every senator she had a meeting with said “yes” to wiping out the debt and “no” to wiping out all the US treasuries… but maybe I give senators too much credit.
