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Monday, December 14, 2020

Yes, MMT Is Not Monetarist

Reader Jerry Brown sent me a link to yet another Scott Sumner article. In this article, he lists 6 points raised by MMT that he accepts as correct, yet he feels the interpretation is incorrect. I looked at the article quickly, and I would summarise the points as: MMT disagrees with the Monetarist interpretation, and he assumes that Monetarism is correct.

It is extremely obvious that post-Keynesians/MMTers disagree with Monetarism. (From a historical standpoint, these debates were essentially over by the time MMT formally split off as a new school of thought, this should be credited to post-Keynesians.) However, this is not really that big a deal, since very few economists now agree with Monetarists in these disputes, other than the people whose macro knowledge consists of Economics 101 textbook snippets. (The big mainstream macro textbooks were written when the mainstream was crypto-Monetarist, and they have not kept up with the times.)

I want to find interesting MMT critiques for my primer, but Sumner's complaints do not fit the bill. If someone clings to Monetarism in 2020, I doubt that anything I write will cause them to update their priors. (As for my primer, I found enough edits in my last pass that I decided to do one last pass over the coming weeks so that I can send my manuscript to an editor in the new year. This slippage is somewhat annoying in terms of the freshness of the text, but since I hope the book will have decent sales, it should be cleaned up. My book sales are not front-loaded like most books in bookstores, so most of my readers are reading the text years after publication anyway.)


  1. "and I would summarise the points as: MMT disagrees with the Monetarist interpretation, and he assumes that Monetarism is correct."

    That is a very good summarization. Or summarisation if you prefer- contra to my autocorrect :)

  2. Scott Sumner has yet another post on MMT or really maybe the differences between MMT and Monetarists and 'mainstream economics'. I think it is a reasonable description but would be interested in what you think.

    1. It's a fairly reasonable summary. Seems to be missing most of the interesting theoretical bits, but the issue is that he was working with an Economics 101 textbook analogue that doesn't go into enough depth in those areas (too complex if you don't know the background).


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