Ending The Pandemic Slump: Is MMT the Answer?

Lunes, Enero 18, 2021 - 1:00pm
CST
Michael Roberts

As the US presidency changes from Republican to Democratic hands, the big spending Republicans are predictably becoming deficit hawks calling for austerity. Yet massive federal spending is needed to stimulate the economy and provide relief to individuals, small businesses, state and local governments. But where can the money come from?

The major economies of the world have been plunged into a deep slump by the COVID pandemic. Governments have been forced to spend heavily to keep businesses afloat and to support households. Government deficits are at record highs and public sector debt is at record levels. If mass vaccination curbs COVID in 2021, should governments stop spending to 'balance their books' and reduce debt, as some say; or should budget deficits be made permanent, as Modern Monetary Theory (MMT) suggests? Is MMT the way out of the crisis?

In the financial crisis of 2008, the Federal Reserve came up with trillions of dollars to bail out the banks. Again last year when COVID closed down much of the economy, the federal government came up with trillions more in relief money. Yet this massive deficit spending has not resulted in inflation. How is this possible? Modern Monetary Theory offers an answer.

Michael Roberts will analyze MMT, its assumptions, its prescriptions, its criticisms. He is a Marxist economist and author, who has worked in the City of London for over 40 years. Roberts is author of several books: The Great Recession: a Marxist view (2009); The Long Depression (2016); World in Crisis (2018): Marx 200 (2018) and Engels 200 (2020). He blogs regularly at: thenextrecession.wordpress.com