In the above clip, Modern Monetary Theory (MMT) economist Stephanie Kelton discusses MMT on the NPR show Planet Money in September of 2018. One of the hosts of the program, Sally Helm, explains MMT’s take on inflation, saying, “If you start to get inflation, that's a sign you might be spending too much. Maybe you could raise taxes to pull some of that money back in.” MMT critic Tom Palley is then interviewed on the show and he attacks MMT for its belief that taxes can effectively be used to lower inflation.
Kelton then defends MMT, “If your concern is that it would be difficult to fight inflation by raising taxes, that is obviously a legitimate concern - that it is difficult to get Congress to act quickly to do the right thing. And so one of the things that MMT economists have advocated for a very long time is finding a way to take the fingerprints of Congress off of the decision making. In other words, to make it happen automatically.”
The Planet Money host Sally Helm explains that MMT calls for “More types of taxing and spending that kick in automatically if inflation starts to tick up.”
Kelton is then shown talking on CNBC three months later claiming that no one in the MMT camp has ever called for raising taxes to reduce rising inflation. While technically she didn’t specifically say taxes should be raised due to inflation on Planet Money, she did say the government should have the power to adjust taxes (like how the Federal Reserve has the independent ability to adjust interest rates) in response to rising inflation without needing congressional approval. This sounds like an MMT endorsement for raising taxes as a method for attempting to reduce inflation. Kelton did, however, concede these efforts might prove ineffective.
Is she lying or just inconsistent in terms of her views on inflation? Did she forget her previous claims regarding MMT and controlling inflation mentioned on Planet Money? Did you notice in the CNBC clip she said that rising inflation “would be dealt with in some other way.” Does she mean that MMT economists have ZERO answers in terms of dealing with rising inflation which is a major concern of MMT critics?
Also, did she agree that the Planet Money hosts could describe her ideas on dealing with inflation in the way they did? What are listeners to one of the most popular podcasts in economics supposed to take away from MMT’s ideas on combating inflation if not that raising taxes and adjusting spending is how MMT deals with rising inflation?
A lack of consensus
Kelton’s claims of MMT being misunderstood is a continued pattern by MMT advocates to discredit their many critics as failing to truly understand their theory:
Not #mmt. I gave 3 talks at the ECB in 2017. Happy to come again.— Pavlina R Tcherneva (@ptcherneva) March 12, 2019
That’s not a correct characteriston of MMT— Brian Ruff (@brian_brianr) March 11, 2019
I suggest that @lefthooknews1 read the literature first. This is so wrong it cannot be taken seriously.— Zap Radon (@zapradon) March 9, 2019
A Guy Who Knows NOTHING! https://t.co/nFYOzEI1jh— Alan Parker #MMT - The Neoliberalism Destroyer (@Truman_Town) March 10, 2019
In fact, even MMTers don’t agree on what MMT is:
If Kelton can't even get her story straight on what MMT is, how do you expect MMT’s cult-like followers to be consistent?
Answer: you can’t.
A Unified Modern Monetary Theory
MMTers must create a unified Modern Monetary Theory which the key economists of MMT can all agree upon. A good way to release such a concept would be to put out a jointly authored book which explains in detail their economic theory so other economists and the general public can actually understand stand what they’re really arguing for. I’m sure it would be a bestseller.
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