Modern Monetary Theory: An Austrian Interpretation of Recrudescent Keynesianism

dc.contributor.authorNewman, Patrick
dc.date.accessioned2022-10-12T02:27:55Z
dc.date.available2022-10-12T02:27:55Z
dc.date.issued2020
dc.description.abstractModern monetary theory (MMT) argues that governments can never go bankrupt because they have the power to print money to finance budget deficits. Consequently, debt monetization can achieve virtually any government objective desired. This paper uses Austrian economics to argue that MMT suffers from the flaws of all forms of Keynesian economics, particularly the original version of the 1930s and 1940s. MMT fails to understand capital-based macroeconomics and how government policy affects the temporal structure of production. MMT also neglects the importance of profit and loss accounting compared to government allocation of resources. The Austrian school argues that traditional New Keynesian countercyclical monetary policy results in a credit-induced boom and bust (Austrian business cycle theory) by injecting new money into private sector loans through the banking sector. However, Austrian analysis demonstrates that MMT’s monetary policy to monetize government deficits and increase the money supply through government spending will instead lead to secular economic stagnation and a stunted capital structure. Overall, the policy prescriptions of MMT are far more dangerous than traditional New Keynesian policies.en_US
dc.identifier.citationNewman, P. (2020). Modern Monetary Theory: An Austrian Interpretation of Recrudescent Keynesianism. Atlantic Economic Journal, 48(1), 23–31. https://doi.org/10.1007/s11293-020-09653-7en_US
dc.identifier.issn0197-4254
dc.identifier.issn1573-9678
dc.identifier.issnhttps://search.ebscohost.com/login.aspx?direct=true&AuthType=shib&db=edssjs&AN=edssjs.493C89A3&site=eds-live&scope=site&custid=s5615486
dc.identifier.urihttp://hdl.handle.net/11416/827
dc.language.isoenen_US
dc.publisherSpringeren_US
dc.subjectKeynesian economicsen_US
dc.subjectMacroeconomicsen_US
dc.titleModern Monetary Theory: An Austrian Interpretation of Recrudescent Keynesianismen_US
dc.typeArticleen_US

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