MMT is Both Descriptive and Prescriptive

Harvested from Twitter. Because I needed it spelled out.

“It’s weird how people sometimes talk about MMT’s prescriptive side as if it’s not customary for a macro framework to have both descriptive and prescriptive elements. 1/x

Milton Friedman gave us the expectations-augmented Phillips Curve (descriptive, in his mind) as well as a (prescriptive policy) monetary growth rule. 2/x

New Classical economists gave us models rooted in rational expectations and then insisted on the importance of announced (vs. unannounced) changed in the money supply. 3/x

Real Business Cycle models emphasize technological shocks as drivers of macro fluctuations but advocate laissez faire, which *is itself a policy prescription*! 4/x

The point is, one’s understanding of the behavior of the macro system naturally invites a policy stance to complement the analysis and optimize performance. 5/5”

Gleaned from Twitter and Facebook

“The core MMT (Modern Monetary Theory – ed) academics have all been tenured (many of us more than once) based on strength of peer-reviewed publications, including heavy empirical/theoretical work. Please rise above this dismissive rhetoric.”
β€” Stephanie Kelton

“First they ignore you, then they laugh at you, then they fight you, then you win”
β€” unknown, though often attributed to Ghandi

“The US government doesn’t use income. It generates government “money” when it spends, which becomes income for the private sector.

The federal budget goes through a lengthy process: In general, the President submits a budget to Congress which goes to the budget committees of the House and Senate, then on to budget resolutions. Congress can propose its own budget prior to the President’s. Whether or not spending must be constructed as a bill (legislation) depends on if spending is discretionary, or mandatory.

If spending is discretionary, this requires annual legislation passed by Congress and submitted to the President for signature or veto. If mandatory, spending simply occurs.”
β€” Ellis Winningham

MMT Online University

Finally! Bill Mitchell announces the launch of MMT University: “online, interactive instruction in Modern Monetary Theory in partnership with the leading proponents of MMT from across the Globe.” A widely accessible, structured opportunity to #LearnMMT. Details in September.