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By Joshua N. FEINMAN, U.S. Chief Economist at DWS
Modern monetary theory (MMT) is sparking heated debate. Proponents claim MMT is a revolutionary paradigm that upends conventional economic thinking and the gratuitous shackles it imposes on public budgets. Others are less convinced. Indeed, MMT seems a rather inchoate doctrine, an amorphous set of tenets, many ill-defined and poorly grounded.
Where its precepts are sound, they are conventional; yes, debt-financed government spending and tax cuts can help revive economic activity when private demand is depressed – nothing terribly "modern" about that. And when MMT purports to sail new seas, it starts to take on water, heedless of the difference between monetary and fiscal policy, and of the...
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