Now readers may wonder, has the government really hit the MMT highway? Am I mischaracterizing Kelton’s views? Is our current mess really an indictment of MMT?
Well, here is an article/interview with Kelton from back in June 2021 with the awesome headline, “Stephanie Kelton: Biden has Adopted MMT.” The article leads with this: “President Biden’s proposed $6 trillion budget will not be fully paid for with tax increases or other spending cuts. It will increase the deficit, according to Stephanie Kelton, and that constitutes an implicit if not explicit adoption of the principles of modern monetary theory (MMT).”
In June, inflation was already elevated. You may wonder what Kelton had to say about it, since in MMT inflation is evidence of overspending. Well, wonder no more dear reader: “Inflation is evidence of too big a deficit, Kelton said. But inflation does not mean that there is too big a deficit; it can be due to “excessive demand pressures.” That is what is happening, according to Kelton, with temporary shortages of goods like computer chips and lumber that will soon self-correct.”
Here is the full review.