Why Does Everyone Hate MMT?
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Why Does Everyone Hate MMT?

James Montier
GMO, 2019
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Editorial Rating

8

Qualities

  • Controversial
  • Eye Opening
  • For Experts

Recommendation

Modern Monetary Theory (MMT) is all the rage these days in economic circles. Advocates say that countries that issue their own currencies can run their treasury printing presses at will to finance fiscal priorities. But opponents squawk that MMT flies in the face of traditional economic rationale and would lead to hyperinflation, massive debt and economic malaise. Investment expert James Montier gets to the bottom of the controversy in a strong rebuff of the economic mainstream. Financial types will find this a compelling, provocative read.

Summary

Defenders of neoclassical economic theory disparage Modern Monetary Theory (MMT) as insanity. However, an economist capable of taking a broader perspective would have to agree that MMT makes a great deal of sense. MMT posits that nations that issue obligations in their own currencies ultimately control the fiscal and monetary conditions within their economic ecosystems, and thus face little risk of an externally sourced default. A sound and liquid banking system provides a transmission mechanism for stakeholder transactions in debt securities.

Ultimately, mainstream...

About the Author

James Montier is an economist and a member of the asset allocation team at GMO LLC. 

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