Aug 25, 2020
Stephanie Kelton’s book The Deficit Myth released in June was just the latest in a series of books, blogs, articles, podcasts, and videos extoling the virtue of Modern Monetary Theory (or “MMT”). We’re told that governments that have sovereignty over their currency can afford a wide array of social programs from entitlement expansion to generous welfare benefits to the Green New Deal. Leftist are ecstatic that they finally have an answer to the Right’s persistent question “how are you going to pay for all this stuff?”
But is MMT sound monetary policy? For that matter, what is monetary policy? What did famous economists like Milton Friedman and John Maynard Keynes have to say about monetary policy? Was it a mistake for America to get off the gold standard? What is the Federal Reserve, and why can’t they seem to leave the interest rate alone? Do deficits matter? If so, how?
For most, monetary policy may sound like a subject that’s dreadfully complicated or—far worse—boring. Yet this opaque subject matter is very important to our economic wellbeing. In fact, bad monetary policy greatly exacerbated economic downturns to the point of creating The Great Depression and The Great Recession. Sound monetary policy benefits us all, and it’s imperative we understand what sound—and not so sound—monetary policy looks like.
Returning guest and friend to the podcast Joseph Sternberg joins Josh in a discussion on monetary policy that’s both digestible and engaging. We last heard from Joseph in episode 35 when he dropped by to discuss his book The Theft of a Decade: How the Baby Boomers Stole the Millennials’ Economic Future.
Joseph is a member of the editorial board of The Wall Street Journal, where he writes the Political Economics column. He joined the Journal in 2006 as an editorial writer in Hong Kong, where he also edited the Business Asia column. He currently lives in London. He graduated from The College of William and Mary in Williamsburg, Virginia with an economics major.