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Ezra Klein
@ezraklein
So a lot of mainstream economists want to defend their honor on coming to a different view of deficits without MMT, and I don't disagree! But what I said was MMTers focused attention on real resource constraints, which is different.
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Jason Furman
@jasonfurman
1. Ezra argues that MMT shifted the deficit conversation. I really don’t think it did. It was the Fed’s target rate stuck at zero and long rates low that did. When I gave a speech on the “New View” of fiscal policy in 2016 I literally hadn’t heard of MMT. obamawhitehouse.archives.gov/sites/default/
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Ezra Klein
@ezraklein
We just had decades of arguments over sustainable debt-to-GDP levels. They were thought to be lower in the Aughts. Then, as Jason is saying, there was a move towards thinking they could be higher. But the spending constraint was always some debt-to-GDP ratio.
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Ezra Klein
@ezraklein
A lot of the folks associated with MMT made the argument, loudly, that the constraint is real resources: We can afford to do what we can actually do. I now hear a lot of Keynesians say that's true. What I'm saying is they didn't talk as if it was true till pressed.
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Ezra Klein
@ezraklein
That was certainly one of my takeaways from this discussion. Kelton was just emphasizing a different set of limits than Jason. The question was how to predict those limits, and respond to them once breached.
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Ezra Klein
@ezraklein
Back at Vox, I hosted a discussion between @jasonfurman and @StephanieKelton that I think makes for very interesting listening now, on all sides. podcasts.apple.com/de/podcast/why
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Ezra Klein
@ezraklein
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@ezraklein
That said, the difficulty for the MMTers is that outlook didn't give them any leg up in predicting inflation now, and it's not given them an obvious leg up I can see in thinking about how to respond to it.
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Ezra Klein
@ezraklein
A lot of people -- the Biden admin very much included -- want a way of responding to inflation that's not simply slowing down the economy through raising interest rates, but is expanding "what we can actually do." That's hard!
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Jason Furman
@jasonfurman
3. Mainstream economics has a clear answer to inflation: raise interest rates. (Or cut spending/raise taxes but most economists prefer the Fed to take the lead on inflation.) MMT is pushing the same exact policies it pushed when inflation was too low. twitter.com/ezraklein/stat
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