Problems With Modern Monetary Theory

It’s just a single speech divided into one page chapters. Not worth it.

If you are looking for a balanced evaluation of Modern Monetary Theory this is definitely NOT the book for you. It is a distortion and misrepresentation of the ideas put forward in Kelton’s book. To take one example from P14 of Wenzel’s book; “The short one minute elevator explanation of MMT is that it calls for the printing of money to solve all the world’s economic ills.” Yet Kelton herself writes onP3 of her book; “Do I believe the solution to all our problems is to simply spend more money? No, Of course not.” Again on P37 she notes regarding the government financing its expenditure through the creation of new money; “Does that mean there are no limits? Can we just print our way to prosperity? Absolutely not. MMT is not a free lunch.” To give a second example Kelton‘s advocacy of increased taxes on the rich is dismissed by Wenzel(P30) as “a move in the direction of pure Marxist egalitarianism.” Where to stop as there are so many other examples of Wenzel's nonsense?I believe it was John Maynard Keynes commenting on the May Report in 1931 who described it as “The most foolish document that I have ever had the misfortune to read.” I think that if he were alive today and read Wenzel’s book that he might want to revise his judgement on the May Report.

With the danger of being too “meta” a review of a commentary on a book.Robert Wenzel has written a commentary on Stephanie Kelton’s The Deficit Myth. A book about modern monetary theory, MMT. MMT is a comparatively new idea in macro economics, one where the focus inflation and government spending in a country with it’s own currency in limited only by inflation not by the revenue the government raises through taxes and other ways. It can finance it’s activities in excess of revenue by simply printing money. When inflation hits, the printing must stop. The purpose of taxes is simply fight inflation not to raise revenue, though they do that too.MMT is really a reformulation of older thinking and it is therefore not obvious that it is at all “modern”. Government has always printed money, even when money were gold coins (coins where debased).Wenzels commentary is a very short book with less than 50 scantily texted pages. The intellectual content is even scantier. His argument comes to this: government spending equal central planning and since central planning is bad government spending is also bad.That much writing on economics is simply a way to dress up ideology is not news and this book is simply a more bare-faced version.The author places whole email exchanges in the text, something I quite appreciate as a nice way to frame what discussions there are in the book. And not just the answer he received back from someone, but also the question he posed to get that answer. Something I for one would like to see done more in policy discussion books generally.As an author the way to avoid contradicting yourself is to remain shallow. Just how shallow depends on how well you think out the whole case you are making. This book is plenty shallow (with a text this short, little else would be possible unless it had a very narrow technical focus – which this one does not), but Wenzel still manages to contradict himself.Wenzel also apparently comes from the Austrian-economics side of things. Among the doctrines held in this school is that markets always clear. In layman's terms: you can always sell something if the price is set low enough. This is obviously not true and there are many examples to attest to this. Wenzel spends page 24-26 on this issue as an attempted take-down of MMT as outlined by Kelton. He quotes at length from von Mises (an Austrian and the chief reason why it is called the Austrian School of economics ) on why persistent unemployment is impossible (despite all evidence to the contrary) and critizises Kelton for disagreeing with von Mieses. I.e his argument is that if you disagree with von Mieses you are wrong. MMT is wrong because it does not conform with the tenants of the Austrian school of economics as articulated by von Mieses.This is hardly intellectually rigorous and is repeated elsewhere in the book.The title of the book is “problems with modern monetary theory”. A more accurate title would be Stephanie Kelton does not agree with Ludwig von Mieses.Two starsOne star taken for the title. I though I was getting an examination and feel slight cheated that it was hardly anything of the sort.I take nothing for the extreme political partisanship (econ as a field is riddled with that) attitude.I also like that Wenzel has substantial quotes. Particularly the answer-with-question-included bits. It fleshes things out nicely.That Wenzel equates government spending with central planning is just ridiculous, and says more about him than anything. I was tempted to take one star for that nonsense alone. But since he lifts so heavily from von Mieses I suppose I have to let that one slide. It goes with that particular territory Though it underscores the point that the title is very misleading.I take two stars for the sheer flimsiness of the arguments. True, the subtitle of the book states “a comment on” and therefore academic rigor is not strictly required. But something like the author’s repeated equating government spending with central planning, weakens the whole thing.Two stars might seem a bit generous, but it was short and he did quote with a little bit context which I appreciate and generally find missing elsewhere.

Not really a book - only 49 spaced out pages, or 37 if you take out pages 1-8 (title, copyright and contents table) and the 4 blank pages. A one sided, emotional and personal (Wenzer says Kelton has a "typical lefty hate of the rich") attack on Kelton by a staunch free marketeer. Pity really - having read Kelton's book, and thinking her solutions sounded almost too good to be true but being unable to conceptualise why, I was keen to read a sensible critique.Disappointed.

The book looks good, however I haven't read it yet, so can't comment on its contents.

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