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There’s Much Ruin in a Nation: An Analysis of Modern Monetary Theory

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  • Mark Skousen

    (Chapman University)

Abstract

This paper analyzes the first macroeconomic textbook based on modern monetary theory (MMT) written by Mitchell, Watts and Wray. MMT is a heterodox theory that a government need not worry about budget and monetary constraints and excessive inflation until a country achieves its goals of full employment, first-class healthcare for all citizens, and other desirable policies. Their textbook, Macroeconomics, leaves out major sections that are standard in macroeconomic textbooks, such as AS-AD analysis and economic growth theory. I argue that MMT is a dangerous theory that can lead to a bloated government, runaway inflation, and slow growth. Furthermore, MMT is unnecessary given that many advanced economies have moved in the opposite direction and achieved full-employment growth without adopting MMT, such as Sweden, Canada, Singapore, and Chile.

Suggested Citation

  • Mark Skousen, 2020. "There’s Much Ruin in a Nation: An Analysis of Modern Monetary Theory," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(1), pages 11-21, March.
    • Handle: RePEc:kap:atlecj:v:48:y:2020:i:1:d:10.1007_s11293-020-09651-9
    DOI: 10.1007/s11293-020-09651-9
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    References listed on IDEAS

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    1. Mark Skousen, 1997. "The Perseverance of Paul Samuelson's Economics," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 137-152, Spring.
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    Cited by:

    1. Aloys L. Prinz & Hanno Beck, 2021. "Modern Monetary Theory: A Solid Theoretical Foundation of Economic Policy?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 49(2), pages 173-186, June.

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