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Who’s Afraid of MMT?

It is not surprising that current and retired central bankers feel threatened by Modern Monetary Theory. With deep roots in the Keynesian tradition and a consistent commitment to achieving full employment, MMT shows that good economics and sound policy doesn't have to be shrouded in obscurantist cant.

AUSTIN – As anyone who has ever been responsible for legislative oversight of central bankers knows, they do not like to have their authority challenged. Most of all, they will defend their mystique – that magical aura that hovers over their words, shrouding a slushy mix of banality and baloney in a mist of power and jargon.

As a result, tormenting central bankers is great fun. John Maynard Keynes famously tormented Montagu Norman, Governor of the Bank of England (BOE) from 1920 to 1944. Wright Patman and Henry Reuss, two US congressmen who chaired the House Banking Committee in the 1970s, did the same to Federal Reserve Chair Arthur Burns. I know that Reuss enjoyed it; I assisted him at the time.

In our day, the voices of Modern Monetary Theory perturb the sleep not only of present central bankers, but even of those retired from the role. They prowl the corridors like Lady Macbeth, shouting “Out damn spot!”