Here’s Why the Dean of MMT Says US Deficit Spending Is Out of Control
A campaign poster for Warren Mosler, from 2018 during his run as a Democratic gubernatorial candidate for the U.S. Virgin Islands, Mosler is widely credited with having the ideas that developed into the doctrine known as Modern Monetary Theory. He has come out against the high US deficit levels recently, against the expectation of many.
Photographer: Scott McIntyre/Bloomber
It may come as a shock to those who have pilloried Modern Monetary Theory as an economic school of thought dedicated to government largesse and deficit spending. But Warren Mosler, the godfather of MMT, is making what would seem like unlikely common cause with fiscal hawks by arguing that the deficit is too large — with negative implications for inflation and bond yields, potentially for years to come.
The takeaway raises several issues, which I will dive into below: