Did the Pandemic Give Modern Monetary Theory a Tryout?
The New York Times suggests that Modern Monetary Theory had a real moment in the sun after the pandemic-induced economic contraction. But monetary and fiscal stimulus is just the normal way of responding to recessions.
The New York Times Building in Manhattan, New York. (JavierDo / Wikimedia Commons)
Last week, Jeanna Smialek wrote a piece at the New York Times that was partially a Stephanie Kelton profile and partially a commentary on Modern Monetary Theory (MMT) in light of the pandemic. More than anything else, the piece is just really confusing and strange. It starts from the premise that MMT got “tried out” during the pandemic, but this premise is just very clearly wrong.
Our response to the coronavirus recession has not been that much different from our response to the Great Recession in 2008.
In both cases, the Federal Reserve cut interest rates to zero.
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