Thursday, November 29, 2012

Liberty for Laymen Podcast: The Upside Down World of MMT- with Robert Murphy



Dr. Robert Murphy completed his B.A. in Economics at Hillsdale College and earned his Ph.D. in Economics from NYU. He is the author of several books including The Politically Incorrect Guide to the Great Depression and the New Deal, Politically Incorrect Guide to Capitalism, Lessons for the Young Economist, as well as study guides to Rothbard's Man, Economy, & State; and Mises' Human Action, and Theory of Money & Credit.  He also teaches courses through the Mises Academy online program.

The topic of this podcast is "MMT", otherwise known as Modern Monetary Theory.  MMT has grabbed the attention of many people in Financial Planning circles and conferences.  What is MMT and what does it have to say about economics?  Is it correct?  Is it a complete crank macro-economic theory?  Where does it fall flat (if at all)?  We discuss it all in this podcast.

During the interview, we discussed Seven Deadly Innocent Frauds of Economic Policy written by one of the chief proponents of MMT, Warren Mosler.

What are the 7 Deadly Innocent Frauds according to Mosler?
    1. The government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow.
    2. With government deficits, we are leaving our debt burden to our children.
    3. Government budget deficits take away savings.
    4. Social Security is broken.
    5. The trade deficit is an unsustainable imbalance that takes away jobs and output.
    6. We need savings to provide the funds for investment.
    7. It’s a bad thing that higher deficits today mean higher taxes tomorrow.
Robert Murphy has written many articles, op-eds, and blog posts about MMT and issues related to the (alleged) frauds posited by Mosler.

If you have or have not heard of MMT, we invite you to listen to this podcast as Robert Murphy dives into the heart of the accounting tautologies that make MMT both intriguing and yet incorrect on many fronts.

Lastly, I would like to encourage people to visit the "KrugmanDebate" which is a promotion to entice Paul Krugman to debate Dr. Murphy that would benefit a food bank in New York City .  I can think of few better reasons why these two economists should not get together and discuss the competing theories of Business Cycle Theory.

Thank you for listening.

~Andy Katherman