Economics
Larry Summers Slams MMT as ‘Fallacious’
- He calls deficit-friendly doctrine a ‘recipe for disaster’
- Wider debate brews among pro-Democrat economists as 2020 nears
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Larry Summers heated up a brewing row among economists over Modern Monetary Theory, calling the deficit-friendly doctrine “fallacious at multiple levels” and accusing its supporters of holding out the promise of a “free lunch.”
The former Treasury secretary under Bill Clinton and White House adviser to Barack Obama is the latest big-name economist to turn his fire on MMT, a school of thought that’s been gaining ground especially on the left wing of the Democratic Party. It argues that governments with their own currencies don’t need to tax, or even borrow, to finance spending -- and that when inflation is low, as it is now, there’s room for bigger government deficits.