Not Even Keynes Can Help Us Now
The famous economist’s guidance about how and when governments should spend money doesn’t seem to apply to the current moment.
That’s one theory.
Photographer: Chris J. Ratcliffe/Bloomberg
High rates of inflation around the world have pretty much ended the popularity of MMT, or Modern Monetary Theory, and its proposition that sovereign governments can spend as much as they want. But current economic conditions also call into question the usefulness of a much more established and accepted theory: Keynesian economics.
The standard Keynesian doctrine is to run a budget surplus in good times, and then use deficit spending to stimulate the economy in bad times. That argument made and still makes logical sense. But it just doesn’t apply to the current moment.