Paul Krugman took another shot at Modern Monetary Theory (MMT) today. He began with this claim:
“Regular readers of comments will notice a continual stream of criticism from MMT (modern monetary theory) types, who insist that deficits are never a problem as long as you have your own currency.”
This is the third engagement of Paul and MMT, and also the third time that he’s offered the above characterization of MMT. After each of his 5 blog posts in the three engagements, he’s received multiple comments correcting this characterization. In addition, multiple posts by others have appeared in reply to each post, pointing out his error of characterization and supplying him with links proving that MMT supporters do believe that deficits are problematic under certain conditions, and that they matter. Already, after his latest mis-characterization a large number of comments (at his own blog) and a few long posts have appeared pointing out that he has made the same error again. The conclusion seems inescapable.
Paul is simply not telling the truth about MMT when he says that MMT supporters “insist that deficits are never a problem as long as you have your own currency.” So, the question is, what will it take to get him to tell the truth? Comments on his blog providing links don’t help. Posts directly addressing his errors at very prominent sites on the web don’t help. Even a lunch that at least one MMT supporter had with him hasn’t helped. So, what will help? How can we get him to recognize a simple error? Why is it he can’t follow a link and read what is there?
When I saw Paul’s new post yesterday and found him repeating the same mis-characterization of MMT as before I found myself thinking: When he said this the first time, it was excusable. When he said it the second time it was lamentable. When he said it the third time it was scandalous. But in saying it a fourth or fifth time, I’ve lost count; it’s just fraudulent, on a level with the statements about the President made by the Tea Party that label him “a socialist.”
Paul made other comments in his post worth discussing, but I’m going to leave it to others to discuss them. There’s already a very good discussion at Cullen Roche’s site, and soon enough, I’m sure that Scott Fullwiler and others will weigh in on Paul’s views that there is a long-term deficit reduction problem, not because of solvency concerns, but because of concerns about eventual inflation, or even hyper-inflation. Paul has made such claims before, contending that there is an Intertemporal Governmental Budgetary Constraint (IGBC) we must be concerned about. There was an extensive discussion of his claims at the end of March at many sites, and the IGBC idea didn’t, in my view, survive the criticism very well. Here’s one post refuting it, and another eliciting a very long comment thread, that pretty much dispatched the IGBC claim.
(Cross-posted from Correntewire.