MMT Redux

The late Hunter S Thompson, self-styled tribune of ‘Gonzo’ journalism, used to like to say: “When the going gets weird, the weird turn pro.” The above graphic illustrates plainly the seeming limitations of central banks to apply conventional monetary stimulus when recessionary conditions threaten – typically between 300 & 600 bps adjustments are the norm in such circumstances. As the now more than 10-year experiment of quantitative easing confronts a period of rapidly-deteriorating global growth momentum, it is worth considering what other policy plays are available to try and reverse the pace, if not direction, of economic attenuation. With this in mind, Primary attended a presentation given by Professor Bill Mitchell, a leading academic proponent of Modern Monetary Theory [MMT] (a subject we first wrote about back in April) on September 23rd at a Labour Party Conference fringe event hosted by the Gower Institute for Modern Money Studies.