The Wall Street Journal of Thursday, 8/25/2022 featured John H. Cochrane’s commentary entitled “Nobody Knows How Interest Rates Affect Inflation.” We would say, “In order to understand how interest payments from Smith to Jones should circulate in order to achieve price stability, continuity, equilibrium and realization of the economy’s potential, one must have a unified theory explaining the whole, organic, dynamic, pretio-quantital,economic process. Then,within that theory one can know How Interest Rates Might Affect Inflation.” (Click here, and here) We would also assert that manipulation by the Fed of the rental price of money – the interest cost – can be counterproductive. (Continue reading)
On Saturday, 12/19/ 2020,John Cochrane‘s blog “Bisin on MMT Rhetoric” cited Alberto Bisin’s review of Stephanie Kelton’s Book “The Deficit Myth. “ Alberto Bisin contends, as do we, that So-Called Modern Monetary Theory, as espoused by Kelton and others, does not qualify as a theory. Cochrane quotes Bisin:
The book should be seen as a rhetorical exercise. Indeed, it is the core of MMT that appears as merely a rhetorical exercise. As such it is interesting, but not a theory in any meaningful sense I can make of the word. The T in MMT is more like a collection of interrelated statements floating in fluid arguments. Never is its logical structure expressed in a direct, clear way, from head to toe.