” What I’d like to know is why this is so hard for PhD macroeconomists? Why can’t heterodox macroeconomists–who studied most of the same economics literature that Stephanie Bell, Scott Fullwiler, Eric Tymoigne, Bill Mitchell, Mat Forstater, Ed Nell, and I (and a handful of others)–get this? I realize that it is a bit easier for those who come straight out of financial markets–like Warren Mosler–to understand the details of monetary operations, or those like Charles Goodhart who saw the monetary ops first hand. But after a quarter of century of hundreds of published articles, thousands of blogs, and far too many conference presentations to count, why is this still so difficult for most PhD economists?
America’s Main Street Economy Vs the Wall Street, by Duane Catlett
There is no connection today between Wall Street (the financial industry) and the Main Street economy (jobs and disposable family income) as evidenced by the fact that the stock markets are at an all-time high but job growth remains stagnant. In this economy, those jobs that are being created tend to be lower paying with fewer benefits than the jobs that are being lost through Congressional budget cuts, and most destructive of all the wealth gap continues to accelerate.
The big question is “why this is happening and what must we do to reclaim the post-WWII position America held for four decades as the most prosperous country in the world?”
Politicians, analysts, and media pundits provide all kinds of rationale for high unemployment rates, low paying jobs, lack of adequate funding for our public institutions, and municipalities facing bankruptcy. Almost all of the reasons given to explain these observations, and especially the lack of good paying jobs, are wrong.
A new branch of economics called Modern Money Theory (MMT) emerged early in the 1990s that perfectly explains this divergence between financial markets and main street economy. It also foretold the euro zone crisis and the recent 2008 Great Recession. It additionally explains why the Fed’s Quantitative Easing (QE) program has been insignificant in stimulating the economy while continuing to accelerate the wealth gap.
MMT is actually not a theory and it has no political ideological basis. It is an objective study of modern (fiat) money and the way a sovereign country with its own fiat currency works. It has nothing to do with big government versus small government, and it has everything to do with our government functioning effectively as our forefathers intended using the mandated financial tools at their disposal.