Thread by @StephanieKelton

A dozen thoughts.....Thread
Headline Keynesian economists continue to claim that MMT is just Functional Finance (FF), which is just old-guard Keynesianism. Nothing to see here folks, move along. But here's the thing... 1/12

Functional Finance came from Abba Lerner. And Abba definitely saw his project as a novel and significant departure from what his Keynesian brethren were up to. Take this passage, from the opening paragraphs of his Functional Finance paper. 2/12 modernmoneynetwork.org/sites/default/…

He is saying that there are "publicly minded men" (you know who the modern versions are) who will agree that deficit spending can be used to target high levels of output and employment, but that these same men have failed to see (or accept) the full implications of FF. 3/12

Who were these men? Next paragraph...Keynes and the popularized version of Keynes (Hicks-Hansen, i.e. the IS-LM guys). Lerner thought these guys played it safe, embracing the use of fiscal policy to get out of the slump.... 4/12

..but getting weak-kneed and apologetic when it came to embracing the permanent use of deficit spending to maintain prosperity. So you get Keynes saying, e.g. "the boom, not the slump, is the right time for austerity." That is *not* FF, and that is *not* MMT. 5/12

Lerner believed these "publicly minded men" were too timid and that their timidity was preventing a fuller expression of Functional Finance from elevating the social condition. Lerner set out to debunk all of the myths about debt and deficits. 6/12

Keynes understood that his narrative was different and more timid. It was the safer, more respectable, play. Although Keynes is reported to have eventually come around.... 7/12

..his initial reaction to FF was, "heaven help anyone who tries [to] put it across to the plain man at this stage of the evolution of our ideas." 8/12 hetwebsite.net/het/profiles/l…

MMT follows Lerner in that we have rejected compromises in the name of trying to deliver (to the public) a palatable story about the limits of deficit spending. We agree w/Abba that the ideas should be posed in their purest (most honest) form. 9/12

As Lerner wrote in 1943, "it is these compromises that are under fire." I would argue that we have come full circle. MMT presents the challenge to conventional narratives that have compromised truth for elegance. A compromise that limits our possibilities. 10/12

I doubt very much the "other side" can't see that. MMT fills a void. People are reaching for it precisely because the dominant framework doesn't accommodate the scale of challenge we face. 11/12

Remember, the opening sentence of Lerner's 1943 essay was about winning the war and eliminating economic insecurity. MMT is increasingly seen as an indispensable economic framework in the battle against climate change and inequality. 12/end

Addendum: Although I've said it a thousand times, MMT ≠ Functional Finance, although we incorporate insights, especially around the use of taxes and bond sales in coordination with spending.