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What this illustrates, which I think a lot of people miss, is that MMT 101 shouldn't actually be that controversial. The fact that it is and so many people have trouble grasping it is a sign of how deeply neoliberalism has penetrated what passes for "common sense". 1/N
MMT 101 isn't necessarily inconsistent with neoclassical microeconomics (the backbone of neoclassical economics as a whole). What its challenging to is the post-Carter economic consensus. It's MMT 301 and 401 that's really challenging. What's that you ask? 2/N
Rejection of Neoclassical Microeconomics.The rejection of the idea that potential output is a determinate,unique value over the short and medium run and that relative prices determine potential output. Rejection of a law-like functional relationship between price and quantity 3/N
Rejecting that price administration is a deviation from perfect competition and that PC is a relevant normative benchmark.The important policy implication is the administrative agency responsible for demand management can't be solely responsible for price stability 4/N
MMT also rejects that there is a law-like functional relationship between interest rates (real or nominal) and investment spending. Specifically, businesses don't generally increase their capital budgets in response to lower rates. IOW, No natural/neutral rates 5/N
More generally, businesses and households don't make decisions "on the margin" or go through maximization processes and this is not "irrational" or because of "limited rationality" but a reasonable habit dealing with the inherent finite degree of cognitive capacity in humans 6/N
These issues, along with the endogenity of money, are why MMT is not reducible to Abba Lerner or James Tobin (or even Kalecki). We need to get consensus on MMT 101 before we can move on to these more interesting theoretical issues. /FIN
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