Thread by @ezraklein

So a lot of mainstream economists want to defend their honor on coming to a different view of deficits without MMT, and I don't disagree!

But what I said was MMTers focused attention on real resource constraints, which is different.

https://twitter.com/jasonfurman/status/1490847001772281857

We just had decades of arguments over sustainable debt-to-GDP levels. They were thought to be lower in the Aughts.

Then, as Jason is saying, there was a move towards thinking they could be higher. But the spending constraint was always some debt-to-GDP ratio.

A lot of the folks associated with MMT made the argument, loudly, that the constraint is real resources: We can afford to do what we can actually do.

I now hear a lot of Keynesians say that's true. What I'm saying is they didn't talk as if it was true till pressed.

That was certainly one of my takeaways from this discussion. Kelton was just emphasizing a different set of limits than Jason.

The question was how to predict those limits, and respond to them once breached.

https://twitter.com/ezraklein/status/1490826966873767941

That said, the difficulty for the MMTers is that outlook didn't give them any leg up in predicting inflation now, and it's not given them an obvious leg up I can see in thinking about how to respond to it.

A lot of people -- the Biden admin very much included -- want a way of responding to inflation that's not simply slowing down the economy through raising interest rates, but is expanding "what we can actually do." That's hard!

https://twitter.com/jasonfurman/status/1490848835710558213

But this is a good day to be having this conversation, because I have a new podcast out with Jason that is very much about real resource constraints! So enjoy: nytimes.com/2022/02/08/opi…