The era of non-stop stimulus

Interesting article in the WSJ today. It made me think that Modern Monetary Theory (MMT) seems inevitable at this point, only question is how long until we get there.

How are you planning to navigate the world of non-stop stimulus?


As far as I can understand it MMT it’s like candy for diabetics: poison. It tastes good while it’s in your mouth but it will claim your eyesight and your feet if you overindulge rather than being moderate

Keep the eye on the ball

Disclosure: I have Type 2 Diabetes, and there’s no one in the world who loves candy more than I do. Those are facts not open to dispute. It’s just that I like to read and to walk by my own two feet even better


That’s my reading sorted for the rest of the week :raised_hands:

Would you agree we are sleep walking towards MMT?

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Unfortunately it looks like it.

When debt is 20% to 40% of GDP I believe there’s nothing to worry about. There’s plenty of room. But with 90%, 100%, or more… I fear


Continued stimulus and/or government spending feels somewhat inevitable, given the resurgence of Keynesian thinking following the GFC I expect we’ll see the same themes again.

A lot of attention was paid to the austerity programs that shortly followed this and I think memories are long enough to bear this in mind now. The focus on debt at the expense of the denominator (GDP) ultimately led to worse outcomes in stifled growth.

We also have to consider the social cost, the links between austerity and populism are pretty convincing:

I think there is a pretty credible argument that this was ultimately a significant factor in the Brexit vote.

Obviously the Debt/GDP figures feel high, but I don’t think the question is “can we afford further stimulus?” but rather “can we afford not to?”. Could cutting stimulus too soon lead to another round of self-destructive populist politics?

I hope that a lot of stimulus will come in the form of infrastructure spending to tackle the bigger challenge we face, climate change. I think the virus is a welcome excuse for significant spending on overdue ‘Green New Deals’ around the world.

All that said question about how the bill eventually gets paid is still pretty worrying, given the state of UK politics it probably won’t be the wealthy footing the bill. While boomers control the vote I don’t hold much hope for a remotely equitable repayment.


I would agree I can see renewables/green companies benefiting from this more than most sectors.

Same with miners/exploration companies who will benefit as a traditional inflationary hedge but also from finding all these metals that are needed for the green revolution.

In general I could see stock markets doing really well in this environment, but this would be countered by heavier personal taxation.

I can’t escape the feeling though that eventually MMT is going to go terribly wrong…

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Not as well-read as Raul or Cameron on this, but I’ve put together a short post on MMT.


I don’t mean to be glib or contrarian, but the status quo has been going terribly wrong since the 80s for most people and it’s getting worse. That’s not to say that MMT might not be ‘even’ worse but maybe it’s worth a try.

Something’s going to give eventually. I think even the declining middle class of America is starting to realise that they’re not just temporarily inconvenienced millionnaires after all, hence all mounting misdirected tensions over there.

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From a social policy point of view I agree that the current system doesn’t work for a lot of people and things like wealth inequality has only increased.

But acceptance of MMT feels like a big gamble to me. If it goes wrong it’s going to lead to the worse depression for a long time.

Great effort

But I think you could include Central Banks and interest rates explicitly. They are implicitly included