Modern Monetary Theory and the European Project with Dirk Ehnts

Macro N Cheese

Steve’s guest this week is Dirk Ehnts, a lecturer and author

who specializes in modern monetary theory (MMT). They discuss Dirk's new book,

"A Simple Guide to the Monetary System," which aims to simplify the

often complex concepts of MMT.

They discuss the significance of the Copernican turn to MMT,

which refers to the shift in perspective that occurred during the COVID-19

pandemic. Dirk explains that the massive increase in government spending and

the lack of inflationary effects challenged conventional economic theories that

had previously dismissed MMT.

Dirk explains the theory behind inflation targeting and how

it has failed to deliver on its promises of price stability and full

employment. He also highlights the role of trade policy and income inequality

in shaping economic outcomes, pointing out that these factors are often

overlooked in favor of focusing solely on interest rates and inflation.

The conversation shifts to the rise of the BRICS

countries (Brazil, Russia, India, China, and South Africa) and the geopolitical

battles that have influenced international trade. They discuss the idea of

losing faith in the US dollar as the primary world reserve currency and the

potential impact on global trade.

Dirk emphasizes that the public needs to understand how

money and resources interact in order to find solutions to problems like

climate change. He believes that as more people become aware of MMT and its

potential policies, there will be a demand for change.

Dirk Ehnts is a German heterodox economist.

He is one of the leading proponents of Modern Monetary Theory in Europe. Ehnts

is a member of the standing field committee History of Economic Thought of the

German economists association. Every summer since 2016 Ehnts has held a course

on MMT at the Summer School of Maastricht University. In February 2019, he

organized the 1st European MMT Conference. He is also a lecturer at the MMT

summer school at the University of Poznan in Poland.