2 ms·

Hmm? Even among fans of the book, the book's incorrect explanation of money creation is the main criticism: https://mainlymacro.blogspot.co.uk/2017/09/the-core

• digi_owl 9y ago
  That seems to focus on the wrong section. Section 10.8 illustrates how commercial banks create money by lending. What the blog entry you linked to talk about is government deficits, and how the textbook clash with the MMT idea of governments regulating the money supply via expenditure and taxes (effectively creating money as they buy goods and services, and destroy it via taxation).
• soVeryTired 9y ago
  I was really just referring to the fact that in section 10.8 they ditched the fractional reserve / money multiplier story that you find in eg. Mankiw's book. I honestly don't know enough about government budget constraints to comment on the mainly macro post, or other aspects of MMT in general.
  • neffy 9y ago
    The standard fractional reserve/money multiplier story is provably wrong, in several different ways. With a pen and paper for example, work through what happens when loans are repaid with that cascade of banks. They missed a note that money is destroyed when the capital is repaid, and it wouldn't have hurt to discuss loan defaults, but as set out, it is definitely an improvement on the old incorrect description. (Which appears to have originated as a copy and paste error from Keynes original description in the Macmillan report.)