James Meadway, the person who became John McDonnell's chief economics adviser when I declined the job because I would not support the austerity and fiscal rules analysis that John signed up to, has written this in The Guardian:
Supporters of modern monetary theory take this truth and use it to talk up the ability of the British government to issue money or ignore its debt. Monetary constraints, they argue, are ultimately not a real constraint on economic activity, and at least in principle, it is possible to imagine a world in which the UK agrees to renegotiate its various debts with everyone else and so reduces this overwhelming external exposure.
I know only one person who is more obsessed with their hatred of modern monetary theory than James Meadway is, and that is Ann Pettifor. She thinks modern monetary theory is all about helicopter money and the Positive Money agenda, when neither claim is remotely true, and all she reveals is her lack of reading or comprehension. Unfortunately (and I wish this were otherwise), James is in the same place. Let me explain what he gets wrong:
1 - The significance of debt
Firstly, he implies that MMT supporters argue that governments can simply ignore their debt. This is not an MMT argument. What MMT actually says is something quite different. It says:
A government that issues its own sovereign currency (like the UK with sterling) cannot be forced into default on debt denominated in that currency.
That is because the government can...
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