In the last few weeks, a number of big names in economics who have previously ignored MMT have criticized it. This number would include Krugman, Larry Summers, Fed Chairman Jerome Powell along with many lesser lights. The immediate reason why is Alexandria Ocasio-Cortez’ bringing up the subject. An interesting topic is why they object so strenuously.
MMT is first and foremost a description of how modern money (defined as money that is not convertible into a commodity of value such as gold as a matter of law) works. But it eventually arrives at two conclusions. One is that policy options exist that would result in full employment and stable prices. The other is that monetary policy (interest rate manipulation) is ineffective as an economic control mechanism and fiscal policy (spending and taxing) should be used instead. These two conclusions separate the objectors into two classes.
There are plenty of people in this country whose level of profits depend on a pool of unemployed people willing to flip burgers or whatever for minimum wage. These people have bought-and-paid-for think tanks and economists whose job is to come up with reasons why we can’t have full employment and price stability.
There is another class of economists whose careers and reputations are tied up with monetary policy. MMT attacks the very basis of their world view.