AFR does hatchet job on Kohler MMT push


The AFR has today used a journalist to declare that a journalist has no authority to discuss MMT (I mean, how would he know?):

Out there, on the wild fringes of economics, modern monetary theory is picking up momentum.

MMT, as it is known, is a panacea for troubled times. Government deficits don’t matter, printing money doesn’t drive inflation, and central bankers can’t be trusted.

Although MMT has few mainstream adherents in the economics profession, in Australia the non-theory theory has picked up an influential disciple: Alan Kohler, a former editor of this newspaper and the face of the ABC’s finance coverage.

Kelton and the other MM theorists offer a devilishly attractive solution to the economy’s travails. Her book, The Deficit Myth, argues that governments can print and spend money without any long-term damage to the economy, and therefore should freely spend during the current recession, and well into the future.

The pandemic is a dangerous time for economy policy. Federal debt will reach $1 trillion by the end of next year, according to private sector estimates. Once the recession ends, society will need to turn its mind to which Australians are going to be responsible for the war-like bill.

MMTers argue that famous examples of money printing-driven hyperinflation – the Weimar Republic’s monetary policies helped trigger World War II – failed in execution rather than theory. The Germans should have turned off the presses when the economy could grow no faster, they say.

…Now that the ABC has decided to abolish the position of national economics correspondent, which was being used for reporting trips to Europe, perhaps it might appoint a trained economist to lead coverage of the defining economic event of our lives?

Serious times require serious analysis.

Sure does. So why doesn’t the AFR provide some instead this throwaway ad hominem?

Because the AFR was so selective in its hatchet job, Alan has published his answers to its questions on the matter independently:


Bubbles with winners like banks and real estate that the AFR can’t do without. No wonder terrified arrogance is its only riposte.

For the record, MMT as policy regime is not set in stone in any way. It could take the form of anything we like. My own idea is to use the central bank to fund giant Manhattan Projects for the public good rather than specific income streams for this or that specific group. One of those projects might be a new national business newspaper freed up from the influence of interest groups (who knows what that might achieve).


MMT does not need to undermine the inflation target.

MMT does not need to be unduly influenced by pollies.

MMT does not need to destroy capitalism as we know it.

Indeed, in part, MMT is about providing enough inflation that we get higher interest rates and give the economy back its cost of capital, the key to reviving the dynamism and inclusiveness of our liberal capitalist system.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.