MB Fund Podcast: Is MMT the solution to the Coronavirus Economy? With Prof. Steve Keen

In today’s webinar MB Fund’s Head of Investments Damien Klassen, and Head of Advice Tim Fuller are joined by Professor Steve Keen to determine if MMT is the solution to an economy ravaged by Coronavirus.

On the agenda, we give an overview of how the Coronavirus crisis will have impacted the already fragile economy when all is said and done, addressing the fiscal and monetary policy responses available to government. We then switch our attention to MMT, where Professor Keen will talk us through his Minsky modelling of MMT and how he believes MMT can be utilised in the economy during the COVID pandemic and to combat chronically low inflation, along with the resulting outcomes of MMT compared with traditional economic approaches


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Tim Fuller is Head of Advice at the MacroBusiness Fund, which is powered by Nucleus Wealth.

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Tim Fuller is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Nucleus Advice Pty Ltd – AFSL 515796.

Tim Fuller


    • Reusa is currently away enjoying extensive relations, however his spokesperson had the following to say: “LOL steve keen”

  1. Can you ask Steve Keen whether he has an opinion on inflationary effect of money printing for handouts vs building infrastructure? The difference being the latter is asset backed. i.e. if the currency was to devalue you could technically sell some of those assets at a profit and take the money back out of circulation.

  2. I will try to post this during the podcast.


    Arguably a weak point of MMT is that it seems to accept the status quo or existing operational model where banks have a monopoly on operating deposit accounts at the RBA. Having regard to the abuses by our banks of their privileges in our monetary system, surely it is time to allow the general public and non-bank organisations the right to open and operate non-interest paying deposit accounts at the RBA.

    Non-interest paying RBA deposit accounts would be a convenient and natural companion to the existing central bank liabilities (notes and coins) that the general public are currently allowed to use. They would also avoid the need to offer a public guarantee on at call unsecured investments (aka deposits) in private banks.


    • Will be interesting to see if Steve answers this question, but the premise of the question is incorrect. MMT does NOT accept the status quo at all, in fact Bill Mitchell himself has suggested something similar. Plus many MMT researchers and advocates have openly argued for deep bank reform including what you have suggested, and much further.

      • Thanks Marcus – I will reword the question.


        Arguably a weak point of the debt loaded status quo is that banks have a monopoly on operating deposit accounts at the RBA. Having regard to the abuses by our banks of their privileges in our monetary system, surely it is time to allow the general public and non-bank organisations the right to open and operate non-interest paying deposit accounts at the RBA.

          • pfh007.comMEMBER

            Another questions I have lobbed into the inbox.

            “..Does Steve agree that when the government sells bonds it is essentially converting what would be non interest accruing central bank deposits into private wealth assets that accrue interest. How is that in the public interest?..”

          • pfh007.comMEMBER

            They asked him that one as well and his response was very interesting though I wasn’t persuaded by his view that by giving the financial sector a nice fat stream of income from bond assets might discourage them from poor quality credit creation.

            I think the evidence to date is that they will happily do both. 🙂

          • PaperRooDogMEMBER

            I think Steve has said there must be tighter control & limits to credit creation as well eg his P.I.L.L rule etc, which should prevent banks from doing both.

          • pfh007.comMEMBER

            Sure but why convert the RBA balance sheet into interest accruing wealth assets at all?

            There might be some limited situations where bonds will be useful but the current approach needs to be given the boot and a democratic MyRBA approach to the central bank is the way to do it.

  3. I’d like to ask Steve the following:
    Why not keep it simple and re-introduce commodity-backed money?

    That way we can have the reset everyone knows we need and individuals and Governments will be forced to live (largely) within their means henceforth. In addition, the ability of commercial banks to make obscene profits will instantaneously disappear too. Oh, and property will be affordable going forward.

    What’s not to love?

        • By design, commodity based currency artificially constrains the money supply and only leads to weakening the state, undermining Govt regulation, fewer services, and massive miss-allocation of resources…and for what useful purpose? None that I can see, particularly for a country such as Australia. In very limited cases I can see some potential benefit, but we are not in those circumstances.

          There is a reason it has been implemented and dropped multiple times in last 100 years for example, and again utterly unnecessary. The true constraint on the monetary supply is economic capacity not the supply of some arbitrary “thing”.

          Our current economic woes revolve around lack of of understanding of the monetary system, lack of transparency, undemocratic processes, deep institutional corruption, and fatally flawed neo-liberal economic dogma created to benefit rich…none of which are deterred by your suggestion. So why lock in austerity AND the disastrous economic outcomes we have today? Where is the upside?

          • pfh007.comMEMBER

            “..By design, commodity based currency artificially constrains the money supply ..”

            They do but not nearly as much the “commodity as money” crowd seem to think because even when there is a “gold standard” the bank credit part of the money supply (the dodgy bit) can still expand (sometimes massively) as banker’s take their chances that they will rarely be required to honour their promises with a lump of the golden stuff.

            Thus why I don’t think a return to a commodity standard is a great solution to the current mess.

          • This subject is too lengthy to go into on the Comments boards but I’ll address a number of the statements you make:
            1. There is no ‘artificial’ constraint on the money supply — it’s a real and necessary constraint. If there are no constraints, then what underpins the value of money?
            2. Milton Friedman is the father of ‘monetarism’ — he argued that if you manipulate the money supply you could influence the economy in a (presumably) positive fashion. Problem is, you can’t increase wealth by increasing the supply of money. All you do is redistribute the wealth, so human intervention in the money supply is a bad idea, because the value of money can be confiscated at will by the authorities any time they feel the need. Vladimir Lenin understood this and so did Keynes – both have been quoted referencing the above.
            3. Commodity money supply doesn’t stand still – it increases at the same rate that the underlying commodity increases.
            4. It doesn’t weaken the State but certainly restrains the State from expansive and wasteful spending. There’s no doubt that gold-backed money would ensure small Govt and a very modest welfare system. And, limited spending on defence.
            5. “and massive miss-allocation of resources…” Quite the contrary – gold backed money actually has real value i.e. it can’t be just printed willy-nilly by a Central (or commercial) Bank, thereby ensuring the when scarce and precious capital IS invested, the person (or people) investing it are reasonably bullish about making a return on it. Said otherwise, malinvestment is limited by default.
            6. “… true constraint on the monetary supply is economic capacity …” that suggests there is a link between supply and capacity. That’s nonsense, because most of the money coming into existence in this country does so through people taking out mortgages. If there’s any link between economic and mortgage credit it’s a tenuous one.
            7. “Our current economic woes revolve around lack of of understanding of the monetary system …” Well, you’re certainly right about that – based on the many comments on this blog over the years, very few have the first clue. And it’s open to debate whether the committee members of the RBA understand it either.
            8. “undemocratic processes, deep institutional corruption” — that’s the beauty of gold-backed money. It limits the size and scope of Govt and in the process, limits the size and scope of its power over citizens and the scope for corruption. Gold-backed money strips power from Govt and grants it to the citizens – it tips the balance. I know this because I understand intimately how this all works.

            I’ve never once heard a contemporary politician argue in favour of a gold standard – nor an oligarch or wealthy businessman – and there’s a good reason for that. They hate the idea of a gold standard – fiat suits them just fine as it ensures rich will be richer every year and Governments will hold sway over their minions.

          • Well the spambot has my response to you and hopefully it’ll be released soon but what I did fail to conclude with was the following:

            The US economy grew at a far faster clip under a gold standard than it has done since suspension of it in 1971 – in fact the growth trend line has been pointing ever lower since the US went off the gold standard. All data on the St Louis Fed website.

          • Dom … I guess you never heard of the business plot or the crushing and repetitive social outcomes attached to a gold standard.

            Basically history can be boiled down to War Debt and then Environmental Calamity diminishing or ending societies, nothing suggests a gold standard fixes any of it, just the opposite according to the anthropology.

            Gripeing on about Hayek’s Ordoliberalism is some heavy duty chutzpah ….

          • @skippy
            You’re right I’ve never heard of any of what you just outlined. If a gold standard suited the elites and the political classes there’d be one in place today – zero doubt about it. When have citizens ever opined (or voted) on the monetary system? Never – because they don’t know how it all works. A fiat money system gifts huge riches to the established wealthy and allows governments to spend to their hearts’ content and maintains their entrenched power. Period.

            To all those who claim we couldn’t have such an expansive welfare system (dole, health and education) under a gold standard, you’re dead right. The money available for all of that would be much more limited and each individual would have to carefully prioritise what they spent their money on — and debt would be very expensive and housing would be what it should be: a consumer item and not a financial asset that can be leveraged to the heavens.

            Nvm, if you can’t see the benefits there’s no point going on — you either understand it or you don’t.

      • Maybe it is more of a timing issue? For example, there may be times when it is better to be moving towards a commodity-backed currency, and times when it is okay to be moving away from a commodity-backed currency.

  4. Does MMT rely on politicians raising taxes to counter inflation?

    Which politician is going to do that.


    • pfh007.comMEMBER

      The current system already requires the politicians to do that.

      The tax system is sucking money out of the economy 24/7.

      The only issue is making sure that the amount be removed is enough to avoid the money being pumped in (or the much larger amount created by the banks) from generating inflation but that doesn’t seem to be a big problem at the moment.

      If it does become a problem there are heaps of ways of exerting downward pressure on inflation without raising taxes.

      Raising interest rates to slow bank credit creation
      Directly regulating bank credit creation
      Reducing government expenditure

      And that is just for starters.

      As for raising taxes governments have never been too shy about doing that. Their favourite technique is bracket creep – silent but deadly.

    • Correct. It’s a total fantasy.

      How many people are mortgaged to the hilt and can barely put food on the table and meet all their basic expenses?

      And suddenly the Gubbermint decides to raise income tax by 5 or 10% to head off high inflation (bear in mind, the tax hit has to impact ALL workers so the ‘basic rate’ is where it needs to happen – or the tax-free threshold gets reduced).

      I think the appropriate response (h/t the resident marsupial) is: Wheeeee ……

      We’ve been down this road so many times in our history and yet “This time is different” (It always is …)

      How anyone with a brain gives Stephanie Kelton the time of day is beyond me.

    • That is a good question. It is a bit confusing because quite a few MMT fans like to call it an operational description of the monetary system we have now and that MMT is already happening.

      I really don’t understand why anyone would want to be associated with the mess we have.

      So yes it seems that COVID-19 may be driving us to the end of the current economic model and if MMT describes the current model then COVID-19 may be a solution to the “MMT” economy.

      MMT might be better off claiming to be a program of reform to the current monetary system but most of the time that is not what they are saying. Most of the time they are saying that the current monetary system could work more in the general public interest rather than a few sectional interests.

      But can it? I don’t think the current monetary systems works the way it does by accident. It works very well for top 30% and they do an excellent job of convincing the rest of the general public that there is no alternative.

  5. call me ArtieMEMBER

    I love the way this place is full of ideas. Not constrained by what the MSM tells us we should think (or even what we should think about)