From MMT Advocate To Outspoken Critic

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, have you noticed that there is a lot of talk about MMT lately?

Tracy Alloway (0:25)

No, no, Joe, I haven't noticed. What's MMT?

Joe Weisenthal (0:29)

No, it seems like hardly a day goes by where someone doesn't weigh in MMT. It stands for Modern Monetary Theory. It's I guess a school of economic thought that's exploding in popularity right now, very much online.

And it's kind of complicated and there's a lot to it, but I think the gist is that people get really excited about is sort of rethinking our approach to deficit. So I think in mainstream discourse, government deficits are seen as bad or maybe sometimes a necessary evil as something to be avoided. And there's a lot more to it, but I think at heart, it's this view like no deficits and government debt isn't the same as regular debt and we don't have to be afraid of it.

Tracy Alloway (1:13)

Yeah, and MMT, by complete coincidence, I'm sure, could also be interpreted as many macroeconomists talking, which is what it has effectively become, right? Like there is so much discourse about this particular topic. And it's kind of weird to observe because you think, oh, it's a relatively obscure economic theory, but I think what gets people really excited about it is that it's an economic theory that essentially comes with a sort of view of what the world is or how the world should be, and also policy implications. So people get really, really riled up about this particular topic.

Joe Weisenthal (1:53)

I had never heard that acronym many macroeconomists talking. I had heard a magical money tree is another pejorative acronym for it. But I think you're right. And it's interesting. There are multiple parallels, I think, to Bitcoin, actually, in the sense like in 2017, all these sort of old mainstream people in banking and finance were asked to comment about Bitcoin, even though I never got any impression that they had even understood what it is, and they all thought it was awful.

And now, this year, we're seeing the same with MMT in the sense that a lot of people are criticizing it and saying, oh, if we adopt this, we're going to end up like Zimbabwe or Venezuela, but it's not really clear that they've actually put in any effort into learning about what it is.

And the other thing I think that parallel, and you think about like why now, both Bitcoin and MMT sort of post-crisis rethinking of like what money is. And a lot of people are frustrated with the economy, inequality, bankers, austerity. And so I think that the frustration with the post-crisis period has sort of opened the door for new ideas to take root and gather steam and force the old guard to defend the existing system in a way they're not used to.

Tracy Alloway (3:12)

Totally agree. And Bitcoin and MMT are sort of two sides of a similar coin. I would say Bitcoin is a question about whether or not a government should have monopoly over money. And MMT is sort of the implications of what happens when a government does have monopoly over the money system. So I'm excited to talk about this one. We will add to the MMT many macroeconomists talking, OOF, in this particular episode.

Joe Weisenthal (3:39)

Yes. And I mentioned that with both of the topics, I felt like there was this phenomenon where everyone grabbed someone on the stage and they said, what's your opinion on this?

And even if it's not clear that the person did any idea what they were talking about for some reason they were listened to. So today we're actually going to talk to someone who has been a critic of MMT. But unlike most critics, he actually understands it well. And at one point he was more of an adherent of it. And I first discovered MMT back in, I think, 2009 by reading his blog.

Tracy Alloway (4:13)

Early adopter.

Joe Weisenthal (4:15)

Yeah, very, way early adopter. So I am excited that on this week's episode we have Cullen Roche. He is the founder of Orchum Financial. A lot of people know him as the author of the very popular finance blog Pragmatic Capitalism. Like I said, I first discovered MMT through him in 2009 Now he's a bit of a critic, but he understands it very well.

Cullen, thank you very much for joining us.

Cullen Roche (4:40)

Hey guys, thanks for having me.

Joe Weisenthal (4:42)

So it's pretty extraordinary how much talk MMT is getting these days, given that it was just, you know, you were just one of hardly anyone, a handful of people writing about it about 10 years ago. Why don't you start off by saying sort of in your view, what attracted you to this framework of thinking about the economy way back then?