Postscript : thoughts on MMT's insights

The economics of the mainstream is in disarray. As Frank Hahn remarked four decades ago, "The most serious challenge that the existence of money poses to the theorist is this: the best developed model of the economy cannot find room for it." He was speaking of General Equilibrium theory, but his claim applies equally well to Dynamic Stochastic General Equilibrium theory, which is used by all the major central bankers of the world to model the economy. Let that sink in. Our central bankers use a model that has no money, no banks, and no financial system to understand the economy in order to formulate policy. Queen Elizabeth II asked why none of the mainstreamers foresaw the Global Financial Crisis coming. Their failure was baked into their model.