Modern Monetary Theory and the European Project with Dirk Ehnts

Steve’s guest this week is Dirk Ehnts, a lecturer and authorwho specializes in modern monetary theory (MMT). They discuss Dirk's new book,"A Simple Guide to the Monetary System," which aims to simplify theoften complex concepts of MMT. They discuss the significance of the Copernican turn to MMT,which refers to the shift in perspective that occurred during the COVID-19pandemic. Dirk explains that the massive increase in government spending andthe lack of inflationary effects challenged conventional economic theories thathad previously dismissed MMT. Dirk explains the theory behind inflation targeting and howit has failed to deliver on its promises of price stability and fullemployment. He also highlights the role of trade policy and income inequalityin shaping economic outcomes, pointing out that these factors are oftenoverlooked in favor of focusing solely on interest rates and inflation.The conversation shifts to the rise of the BRICScountries (Brazil, Russia, India, China, and South Africa) and the geopoliticalbattles that have influenced international trade. They discuss the idea oflosing faith in the US dollar as the primary world reserve currency and thepotential impact on global trade. Dirk emphasizes that the public needs to understand howmoney and resources interact in order to find solutions to problems likeclimate change. He believes that as more people become aware of MMT and itspotential policies, there will be a demand for change.Dirk Ehnts is a German heterodox economist.He is one of the leading proponents of Modern Monetary Theory in Europe. Ehntsis a member of the standing field committee History of Economic Thought of theGerman economists association. Every summer since 2016 Ehnts has held a courseon MMT at the Summer School of Maastricht University. In February 2019, heorganized the 1st European MMT Conference. He is also a lecturer at the MMTsummer school at the University of Poznan in Poland.