Mathew Forstater and Warren Mosler use MMT’s idea about the source of money’s value to argue that the concept of a natural rate hasn’t been relevant in major economies since they moved to a floating exchange-rate system in the 1970s. The “natural” or “normal” rate is now zero, in the sense that central bankers have to take specific actions to prevent it from settling there, and keeping it above zero is “necessarily a political decision” on their part.
Public Service Employment: A Path to Full Employment (Wray, Dantas, Fullwiler, Tcherneva and Kelton, 2018)
MMT economists have long supported a jobs guarantee. They draw inspiration from American economist Hyman Minsky, who said the government can serve as the employer of last resort, and from the public works programs of the New Deal.
The MMT argument is that the jobs guarantee isn’t just a welfare measure: It’s also a key stabilizer of the economy, which will set a floor on wages and shore up demand during recessions. They argue that it’s better to use employment as a buffer than unemployment -- their description of the current approach, in which the Fed sets interest rates based on the idea that if the jobless rate gets too low then the result will be high inflation.
Even if the government paid 15 million people to participate in such a work program, “the impact on inflation would be macroeconomically insignificant,” the economists estimated in this 2018 study.
This article provided by Bloomberg News.