Following the Great Depression, there was a period of intellectual and political upheaval. First Keynesian and then rational expectations revolutions altered our views on economic policy.

There are plenty of aggressively confident people out there, but it doesn't mean they always know what they're talking about. Last year, a former governor of the Bank of England, Mervyn King, even criticised the current generation of policymakers for failing to acknowledge how much the world had changed since the global financial crisis.

King was calling on policymakers to acknowledge the world's advanced economies (including Australia) had been stuck in a "low-growth trap" for at least a decade.

"The conventional way of looking at things has misled us in both the diagnosis of, and the prescription for, our current economic problems,"

"If we are to escape the low-growth trap, the diagnosis of the phenomenon is relevant.

Conventional wisdom attributes the stagnation largely to supply factors as the underlying growth rate of productivity appears to have fallen.

"It is surprising that there has been so much resistance to the hypothesis that, not just the United States, but the world as a whole is suffering from demand-led secular stagnation."

He said since the global economy was suffering from a sustained lack of demand, countries would have to work together to reallocate resources around the world to revitalise demand.

"Escaping from this low-growth trap is a different proposition than climbing out of a Keynesian downturn and requires different remedies," he said.

They're not omniscient. They can be wrong on major questions. Their models can prevent them from seeing how the world works.

they shouldn't be so resistant to different ideas — especially in the wake of the current economic calamity that's putting central bank printing presses in overdrive.

Robert Hormats, a former senior economic and trade adviser to five different US presidents, says this pandemic is forcing the US Government to embark on an involuntary experiment with modern monetary theory (MMT), and the same has been said about the United Kingdom.

Should we be thinking differently about who should have responsibility for it, given its unprecedented nature?

The idea I developed in the late 90s was designed before this series of paroxysms (the 2008-09 financial crisis and the coronavirus recession), which are so profound that they call into question the interface between monetary and fiscal policy. It's even more important in that context

He said modern economies had become too complicated and we shouldn't expect politicians to know what scale of spending and taxation was necessary to promote sustainable growth through an economic cycle.

"The conventional way of looking at things has misled us in both the diagnosis of, and the prescription for, our current economic problems," he said. "If we are to escape the low-growth trap, the diagnosis of the phenomenon is relevant. "Conventional wisdom attributes the stagnation largely to supply factors as the underlying growth rate of productivity appears to have fallen. "It is surprising that there has been so much resistance to the hypothesis that, not just the United States, but the world as a whole is suffering from demand-led secular stagnation."

>"Considering the scale of stimulus spending that will be required to fix our economy over the next decade, it might be time to think differently about who should have responsibility for it, writes Gareth Hutchens."

But there would be definite advantages to distancing the stance of fiscal policy from day-to-day government (a government's fiscal policy "stance" refers to how its level of spending and taxation influences aggregate demand).

Interestingly, there's some overlap between Gruen's idea for an independent fiscal authority and some of the ideas coming from proponents of MMT.

When there's slack in the economy it's a rookie error to think of money as a scarce resource, because money is a costless fluid," he said.

In the late 1990s, Nicholas Gruen, a prominent Australian economist, began arguing Australia needed to create an independent statutory agency, much like the Reserve Bank, but with responsibility for the stance of fiscal policy — that is, the balance between government spending and taxation.

Last year, a former governor of the Bank of England, Mervyn King, even criticised the current generation of policymakers for failing to acknowledge how much the world had changed since the global financial crisis.

"If nothing else, MMT's quite a good marketing pitch for creating a Keynesian populist logic to counteract the austerian populist logic that encourage everyone to think that the government's going to go broke,"

So then the question becomes: how do we come up with a system that has the right amount of fluid — money — in the system? And that's an interesting question.

First Keynesian and then rational expectations revolutions altered our views on economic policy. "No-one can doubt that we are once more living through a period of political turmoil. But there has been no comparable questioning of the basic ideas underpinning economic policy.

Economy is one of the major crisis now a days ! So sad to hear that. We will fight

"No-one can doubt that we are once more living through a period of political turmoil. But there has been no comparable questioning of the basic ideas underpinning economic policy.

No-one can doubt that we are once more living through a period of political turmoil. But there has been no comparable questioning of the basic ideas underpinning economic policy. This really needs a change I basically and sincerely agree that a change is required in both our economic an administrative policy..

Very nice economy

You should help thos people whic are helples because rich mans become richer and poor mans become [poorer.so](http://poorer.so) help the people..

Repairing economy after coronavirus crisis could require taking spending and taxing power away from government [https://www.abc.net.au/news/2020-08-16/economic-rebuilding-after-coronavirus-modern-monetary-theory/12563664](https://www.abc.net.au/news/2020-08-16/economic-rebuilding-after-coronavirus-modern-monetary-theory/12563664)