PERCEPTION.
Zach Moller 19, bachelors and masters in economics, 7-18-2019, “What Is MMT, and Why Isn’t It Practical?,” https://www.thirdway.org/memo/what-is-mmt-and-why-isnt-it-practical, oj
The Federal Reserve provides an important macroeconomic safety net for the country. And it is able to play the role of an independent steward in the economy free, or mostly free, from political intrusion. For example, in the wake of the Great Recession, Congress worked to provide stimulus to bring the economy out of the tank. But it wasn’t enough. Fortunately, the Federal Reserve stepped in to help the economy through the fiscal policy doldrums in 2011 and 2012.
Further, our current economic situation is one of low inflation and low-interest rates. This is because markets trust the Federal Reserve and, as a result, businesses and individuals have well-anchored inflation expectations (i.e. they think inflation is going to be low and stable). Under MMT, however, the Fed’s role would be upended. A shift in strategy and relationship to inflation would have an uncertain effect on individuals’ and businesses’ inflation expectations. And possibly more dangerous during economic downturns, we would move from having both monetary and fiscal policy tools to only having fiscal ones.