Modern Monetary Theory: Is it new? Does it work? Could it happen in the UK?

Held on Tuesday, July 16


  • Jonathan Reynolds MP

  • Phil Armstrong (Southampton Solent University)

  • Fran Boait (Positive Money)

  • Paul Ormerod (Volterra Partners)

  • Jamie Dannhauser (Ruffer LLP)



This is a tricky one. The CSFI doesn’t normally do macroeconomics. We tend to stick to finance – though that turns out to be a very elastic term, stretching from EU regulation, to FinTech, to sustainability, to financial exclusion… But something is happening out there in the wider world of academic economics that we all (and the City, in particular) ought to be aware of.

This isn’t just the airy-fairy utopianism of a Guardian Big Read. It is a bottom-up repudiation of some of the basic assumptions that have underpinned the way economics is taught (Samuelson for my generation; Mankiw for younger souls) – and the way that those with a basic training in macroeconomics have tried to manage the economy. It isn’t specifically British; indeed, much of the spadework has been done at the University of Missouri Kansas City (prompting jokes about Dorothy and the Yellow Brick Road). But it is picking up traction here – not least in think-tanks affiliated with the Labour Party.

We generally call it Modern Monetary Theory, but opponents often slag it off as the “Magic Money Tree”. Its basic insight is a pretty simple one: there is really no reason for governments to attempt to fine-tune the economy through complex central bank operations in the money markets. If they want to boost activity, they can simply create money and spend it – on the goods and services that governments regularly require. If they want to cool down the economy, they can reverse the process and drain money out of the economy. The only constraint (proponents say) is inflation; that should be the test.

Of course, it is (a bit) more complex than that, and many economists who support MMT have added all sorts of bells and whistles – guaranteed incomes are a popular add-on. But that is the basic insight, and it is hard to quibble (though I would worry about inflation being a lagging indicator). So does it have a future? On such an issue, views are mixed – but we have put together a powerful panel that covers Westminster and the City, as well as academia:

  • Jonathan Reynolds  is Shadow Economic Secretary to the Treasury, a role he has held since October 2016. Jonathan was elected as the Labour Member of Parliament for Stalybridge and Hyde in 2010. He has served as Shadow Minister for Energy and Climate Change, Shadow Minister for Transport and as Parliamentary Private Secretary to Ed Miliband during that time.

  • Phil Armstrong taught for 30 years, primarily at York College. He is currently researching MMT at Southampton Solent University and is a member of the Association for Heterodox Economics.

  • Fran Boait is executive director of Positive Money, a think-tank that campaigns for “systematic change of the money and banking system”. She is also a director of Finance Watch, a senior fellow at the Finance Innovation Lab and an adviser to the Transparency Taskforce. She has a PhD from Cambridge (in geophysics).

  • Paul Ormerod is a partner at Volterra Partners, which he cofounded in 1998, and a visiting professor in the Department of Computer Science at UCL. His critique of mainstream economics, The Death of Economics, sold 1.5 million copies worldwide.

  • Jamie Dannhauser is an in-house economist at Ruffer LLP, which he joined in 2014 from Lombard St. Research. He is also a member of the IEA’s Shadow MPC.

I am keen to learn – and MMT is something that I think we all need to know a bit more about. So, if you (and/or a colleague) are interested, come along; just let us know by emailing or by calling the Centre on 0207 621 1056. As usual, there will be refreshments (wine and sandwiches) to keep things jollying along.


Many thanks,

Andrew Hilton