61: Modern Monetary Theory: Are deficit hawks an endangered species?

Where have all the deficit hawks gone? With mainstream politicians no longer comparing government finances to household saving habits, it appears that a new wave of fiscal spending is on the horizon.      This is part of a growing debate around Modern Monetary Theory, also known as MMT or “a dangerous proposition” if you’re the ECB, about why spending should only be constrained by inflation, how unemployment exists by choice, and that fiscal policy should be the main tool to control economic cycles.     In a world where central banks have become persistently more dovish as inflation targets are missed, the tenets of MMT mean that it has become much easier for politicians to run up larger deficits. In this episode, we explore the potentially radical implications this theory and the changing political landscape could have for inflation and investors’ portfolios.     Find more of the team’s insights on Politics & Policy here: http://www.lgim.com/uk/en/insights/our-thinking/long-term-thinking/?cid=lgimtalks     ·         Alex Mack, Fixed Income Fund Manager ·         Mark Chappel, Senior Content Manager     We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.     This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.