Unconventional Monetary Policy
This recent piece on MMT is a fine example. The key question gets isolated in the comments:
"How can the Fed put money into circulation if the people don’t want it?"Scott never responds in this post, but in the past he's written about "unconventional monetary policy".
"Unconventional monetary policy" means the Fed targets some level of nominal GDP and keeps buying things until that level is met. Usually, the Fed buys and sells short term Treasuries to influence the clearing price of reserves in the overnight interbank market. The clearing interest rate in the overnight interbank market is the "Federal Fund Rate" and this intervention is the mechanism it uses to manage the level of excess reserves in the system (as it can drain reserves by converting them to Treasuries). Scott argues that the Fed can buy other things, like road repair services, bridge building services, etc. etc. and therefore hit any NGDP target it chooses.
"Road repair services" and "bridge building services" are very unconventional monetary policy instruments indeed -- but they are utterly conventional fiscal policy instruments. Indeed, much of the Obama stimulus (for reasons for politics and ignorant atavism) was focused on lame "shovel ready" projects of exactly this sort. So Scott is advocating what most of us think as "fiscal policy" but renaming it "unconventional monetary policy". Why?
I think most of us think of "monetary policy" as setting "interest rates", but Scott might be thinking of "monetary policy" as policy conducted by the monetary Authority, which is the Fed. Therefore, whatever the Fed does is "monetary policy" because, by Gods, it's being done by the Fed! This kind of makes sense, and at least we now have a transmission mechanism by which the Fed can, actually, hit an NGDP target -- direct purchasing of products and services.
But when stated in this clear way, I don't know how happy people would be if the Fed starts engaging in fiscal policy -- they believe that to be a matter for Congress. The Fed would pay for this by expanding its own balance sheet (the Fed simply marks accounts up and down to buy and sell things) so it would not show up in the Government deficit number, but there's no reason the Fed cannot use this same ability and move Congressional spending "off balance sheet" in the same way if it so chose.