Is Paul Krugman Going MMT?

Paul Krugman at a press conference
(Swedish Academy of Science). [A]

Paul Krugman's NYTimes blog links to a little paper ("The Simple Analytics of Invisible Bond Vigilantes", PDF) explaining, with mainstream economic tools, why a country like Greece is indeed vulnerable to the "bond vigilantes", while countries like the US are not:

1. The US (and the UK and Australia), unlike Greece (and Italy, Portugal, Spain, Ireland), has its own national currency, issued by the American government.
2. Unlike the EUR, the USD exchange rate fluctuates freely.
3. The US interest rate is determined, as matter of policy, by the US Fed; the EUR interest rate is determined by the European Central Bank.
4. The US has virtually no foreign debt denominated in foreign currency. Greece's debt is pretty much entirely denominated in EUR.

If you have mainstream economics training, you should have no difficulty following Krugman's paper: it's brief, to the point and well explained.

At the other hand, if you know something about MMT, you'll find that the 4 points above are all made by MMT.

Pretty please, Australian journalists refer to my friend Heteconomist (here) for a fuller and better discussion than anything I could offer here.

Congratulations, Prof. Krugman.

Image Credits:
[A] Paul Krugman, Laureate of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 at a press conference at the Swedish Academy of Science in Stockholm. Wikipedia.