Summary of Market Macro Myths

Debts, Deficits, and Delusions


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Market Macro Myths summary
This intriguing article seeks to shatter the “myths” of “sound finance.”


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Notable “sound finance” proponents such as Warren Buffett, Angela Merkel and Barack Obama argue that a balanced government budget and economic health go hand-in-hand. Adherents to a philosophy known as “functional finance,” on the other hand, believe that governments should tailor policy to foster price stabilization and full employment. With that latter viewpoint in mind, investment expert James Montier deconstructs and demolishes some well-worn “myths” about fiscal policy in this engaging, thought-provoking article. getAbstract recommends his paper to anyone interested in a nontraditional view of fiscal and economic policy.

In this summary, you will learn

  • What supporters of “functional finance” believe is the role of government’s fiscal policy and
  • What “five fiscal fallacies” proponents of balanced government budgets support.


“Functional finance” advocates for government policy that enables full employment and price stability in an economy. It debunks “five fiscal fallacies” that balanced-budgets supporters hold: “Myth 1: Governments are like households” – The accumulation of excessive debt in the private...
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About the Author

James Montier is on GMO’s asset allocation team and has written several books on investing.

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    Roman Furberg 1 year ago
    Local government does not print money, and will not be able tp pay their workers if they run out of money.
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    Kamlesh Khushalani 1 year ago
    How does one pay themselves as bondholders if debt is held by China and other countries?

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