Reconciling Modern Monetary Theory with the Wisdom of Mark Thoma

The NYT had a brief discussion of Modern Monetary Theory (MMT) today in the context of a profile of Warren Mosler, one of its major proponents. The profile includes a dismissive comment from Mark Thoma, a professor at the University of Oregon and the creator of the blog, The Economist's View:

"They deny the fact that the government use of real resources can drive the real interest rate up ... I think it’s just nuts."

This description is not exactly right. MMT advocates would say that the Fed...