A broken clock is right twice a day.
Is Modern Monetary Theory (MMT) anything new?
The concept being pushed by the likes of Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Bernie Sanders (I-VT) suggests that the Federal Reserve (or Congress) print money to pay for the deficit. But isn’t that what it is currently doing with the nation’s $23 trillion debt and $1 trillion federal deficit?
Either way, the U.S. central bank claims in a new paper that MMT would be a disaster for the country.
Scott A. Wolla and Kaitlyn Frerking wrote in the report:
“A solution some countries with high levels of unsustainable debt have tried is printing money. In this scenario, the government borrows money by issuing bonds and then orders the central bank to buy those bonds by creating (printing) money. History has taught us, however, that this type of policy leads to extremely high rates of inflation (hyperinflation) and often ends in economic ruin.
An important protection against this type of policy is to create an independent central bank that is insulated from the political process and has clear objectives (such as a specific target for the inflation rate) so that it can make policy decisions to sustain economic health over the long run rather than respond to political pressures.”
But MMT proponents, including Stephanie Kelton, professor of public policy and economics at Stony Brook University, suggest that MMT would allow governments to make investments today in education, infrastructure, and income inequality programs.
The state’s “red ink becomes our black ink and their deficits are our surpluses.”
Yuck.
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