By: Andrew Moran
It is bedlam in America, and the left is exploiting the pandemonium to institute their treasure trove of socialist goodies. The progressives have enrolled in Rahm Emanuel’s school of thought of “never letting a crisis go to waste,” promoting one of the many causes du jour that have already been disqualified from serious discussions and tossed into waste bins during times of normalcy. The modern monetary theory (MMT) is another work of science fiction that leftists are attempting to make official public policy amid the mayhem. MMT acolytes, like the revolutionaries of a universal basic income (UBI), purport that it would save the population from financial devastation, which was caused by the very same system these folks are advocating. MMT might be marketed as a prescription to remedy the statists’ century of destruction, but the only thing we would need if it is implemented is a hefty dose of nepenthe.
Got MMT?
If you have yet to read the latest yarns in some left-leaning academic journal or white paper, you probably are unaware of the newest scheme emanating from the minds of Keynesian economists. MMT presents the concept that governments no longer need to be constrained by deficits and forced to operate based on taxes and borrowing. Were they ever handcuffed? Apparently so. Instead, politicians can print as much money as they need since they are the primary issuers of the currency. According to the purveyors of this perverse logic, the state can reject the idea that it cannot afford free health care, free tuition, and free money if it controls the keys to the printing press.
Suffice it to say, when Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Bernie Sanders (I-VT) are on board with this policy tool, the public should be afraid – very afraid. Modern monetary theory should be renamed as either the magical monetary theory or the madness monetary theory. You decide.
Print, Spend, Repeat
Dr. Stephanie Kelton, an economist and author of The Deficit Myth, published a love letter to MMT in The New York Times, titled “Learn To Love Trillion-Dollar Deficits.” Despite the overall premise of this laboratory experiment being flawed, she correctly pointed out that Congress’ astronomical spending this year was MMT in action. The government did not raise taxes nor borrow from China to prop up the economy (yet), choosing to spend on a whim without any concern about the future of the public purse.
The Treasury Department is auctioning off a record amount of bonds that are positively received among investors, according to early investment and polling data.
Do the reckless actions of the 2019-2020 class of Democrats and Republicans justify MMT? Hardly. Anytime there is bipartisan policymaking effort, and a kumbaya moment among donkeys and elephants, Frankenstein’s monster usually resorts to looting, pillaging, and fleecing your pocketbook and liberties. You know, like the everyday riots unfolding in America today. Of course, the entire purpose of suddenly suspending any hatred for the other side is to advance the endgame of expanding the size and scope of government. In Kelton’s case, her crusade is the Green New Deal (GND), the unlimited money-spending legislation that is meant to transform the U.S. into a utopia – or dystopia.
Many Americans and lawmakers on both sides have been concerned about the GND for its astronomical price-tag. If MMT were to be implemented, politicos would no longer need to conjure up elaborate mathematical formulas to justify these egregious outlays. If MMT were ever official policy, both sides of the aisle could fiddle around with their pet projects until there is a currency crisis, which proponents seem to believe could never happen. And this is causing some supporters to hit the pause button on their endorsement.
While MMT is mostly a leftist concoction, some supporters fear that Republicans would utilize it to their advantage. No, really? The GOP would never, ever tap a reckless system to advance their causes!
Others have championed the initiative by using Japan as an example. The Bank of Japan (BoJ) owns most of Tokyo’s $11 trillion debt and remains the world’s third-largest economy. But they ostensibly go full yada-yada on the myriad of problems facing the Japanese government: zombie banks, stagflation, failing state services, and many others.
Kelton then concluded in the former newspaper of record:
“An understanding of Modern Monetary Theory matters greatly now. It could free policymakers not only to act boldly amid crises but also to invest boldly in times of more stability. It matters because to lift America out of its current economic crisis, Congress does not need to ‘find the money,’ as many say, in order to spend more. It just needs to find the votes and the political will.”
This is a disappointing passage to compose, especially from an economist who is supposed to know better. Every piece of government spending needs to be paid for, hence why libertarians aver that each new expenditure is a tax. Otherwise, why not just print money to infinity and then make cash rain from the skies over every city in the U.S. today? Why be restrained by inflationary forces and embark upon a spending spree to enrich every citizen?
Considering that politicians have posted massive budget deficits this entire century amid record revenue generation, you can stand to reason that policymakers have already freed themselves from the shackles of Accounting 101. Is it just that MMT would officially abandon any semblance of fiscal responsibility? Well, in that regard, then that would at least force Washington to be honest for once.
What Would Paul Krugman Say?
The next few years should be riveting for MMT. If there is no price inflation, they may declare a premature victory. Even if there is massive price inflation, MMT bobby-soxxers would still give themselves a pat on the back and declare it critical that the poor and middle-class be given a pile of cash to pay for ballooning food and shelter prices. No matter what happens, the MMT crowd will allude to anything as critical evidence in support of congressional control of the printing press. But there is one person who might not be an MMT fanboy: Paul Krugman, who seems more confused by MMT than anything else. Now you can empathize with anyone who does not bow at the alter of statism, Mr. Krugman. Perhaps a trillion-dollar coin and a space-alien invasion are more feasible interventions to generate prosperity for all. When Krugman Nation does not have your back on this neo-Keynesian scheme, you have lost the plot.
This was originally published on Liberty Nation.
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