Everyone from politicians and economists to ill-informed college students are discussing the merits of what is referred to as Modern Monetary Theory (MMT). While the theory is nothing new, it has been adopted by those that are very new, the socialists among us.
I don’t know about you, but I immediately get hot flashes when I see the likes of Bernie Sanders and Alexandria Ocasio-Cortez (AOC) trying to steamroll a policy to the American Bolsheviks. MMT has been around for some time, having come out of the Chartalism school in the first half of the 1900’s and was made into MMT in the early 90’s by Warren Mosler.
To the casual observer, MMT may sound a lot like standard “prime the pump” Keynesianism, the idea that the Government can and should run deficits to smooth out the business cycle. MMT, like Chartalism, states that money does not have intrinsic value, but is given value by the government. As an aside, the innovation of Bitcoin throws a wrench into the central control placing value on a fiat currency. Cryptocurrencies are issued in a free and open marketplace, have no connection to any government, and there’s no law that says anyone must accept it. Yet it has value and people are willing to trade and accept virtual currencies. Just saying…
My gut reaction to the current MMT is to instantly reject it based solely on the association of words such as “government,” “control,” “Bernie Sanders,” “Green Deal,” “yadda-yadda.”
I’m also going to put this on the table for thought. I will guess you won’t have read this anywhere else.
The European Union took the bold step toward a one-world currency with the advent of the euro. While MMT’ers will throw out the example of Japan as being good, we also know that the example of pre-WWII Germany is bad. Even the New York Times’ Paul Krugman says, “It would be quite likely that the money-financed deficit would lead to hyperinflation.
It becomes clear that any attempt to extract too much from seigniorage (profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs) — more than a few percent of GDP, probably — leads to an infinite upward spiral in inflation. In effect, the currency is destroyed. I will postulate that the quislings such as AOC are puppets of the likes of George Soros and other money changers, who once nearly broke the Bank of England, and work day and night to destroy the dollar.
As the people of England suffered, so would the average American, at the expense of enriching the few like Soros, who ironically are the one-percent hated by the left. It’s heavy stuff, I know. Take an Advil and think about it.
Now that Modern Monetary Theory and Democratic Socialism have found each other, we have to look at why it’s such a dangerous combination. Any good revolution (after taking your guns, of course) will begin with Newspeak. The socialist left is fluent in such, and has transcribed several new phrases for you. Regarding MMT, you will be told that we no longer have “deficits,” but a more tolerable “national spending achievement.”
As you may have noticed thus far, the central government is the common denominator of theory and action. A sovereign will have to be prescient in its ability to see and measure this “national spending achievement.” One would argue if that was attainable, why can’t the government control inflation via price controls and eliminate taxes altogether? Oh yes, and don’t forget that a commandment of MMT is that every fellow-traveler will have a job that wants one. MMT is by far too deep a concern to rationalize in a thousand words or so. It is fair to say that after Bretton Woods there is no more pretense that the currency has any intrinsic value. History dictates that this monetary maneuver will not end well.