Really Bad Ideas, Part 1: Modern Monetary Theory

The past century has been an orgy of experimentation. We tried fascism, which initially looked good to some before (literally) crashing and burning. We tried communism, which looked great to many before killing millions and withering away. Fiat currency and fractional reserve banking, meanwhile, still make sense to most economists and politicians but seem to be heading for a fiery end.
And we’re not done. Lots of new ways of organizing society are competing to be the next big thing. This series will consider some of the really bad ones, starting with Modern Monetary Theory (MMT).
MMT’s basic premise is that governments don’t really need to finance themselves through taxing and borrowing when they can just create money and spend it, thus simplifying their operations and satisfying everyone’s needs. Here’s an excerpt from a long panegyric from the Nation magazine:
The Rock-Star Appeal of Modern Monetary Theory In early 2013, Congress entered a death struggle – or a debt struggle, if you will – over the future of the US economy. A spate of old tax cuts and spending programs were due to expire almost simultaneously, and Congress couldn’t agree on a budget, nor on how much the government could borrow to keep its engines running. Cue the predictable partisan chaos: House Republicans were staunchly opposed to raising the debt ceiling without corresponding cuts to spending, and Democrats, while plenty weary of running up debt, too, wouldn’t sign on to the Republicans’ proposed austerity.

This post was published at DollarCollapse on MAY 11, 2017.