Anybody heard of MMT?
This woman wrote a book and it's been blowing up in FinTech circles.
The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy
by Stephanie Kelton
From Wikipedia
According to MMT, governments do not need to worry about accumulating debt since they can create new money by using fiscal policy in order to pay interest. MMT argues that the primary risk once the economy reaches full employment is inflation, which acts as the only constraint on spending. MMT also argues that inflation can be addressed by increasing taxes on everyone to reduce the spending capacity of the private sector.[4][5]
So basically her arguments are that,
This type of thinking and economic policy has happened many times before. The result is always the same, a debased currency that no one inside or outside of the country trusts, rampant inflation that destroys the savings of the people, and a crippled economy. If it sounds too good to be true, it usually is, and printing money freely without consequence is obviously stupid to anyone who truly understands the economy at even a high school level. Money, is an instrument for containing wealth, it is not the same as wealth. Wealth growth happens slowly over time with technological, and societal progress, and if you divorce the money supply from that natural slow growth, you make the money worthless. It happened before in the U.S. fifty years ago, the "stagflation" of the 70's, when the government tried to run huge budget deficits starting in the sixties. Then in the seventies, the government had to start borrowing in foreign currency (mostly Deutsche marks and Swiss francs) because nobody trusted the american dollar.
I have seen a lot of financial education you-tubers with large audiences making videos about how great this new "theory" is and how true it is and how we should all demand our governments start churning out trillions in new money to fund new projects and make everything sunshine and rainbows,..... what could go wrong?
When you look at the comments on those videos, almost all the people commenting are in agreement about how great the theory is, and how the government not printing huge amounts of money to hand out to anybody who wants it, is just the rich assholes and politicians trying to keep us all down.
I'm concerned that if this new breed of stupidity catches on in influential circles in the states, that our biggest trading partner could run their economy off a cliff for a decade or so.
Fuck.
This woman wrote a book and it's been blowing up in FinTech circles.
The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy
by Stephanie Kelton
From Wikipedia
According to MMT, governments do not need to worry about accumulating debt since they can create new money by using fiscal policy in order to pay interest. MMT argues that the primary risk once the economy reaches full employment is inflation, which acts as the only constraint on spending. MMT also argues that inflation can be addressed by increasing taxes on everyone to reduce the spending capacity of the private sector.[4][5]
So basically her arguments are that,
- money is made up, fiat currency is a social construct
- any government that issues bonds in it’s own currency has monetary sovereignty and can print as much money as it likes with little if any consequences
- Taxes aren’t needed to pay for government spending, the only reason for taxes is to motivate people to work
- Running a large deficit is good, because it makes the economy better and gets stuff done
- The only consequence to government overspending is possible inflation and that’s not such a big deal anyway
This type of thinking and economic policy has happened many times before. The result is always the same, a debased currency that no one inside or outside of the country trusts, rampant inflation that destroys the savings of the people, and a crippled economy. If it sounds too good to be true, it usually is, and printing money freely without consequence is obviously stupid to anyone who truly understands the economy at even a high school level. Money, is an instrument for containing wealth, it is not the same as wealth. Wealth growth happens slowly over time with technological, and societal progress, and if you divorce the money supply from that natural slow growth, you make the money worthless. It happened before in the U.S. fifty years ago, the "stagflation" of the 70's, when the government tried to run huge budget deficits starting in the sixties. Then in the seventies, the government had to start borrowing in foreign currency (mostly Deutsche marks and Swiss francs) because nobody trusted the american dollar.
I have seen a lot of financial education you-tubers with large audiences making videos about how great this new "theory" is and how true it is and how we should all demand our governments start churning out trillions in new money to fund new projects and make everything sunshine and rainbows,..... what could go wrong?
When you look at the comments on those videos, almost all the people commenting are in agreement about how great the theory is, and how the government not printing huge amounts of money to hand out to anybody who wants it, is just the rich assholes and politicians trying to keep us all down.
I'm concerned that if this new breed of stupidity catches on in influential circles in the states, that our biggest trading partner could run their economy off a cliff for a decade or so.
Fuck.
