‘I never dreamed we would be debating socialism versus capitalism in America during my lifetime…’
(Joshua Paladino, Liberty Headlines) Democrats running for president and serving in Congress have embraced a dangerous new economic theory that only university professors, media personalities and bureaucrats could have concocted.
Anyone who manages their own finances instinctively laughs at the proposal of so-called Modern Monetary Theory, which argues that the United States federal government can never run out of money and therefore can spend without limit.
MMT is so outlandish that a group of Republican senators introduced a resolution to condemn the “radical policies that threaten [the] U.S. economy.”
“In an effort to pay for their radical Socialist policies, Democrats are actually embracing the idea that our $22 trillion national debt doesn’t matter,” said Perdue, a member of the Senate Banking Committee, according to a press release.
“Not only is Modern Monetary Theory questionable at best, it jeopardizes the United States’ economic security. Some in Washington still refuse to accept the fact that we are in a full-blown debt crisis. I never dreamed we would be debating socialism versus capitalism in America during my lifetime.”
Advocates of MMT argue that the U.S. federal government can print money to pay off its debt.
Printing money in the modern economy comes in the form of low-interest-rate loans, specifically when banks loan more money than people save.
The federal government only requires that banks keep 10 percent of the money that is deposited.
The other 90 percent is loaned and invested. The resulting economic growth leads to more loans, thus increasing the money supply in a cycle.
But if the money supply increases beyond economic productivity (or if loans are given that systematically fail), then money begins to lose value, leading to inflation and stagnation.
MMT describes money as a means of payment, but it is more than a way to pay for things.
Money is a good that represents and stores value.
Like any other good, money decreases in value as the supply of it increases. If everyone has a $1 million bill, then everyone might as well have a $1 bill.
Adjusting the amount of money does not make the average American wealthier, but evidence suggests that it does benefit elites, such as bankers and politicians.
Bankers and politicians have first access to new money. This early access allows them to spend the money and benefit from it before inflation hits the economy as a whole.
Tillis, a member of the Senate Banking Committee, said he recognizes that MMT benefits the few at the expense of the many.
“As the radical left continues to push policy proposals that will explode our national debt, like the government take-over of health care and the Green New Deal, its embrace of Experimental Modern Monetary Theory and belief that the federal government can spend endless amounts of money without consequences will bring dangerous ramifications for American families,” said Tillis.
“One look at the current humanitarian crisis in Venezuela is proof that this Experimental Modern Monetary Theory does not work, and I will continue to work to reduce our out-of-control spending so future generations are not burdened with overwhelming debt,” he said.
Proponents of expensive government-spending proposals like the Green New Deal and Medicare for All often ignore the costs, argue that they can be debt-financed, or spew a partisan talking point—tax the rich.
Rep. Alexandria Ocasio–Cortez, D-NY, has insisted that the United States federal government can pass and pay for the Green New Deal, even though she doesn’t know how much it will cost. Economists have estimated a total price tag of around $93 trillion for the first 10 years.
Modern Monetary Theory gives radical, spend-and-spend Democrats a free pass on the funding question.
When the perennial question in American politics is asked—“Who’s going to pay for this program and how much will it cost?”—they can pass the buck to economists and theories.
But Modern Monetary Theory raises serious questions for voters.
If the United States federal government can spend without limits, then why are Americans, many of whom do not have $400 saved for an emergency, paying taxes at all?
If the Federal Reserve can print money on the path to prosperity, then why tax the rich?
“The notion that the Federal Reserve can simply print more money to allow Congress to increase federal spending beyond our means is fundamentally flawed,” said Moran, a member of the Senate Banking Committee, who introduced the resolution to condemn MMT.