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2019-08-10 07:00 by Karl Denninger
in Monetary , 182 references Ignore this thread
The MMT Lie*
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If you wanted to accelerate the collapse of America and bring on a Civil War you could hardly do it better than by advocating for and managing to enact this nonsense.

A key figure in the “Modern Monetary Theory” economic camp, her assertions that the federal government could spend freely for things like a jobs guarantee or Green New Deal without risking runaway inflation, a debt default or a clubbing by global creditors have been Twitter-bombed by mainstream economists as left-wing free lunchism.

Well that's because it is -- but not really much different than the free lunchism that has been going on for the last 20 years.

Let me remind you that in real terms there has been no economic growth of substance since 2000 and only one positive year -- under 2% at that -- since 2007!

 

This is in a world where interest rates (since 2008) were indistinguishable, on government debt, from zero in real terms.

Therefore we've already had our experiment and it has failed.  We can fail it harder and more-seriously, and walk right down the road into a literal destruction of our nation, by continuing this crap.

The basic argument made by the MMT "theorists" is that since "inflation is low and contained" we can simply "print" the money we want, spend it, and that's constrained only by inflation, of which there is none of seriousness at present.

The problem isn't the claim of where the constraint comes from -- it's that the claim of "low and and constrained inflation" over the last two decades is a lie.

The cost of medical care has skyrocketed over the last 20 years.  So has post-secondary education.  So has actual housing expense; witness the housing market meltdown in 2008 and the resulting re-inflation of said bubble, which has done exactly nothing in terms of price compared with salaries.

Ditto for a whole host of other mandatory spending.  Property taxes in many jurisdictions have more than doubled in the last 20 years.

Your salary hasn't doubled over that period of time.  In fact quite to the contrary.

The number of households that pay more than half of their income in rent has skyrocketed in the last decade -- it is up by about 50%.  Clearly, they don't think inflation is "low and controlled."

Indeed that's the problem and it's not just rent; it's total cost of basic needs.

It's extraordinarily misleading to cite numbers like "GDP per-capita" as justification for this sort of nonsense, since there's not even a passing shot at reasonably-even distribution of same.  Believing that one can somehow "print" one's way to prosperity is a complete crock; all that emitting more money into the system does is raise the price level, and since you cannot and will not make sure that everyone gets the same amount (not a percentage of their income but in gross dollars) from federal deficit spending the accrual simply screws those on the left side of the curve.

Of course there have always been poor people -- here and everywhere else.  But what's happened over the last 30 or so years in this country is outrageous.  Technological advancement means you can do more with less; that is, it takes fewer hours of labor to produce the minimum requirements for living in a reasonable manner.  Rather than have that outcome on a continuing basis, however, we've seen the opposite over the last 20 or so years in America.

Why?

It's not because there is an insufficient amount of money around.

It's because people collude and either screw you, forcing you to pay more for less, or just flat-out steal it.

At its core MMT is simply a means to steal more and faster.  It's entirely possible for the United States to run a budget surplus, as I've pointed out, simply by taking on the medical monopolists.  In addition were Congress to demand that The Fed stop running interest rates below the federal deficit level as a percentage of GDP then Congress couldn't spend in deficit at large scale without rates going up dramatically and immediately.  This in turn would force the fraud out of the system and it is that fraud and unpunished felony that has hosed everyone in America on the left side of the bell curve and is now reaching well into those on the right side!

A restive population eventually revolts -- one way or another.  It does so at the ballot box if it can effectively do so but if prevented from doing so, say, if every candidate that can be and is elected makes the problem worse for those on the left side then eventually you wind up with the destruction of that government and often destruction of the society itself.

MMT, in short, is a fraud.  It is simply an attempt at extending the frauds that allow "professors" to sit in their ivory towers while their students are butt****ed within an inch of their lives with $100,000 student debts.

The correct answer to people running crap like this, no matter who they are, is to force them into said refrigerator box as their best and highest place of residence -- complete with rats and drug-abusing homeless individuals, many of the latter who are there precisely because of the policies they promoted.

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