{"id":1106408,"date":"2019-03-19T18:39:19","date_gmt":"2019-03-19T18:39:19","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=106971"},"modified":"2019-03-19T18:39:19","modified_gmt":"2019-03-19T18:39:19","slug":"exposing-the-myth-of-mmt","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1106408","title":{"rendered":"Exposing the Myth of MMT"},"content":{"rendered":"

This post Exposing the Myth of MMT<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Yesterday I discussed modern monetary theory (MMT) and how it\u2019s become very popular in Democratic circles.<\/p>\n

That\u2019s because it allows for much greater government spending without having to raise everyone\u2019s taxes. And everyday citizens could get behind it because it promises to fund lots of programs without seeing their taxes raised.<\/p>\n

What\u2019s not to like?<\/p>\n

If MMT were just a fringe idea with a few fringe followers, I wouldn\u2019t waste my time or your time on it. But it\u2019s coming your way, so it is important to understand it.<\/p>\n

If you missed yesterday\u2019s reckoning, go here<\/strong><\/a> for a refresher.<\/p>\n

The people who are thinking about MMT, who understand it at least in some superficial way, are the people who are driving the policy debate or running for president.<\/p>\n

Many mainstream economists and money managers have attacked MMT, including Fed Chairman Jay Powell, Larry Summers, Paul Krugman, Kenneth Rogoff, Larry Fink, Jeff Gundlach, Jamie Dimon and Ray Dalio.<\/p>\n

But much of their criticism is unjustified (see below for more). I\u2019m an opponent of MMT \u2014 but for different reasons. As far as I know, I\u2019m the only analyst who\u2019s raised the objections I list below.<\/p>\n

Today, I\u2019m going to show you what I believe to be the real problem with MMT.<\/p>\n

Again, it\u2019s easy to see why so many politicians on the Democratic side would be such big supporters of MMT.<\/p>\n

Some or all of them have come out in support of the following programs:<\/p>\n

Free college tuition, student loan forgiveness, Medicare for all, free child care, universal basic income (UBI) and a Green New Deal. Some support them all.<\/p>\n

Needless to say, that\u2019s going to cost a lot of money. Just consider the Green New Deal alone.<\/p>\n

I\u2019m not going to go through every detail of it. But in essence it would spend trillions of dollars, for example, building high-speed rail. The idea is to cut down dramatically on air travel. It would also convert nearly every single structure in the country to solar power.<\/p>\n

I wrote this article from a house that\u2019s running on solar power. But it\u2019s very expensive to put the system in. I have a big system, but it barely covers my house. And every time I look at it, I say, \u201cOh, we\u2019re going to do this for every house in the country? Good luck with that.\u201d<\/p>\n

Some analysts have estimated that the Green New Deal would cost around $97 trillion. That\u2019s trillion, not billion \u2014 or nearly five times annual U.S. GDP.<\/p>\n

When critics hear that a Green New Deal could potentially cost something like $97 trillion, or proposals for Medicare for all, free tuition, free child care or guaranteed basic income, they say, \u201cThat all sounds nice, but we just can\u2019t afford it.\u201d<\/p>\n

That\u2019s their main argument \u2014 that no matter how desirable these programs might be in theory, we just can\u2019t afford them. Most criticism of MMT falls along those lines.<\/p>\n

Even the Keynesians like those I mentioned earlier, who generally favor large amounts of government spending to stimulate the economy, have come out against MMT.<\/p>\n

Besides that claim that we can\u2019t afford it, even the Keynesians say MMT would be highly inflationary. If you printed that much money and start handing it out to people, demand would outstrip the output capacity of the economy and you\u2019d get high inflation.<\/p>\n

But the MMT advocates have an answer to these objections. They\u2019re not the least bit intimidated by critics who say we can\u2019t afford it.<\/p>\n

They say, \u201cYes, we can, and Modern Monetary Theory proves it. Just print the money and monetize the debt. Japanese debt is 2.5 times the United States\u2019 debt, and China\u2019s is higher than ours.\u201d<\/p>\n

They haven\u2019t collapsed, so we can take on far more debt than we have today. Furthermore, QE did not create much inflation. In fact, the Fed would like to see more inflation than it has. It still can\u2019t produce a sustained 2% inflation rate after all these years.<\/p>\n

You might think the argument is ridiculous. After all, do we really want to become Japan?<\/p>\n

But in important ways, the MMT crowd has the upper hand in the debate.<\/p>\n

Regards,<\/p>\n

Jim Rickards
\nfor The Daily Reckoning<\/em><\/p>\n

The post Exposing the Myth of MMT<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post Exposing the Myth of MMT<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

The Green New Deal would cost how much!?… Why MMT advocates may have the better arguments against traditional Keynesians… <\/p>\n

The post Exposing the Myth of MMT<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[484,366,2059,2060,2061,1325,2062,463],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1106408"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1106408"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1106408\/revisions"}],"predecessor-version":[{"id":1106409,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1106408\/revisions\/1106409"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1106408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1106408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1106408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}