What is Modern Monetary Theory
Many people are asking, “What is Modern Monetary Theory?”
In short, Modern Monetary Theory (MMT) is the most recent effort by our elected representatives to explain away and justify their reprehensible and destructive fiscal policies.
Overview of What is Modern Monetary Theory
When attempting to explain its reservations with Modern Monetary Theory, the understandably slanted In Defence of Marxism writes:
“…MMT might as easily stand for ‘magic money tree’. That, after all, is what this theory promises: a way of funding everything we want, and more, without having to worry about the hassle of taxation or – more importantly – class struggle.”
To be clear on what is Modern Monetary Theory. MMT does not fund everything We the People want. Instead, MMT economics sets the stage to fund EVERYTHING that the government wants, regardless of what We the People want.
In effect, Modern Monetary Theory proponents erroneously believe that the government should not be required to balance budgets. Instead, they think the government should be encouraged to create money anytime it wants, without any thought of the consequence.
Think about it from the government’s perspective. Want to send millions of dollars of aid to a country that pisses down our back? No worries, punch some dollar signs into a computer, and the assistance is on the way.
Want to bail out California? No sweat! Fire up the printing presses, hit send, and let the MMT economics run wild.
Want to bail out Wall Street? Again, just hit a button.
The Pillars of What is Modern Monetary Theory
The foundation of the what is Modern Monetary Theory rests on three primary pillars.
The first pillar states that our government can never run out of money because it can create and issue its own fiat currency. Therefore, whenever the government wants money, it snaps its fingers, pushes a button, and presto, it has more money.
The second pillar of MMT economics proposes that deficit spending will not lead to inflation as long as We the People continue to work, produce, and feed the economy. If this sounds odd to people in the supposedly free world, it should. That’s because nowhere does MMT appear to have concern for “life, liberty, and the pursuit of happiness.” Instead, MMT appears to view workers as mere tools to work, toil, sweat, and grind on behalf of the government. If that sounds like communism, perhaps there’s a reason.
Lastly, the third pillar of Modern Monetary Theory believes that taxes do not support government spending. In that vein, the theory states that the government should spend money as it wants without regard for deficits or inflation. Rather, instead of worrying about deficits and inflation, MMT economics believes the answer is to raise taxes in response to any deficits or inflation it creates.
Two Big Problems of Modern Monetary Theory Economics
The first problem of Modern Monetary Theory is that MMT promotes deficit spending and inflation as NOT something to be concerned with before spending.
Instead, those who support MMT believe that deficits are not a problem until they become an issue well after spending the money. When deficits and inflation become a problem, the MMT solution is to tax We the People to reign it in.
The next problem with MMT is that the theory proposes that raising taxes helps promote economic growth because doing so allows the government to remove money from circulation.
Yes, that’s right. When you hear MMT supporters talk about extracting money from circulation, a large percentage of that money will come out of the taxpayers’ wallets.
In other words, rather than operating on a responsible budget that balances the government’s income and expenses, MMT believes that any government-created deficits can be corrected by increasing taxes after the fact.
This Modern Monetary Theory belief begs a simple and somewhat rhetorical question. When working to offset its out-of-control MMT-based spending, whose tax dollars provide the after-the-fact solution to the government-generated deficit?
It’s our tax dollars, the tax dollars of We the People, that MMT economics proposes must be increased to offset the government’s unaccountable spending.
That’s right! MMT discourages the government from balancing the budget and behaving financially responsible BEFORE spending money. Instead, Modern Monetary Theory dictates that the government spend first and force We the People to bail it out second.
How would that thought and spending process work for you?
Summary of Modern Monetary Theory Economics
So, what does Modern Monetary Theory mean for you and the rest of We the People?
First, Modern Monetary Theory is, in my opinion, garbage. MMT attempts to create a rational explanation for past, present, and future unfettered government spending. Moreover, MMT economics is a concerted effort to justify tax increases.
The fact is that the United States has not operated from a set budget since 2006. Instead, our government works off of continuing resolutions and the threats of government shutdowns.
The sad reality is that our government is already operating on the magic money tree theory. Even worse, the government has been working that way for years.
Therefore, it only goes to reason that the supporters of runaway deficit spending would create a theory to give credence to their out-of-control ways.
The Bottom Line
The answer to what is Modern Monetary Theory is simple. MMT is a nonsense economic philosophy designed to justify and encourage out-of-control government spending.
MMT is a theory that blatantly takes money from We the People and uses that money as a slush fund for our politicians to line the pockets of the elite and powerful.
Stay safe, secure, and prepared,
An interesting read Brian. What happened in 2006 to cause the government to stop operating from a budget?
I’m only guessing that our elected representatives wanted to spend more than they could budget for. So, rather than discussing, debating, and coming to a compromise, they collectively decided to print money and gave up on a budget. The greater problem is that We the People, didn’t hold them accountable for it.