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The monetary system in use today is called MMT

“…the majority of expert economic theory simply defines money as currency that is issued by a sovereign government. This theory is known as “Modern Monetary Theory” (MMT) or “neochartalism” and has its roots in economics going back at least to John Maynard Keynes, whose views have perpetually been a major target for every sort of attack from right-wing thinkers.”

Uh, no. One would be hard pressed to find a “majority of expert economic theory” that agrees on anything, but whatever the conventionally accepted norms are in this respect, they certainly don’t call the current monetary regime “Modern Monetary Theory” or MMT. I’m a bit surprised Golumbia didn’t go with its closely related cousin, Modern Monetary Realism (MMR) because that sounds less like a theory and more like “reality” (I said “sounds like”, not that it is).

In any case, he makes it sound like MMT is the name for the modern day monetary system and forms the basis of conventionally accepted economics, another factually incorrect premise. MMT is rather fringe, with among others, none other than mainstream economic apologist Paul Krugman being skeptical about it.

In a rather curious admission, Krugman cedes that MMT is in harmony with his own theories around monetary policy, but that when he thinks through how MMT as posited works “it would be quite likely that the money-financed deficit would lead to hyperinflation. (We’ll just leave that right there).

MMT is economically analogous to hooking up the outputs of a generator and a motor to each other and hoping for a perpetual motion machine. The TL,DR version is that a government that denominates its debt in its own currency can print as much money as it wants because it can make the taxes payable in only that currency. The taxation sucks up any excess inflationary pressures from the money printing, ad infinitum. That’s MMT in a nutshell.

In any case, MMT isn’t a majority consensus . Even most mainstream economists at least pretend that the central banks can’t print forever and that someday they’ll have to unwind their balance sheets …somehow.

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