The “So What?” at the local level? National policy effects state and county budgets.
- “As a reminder, MMT argues that sovereign governments with their own currency can’t go broke and can spend until inflation becomes an issue.” (1)
- To condense the argument: Taxes are not about raising revenue for the government. They’re to reduce spending power to avoid price inflation. (1)
- “Consider the Atlanta Fed’s wage-growth tracker for prime-age U.S. workers, currently at 3.9%. It bottomed out at a record low 1.6% at the end of 2010, down from 4.2% before the recession began. It didn’t reach 3% for another four years and still hasn’t reached the levels seen from 1999 through 2001.” (1)
- The Peterson Foundation, one of the last voices calling for fiscal restraint, bemoaned the budget deal: “Another $400 billion in debt is the worst possible holiday gift for our children,” the group said. “We should be looking at ways to reduce our interest burden so that we can fund important national priorities.” (1)
- Kelton points to Japan, which is running a debt-to-GDP ratio of about 238% with low inflation and interest rates locked near zero, as an example of failing conventional wisdom. (1)
- None other than Ray Dalio, founder of Bridgewater Associates, has said he sees MMT as “inevitable.” Policymakers, he says, have to figure out “how to get the economic machine to produce economic well-being for most people” when typical central-bank tools fail. He sees a coordination of fiscal and monetary policy as the only answer. (1)
(1) Dec 23, 2019. Bloomberg, America Turns From Tea Party to MMT in a Decade The winds of economic thought have shifted drastically heading into the 2020s. By Brian Chappatta
- Since August 2011, the U.S. public debt has increased by almost $9 trillion, to $23 trillion, and virtually no one has batted an eye …
- Randall Wray, a senior scholar at the Levy Economics Institute of Bard College and a leading thinker in Modern Monetary Theory. (MMT) “We do not have to repay the debt — what we have to do is make the interest payments.”
- None other than Ray Dalio, founder of Bridgewater Associates, has said he sees MMT as “inevitable.”
(2) The Federal Reserve Is Directly Monetizing US Debt In a very real way, MMT is already here by Chris Martenson Friday, November 15, 2019
- At a time, mind you, when US fiscal deficits are exploding and foreign buyers are heading for the exits.
- It’s now clear that something spooked the Fed badly in September. … We still don’t know what exactly went on, but the Repo market blew up. While this was a clear sign that something big was amiss, the Fed has not yet explained what the cause was, who needed to be bailed out, or why.
- Given all the secrecy, obfuscation and lies, the Fed is now in clear violation of the spirit of the Federal Reserve Act of 1913.
- The debate over whether or not MMT (“Modern Monetary Theory” see here for background and discussion) should or should not happen is now moot. It’s already here.
- This is a very serious and extremely important conversation to have. But it’s not being had at all.