Wednesday, February 27, 2019

The Incredibly Rapid and Dangerous Expansion of Modern Monetary Theory Supporters

Modern Monetary Theory is essentially a theory that holds the remarkable idea that government can create prosperity in an economy by printing money.

It completely ignores the driving factor of the production of goods and services. 

To the MMTer it is all about the central bank money pump, and not to be ignored, for government projects. In other words, it is socialist monetary Keynesianism on steroids.

Doug Henwood reports:

Now that policies made famous by Bernie Sanders, like Medicare for All and free college, and newer ones like the Green New Deal, are infiltrating the political mainstream, advocates are always faced with the question: “how would you pay for them?” ...Even self-described socialists seem to have a hard time saying the word “taxes.” How lovely would it be if you could just dismiss the question as an irrelevant distraction?
Conveniently, there’s an economic doctrine that allows you to do just that: Modern Monetary Theory (MMT). Newly elected Rep. Alexandria Ocasio-Cortez is at least MMT-curious, and it’s all over Marxist reading groups and Democratic Socialists of America chapters. It’s even seeping into the business press — Bloomberg’s Joe Weisenthal is friendly to the doctrine. James Wilson of the New York Times tweeted recently, “The speed with which young activists on both left and right are migrating toward MMT is going to have a profound effect on US politics in the 2020s and 2030s.”
While adherents strenuously profess that MMT is subtler and more complex than this, its main selling point is that governments need not tax or borrow in order to spend — they can just create money out of thin air. A few computer keystrokes and everyone gets health insurance, student debt disappears, and we can save the climate too, without all that messy class conflict...
At the center of MMT is a small group of academics, reinforced by a fervent army of acolytes on social media. Leading academic names include L. Randall Wray, now of the Levy Institute at Bard College; Stephanie Kelton at Stony Brook; Scott Fullwiler of the University of Missouri at Kansas City (UMKC, which has served as the MMT’s Vatican — both Wray and Kelton spent many years there); Pavlina Tcherneva, also of Bard (though she got her PhD and spent six years at UMKC). Though not a core member of the club, James Galbraith of the University of Texas, a prominent progressive economist, is a fellow traveler. Hovering above, behind, and around them is the figure of Warren Mosler, who runs a hedge fund, holds forth on MMT, and writes big checks in support of the cause. Mosler, whom Galbraith has described as a “national treasure,” isn’t afflicted with false modesty: he calls his blog “the center of the universe” and on it quotes a description of his very slender book Soft Currency Economics as “The most important book ever written.” He lives in the US Virgin Islands because it is a tax shelter with nice weather, a point worth keeping in mind when we look more closely at MMTers’ thoughts on taxation...
Although the politics of MMT lean left, the angle of the tilt is hard to measure precisely. Mosler was described by a colleague as “politics agnostic”; by Yves Smith of Naked Capitalism, a promoter of the school, as a “conservative.” Wray has said MMT is compatible with a libertarian, small government view of the world. Kelton, in an interview with the activist and journalist Nomiki Konst in which she describes MMT as a “brand,” graciously concedes that “Marx was important at some point.”...
MMTers extend this hubris about the precision and power of policymaking to the realm of interest rates, which they think the central bank is completely in control of and should be kept as close to zero as possible. (Mosler thinks rates should actually be zero.) ...
That brings us to the next problem: inflation. When the printing presses run freely, it’s not only reactionaries who think that runs the risk of spiraling prices. As I was researching this piece, many people to whom I described MMT, from Democrats to Marxists, brought it up as a worry. MMTers are coy about the topic — they never say how much is too much, and they profess great confidence in their ability to control it. In a paper criticizing MMT, the left-Keynesian economist Thomas Palley says he’s heard a “leading” MMTer say inflation less than 40 percent is “costless.” ...
It seems that many on the contemporary American left are still under the tax-phobic legacy spell of post-Reagan politics, which makes MMT seem appealing — an easy answer to “how are you going to pay for that?” Shortly before her election to Congress, Alexandria Ocasio-Cortez was stumped by that question in a TV interview with Jake Tapper. Afterwards she met with Kelton and had kind things to say about MMT...
On social media, the style of argumentation is even more striking. Critiques are first met with the assertion that you just don’t understand — you haven’t read enough of the literature to comment knowledgeably. But they’re quick to resort to mockery and insult. One of my favorite instances came from two of the more prominent younger members of the school, who had these persuasive reactions to my critiques on Facebook.
The mass of MMT rank-and-filers on social media are incredibly fervent. One acolyte emitted 220 tweets in response to a critique I’d offered.
MMT’s most charming style of polemicizing comes from Scott Ferguson, a film and media studies academic, author of Declarations of Dependence: Money, Aesthetics, and the Politics of Care. Under the spell of MMT, Ferguson urges radicals to junk “the Marxist image of money as a private, finite, and alienable quantum of value” and discover “money is a boundless public center that can be made to support all.” He proceeds to a series of declarations of a sort you don’t usually find in a university press book (though this one was subsidized by Warren Mosler): 
Seize the money relation!Enlist the aesthetic in money’s expansion!Hail money as the center of caretaking!Declare your dependence on care’s center!Relinquish attachments to thisness!Imagine a boundless public center!Never forsake abstraction for gravity’s attractions!Exalt abstraction as the locus of care!It goes on for over two hundred pages, as Ferguson summons Heidegger and the Eucharist to uncover in this new notion of money endless reservoirs and beauty and tenderness. This develops the utopian potential of MMT in ways that are outside the economist’s standard skillset, but it bears a tenuous relation with earthly reality.


1 comment:

  1. So now counterfeiting is a three-letter word, 'MMT'. This reminds me of a quote attributed to Lenin about revolution: "First, confuse the vocabulary."