This is a short version of the previous post. I submitted it to the Washington Post on May 11. It was not published.
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Five US Senators propose a Resolution to condemn Modern Monetary Theory. They are as misguided as those condemning the Copernican view of planetary motion. MMT takes an enlightened look at economic practices staring us in the face.
Current economic policy depends upon maintaining a consistent level of unemployment to manage inflation. Consider that! Government enforces involuntary unemployment to prevent inflation.
MMT proposes to prevent inflation by assuring full employment with a federal job guarantee. Resource availability demands that deficit spending be limited to that required for full employment. That’s a lot more than currently allowed.
MMT shows that government spending is not limited by available dollars. It is limited by available real resources that include manpower, raw materials and productive capacity. Households must live within their means; sovereign nations must live up to their means.
Government fiscal austerity has backfired around the world giving rise to tremendous wealth inequality and the consequent rise of populism. The economic insights provided by MMT show that there is room for much more federal fiscal stimulation of the economy.
MMT is backed by decades of study and scholarly publications. The policies proposed by MMT would result in more equitable distribution of wealth, full employment, and maximum use of our nation’s productive capacity. Why would anyone condemn that?
Monday, May 20, 2019
Friday, May 10, 2019
Senator Thom Tillis is Wrong to Condemn Modern Monetary Theory-MMT
This was submitted to the Raleigh New & Observer on May 4. It was not published.
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Of all the economic practices that have been or might be implemented by our federal government five US Senators propose a Senate Resolution to condemn the one practice that promises to do the most good. They apparently admire those practices that continue to enrich the top 10% at the expense of the less fortunate. They cling to the old rationale that the federal government must balance its budget like a household or burden future generations with debt. MMT shows them to be wrong.
Senator Tillis and two of his Senate Banking Committee colleagues along with two other Senators demonstrate with this ridiculous resolution that they favor their rich donors over the rest of us. They take issue with federal deficits proposed by “radical Socialist policies” that will “explode our national debt” and burden future generations. It’s a familiar refrain used to restrict government spending that would benefit us all.
MMT is a study of the fundamental fiscal and monetary operations at work in our economy. On the basis of simple accounting arithmetic MMT recognizes that in our economy a federal deficit provides a surplus in the private sector. Because the government issues our money, it is not constrained like a household budget. Deficits don’t burden future generations; they enrich them.
Current economic policies depend upon maintaining a consistent level of unemployment to manage inflation. That means government enforces involuntary unemployment to prevent inflation. MMT proposes to prevent inflation by assuring full employment with a federal job guarantee. Deficit spending must be limited to that required for full employment.
MMT shows that government spending is not limited by available dollars. It is limited by available real resources that include manpower, raw materials and productive capacity. Households must live within their means; sovereign governments must live up to their means.
Fiscal ignorance is not limited to Republican conservatives. Too many Democrats also worry about deficits and think that government deficits “crowd out” private investment, because there is a limited money supply. This ignorance also leads to the notion that deficits cause interest rates to increase. MMT understands that interest rates are set and controlled by the Federal Reserve Bank.
MMT understands that money is created by both government spending and bank loans. And, money is removed by federal taxes and loan repayments. So, when the private sector is overburdened with debt, government spending can keep the economy humming. Obviously, Senator Tillis and his Banking Committee cohorts don’t understand banking and government fiscal operations.
Current economic practices put money in the pockets of the rich in the hope that money will “trickle down” to the rest of the population. That has never worked anywhere in the world. MMT understands that our economy runs on sales. So, putting more money into the population will result in more sales creating demand that will encourage investment.
Government fiscal austerity has backfired around the world giving rise to tremendous wealth inequality and the consequent rise of populism. The economic insights provided by MMT show that there is room for much more federal fiscal stimulation of the economy.
MMT is backed by decades of study and scholarly publications. The policies proposed by MMT would result in more equitable distribution of wealth, full employment, and maximum use of our nation’s productive capacity. Why would anyone condemn that?
*************************************
Of all the economic practices that have been or might be implemented by our federal government five US Senators propose a Senate Resolution to condemn the one practice that promises to do the most good. They apparently admire those practices that continue to enrich the top 10% at the expense of the less fortunate. They cling to the old rationale that the federal government must balance its budget like a household or burden future generations with debt. MMT shows them to be wrong.
Senator Tillis and two of his Senate Banking Committee colleagues along with two other Senators demonstrate with this ridiculous resolution that they favor their rich donors over the rest of us. They take issue with federal deficits proposed by “radical Socialist policies” that will “explode our national debt” and burden future generations. It’s a familiar refrain used to restrict government spending that would benefit us all.
MMT is a study of the fundamental fiscal and monetary operations at work in our economy. On the basis of simple accounting arithmetic MMT recognizes that in our economy a federal deficit provides a surplus in the private sector. Because the government issues our money, it is not constrained like a household budget. Deficits don’t burden future generations; they enrich them.
Current economic policies depend upon maintaining a consistent level of unemployment to manage inflation. That means government enforces involuntary unemployment to prevent inflation. MMT proposes to prevent inflation by assuring full employment with a federal job guarantee. Deficit spending must be limited to that required for full employment.
 |
| Government enforces involuntary unemployment on millions of potential workers. |
MMT shows that government spending is not limited by available dollars. It is limited by available real resources that include manpower, raw materials and productive capacity. Households must live within their means; sovereign governments must live up to their means.
Fiscal ignorance is not limited to Republican conservatives. Too many Democrats also worry about deficits and think that government deficits “crowd out” private investment, because there is a limited money supply. This ignorance also leads to the notion that deficits cause interest rates to increase. MMT understands that interest rates are set and controlled by the Federal Reserve Bank.
MMT understands that money is created by both government spending and bank loans. And, money is removed by federal taxes and loan repayments. So, when the private sector is overburdened with debt, government spending can keep the economy humming. Obviously, Senator Tillis and his Banking Committee cohorts don’t understand banking and government fiscal operations.
Current economic practices put money in the pockets of the rich in the hope that money will “trickle down” to the rest of the population. That has never worked anywhere in the world. MMT understands that our economy runs on sales. So, putting more money into the population will result in more sales creating demand that will encourage investment.
Government fiscal austerity has backfired around the world giving rise to tremendous wealth inequality and the consequent rise of populism. The economic insights provided by MMT show that there is room for much more federal fiscal stimulation of the economy.
MMT is backed by decades of study and scholarly publications. The policies proposed by MMT would result in more equitable distribution of wealth, full employment, and maximum use of our nation’s productive capacity. Why would anyone condemn that?
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