Tag: monetary theory

Categories
national politics & policies political economy

The False Gospel of the Printing Press

inflation, economist, monetary theory

It’s been a while since I’ve mentioned “Modern Monetary Theory,” popularly known as MMT.

While MMT is not popular here, it is gaining adherents outside the ranks of Common Sense readers like a new Ponzi scheme taking on suckers.

Modern Monetary Theorists go on and on about the gospel of printing money, like they just discovered that the Fed-​and-​Treasury act of borrowing within the banking system isn’t the only way to inflate the money supply.

You can indeed “just print money”!

Granted, the MMTers do a lot of fancy footwork, or silver-​tongue-​work — the closest they get to hard money — to avoid the infamous consequences of monetary inflation, “price inflation” being just one of them. They are so enamored of the money press that they’re like teenagers discovering sex: didn’t you old folks know about this great thing?

It would be comical were it not … inflationary.

At the present moment in history, of course, MMT is in a tricky situation: huge increases in the money supply during the COVID period resulted in no small amount of … huge price increases.

“Whatever you call it, MMT is printing money,” Matt Taibbi just wrote in a terrific May 18 piece, “and no matter how sure you might think you are that it will work, you aren’t, and can’t be. Sure, our leaders have been doing it, printing $4 trillion through multiple rounds of QE and $5.5 trillion more in the CARES Act, and sure, that last spree only inspired about 20% inflation so far. Still, any economist who says with a straight face he or she is sure this experiment won’t end with your kids using dollars as toilet paper is lying.”

Or just engaging in old-​fashioned money-crankism. 

The old get-​something-​for-​nothing racket. MMT’s just the latest form.

This is Common Sense. I’m Paul Jacob.

PDF for printing

Illustration created with PicFinder and Firefly

—

See all recent commentary
(simplified and organized)

See recent popular posts

Categories
free trade & free markets national politics & policies too much government

Going After the Gold

What does gold have to do with medical care? Ingested, it’s a poison. It’s not often used in treatment.

So why did the Obama administration place a provision further regulating the buying and selling of gold into the Democrats’ medical reform legislation? 

Economist Thomas Sowell explains, in a recent column, why politicians are obsessed with the yellow metal. Before FDR, gold provided a check against politicians’ desire to spend the money government could “just print.” Because, in those long-​ago days, paper dollars were backed by gold, Americans would cash the paper in for gold when it looked like the Treasury had gone on a printing spree. So inflation (the increase of the supply of money, and the consequent diminishing of its value, leading to increasing prices) was checked.

In 1933, FDR confiscated most of America’s circulating (and hoarded) gold, and Nixon took us off the gold standard completely in the ’70s, morphing our monetary system into a pure fiat (inflationary) standard. 

Also in Nixon’s time, it became legal, again, for Americans to own gold.

So why make it harder, now, to trade in gold — when gold is not money?

Because investors, in times of inflation and crisis, turn to gold as a hedge. Against politicians, basically. And, says Sowell, “the Obama administration sees people’s freedom to buy and sell gold as something that can limit what the government can do.” 

Gold, like freedom, “cramps the government’s style.”

That speaks volumes about gold … and “Obamacare.”

This is Common Sense. I’m Paul Jacob.