Tag: money

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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.

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general freedom international affairs national politics & policies too much government

To End the Great Declension

Argentina, Javier Milei, money, inflation, government

“Today begins a new era in Argentina,” said Javier Milei in his inaugural address as the new president of Argentina. “Today we end a long and sad history of decadence and decline and begin the road to the reconstruction of our country.”

President Milei has focused on a problem — the decadence of mass poverty — and identified it with a basic view of government: interventionism in markets, central control and bureaucratic proliferation. These, once established, start a cycle that must end in decay, decline. “The outgoing government has left us with hyperinflation, and it is our top priority to make every effort to avoid a catastrophe that would push poverty above 90 percent and indigence above 50 percent,” he explained.

Milei is not hesitant; gradualism’s not his bag, for the country does not “have margin for sterile discussions. Our country demands action and immediate action.”

At some point, the argument runs, you have to boldly cut government. Not just cut the rate of government growth, which is about all American Republicans have achieved — often allowing others to take the credit, as with Bill “The Era of Big Government Is Over” Clinton.

Milei’s first act as president was an executive order reducing the number of government ministries from 21 to nine. If this move actually succeeds in paring down the size of Argentina’s state apparatus and workforce, it will be something of a miracle.

In a country that needs miracles. 

Here in these United States, we may not have hyperinflation, as such, but we do face a crisis. The deficits are persistent, and majorities in both parties seem utterly unconcerned about the $34 trillion debt, rushing at us fast. Costing more to service than we spend on defense.

Only Vivek Ramaswamy has pushed specific ways to cut government.

But, unlike Milei in South America, here in North America Vivek’s just not that popular.

This is Common Sense. I’m Paul Jacob.

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election law partisanship political challengers

Democratic Money for Republicans

blue wave, red wave, money, campaign finance

“After years of claiming that money in politics is bad and Trumpists will destroy America,” writes Joe Lancaster in Reason, “Democrats spent millions to boost the people they are most afraid of.”

In a strategy that might be designated Too Clever by Half, “Throughout the 2022 primary season, groups affiliated with the Democratic Party funded ads to boost immoderate Republican candidates,” Lancaster explains. “The goal was to boost the least moderate candidates in the hopes that they would be easier to beat in a general election.”

The Senate Majority PAC bought ads for New Hampshire’s Republican U.S. Senate primary, for instance, calling Chuck Morse a “sleazy politician,” allowing a retired brigadier general to advance on to the general election — only to lose to the incumbent. Another Democratic PAC pushed “nearly $100,000 on ads proclaiming Republican House primary candidate Robert Burns ‘the ultra-​conservative candidate’ who ‘follows the Trump playbook.’” Burns went on to defeat his more moderate competitor and then be defeated in the general election.

That was the pattern around the country.

If this all sounds familiar, this is how we got Trump into the forefront in the first place. Hillary Clinton’s campaign infamously orchestrated the corporate news media’s fixation on Trump in 2015 and through to Trump’s winning the primary contest. And then, you will remember, the news media changed course and started the great anti-​Trump freak-out.

This time, however, it may have paid off. Or at least not horribly backfired, for the much-​prophesied Election Day 2022 “Red Wave” merely eroded the Democrats’ stranglehold on unified government. 

Washed away, instead, is the idea that Democrats truly fear these “mega-​MAGA Republicans” or care about democracy.

This is Common Sense. I’m Paul Jacob.

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deficits and debt free trade & free markets national politics & policies too much government

Inflation Evasion…Depression

consumer price index, inflation

Going into the lockdowns and bailouts, a consensus of politicians and their court wizards, the economists, had belittled the specter of inflation.

Nowadays, when folks use the term “inflation,” they really mean upward movement on the consumer price index (CPI). Some economists, who have a sense of history,* reserve the word not for price level increases, but for increases in the supply of money. And the two concepts are tightly linked. 

But a whole lot of people seek to blame CPI rate increases on anything but monetary policy, as Veronique de Rugy notes in an article at The American Spectator.

“Theories for why we shouldn’t worry abounded,” de Rugy writes. “It was caused by a base-​effect price increase, supply-​chain restraints, a drought in Taiwan — everything but the Fed’s expansionary policies and Congress’ overspending, in part because some of these experts had cheered for these actions all along.”

And then inflation came back.

Big time.

While expressing some humility and an unwillingness to make predictions, de Rugy insists that “the amount of money printed, borrowed, and spent during the last few years led to a one-​time price level rise, and we may have a way to go until we are done.” 

She also insists that the Pollyanna phrase “transitory inflation” is no comfort: “inflation was always going to be transitory. Even the inflation of the 1970s ended in the ’80s. What mattered is whether transitory inflation meant a few weeks, months, or years.”

And, I cautiously add, how de-​stabilizing it is. Consumers rightly worry about rising prices, but inflation doesn’t hit all sectors the same. Credit expansion leads to imbalances that are hard to correct. 

And the correction is “depression.”

This is Common Sense. I’m Paul Jacob.

* Including the history of their own discipline. Readers of Austrian economists such asF.A. Hayek get a better sense of past debates than from other economists.

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media and media people national politics & policies

Big Bucks Buy Votes

elections, money

Want to know how Washington works? 

Or doesn’t work? 

Drafting legislation to provide COVID (and COVID lockdown) relief, President Joe Biden and Congress contemplate just how big to make the next round of government checks sent to “the inhabitants of America.”

And which folks to send the freshly printed moolah.

“Something very weird is happening,” explains Washington Post columnist Paul Waldman. “On one side you have Republicans and conservative Democrats saying people at higher incomes don’t deserve this government help. On the other side you have liberals advocating that higher-​income people should share in this largesse.” 

Including socialists Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez.

“So if I were Biden,” Waldman advises, “this is the argument I’d make to [conservative Democratic Senator] Manchin:

1. People like it when you give them money. A lot.

2. The more people we give money to, the more people will be pleased with us.

3. That will improve our chances of keeping control of Congress in 2022 and the presidency in 2024.

4. If we keep control we’ll be able to do more of the things you want to do. If we lose control, we won’t be able to do anything.…”

Translation? Stay in power by buying votes. 

Seems the advice you’d get from a sleazy political consultant, not a newspaper columnist. 

Biden and senior Democrats have also unveiled a plan to pay parents up to a certain income over $50,000 per child from birth to 17 years of age.* One obvious benefit? “Its execution could also prove crucial to deciding Democrats’ ability to maintain control of Congress,” informs The Post, “given its likely direct impact on the lives of tens of millions of voters.”

This is our direct-​deposit Republic.

But not Common Sense. I’m Paul Jacob.

* The Democrats’ plan came just “days after Sen. Mitt Romney (R‑Utah) surprised policymakers with a proposal to send even more in direct cash per child to American families.”

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ballot access initiative, referendum, and recall Voting

Worms for Early Bird Voting?

ballot box, voting, democracy, money, pandemic

Election Day is six weeks away. Yet, in my home state of Virginia, voting began last week.

Is it responsible to cast a ballot so early? 

You may know with metaphysical certainty how you’re voting for president — even in the event of some major cataclysm — but have all the state rep and city council and ballot measure campaigns also played out fully enough for you?

Here in Virginia, we get few candidate races in our split-​up state and federal elections, much less ballot issues to decide. I could have made all my (very few) choices months ago. But I trust that in a more competitive and healthy representative democracy we would more want to hear out the candidates.

A lot can happen in six weeks. And you cannot change your vote once it’s cast.*

The new Democratic-​controlled Legislature — in reaction to the pandemic, to prevent crowding at the polls — expanded the early voting period this year. It started September 18 and ends October 31.** 

There are costs to expanding early voting — including making campaigns more expensive to run and win. Disabled from marshaling advertising into a two-​or-​three-​week period before the vote, campaigns are forced to sustain publicity for a month. Or longer. 

While better-​funded incumbents have little difficulty with the added cost, it cripples challengers. It especially handicaps grassroots ballot initiative proponents battling public employee unions or the Chamber of Commerce. 

Make the voting process comfortable and easy for citizens. But let’s be certain not to make it comfortable and easy for incumbents and special interests.

This is Common Sense. I’m Paul Jacob.

* In Sweden, you can change your early vote, informs my friend Bruno Kaufmann, a journalist and direct democracy advocate. They call it “second voting.” 

** Though several other states routinely allow more than six weeks of early voting.

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