Tag Archives: MMT

MMT (Modern Monetary Theory) Thoroughly Disemboweled

The best I can figure is that some very liberal, trust-fund Phd Sociologist professors at Bennington hooked with a group of radical Public Policy students from Harvard somewhere in a cabin in Vermont and did a group analysis of John Maynard Keynes’ “The General Theory of Employment, Interest and Money” after ingesting copious quantities of LSD. From out of that drug-addled assemblage, MMT sprung to life in “socially correct” political circles in NYC and DC.

Short of that explanation for the current obsession with MMT – also known as “Magical Money Tree” –  among the elitist intellectual trust-fund liberal political class, I have a hard time explaining the enthusiasm for this comic book version of economics.

A good friend of mine, who happens to be highly intelligent and obsessive about research, is thoroughly confounded by the idea anyone in their right mind would consider MMT as a serious policy tool other than as a mechanism to accelerate the confiscation of wealth and liberties from the public.

The best I could offer is that legitimizing MMT with academic endorsements is a precursor to the next round of QE, which will have to be Weimar in scale.  Occam’s Razor applies here. It’s that simple.  A Government unable  slow down its spending deficit has no other means of paying its bills other than to raise taxes to a level that will trigger mass revolt or use its printing press.  You see where this is going…

Interestingly, a writer/analyst who springs from the left, and who otherwise I would have thought to have been a proponent of MMT, thoroughly explores and disembowels the concept.  You can literally sense the author’s struggle to find a use for MMT:

We have a private economy driven by exploitation, overwork, asset stripping, and ecological destruction. MMT has little or nothing on offer to fight any of this. The job guarantee is a contribution, though a flawed one, and it’s not at the core of the theory, which proceeds from the keystroke fantasy. That fantasy looks like a weak response to decades of anti-tax mania coming from the Right, which has left many liberals looking for an easy way out. It would be sad to see the socialist left, which looks stronger than it has in decades, fall for this snake oil. It’s a phantasm, a late-imperial fever dream, not a serious economic policy.

Ordinarily I would have briefly skimmed through this essay. But if you are making an effort to be open-minded and understand the genesis, history and follies of MMT, it’s worth spending the time to read this piece in its entirety – then you can have a good laugh:  Modern Monetary Theory Isn’t Helping by Doug Henwood

Modern Monetary Theory isn’t just an insult to one’s intelligence, it’s a complete affront to common sense.

Gold Is Historically Cheap To The Stock Market

“The monetary authorities running the paper-money schemes of the present are anxious to forestall significant rises in the paper price of gold, because such rises would diminish confidence in the lasting value of the paper money in use today.”Hugo Salinas Price

The price of gold was victimized by yet another raid on the Comex paper gold market on Friday. The pattern has been repetitive over the last 15-20 years:  hedge funds push the price of gold higher accumulating a massive net long position in gold futures while the Comex bullion banks feed their appetite, building up a mirror-image large net short position.

A raid is implemented typically on a Friday after the rest of the world has shut down for the weekend, the Comex banks begin bombing the Comex with paper, which in turn sets-off hedge fund stop-losses set while the market is moving higher. This triggers a “flush” of hedge fund long positions which the banks use to cover short positions, booking huge profits.

As evidence, the preliminary Comex open interest report based on Friday’s activity shows the gold contract o/i dropped 14,316 contracts. For the week, gold contract o/i is down over 26,000 contracts representing 2.9 million ozs of paper gold. This is 8x the amount of “registered” – available for delivery – gold in the Comex gold warehouse.  I call this “a Comex open interest liquidation raid” by the bullion banks.  When the CFTC finally releases a COT report to reflect Comex trading activity for this past week, it will likely show a large drop in the net short position of the banks and a concomitant large drop in the hedge fund net long position.

Trump was out flogging the Fed on Friday for holding the dollar up with interest rates – interest rates that the Emperor of DC has declared “too high.” This likely signals a political campaign to drive the dollar lower, which will be bullish for gold.

Trevor Hall and I discuss on our Mining Stock Daily podcast why we believe the current sell-off in the price of gold will lead to higher prices. I also present a couple junior mining stocks I believe will be acquired in the escalating wave of gold mining company M&A transactions (click on the image or HERE to listen to the podcast):

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You can learn more about the highly undervalued junior mining stocks mentioned in the podcast plus many more in the Mining Stock Journal:  Mining Stock Journal information