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.