MMT is now a reality

Mar 31 01:03 2020 Print This Article

[This blog post is an excerpt from a recent commentary published at TSI]

Modern Monetary Theory (MMT), which isn’t modern and isn’t a theory (in the true meaning of the word), is now being put into practice in many countries, including the US. What’s happening isn’t being called MMT, but that’s what it is.

Under cover of the “coronacrisis”, we are now witnessing the introduction of MMT. Specifically, in an effort to alleviate the short-term pain associated with the economy-wide shut-downs that they are enforcing as part of history’s biggest ever over-reaction, governments are now promising to spend money as if they had access to an unlimited supply of the stuff. They can do this because with the help of the central bank they do have access to an unlimited supply of the stuff.

The US government and the Fed are leading the way and in doing so all lines that are supposed to separate these two organisations are being blurred or eliminated. To put it another way, the pretence that the Fed is independent of the government has been dropped.

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The Speculative Investor

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