Hat tip to 357 Magnum for the link to an article on Modern Monetary Theory (MMT). "The Worst Economic Idea Since Socialism - Explained Using Bikini Girl Graphics" at Wilder, Wealthy and Wise. I hope it's obvious that you don't do an article on economics explained by graphs printed over pictures of girls in bikinis without the required amount of goofing around and lots of snark.
The main idea of MMT is that since government creates money there are exactly no limits to how much money government can create. Back when money was backed by gold (say, with one ounce of gold being worth $20) there was a physical limit – by definition you couldn’t have more $20 gold coins than you had ounces of gold. MMT says, “Hey, since Nixon took the world off of the gold standard, we’ve been making up this money stuff anyway. So let’s go all in.” This is not exactly like a drunken 21 year old with Mom and Dad’s credit card in Las Vegas. Not exactly. The credit card has a credit limit.
So, under MMT, there is no limit to how much money government can print. The genius idea (from Bill Mitchell, an Australian economist who came up with the name “Modern Monetary Theory”, and whose dog’s name is “Dog” and daughter’s name is “Girl”, and whose pet name for his wife is “That Woman On The Couch”) is that there is also no limit to the amount of money that government can spend. This is Alexandria Ocasio-Cortez’s high school prom fantasy where Justin Bieber picks her up in a pink helicopter and makes her all warm in her special place. Oh, and by special place I mean other people’s wallets: this is a family-friendly blog, get your mind out of the gutter. The implications are stunning. “Why not just pay for everything? The government can just print the money, right?”
We're not making this up. She actually said this - and then she said the world was going to end in 12 years and we "just pay for" whatever it costs to meet the "Green New Deal" dream costs, too.
Getting back to the Modern Monetary Theorists, this is deep thought, folks. Mitchell actually uses an example to try to correlate money created by QE to the number of points football teams can score in a game.
An analogy used on a website that promotes MMT is that football referees don’t have a limit to the number of points that can be awarded during a football game. There’s no requirement that they come from somewhere, and giving someone else a point doesn’t take a point away from you. Therefore points are infinite and don’t change the way the game is played.How does this relate to money? What? Are you some kind of hater? It's some sort of tortured, brain-dead, logic.
People don't have enough money? Just add a zero to every printed bill and instantly people have ten times as much money! Never mind consequences, there won't be any because they say there won't! Dr. Mitchell thinks we can have all of this infinite money and low interest rates. We just need high taxes to take the excess money out of circulation... so government can buy something or other.
You see, Marx’s theory (as well as MMT) both incorporate a fascinating idea – that the value of an item is based on the inputs that it takes to make the item. So, from that standpoint, our armpit-hair artisan should be able to charge the cost of her Xir schooling (plus that summer in Europe with Marco!) and her Xir apartment and food cost for that armpit hair sculpture. It is that valuable.There has to be a balance between mocking this and emphasizing that people trying to run the entire country really believe this. Don't think it's not popular to run on the idea of "infinite free stuff for everyone"? Have you been watching lately? As Wilder, Wealthy and Wise put it.
Real world economics that don’t result in economic collapse and the starvation of millions of people would disagree. An armpit hair sculpture is worth only what someone is willing to pay for it, and not a penny more. It’s a market, and it’s based on free exchange. It’s that simple idea of the market setting the price that makes capitalist economies work. And it’s the brutality of the market that ensures that armpit-hair artists have to have a real job actually producing things that people want. Like coffee.
Ideas like MMT seem to be too good to be true because they are too good to be true. They always end in failure, poverty, and human suffering. Thankfully they can use that taxation sponge to soak up all the blood after the revolution.
(Another link from 357 Magnum - this time to CNSNews.com)