MMT-R

military Keynesianism continues

MMT — Modern Monetary Theory — is the kooky idea that governments, because they are powers unto themselves, can actually keep printing and spending money regardless of how much effective taxation they conduct. The claim is that, managed properly, uncontrolled deficit spending by the public can continue forever without setting off punishing, Weimar Republic-style, inflation.

MMT is a left-wing hypothesis, promulgated by those who claim that paying for all the social-democratic programs we don’t have here in the USA — national health and liability insurance, fully funded day-care-through-high-school public education, generous family leaves, long vacations, strong labor laws, guaranteed minimum incomes, easy access to world-leading colleges, shrinking work weeks, etc. — won’t actually require a big fight over finances, if and when the forces of progress ever take enough power to enact them.

This presumption is almost certainly wrong, if not outright dangerous.

But here’s an interesting twist: The political right also now relies on its own version of MMT, only on behalf of its own favored forms of state spending.

Consider this item from today’s Wall Street Journal:

Both the subprime mortgage crash of the late aughts and the Covid-19 shutdown triggered huge increases in MMT-R (public deficit spending without either major welfare-state extensions or lasting downward economic redistribution). And there is no sign of any reversal of the basic borrow-and-bomb policies.

Can this pattern hold, financially speaking?

Interesting times, as they say.