The Problem with MMT

2019 February 2
by drdog09

That’s Modern Monetary Theory and why you better hang onto your wallet.

So what is MMT

Compared to say the Mises monetarists, its a fairy tale. —

MMT’ers believe that government’s red ink is someone else’s black ink. Sure, the government owes dollars, but they have a monopoly of creating those dollars, and not only that, the creation of more and more dollars is essential to the functioning of the economy.

Here are the policy implications of accepting MMT:

  • governments cannot go bankrupt as long as it doesn’t borrow in another currency

  • it can issue more dollars through a simple keystroke in the ledger (much like the Fed did in the Great Financial Crisis)

  • it can always make all payments

  • the government can always afford to buy anything for sale

  • the government can always afford to get people jobs and pay wages

  • government only faces two different kinds of limitations; political restraint and full employment (which causes inflation)

  • The government can keep spending until they begin to crowd out the private sector and compete for resources.

And in fact, Stephanie Kelton argues it is immoral to not utilize this power to fix problems in our society. From an interview she gave,

“if you think you can’t repair crumbling infrastructure or feed hungry kids, unless and until you find some money somewhere, it’s actually pretty cruel because you leave people who are struggling in a position where there are still struggling and they are hurting, and they are not properly taken care of…”

I know what you are thinking. Sure sounds like socialism.


Essentially, MMT is Keynesian theory on steroids. The Keynesian ethos was that the government would spend to stimulate the economy by issuing dollars and funding ‘works projects’. Once the pump had been primed there would be a gradual claw-back on the dollars and phase out of the projects. MMT goes further:

  • They apply Keynes first part per usual, forever.

  • There is no intended claw-back so long as the inflation rate is kept in check.

Seems nice and simple yes?

So What’s the Problem

Well other than it won’t work long term? I see two:

  • First off whose inflation statistics ya gonna use? The one that BLS issues? That’s a monthly fairy tale on par with anything Mr. Disney produced. The CPI basket is currently incomplete with whole categories of consumer products unaccounted for. Worse the basket of goods has been modified on a fairly regular basis to manipulate the numbers. Without a standard basis for inflation reporting the ability to manage a MMT directed economy is but a shot in the dark.

  • MMT bases its premise that a sovereign actor with a sovereign currency can expand without impunity. The problem is here in the US we have other actors not so blessed — States and Munis. These entities have to balance their budgets each year (or at least appear to). Currently these entities live in a 3% world. What would happen to say the State of Illinois if thanks to Fed action the prime rate went to 8%? Do the works ‘Constitutional Crisis’ come to mind? It should. The State would be bankrupt and Chicago with it for good measure.

And guess what? There is an sovereign actor that fits perfectly the model the MMT crowd crows about — Pax Romana. It was a monolithic State with a single monetary system. It even had the State induced inflation by the doping of coins like the Denarius with lesser metals to the point that the % of precious metal in them were in many cases less than 5% of the total. Such actions were a component of the fa ll of Rome and the empire. Inflation being a key problem for the later ages of the Empire.

The other problem with MMT is faith. So long as there would be faith in the sovereign lucre by the fact its the only game in town it might manage. But that is not the world today. There are a basket of other currencies in the world physically. There is also gold and silver. Finally there is digital currencies. Was there to be a loss of confidence in the USD people would migrate to these other financial forms for their day to day transactions. Heck in major cities in the US many merchants accept BTC and Euros for example; no longer being tied to the form but definitely to the value of the tendered currency.

What to Do?

Recognize that this is in play and that in a AOC infected political environment MMT looms large in funding every pie in the sky dream the Socialists have. Realize that inflation will be a keynote in their schemes regardless what the BLS reports.

For you the individual —

  • Get on a kick of putting your savings in metals.

  • Buy inflation proof investments. A house of course if you can position yourself accordingly. Short term corporate notes.

  • If you don’t have a business, start one. Just as businesses really don’t pay taxes, neither do they pay for inflation. In both cases they pass the costs on to the consumer.

  • Teach a producer mindset within and without your family group. Only producers will survive in this MMT style economy, consumers will be the chumps. (We are all chumps in some regards, can’t be avoided.)

  • Best you can, avoid frivolous debt.


Realize that we are headed in a new less that rationale econ-political environment. Note that politicos like Warren are even discussing confiscation of wealth. Most of the youth have no concept of how business operates let alone where their W-2 income originates. Toss in the hordes from the South and things will look extremely grim very quickly.

21 Responses leave one →
  1. 2019 February 2 9:58 am
    bc3b permalink

    Super Bowl half-time entertainers to push social justice:

    Haven’t watched the Super Bowl fr at least four years.

  2. 2019 February 2 10:06 am
    justrand permalink

    what is this “Super Bowl” thingee you speak of?

  3. 2019 February 2 10:06 am
    justrand permalink

    back on topic…

    Mrs. JR and I were discussing buying more silver and some gold just other day. I need to accelerate this!

  4. 2019 February 2 10:35 am
    TLS permalink

    In regards to the last thread, Gov. Coonsman could just break out the facial recognition software and clear his good name. If it can see through scarves and glasses, I bet it can see through some black paint. Of course, tech companies don’t want to point this out to people.

    Also, funny how all the Dem’s skeletons stay in the closet until the party deems them a liability. I’ve noticed that we never get to know who actually found the decades old incriminating evidence. Maybe we should spend less time worrying about Russians blackmailing Trump and more time worrying about the D’s blackmailing their our party members. For example, did someone decide Biden is not the right candidate in 2020:

  5. 2019 February 2 10:45 am
    justrand permalink

    TLS, Gov. Coonsman has gone from APOLOGIZING for it being him one of the two outfits…to claiming he can’t REMEMBER if it IS him in the photo…to DENYING he is one of the two!!!

    in 12 hours!

    Now, of course, we all have to wonder, if it ISN’T him in the photo, why is it on HIS page in the Yearbook???

    Gov. Coonsman wants to get back to less icky topics, like dismembering infants. Bless his heart.

  6. 2019 February 2 10:53 am
    Eph permalink


    Rumor has it that Biden is a non-starter for 2020.

    Behind the scenes told not to run

  7. 2019 February 2 11:04 am
    mulletover permalink

    The governor won’t resign.

    He is not a current day racist, and ain’t stepping aside for no black Lt Gov.

  8. 2019 February 2 11:16 am
    TLS permalink

    Behind the scenes told not to run ~ Eph

    And it looks like now he’s been told publicly.

  9. 2019 February 2 11:37 am
    justrand permalink

    Mullet, if the Dems want him gone bad enough he will have an “accident”

    it’s how they roll

  10. 2019 February 2 11:43 am
    Eph permalink


    Yes sir. No chance for a black man to take his place.

  11. 2019 February 2 12:48 pm
    JimNorCal permalink

    Candidate Trump absolutely nailed it.
    And Hillary blustered “scare tactic”. Uh uh. Reality.

  12. 2019 February 2 2:53 pm
    drdog09 permalink

    A lot of people are saying ‘what super bowl?’ —

  13. 2019 February 2 3:22 pm
    justrand permalink

    me too, drdog…I’ve said it the last 3 years, and this makes 4

  14. 2019 February 2 4:09 pm
    JimNorCal permalink

    Last two years SB was the only game I saw (social obligations) but hope to skip entirely this year!

  15. 2019 February 2 5:37 pm
    gnqanq permalink

    The 4 B’s.




    Band Aids

    Precious metals are always good BUT you can not chew gold and silver. Always put food first and when you think you have enough – Buy more.

  16. 2019 February 2 6:00 pm
    drdog09 permalink


    Race war? — –Many a Millennial is going to have an epiphany when the curtain goes up.

  17. 2019 February 2 6:06 pm
    JimNorCal permalink

  18. 2019 February 2 6:07 pm
    JimNorCal permalink

    Gold has gone up about $120 since Dems won the House.

  19. 2019 February 2 6:27 pm
    gnqanq permalink

    drdog – the good news is that reinforcements for our side is on the way. Generation Z is the most conservative since the Greatest Generation.

    Also, I will tell the snow flakes on the other side – “When white people go off – whole civilizations disappear.” Check history to see the results.

  20. 2019 February 2 9:59 pm
    Eph permalink

    19 Jim,


    Keep that between us please!

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