The Wall Street Journal is reporting that economists are openly making a “once-heretical” argument when they support monetary inflation and dismiss the swelling of the United States’ national debt as a reason to worry.
To these heretics, the Journal explains, there’s a new way of looking at economics that excuses governments being irresponsible with other people’s money. And ignoring the fundamentals of economics as a social science is the core principle of this approach.
Unfortunately, this new theory encourages nothing but more corruption, power grab, and abuse. A reality that wasn’t carefully spelled out, even by the Journal.
With annual deficits set to top $1 trillion within the next three years, the Journal warns that U.S. debt will total 93 percent of gross domestic product before 2030. But as America rakes in debt, investors don’t seem too worried. The Journal makes this argument by explaining that despite the high debt levels, interest rates remain low. As a matter of fact, as debt rose from 34 to 78 percent of the share of the GDP, treasury yields dropped from 4 to 2.7 percent. It’s almost as if the U.S. could do no wrong in the eyes of investors, and the greater the debt, the more confident they feel.
This reality, however, is a sham.
As the Journal correctly points out, left-leaning economists are supporting the idea that debt shouldn’t worry anybody. They justify the lack of urgency by arguing for Modern Monetary Theory, an economic paradigm that supports the idea that any potentially negative consequences anyone may tie to government deficit spending are illusory and that the fiat monetary system is superior to the gold standard.
To MMT proponents such as Rep. Alexandria Ocasio-Cortez and former Bernie Sanders advisor Stephanie Kelton, printing money is the solution to all problems. After all, the U.S. can just tell the Federal Reserve it needs to expand its balance sheet in case the country runs out of investors to buy its treasury bonds.
Needless to say, these brilliant minds seem to completely ignore the fact that “printing money” is just another tax on the poor. In other words, when more paper money is injected into the economy, the first ones to put their hands on it make a profit, but once the cash hits main street, it loses its value, inflating the cost of everything. To the poor, low-, and middle-income Americans living paycheck to paycheck, this means they won’t be able to afford as many goods or services as they once did.
But who cares about the poor when you can implement all your dream policies on a whim?
Politicians and their minions enjoy MMT precisely because it provides them with ammunition to implement their big government programs without any restraints.
If they do not have to worry about persuading more investors to help or push Congress to increase tax revenues to fund their programs, they can just convince the Fed to give them the money. But as the government continues to borrow and enlarge its balance sheet, throwing in more easy money into the economy, the country’s economy weakens. The poor become poorer, the middle class disappears, and the rich, well, the rich will do what they can to stay rich, meaning they will continue to lobby governments to keep their competitors out of the game.
With politicians who claim to speak for the little guy backing this kind of rotten game, we’re better off canceling government altogether. After all, they don’t speak for any of us.
By fooling people into thinking that creating money out of thin air will fix all problems, these disgraceful “public servants” are only further trapping us all into a life of misery.