Cryptocurrency: Abject Failure of Keynsian Modern Monetary Theory MMT

[grarpamp]

Modern Monetary Theory Bites The Dust

https://economicprism.com/modern-monetary-theory-bites-the-dust/
http://www.shadowstats.com/alternate_data/inflation-charts

Fashion changes from one year to the next so fast it’s best to ignore
it.  Not only will you save money by not chasing the latest shiny
object.  You’ll also retain more of the most valuable commodity of
all.  Your time.

Non-fungible tokens (NFTs), for example, were the popular new movement
just a year or two ago.  Digital art, made by hipsters with names like
Beeple, was going to make the world a richer, more stylish place.  Now
only dorks and dweebs collect NFTs…and they do so in secret.

Similarly, just a couple of years ago Modern Monetary Theory (MMT) was
all the rage.  But that was before rampant money printing triggered an
official consumer price inflation rate, as measured by the consumer
price index (CPI), of 9.1 percent.

Hindsight is always 20/20.  Yet, sometimes, foresight is 20/20 too.
In the case of MMT, practically everyone could see there would be hell
to pay…even through broken spectacles.

The future consequences were crystal clear.  Printing up money and
passing it out around town, thus entitling people to claims on goods
and services without commensurate production, is fundamentally
foolish, reckless, and outright suicidal.  Only academics and central
bankers were blind to the arrival of today’s inflation.

If you recall, as inflation was heating up during the second part of
2021, Federal Reserve Chairman Jerome Powell and Treasury Secretary
Janet Yellen told everyone it was transitory.  Then, as inflation
continued unabated, Powell finally admitted in December 2021 that
inflation was no longer transitory and that the word needed to be
retired.

Powell and Yellen have their finger prints all over this consumer
price inflation mess.  Yet they didn’t act alone.  Advocates of MMT
cheered on their mass money printing with righteous assurances.  They
said inflation wouldn’t be a problem.

But now that consumer price inflation is raging at a 40 year high,
where did the promoters of MMT go?  Why aren’t they tackling inflation
with the same enthusiasm?
Tard-buckets-Opotamus

Fanciful schemes offering the more abundant life always yield the
unsuspecting and outright gullible to the assurances of dreamers,
schemers, theorists, reformers, and scoundrels of all stripes.
Promises of something for nothing are too intoxicating to pass up.

For several years Alexandria Ocasio-Cortez, Bernie Sanders, and other
American socialists, served up fresh pitchers of grape Flavor-Aid
laced with MMT as a solution to all the downtrodden’s problems.  To
join the cult all you had to do was drink from their cup.

MMT, as you may have heard, offers booms without busts, and money
without limits.  The nuts and bolts of the theory state that a
government that creates its own money, like the USA, cannot default on
its dollar based debts.  Therefore, the USA can print all the money it
needs to amplify the economy – debts and deficits be damned.

Should such overt dollar debasement lead to price inflation, MMT has
just the solution.  Raise taxes and issue bonds to remove the excess
money from circulation.

Taxes, you see, are not for funding government spending.  Rather,
they’re for throttling back the money supply to attain the magical
balance of growth and inflation.  With MMT, big government statists
can hatch boondoggles first, and leave taxation for later.

The whole theory, or lack thereof, is abundantly retarded.  Yet in
early 2020, something abundantly retarded was precisely what was
needed.

When quantitative tightening (QT) was abruptly terminated and reversed
in September 2019, the Fed’s balance sheet was $3.7 trillion.  Soon
after, in the face of the fabricated coronavirus hysteria, the Fed
jacked up its balance sheet by $5.2 trillion to a high of $8.9
trillion.  A good part of this took place between March and June 2020.

What happened next…
Cult of MMT

At first, the consequences were nonexistent.  In February 2021, after
nearly a year of monster money printing, the CPI showed an annual rate
of inflation of just 1.7 percent.  MMT supporters were riding high.

By that point, the U.S. government, and by extension the American
people, were fully committed to a program of currency debasement to
finance government mandated lockdowns.  Washington was also attempting
to inflate away its debt burden.  The authorities prefer an implicit
default via inflation as opposed to missing bond payments to
creditors.

Intelligent minds, from John Law to Charles Ponzi to Bernie Madoff,
from John Maynard Keynes to Milton Friedman to Ben S. Bernanke, from
Benjamin Strong to Alan Greenspan to Jerome Powell, and everyone in
between, have promised something for nothing.  They’ve put their
intelligent minds to the task…

Countercyclical stimulus spending.  Interest rate suppression.
Quantitative easing.  Elastic currencies.  Money shuffling.  Inflation
targeting.  Smoke and mirrors.

…all so governments, and individuals, can spend well above what they
can afford, and then welsh on the debt without consequences.

During the rampant money printing of 2020 and 2021 Stephanie Kelton
emerged as the MMT messiah.  In June 2020, her book, “The Deficit
Myth: Modern Monetary Theory and the Birth of the People’s Economy,”
was published.

It quickly became a New York Times Bestseller.  And it also received
rave reviews from unlikely places.  Upon reading the book, gangsta rap
pioneer, Ice Cube, for example, tweeted on September 3, 2020, the
following means of salvation:

    “America loves to cry broke.  But in America money does grow on trees.”

    “America is a currency creator so there’s no reason for people to
live like this.  Government and the banks have made a deal to keep the
people in debt.  They always say if you print money it will cause
inflation.  They just printed 3 trillion.  Little or no inflation.”

Does a 9.1 percent CPI reading, with an unofficial reading of nearly
18 percent, constitute little or no inflation?
Modern Monetary Theory Bites the Dust

Currently, the Fed’s balance sheet is roughly $8.9 trillion.  And
consumer price inflation is raging at a 40 year high.  What’s more,
the Fed is hiking rates with the purpose of containing inflation.  But
the only way for the Fed to contain inflation is to trigger a massive,
1930s-style depression.

Yet MMT proponents have gone silent.  Why aren’t they using MMT to
attack inflation?

The cult of MMT, like most cults, has proven to be lacking for the
general populace.  Instead of bringing wealth and abundance to the
American worker it has brought wealth and abundance to the elites and
central planners who first receive and direct the flow of the newly
minted fake money.

Moreover, like most cults, when MMT’s leaders are needed most, they
conveniently disappear.

Is Kelton not a true believer in MMT, after all?  Because if Kelton
was a true believer, wouldn’t she be advocating for higher taxes right
now?

That’s how MMT is supposed to work, right?  When inflation heats up,
taxes are supposed to be raised to remove excess money from
circulation?  Isn’t that the MMT solution to inflation?

Kelton, however, is not banging the drum for higher taxes.  Perhaps,
this is because higher taxes are perennially unpopular.  Similarly,
promoting money printing is much more hip and cool than promoting
higher taxes.

So what’s Kelton up to these days?

Her most recent tweets include pictures of her dog with a paper towel
roll in its mouth and dirty mother clucker sandwiches where a glazed
donut is used for the bun.  There’s also a recent tweet documenting
her first time having a smoked old fashioned – which she highly
recommends, sans the simple.

Did MMT just bite the dust?

For now, it appears to have.  We suspect it will be gone until a
massive depression wipes away inflation.

Then it will be resurrected to great folly so the money printers can
really get to work.