Who's Afraid of MMT?
Chances are if you're a regular reader of Real Progressives, you are not.
However, chances are also fairly good that someone you know definitely is. Think about yourself, the first time you ever heard of Modern Monetary Theory? What was your initial reaction? How did you respond to the diametrically different way of looking at our economy?
If you were a progressive at the time, then you probably were no stranger to questioning mainstream narratives. Ultimately, that is likely what allowed many to get over their initial fears or apprehensions about MMT; the realization that the mainstream economic narrative, the one that's readily accessible, pre-packed and omnipresent, is simply the next in a long line of establishment narratives that just happen to also be very wrong. That won't likely be the case with people who are less prone to question mainstream narratives which are comfortable to them.
If it wasn't that, then perhaps it was seeing the long list of Doctors of Economics that support the MMT view of how money works in a global economy. When you dedicate your life to educating yourself at that level, you are investing in your professional reputation, and you're not likely to risk all of that time, money, and effort on half-baked theories with wild, unfounded assumptions which might jeopardize it.
Maybe it was knowing that one of those Doctors of Economics was Stephanie Kelton, who was Bernie Sanders' chief Economic advisor, and who now works at the Bernie Sanders Institute, as a senior fellow.
Or maybe you just had an open mind that was interested in Economics to begin with, heard the ideas, and they resonated with you.
Whatever the case, it's important to remember that you weren't born knowing about MMT, and you (very likely) weren't taught it in school, either. It's important to pay attention to the door you went through to get in so that others can use that door also. You can show them where it is. This may be as simple as sharing a video that finally helped you "get it", or it may simply be a reminder to be patient with people because you were once one of them.
That's a hard thing to do though, when you're fighting through waist-high misinformation, on the front lines of a war against the mainstream economic narrative. When you don't have a Ph.D. after your name, it's even harder to get people to actually listen to you, let alone trust what you're saying, especially when it calls into question a lot of what people have been taught their entire lives.
In this war, ideas are weaponized, but it's important to remember that civilians can be rigged to explode by feeding them false information, in the same way that children can be made into walking bombs by terrorists. Does that mean we should submit to the oblivious? No, it means we need to learn how to defuse them peacefully. Part of that is viewing them as yet another victim, rather than the enemy. We can save lives, but let's do more than that. Let's educate, and change lives for the better. Yes, there will be trolls, but not everyone who has a misconception about MMT is a troll.
Many may be thinking at this point that the subject has taken a rather serious turn, broaching the subjects of war, weaponized ideas, terrorism, etc.
Yes, it has.
Why do you think the corporate political establishment is so desperate to maintain its mainstream economic narratives? Information is a vital resource, like water, and like much of our water here in the US, this information resource is contaminated. Instead of being contaminated by lead or chemicals, it's contaminated by lies. These lies are the very lifeblood of austerity. They allow austerity to grow and thrive as a viable idea, when in fact it is based purely on a fabrication.
"There is just not enough to go around. Sacrifices must be made."
Talk about ideas being 'weaponized'...
Put simply, Modern Monetary Theory is a description of how money works in a global economy, and how local economies work within that economy. Although MMT is far-reaching in its implications, this article will focus on just a few, relevant and important points, taking each in turn.
So let's go through some common sticking points together. I'm sure many have already gone through them in their own personal social interactions.
1) Federal Taxes do not fund spending.
Yes, it is a simple thing to know and understand that Federal income taxes don't fund spending, but it is not enough to simply say that. You have to be prepared for the inevitable question of "If this is the true description of how our economy works, then why isn't it the mainstream description?" That is a fair question, and to answer it, all that is needed is an understanding of the mainstream description, an understanding of how MMT differs from that, and an understanding of why those differences are there, who benefits from them, and what they stand to gain from the misunderstandings and deliberate misinformation.
So things get a little more complicated, but not too badly. Let's break it down.
First of all, money can be looked at as a living thing, with a life cycle. Money is born, it has a life where it runs around and does its job, and then it dies. All of these life stages, just like in a natural ecosystem, must be there. This concept applies, whether we're talking about the established mainstream Economic view or the MMT view. The difference comes when we talk about where money is born from, and what its ultimate demise is.
According to the mainstream view, the source of money is the people who are "the money makers", businesses, big and small. They make the money by selling products and services, they spend it out into the economy, they pay taxes, and the government then uses this (limited amount of) money to purchase what it needs. According to this view, money is created at the top and cycles downwards (trickle-down).
Every part of that narrative is a fantasy.
According to the MMT view, money is created when budget bills are passed by Congress. This money cycles downward as it circulates through the economy via payments to individuals and businesses. At tax time, Federal taxes are collected, and the debt is canceled. That money is literally deleted.
So why don't we just print more money? Why don't we just give everybody a billion dollars?
Simply put, if we can't support that extra money with goods and services, it's useless. We have to operate within the confines of a particular economy, and those limits are defined by our ability to produce.
So what, exactly, is the difference between the two viewpoints? Aren't both of them limited by the rate of production?
While both are limited by production, only MMT allows for the production rate to be increased as needed. The mainstream viewpoint can only use what has already been produced. Given that the US is nowhere near full production capacity, we have a lot of room to grow, to accommodate a very large, booming economy with a thriving middle class again. Part of this deficit is likely due to outsourcing our jobs and entire industries to other countries where workers can be exploited financially to a greater extent. The mainstream economic explanation not only covers up this dire situation, it perpetuates it and creates excuses for it. If you turn it on its ear, the thing that can save us is the very same thing that will kill us.
Which leads us to our second point.
2) Creating money does not necessarily cause inflation.
While you can cause inflation by exceeding your projected capacity, current capacity can be exceeded in order to build toward a goal, with careful planning. That is not possible when you adhere to the mainstream economic description, which limits your use to what is current.
Meanwhile, actual inflation is at least exacerbated, by the increased ratio of CEO to worker pay. It's now 'normal' for a CEO to make 270x what a regularly salaried person nets. That rate has skyrocketed since the 70's. The only way to keep stockholders happy is to keep raising prices. That's why the lie of "increased money supply causes inflation" is perpetuated. It serves two purposes: It increases income inequality by justifying and regulating it, and it hides the true reasons for it, allowing it to continue indefinitely. Does that sound familiar? It should, we just described a very similar situation in item #1.
And as you might expect by this point, thematically we're aligned to segue right into the next item.
3) There is no "national debt", let alone a "debt ceiling".
The US is a monetarily sovereign nation with a fiat currency. What this means is that the United States of America literally cannot go broke, cannot go into debt, and does not owe US dollars to any other nation, including China.
Unfortunately, we as a nation are bombarded by messages to the contrary. We are told that the purpose of the debt ceiling is to impose fiscal discipline on Congress, but unless we raise the debt ceiling, the Treasury Department won't be able to pay its bills in full, and on time. The Treasury Department is not above issuing threats of a financial meltdown if the debt ceiling is not raised, and politicians are more than happy to jump onboard to show their support. Like the other mainstream illusions, this one is very, very important for them to maintain, and they will stop at nothing, including holding the government of the US for ransom, until their demands are met.
But what is actually happening, when they raise this "debt ceiling"? How does that differ from the "planning beyond current production" discussed earlier? It differs in one, fundamentally important way: it takes the legitimate means to budget in a productive way and twists it as a stop-gap measure. In doing so, it supersedes things like public opinion, and need. What this translates out to is more profit for the rich, who then ride in on white horses to save the silly paeons from themselves. Could we see this coming by now? Let's hope so.
"But it has been more than a decade since Congress has adhered to the regular budgeting process, forcing lawmakers to cobble together comprehensive stop-gap spending bills like that one approved in May that covered the remainder of the current fiscal year."
The conflict and controversy surrounding the debt ceiling are also a Duopolist's dream, as they produce no end of partisan conflict and strife. ALL. FOR. NOTHING.
So now we've covered a good deal of bases, regarding MMT. Hopefully, when we encounter people who are skeptical about questioning a belief system that is so far-reaching and ingrained, we can be better prepared to show not only the motives of those would use the lies against us, but the means, of how they are doing it.
If that doesn't work, there's always precedent. For those of your friends and family that just can't wrap their heads around what they can only perceive as a huge conspiracy of almost Universal scope...
At one point, the established scientific view was that of Spontaneous Generation. According to the tenets of that belief system, animate objects like fleas could arise from inanimate things like dust. This was the mainstream view for over 2,000 years. Those who challenged it were shunned and laughed at. They risked their professional reputations by rejecting this view. In fact, it wasn't until the mid 1800's that the Spontaneous Generation way of looking at nature was conclusively debunked.
The evidence was being presented for centuries, but it conflicted with the established viewpoint, so it was immediately dismissed as "heretical".
Our problems today are not the result of a lack of Scientific rigor or instrumentation. We have microscopes, calculators, and brains capable of using them. We have all the proof of MMT that we need. All we need now are people waking up to the fact that our current economy is a stunted corruption of MMT. It turns potential into limit. It turns benefit into liability. It turns profit into debt. Our Economy has literally been hijacked, weaponized, and used against us, and our ignorance of that fact enables it to continue.
So, for those who ask "When will MMT be enacted?" The question you're wanting to ask, really, is "So when will they get real and stop looking for lame excuses to dumb down our economy to our detriment, and to their own enrichment?"
The answer is, "After we've all woken up, seen what's happening, and demanded that it stop." And that MMT is a description, not policy. WE get those policies when we unite to help all, not just the 1%.
...And not a moment before that.