MODERN MONETARY THEORY(MMT), THE FUTURE?

Source img:https://capitalibre.com/2012/10/la-teoria-monetaria-moderna

In the mainstream media, the Democrat Ocassio-Cortez gains weight and prominence. His followers, mostly young, are disenchanted with the American dream that has taken a turn to socialism. The overprotection with which they have been raised, and the strong left bias of the education received, motivate this change.

As it turns out, Cortez, Alexandra or whatever they want to call her, is a defender of modern monetary theory. From deficit to spurs. This theory is based on the monopoly of the state to issue currency, which empowers the government to issue all the money it wants.

Fuck the deficit.

Cortez intends to establish a Green New Deal, revolutionizing the economy with an environmental aspect. To do this, the central bank rollers will work, reaping the fruits of this old modern theory.

However, recent history gives it a false legitimacy. There have already been massive repurchases of assets by central banks; bailouts to private banking ... and a long endless interventionism for the richest. In this context, the follies of the new and socialist Democratic party are difficult to discredit.

What risks does modern monetary theory entail? Well, of course, the printing of money without control will increase the money supply in the economy. This will have the inevitable effect of inflation, a goal sought in the first instance that is more than likely to escape from the hands.

Examples of printing without currency control, we can find them in Venezuela.

Another of the pillars on which it relies is the axis of transactions between the state and private agents. According to the TMM, if the state incurs a structural deficit, it is because the market picks up the witness of that deficit, which is therefore favored. Public debt meanwhile grows steadily but ... No problem! Inflation is to put you in control.

Thus, the reign of modern monetary theory can bring hyperinflationary spirals to Western economies. Examples of mass printing of bills have not gone well in the past, and I see no reason to think that this should be the exception.