Robert Shiller writes “Modern Monetary Theory Makes Sense, to a Point” (MMT)
in today’s NYT. What is MMT?
It comes out of the Bernie Sanders campaign (among others) and seems to
say “print all the money you want -- because
you can.” Sound silly?
The printing must be for “good causes.” But aren’t they all?
And increased national debt is not a problem “because we owe it to ourselves.”
But who is “us”? Mercantilism (you would
have thought) was disposed of many years ago.
Are nations meaningful economic entities? Most people are interested in with whom they
trade insofar as whether they trust them enough to arrange a mutually attractive
deal. Nationality only enters the
discussion when political economy becomes
tribalist crazy. There is way too much tribalism in the world without this.
I have been driving Japanese cars almost my whole (driving)
life. The national origins of the
product are irrelevant. So it is with
most purchases – unless politicians seize on national origins of product for
their own jingoist reasons.
But say this for the MMT people. They have three things
going for them. (1) Americans (for the most part) have stopped caring about the
national debt. (2) And – to this point – they have been right. The world continues
to want U.S. securities in their portfolios.
(3) And politicians love to spend but hate to tax.
So go for it? Political time horizons are what they are. Reason #995 for small government.
ADDED
Arnold Kling calls it Modern Ponzi Theory
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