MMT: A Fantasy Theory Loved by the Academic Elite
Inflation rates are rising in the United States and in many parts of the world. This is alarming for many consumers, but to some, the inflation rate doesn't really matter. Who are these people? Well, they are the academic elites who propagate a theory called MMT (Modern Monetary Theory). According to the adherents of this theory, inflation can be reduced by raising taxes.
Furthermore, they believe that debt itself is money that the government put into the economy, and has not yet taxed. They say that raising debts and increasing deficits will have little to no effect on the rate of inflation and will not do any serious harm to the economy. Even further an this, they say that a country can issue all the debt it needs without any default risk. Reading this, you might think that such people are living in a fantasy, but they are quite convinced of their ideas.
The term “Modern Monetary Theory” was first used by Warren Mosler in the 1970s, but it's actually connected to a few older schools of thought. The general intellectual history in which MMT was developed can be summarized as follows:
In the early 20th century, many economists began to look at monetary policy in a more "modern" way, questioning whether traditional "rules" were adequate for dealing with more modern monetary problems. The world economy was frequently dealing with problems in containing deficits, managing unemployment, and stabilizing the bond market. Economies went through depressions, periods of stagflation, and some currencies were driven into ruins. These conditions led the thinkers behind MMT to propose new ways to deal with age-old problems.
They explained that we no longer have to worry about the deficits created by massive spending proposals, since such proposals will decrease unemployment and thereby increase taxes, which decreases inflation. They even have such theories mathematically worked out into neat formulas. Some may say these policies have led to the bankruptcy of former powerful nations, but the theorists disagree. They say their ideas are more similar to schools of thought like functional finance and chartalism.
So will these academics have any effect on real world policy? Well, yes. They are already strongly influencing the EU policy board. They now have a President in the White House who appointed a Treasury Secretary (Janet Yellen) who loves the theory. Nearly all of President Biden's economic advisors are connected with labor-economics, and view it as their prerogative to spend their way out of unemployment.
How VLM Thinks
What approach is Victory of Light Media taking? Well, for one, we understand that Heavenly Economics originates from the souls of Adam Smith, Joseph Schumpeter, and Friedrich Hayek. Massive spending programs lead to a bigger government, which leads to increased authoritarianism. Keynesian economics puts a country on the path towards authoritarianism and reduced freedom of the people. The angels in heaven who guide over finance and economics are wishing for increased economic growth-rates through productivity increases, which will in turn help to pay down deficits and solve social security problems.
Supply-side economics is preferable to demand-side economics. It leads to increased freedom of the citizens, thereby allowing them to pursue their individual soul-training entrusted to them as children of God. We must protect economic freedom, religious freedom, and democratic freedom. This is what will allow each person to fulfill their own destiny. Countries which have such systems in place can attract more angels to be born in the future. This will in turn lead to solving economic problems, diplomatic problems, moral problems, and allow that country to get a little bit closer towards God's Ideal. Let's always think about God's great system before we make big decisions on a national basis. Thank you.