An open letter to progressives enamored with MMT
Progressive advocates of Modern Monetary Theory say it can enable the government to fund ambitious social programs like tuition-free public higher education, Medicare for All, and the Green New Deal. The government should feel liberated to do so because it’s no longer relevant to ask: “How can it be funded?” Unless the economy is already fully employing all available resources (which is actually a rare circumstance) just print the money needed to fund the programs.
What programs get funded is a political question. Concern with deficits should not be a constraint.
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“Just print the money needed to fund the programs.”
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Now: Let’s come back down to earth. Let’s re-gain perspective and think about the situation.
Big governments with limitless fiat currencies.
Um . . . how far from basic natural reality can we possibly get?
That thing in Washington, DC . . . an idea that it represents us. So we should be able to organize and influence its expenditures.
Well . . . “us” doesn’t really apply. The thing in Washington, DC is an “it” and it will spend its money in all kinds of idiosyncratic ways. It’s a center of concentration that throws around trillions of dollars all over the place.
It’s monstrous. It’s insane by the very nature of its scale and we’d be better off gradually reducing our dependency upon it.
It has such dominance that it noticed about fifty years ago that it didn’t any longer need to pretend that its currency is backed by anything real. It can just print. This realization gave it an enormous amount of additional power.
Anybody think we should extol that power? Anybody think “we the people” can make it do great beneficial stuff with that power?
It does all kinds of stuff. It bails out stuff . . . people, banks, corporations, states. It buys stuff . . . bombers, ventilators, White House chandeliers. It funds stuff . . . social programs, yacht marinas, art endowments, foreign governments.
What a source of beneficence! Wish I had a money tree.
Does it seem unnatural to be in possession of a money tree? Deep down you know that it’s insane. It’s reflective of a society that has fully lost its bearings and its grounding in what’s real. It results in distortions of economy, efficiency, ecology, and morality.
Ecology is all about limits and balances. It depends upon visibility and transparency. Only in a mass society where nobody knows what the hell is transpiring could you have an entity that blithely doesn’t need to live within its means. That can print, spend, and spew money.
The dollar got so almighty that it’s clamored for all over the world. It commands the productivity of cheap labor all over the world. For now, we benefit and can have some nice things. As sure as you’re born, the remote, ungrounded, amoral Leviathan that prints all those dollars will increasingly run amok in its privilege and its mightiness. It will print its dollars until the currency floodwaters rise. It will run amok because it’s able to.
It may listen to Stephanie Kelton one day, Warren Buffet the next, Elon Musk the next. No one knows. There’s no rhyme or reason to it. It ain’t listening to you or me. There’s no coherent “we the people” to “democratically control” it.
So let’s not foster any illusions about it or its money tree.
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Addendum re: the comment: “how far from basic natural reality can we possibly get?”
Here’s the context of that:
Not only does the Leviathan’s production and consumption ignore ecological limits and balances, but, to make matters worse, the amount of paper “wealth” that sits above the real wealth of the real economy is enormous.
In other words, when it comes to the productive economy, we’re twice removed from reality.
People living and producing together in the bioregional territory they call Home would directly see and know the parameters of the resource availabilities and ecological exigencies around them. They’d be attuned, they’d be concerned, they’d be knowledgeable. This would come naturally; limits and balances would be directly relevant to their sustenance.
Production within the modern global megamachine orients to the global market, rides roughshod over local concerns, cares nothing for local limits and balances, treats violations of such as “externalities.” Ignoring externalities increases profits.
Decision-making is remote. It’s as if the machine hovers above the earth and cranks away untethered to the reality that people, fauna, and flora live within.
Beyond that, the paper economy has less and less relation to actual production of real goods and services.
Fractional reserve banking came into existence several hundred years ago, and became predominant as capitalism developed during the 18th and 19th centuries. The complex of central banks, Keynesian fiscal policies, and fiat currencies during the 20th century fostered artificial credit expansion and hyper-financialization. The huge and growing disparity between the paper and the real had to become problematic at some point. It started to in 2008. Since then the governments and the central banks have been terrified about debt deflation, the paper claims being so far beyond the real wealth they’re supposed to represent. That’s why the banks have been printing and the governments have been handing around so much money.
As Keynesianism provided the justification for deficit spending after the crisis of the Great Depression, MMT now will give governments the theoretical sanction to ignore deficits entirely, and so to keep printing money to buttress the overvalued paper and the zombie corporations.
Unmoored from ecological reality, the productive machine sits above the earth. The paper economy hovers above it somewhere in cyberspace. It’s all insane. Good luck trying to reform it or socialize it. I think most of our effort should go into building the new world within the shell of the old; toward getting ourselves back to basic, natural reality.
