What is MMT?
MMT is an acronym for modern monetary theory. As many of you already know, there are several styles or philosophies behind the macro level of economics. Mainly they break down to what we would classify and as Keynesian and Austrian styles of econ. We do not want to use this video to describe these in great detail but we honestly feel that both of these have had MANY blurred lines over the years and both would be tough to see, or view in the current structure of crony capitalism that we have and live under today (in the USA). We think this line has been heavily blurred by the social ramifications of enacting such “harsh” policies (depending on which side of the coin one is on the other can seem very harsh).
MMT is what we might envision the direction that our policy makers might choose to lead us down next, certainly with some tweaks or course.
Before we get started, we want to convey this video has very little (nothing really) to do about influencing future policy in any way! However, we are creating this just to make people aware of what exists in the marketplace and what we might see in the future. We, by NO means would support anything mentioned in this explanation, to any degree.
Before we get into too much detail, I would like to give “credit” (I would use that term loosely when speaking of this) to the professor who coined this term, Prof Stephanie Kelton. I don’t know much about her but she is a big proponent of allowing the central banks to provide their guidance to not only rates, but also money supply via debt, or new money creation. In this video we would like to take this to the next step and help you understand your future expectations of market performance overall and if this could be a positive or negative for yourself as a consumer. This monetary theory relies on government spending and debt as a significant tool in developing “growth”, only limited by future inflation expectations.
MMT would suggest that since many governments have a central bank with unlimited power to create currency, such an entity “cannot” go bankrupt in their own currency. Issuing currency is one of a couple of strategies that the Fed uses as a tool in order to help steer the economy. Another aspect of the theory is that since government can give extreme guidance to the system and actual overtake certain aspects of growth by fulfilling these aspects themselves. This theory should, or is said to be limited by, social constraints along with inflation or employment. Many theorists that hold to this sort of thinking would actually believe that full employment causes inflation instead of the normally accepted definition of the word (inflating the supply of the item being discussed, in this case, money). Opposite of some traditional thinking, which would believe that everything does have limitations based upon logic, the thought behind MMT would believe that since currency is easily printed or created by a key stroke, that nearly everything “monetarily” is fine because the system can be altered as needed moving into the future. The real risk in the mind of the MMT community isn’t on the “too much currency or debt” risk, but instead the “risk of harming productive capacity”. This harm would, in the view of the MMT, suggest that the real risk isn’t a matter of how easy money can be used, but instead the theory would believe that if the central planners and the system don’t control debt and money enough, that we might have issues/problems.
We would continue to believe that this sort of monetary guidance will eventually have such potential severe impacts on the longer-term economy; that the ability for a central bank to control might become more of a challenge than we might first presume. We might also ponder the idea that things have permanently changed, and there isn’t really a way for history to repeat itself based on the social issues that we face moving forward, and how those said social impacts interact with economic and policy-oriented decisions. We have always found this sort of “re defining” words to fit into the current paradigm to be a symptom of current circumstances, but this may not actually be the case, and we could certainly be wrong.
Next, I will try to put that into some context so that you can use this information to see some of where we have been and where we might head as we watch policy makers decide their next course of action. In our humble opinion, our current system, of more directed capitalism, is something that can and may continue to exist but as we watch how this is matched up with any future challenges the system may face, we see the social barrier being potentially a hard wall that consumers (or the population) might force the central planners to deal with. What does this mean exactly, we think many consumer might be concerned or annoyed in the Feds “support” of the system versus the consumer. We feel like we might have entered a phase or cycle in our society where the average consumer sees “trickle down” economics impacting the society at the “top” (wealth or upper class) but not as much where the “masses” might view themselves.
We might argue and feel that our last two elected official to the white house have both been an illustration of discontent with the current “system” and might elude us of what is to come. To try to stay totally out of politics on this video (if that is possible) we might see that there is a very good likelihood that the democrats would support this new type of policy strategies, and, oddly enough, this might even be a policy strategy we see supported and embraced by both major political affiliations.
