Modern Monetary Theory

"I don't believe you're seriously considering listening to these men."
--Walter Peck (Ghostbusters)

Bloomberg piece discusses 'modern monetary theory' (MMT). As the author notes, MMT is not new. It is based on the ludicrous notion that governments can borrow forever with no adverse consequences. "What if the government does not have to pay back what it borrows, now or forever?"

That such a question is seriously considered reflects just how far off the rails we already are.

Of course, policymakers have been proceeding as if MMT was already in force. Federal debt is now close to $22 trillion. Central banks around the world have been monetizing debt for years with trillion$ created out of thin air to buy government bonds and related obligations.

The author raises the specter of hyperinflation springing from these policies but wonders why big inflation has yet to arise from all of the money printing so far. One reason is that most of the trillion$ created by central banks have remained within the financial system. Look at long term price charts of stocks, for example, for pictures of what big time inflation looks like.

Once these dollars make their way out of financial system containment and spread into goods and service economic systems, then the inflationary horse put in motion by MMT will really start to gallop.