Modern Monetary Theory (MMT) could become a cult. We need to look into it. MMT is not just another economic system. It argues for unlimited government spending until inflation hits, because we have our own currency. It argues for guaranteed employment. It argues that the resulting inflation can be tamed by tax cuts. It argues an explosion in the money supply is needed to fund all that needs to be funded.

MMT has the potential to become a cult because the fusion of it with the Green New Deal compels followers of both to seek changes that will trample the rights of many. MMT is not inherently left wing, except for job guarantees. When inflation rises, the theory goes, people will quit or lose their productive jobs due to massive taxation on business, and be moved to guaranteed make work jobs. Rather than the dual mandate of the Fed, full employment and price stability, the theory mandates a guaranteed work force at all times.  

William Palley has weighed in. For him, MMT is not a new theory at all. If it isn't an economic theory that can stand on its own, it may very well be cultlike. Palley said:

In the current moment of high unemployment, MMT makes a valuable contribution as part of the rhetoric of advocacy for expansionary policy. However, as regards macroeconomic theory, MMT adds nothing new warranting its own theoretical label. Instead, its over-simplifications represent a step-back in understanding. In physics, the crank physicist is drawn to the idea of a perpetual motion machine that denies the effects of friction. In economics, the crank economist is drawn to the idea of a money tree that voids financial constraints and macroeconomic trade-offs. MMT constitutes a form of modern money tree economics.

There is nothing worse than a crank except for a crank who is also a cult follower. MMT has been adopted by an even more cultlike concept, the Green New Deal - or at least, some economists who speak for MMT are now supporters of the Green New Deal, helping to bond the two together in perception, if not reality.

What a Leading MMT Economist Believes

We know what Stephanie Kelton, possibly the most vocal economist of MMT, believes:

We have momentum ― incoming Democrats, like Reps.-elect Alexandria Ocasio-Cortez of New York and Rashida Tlaib of Michigan, are building support for an ambitious climate plan, and more than 15 members of Congress are calling for a select committee with a mandate to draft comprehensive legislation: a Green New Deal. We have the outline of a plan: We need a mass mobilization of people and resources, something not unlike the U.S. involvement in World War II or the Apollo moon missions ― but even bigger. We must transform our energy system, transportation, housing, agriculture and more. What we don’t (yet) have is the final, vital ingredient ― a critical mass of politicians prepared to unleash the enormous power of the public purse to save the planet. 

Here are her chilling word choices: "Momentum"; "Mass mobilization of people and resources"; "Transform energy transportation, housing, agriculture". Kelton says that this is like World War II mobilization, but says it is far larger!  Anytime you speak of mass mobilization of people outside of wartime, warning flags must be raised.

That does not mean that the system of MMT was thought of as a cult at the time Cheney said deficits don't matter. MMT can be an economic tool, as Scott Sumner has implied, that usually results in failure:

In 1968, LBJ raised taxes sharply as a way to slow inflation, the MMT solution. In one sense this policy was a smashing success, as the budget swung into surplus during the 1968-69 fiscal year (which went from July to July in those days). That was a mind-boggling accomplishment at the time. When does a country balance its budget in the midst of a major war, and when it is also rapidly scaling up the “Great Society”? (Everything from expanded welfare, to Medicare, Medicaid, housing programs, moon landing, etc.)That’s crazy!

Unfortunately, it was a complete failure at holding down inflation, which continued to accelerate.

MMT Tied to Utopian Movement

Tying the MMT movement to the Green New Deal may turn the movement into a utopian cult. Rick Newman, a Yahoo columnist, has characterized the movement as a misguided utopian takeover by an all powerful government.

Newman goes on to say that a carbon tax would be more efficient, but Macron of France has found out that the yellow vests did not want more tax on fuel. After all, even the carbon tax is hurtful to the poor and many in the middle classes who must commute.

Lou Del Bello of Futurism.com has said that gasoline stations spread through America slowly. He went on to say: "As climate change threatens the way of life of billions of people around the globe, we don’t have that same luxury." That we lack time could imply the Green New Deal may require a totalitarian approach (although he does not mention it). 

There is a certain respect among economists that the various economic systems that exist in the world may have flaws, but at least have some truthful contributions to make to the field.But the MMT system makes a lot of incorrect assumptions. There is an element of dishonesty in it.

Please do not think that many Americans are happy with the austerity and slow economic progress that we have in modern times. But the Green New Deal does not promise economic progress, only green progress. It takes no measure of the cost of its goals on the poor, the middle classes. The jobs created from a green revolution will go away and there will be fewer jobs after the infrastructure is established.

Many people want less military, more help for the poor, environmental protection, the rich to pay more taxes, not less, etc. But they want all of it within the framework of orthodox economics. But Ellis Winningham, an MMTer, said this about the wealthy:

1.) They’re going to be taxed, not to pay for things, but to reduce their wealth in terms of dollars simply because they are too damn rich.

That statement makes me uncomfortable. There is suddenly a punishment for being rich, a confiscatory concept within MMT that makes for forcing resources out of the hands of those who own them into the hands of everyone else. Yes, many billionaires are being created by central bank bubbles, but taxation should be based upon societal need and ability to pay, not punishment for undo success.

And as Newman implied, spending (e.g., MMT) will need to be massive to establish green tech not even invented yet. Republican doomsayers think this means that under the Democrats, industries will just be nationalized.

The good thing is that there are many Democrats that do not support MMT and/or do not support the Green New Deal, and want to move towards the center, since the Republicans have gone so far right. And there are some Republicans who do not support Donald Trump and a cult that he himself acknowledges when he said his followers would follow him if he committed murder.

The GND/MMT starts out with seeking support for goals with voting on non binding voluntary plans of action. And the main goal is a strong lure, that of saving the planet. Who doesn't want to save the planet? They have signs that say "Step up or step aside". The militancy is palpable.  

Physics of the GND/MMT Movement

The physics of the green systems is discussed by Forbes contributor Mark P. Mills, a physics degree holder who testified before Congress:

To be blunt: there is simply no possibility that more government funding for wind turbines, silicon solar cells or lithium batteries will lead to a “disruptive” 10-fold gain. All those technologies are approaching physics limits, just as aviation engines have.

and:

Traditional metrics are inadequate to visualize the magnitude of energy required by our digitally infused industrial society. Roughly 85% of global energy comes from oil, coal and natural gas.

and:

Over the past two decades, the world has spent more than $2 trillion on non-hydrocarbon energy alternatives, but hydrocarbon use has risen nearly 1.5-fold and hydrocarbon’s share of global energy supply has decreased by only a few percentage points. These realities are what likely motivated Bill Gates – who has given serious thought and significant capital to energy innovation -- to recently state that “there is no [energy] substitute for how the industrial economy runs today.”

Talk about misallocation of capital, due to low interest rates.

Gail Tverberg has said green simply cannot replace gasoline. It is not possible, from an economic standpoint.

The pendulum always swings, and it's not surprising that when it appears to have swung all the way to radical capitalism - of the 1%, by the 1%, for the 1% - a radical form of socialism that is way too invasive is proposed. 

Adults must come to the rescue to bring some common sense to the GND/MMT movement, because we need to save what we have left of our democracy.  The future is darker for us all if we don't. I have thought it was in the interest of capitalists to make sure the country as a whole prospers.