E Is The Fusion Of MMT And The Green New Deal Creating A Cult?

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. 
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Disclosure: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment ...

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Gary Anderson 1 year ago Author's comment

Update: Ocasio-Cortez just said capitalism is irredeemable. The Democrats must end support for her if they want to continue as a party that can be taken seriously going forward. MMT economists including Kelton should run like hell from this congresswoman.