MMT is in Full Effect
Just one year ago the concept of Modern Monetary Theory was a laughable joke only serious to the extreme left-wing of congress.
Today it was given the go-ahead by a bi-partisan vote in the House. The first real vote on a MMT bill, a fringe economic idea that money can be printed unlimited, passed when it was voted to increase the second round of stimulus checks from $600 to $2,000. While stimulus checks have been issues before, arguably this arbitrary increase represents a pivotal shift where money becomes just a number on paper. There was no debate on the merit of these payments. Just that the pork in the omnibus spending package far outweighed the measly $600 going out to Americans. Don’t mention that unemployment benefits were extended to patch that problem. Don’t mention that Americans are saving more money than ever before because they have nowhere to spend it. Don’t mention that mortgage and rent forbearance was addressed in the bill. The only thing that wasn’t verboten was that Americans needed more cash and it was the solution to all our problems.
The debate about whether $2000 or $600 to Americans as compensation for dealing with the government’s lock downs is worthy to have. However, borrowing money today from the people only to have them pay it back at a later date is the sort of thinking MMT’ers never consider. Record low interest rates have, at face, made it seem like that transaction is cost-less or even beneficial! But inflation will eventually spoil the party. It has happened throughout history time and time again. With all the money printing MMT is advocating prices are sure to rise.
Follow this exercise. Americans may pay back their $2000 stimulus somewhere down the line and inflation may make that seem like a little amount when that happens.
Say $2000 represents your average monthly expenses in 2020, in 2030 your average expenses are $4000. In 2020 you get a stimulus check that represents all or 100% of your monthly expenses but in 2030 you also pay back $2000, now what represents only 50% of your expenses, 50% of that $2000 today again is $1000. How I want you to think about how much you have to pay back today.
Inflation doesn’t just impact your loans you have to pay off, other prices increasing are increasing as well. Think about it this way. You received a $2000 stimulus check and pay it back in 10 years. When you pay that back it “feels” like giving back $1000 because, like your $2 buys what used to be on McDonald’s Dollar Menu, prices rise. That is because over that 10 years inflation increased by an average of 7.2% each year. What you gain on what you have to pay back, you lose on everything you buy. What if your rent inflated by 7.2% a year? Now, your monthly rent at $1000/month increases by 7.2% a year until 10 years from now you are paying $2000. In just 25 months, after a year of $1000/month rent, a year of $1072/month rent, and a month of $1142 rent, all your “inflated away” savings of your $2000 stimulus check, that $1000 dollars, is gone. And you have 95 more month of inflating rent prices! Inflation is the next big financial crisis and we are going to hate ourselves for this excess money printing very soon.
COVID lockdowns have been tough but Americans don’t need bribes that are only going to create another crisis down the road. The only solution to the locked-down economy is to unlock it, open it up, and let Americans go back to living.
Main St. Economics 
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