The biggest fear and objection to MMT ideas of non debt based government spending is – inflation. Even Progressives such as Nat O’Connor of Tasc cite inflation as the reason why a ECB distribution of debt free money on a per capital basis should not be attempted no matter how attractive it appeared. When one asks why these words are intoned in a very serious voice ” the quantity theory of money’. To non-economists the words sound impressive but harmless. But belief in the power of this mantra is pervasive in the political classes and because it is believed it has power much like the witch doctors magic. This article by Maddog in Money and Public Purpose on the Daily Kos blog goes to the trouble to give us an antidote to the power of these words by explaining the even bigger juju formula it relies upon. He then explains the circular logic used by witchdoctors, oops, I mean neoliberal economist to make the formula deliver the outcome he wants. Maddog concludes thus..
“I’ve tried to show in the most logical way I am capable, of why we shouldn’t fear increasing the amount of money at times like this. Now that you’ve seen the basis for the “Quantity Theory of Money” and the assumptions that it relies on, I hope you see that it is bullshit. While it may be “technically” true when its assumptions are true, the assumptions it relies on are rarely, if ever, true. I hope you can also use this knowledge to explain to your right-wing and (more importantly) not-so-right-wing friends why they don’t have to feel uneasy about budget deficits. That way you can pivot back to talking about unemployment. This is the sort of thing that Obama and congressional Democrats should be doing, but since they aren’t, it’s up to us and other grassroots activists to do so. (link to full article)
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