Modern Monetary Nonsense (“Theory”)
If you’ve talked to the average modern monetary theorist, at least laymen, you will quickly see that they constantly say things that are technically true but effectively false. For example, I constantly hear that a country with its own currency can’t default on its debt. While that may technically be true, it’s effectively false. In other words, the conventional wisdom is that there will be negative consequences for a country if they ignore their debt. I don’t know if academics are actually making such silly points as, “Have your own currency? No problem”.
I also see other silly things said, at least under the guise of being MMT. For example, I’ve seen people say that we don’t need to worry one iota about the national debt. That seems like a bold claim, so you would expect some serious justification. Instead, said person commonly says something along the lines of “Well Government debt isn’t like household debt.” Who said it isn’t? That’s just question-begging. Who said there’s no consequences? Why couldn’t other countries lose confidence in our dollar?
I’ve also encountered a person who claimed he was an MMT and said that the Federal Reserve can just erase our national debt overnight. I don’t know if that’s actually what MMT teaches, but even if it were, it’s wrong. At least, it’s wrong if you think there wouldn’t be consequences. Again, we are getting into, “Yeah, bro, that technically true, but it’s effectively false.” At the very least, one needs to offer evidence for such claims.
Again, I want to make a distinction between laymen and academics (and make a distinction between what MMT actually is vs. what people claim MMT is). I want to be charitable and assume academics aren’t making such silly points in defending modern monetary theory.
