MMT is an alt right Reaganite concoction that preserves capitalism and splits anti-cap movements

MMT has become a cause célèbre in recent years for insisting that government spending is not constrained by a budget, in the traditional sense. Cutting against mainstream economic thinking, which sees excessive government deficits and rising debt as an inflationary danger, MMT argues that a government issuing, borrowing, and collecting taxes in its own currency can spend as much money as it wants, so long as it is a fiat currency not tied to a commodity like gold, nor pegged to another foreign currency in a fixed exchange ratio. Governments fundamentally differ from individuals in this way. As a taxpayer, your spending is constrained by the amount of currency in your bank account; for the government that issues that currency, however, no such limit exists, because unlike you it can essentially create money out of thin air, and then get others—like you — to use it. Such a monetary sovereign can, and therefore should, create and spend as much as it needs to secure full employment and mobilize all available resources in its economy, regardless of deficits and limited only by the need to keep inflation under control. Or, in the words of the economist and MMT forefather Abba P. Lerner, finance should be “functional,” evaluated by its results on the economy, rather than "sound," shackled by arbitrary, self-imposed budget limits.3 “Countries with monetary sovereignty, then, don't have to manage their budgets as a household would," says Stephanie Kelton, one of MMT's leading economists. “They can use their currency-issuing capacity to pursue policies aimed at maintaining a full employment economy.”4 If the British aristocrat Keynes was writing at the twilight of the British Empire, now the MMT movement emerges in the darkening glow of another senescent, slowly dying superpower, offering similar remedies to stay the terminal decline of American capitalism.

Kelton herself was the chief economic advisor for the Bernie Sanders campaigns in both 2016 and 2020. For her, a greatly expanded role for government spending and a federal jobs guarantee would yield a “people’s economy,” in which “private enterprise and public investment all combine to raise living standards for everyone.”5 Some take it even further. In a book called Reclaiming the State, William Mitchell and Thomas Fazi enlist MMT as a central pillar in a campaign to rescue the nation state as part of a “progressive vision of sovereignty.” This entails nothing less than a “drastic expansion of the state’s role—and an equally drastic downsizing of the private sector’s role—in the investment, production, and distribution system,” even “a broad renationalisation of key sectors of the economy and a new and updated notion of planning.”6

These supposedly leftwing applications of MMT sit awkwardly next to the theory's enthusiastic reception by a fun assortment of libertarians, plutocrats, war criminals, and corporate-nationalist reactionaries. The hedge fund manager Warren Mosler, its principal founding figure, conceived his foundational text “Soft Currency Economics” “after spending an hour in the steam room with [Donald] Rumsfeld at the Racquet Club in Chicago.”7 Rumsfeld helpfully referred Mosler to the famous huckster of Reaganite trickle-down economics, Arthur Laffer, who then directed him to his future collaborator, the wealthy financier Mark McNary. Unsurprisingly, given this provenance, Mosler has also been received enthusiastically by Tea Party Republicans.8 John Carney, a Trumpist economics columnist at Breitbart, enthusiastically endorses MMT, even suggesting that “the idea for a job guarantee is ‘very close to what Make America Great is. We don’t want welfare, we don’t want handouts, we want good jobs for the American people.’”9 He predicts more support on the right for MMT once people begin to realize it justifies more tax cuts. The Republican Senator Marco Rubio approvingly cites the prominent MMT economist L. Randall Wray in his corporate nationalist manifesto, “American Investment in the 21st Century.”10 And Donald Trump himself is on record as having seen the light, telling a former chief economic advisor that we should “just run the presses—print money.”11

The weird cast of characters coalescing around and in the background of MMT reflects how the theory rests on a basis of incontrovertible fact that anyone can see. Trump, for instance, has probably never heard of the theory, but he knows very well that the US Federal Reserve can simply buy bonds indefinitely as a way to directly juice the stock market—which it has indeed been doing almost continuously since 2008. Moreover, it can apparently do so without the slightest hint of inflation. This flies in the face of the budgetary dogmas of neoclassical economists and “deficit hawk” politicians, who axiomatically believe that deficit spending by governments will accelerate inflation by devaluing the currency and driving up prices.12 Yet for over a decade now the balance sheet of the Federal Reserve has steadily expanded, through all of its various monetary stimulus programs, by seven trillion dollars and counting.13 In response to the COVID-19 pandemic in early 2020, the Fed intervened in global credit markets with an unprecedented commitment, if necessary, to flood the markets with a deluge of dollars over three times as large, some $23.5 trillion.14 In the orthodox view, a monetary supernova of this scale should have vaporized the value of the currency, burning it away through hyperinflation, but in fact the dollar has actually appreciated. In effect, MMT provides a formal theory for the current, de facto state policy of unlimited monetary expansion, as the central banks continue to flood private banks and corporations with tidal waves of free money, like some gigantic iron lung pumping oxygen into the comatose body of a braindead patient., preserving the structures of capitalism. 15