The more the plan spills over to broad adoption of MMT, the more it destroys the dollar
Michael Edesess 20, adjunct associate professor in the Division of Environment and Sustainability at The Hong Kong University of Science and Technology and a research associate of the EDHEC-Risk Institute, 6/29/20, “Modern Monetary Muddle,” https://www.advisorperspectives.com/articles/2020/06/29/modern-monetary-muddle
One of Kelton’s main proposals is to take the task of balancing inflation against resource exploitation (i.e. employment) away from the Fed and give it to Congress. Congress would decide whether there is slack in the economy. It would decide whether to make use of that slack by spending more, without regard for whether that spending is “covered” by taxes. If there were no slack at all and the economy was tightly wound, then Congress would decide whether to mop up the excess dollars by raising taxes. It would do this, of course, by drawing on expert advice, for example from the Congressional Budget Office. But that advice would not be couched in terms of balancing the budget, but in terms of determining the extent to which national resources were fully utilized and inflation was emergent.
The critics are freaked out by two things.
In her book, Kelton devotes a lot of pages to waxing optimistic about all the things we could do once we realize that the spending doesn’t have to be paid for by additional taxes. This raises fears that those who embrace MMT will, in fact, go on a spending bender, exceeding the available resources and causing inflation – just as in Summers’s developing countries like Argentina, Brazil, and Zimbabwe.