The current pandemic has certainly interrupted our lives and activities for the past year. But the pandemic has produced a fatalistic opportunity that is being overlooked. Our first round of stimulus may have been needed, but we will only know that through the lens of history. But there is clear evidence that more stimulus is not needed as our financial markets are awash with funds that cannot be used in any productive way.
Free college, food, healthcare, and infrastructure projects are all being advanced under a new financial concept known as “Modern Monetary Theory” (MMT). The Washington crowd in both parties realize that “free things” equal votes. Under the guise of “infrastructure” they are embarking on a spending path that is unsustainable. But MMT is a new catch phrase that most of us haven’t researched, and it leads to a set of long-term financial issues many are ignoring.
The basic premise is that our national debt does not matter and that so long as you have a fiat currency, the quantity of money in circulation is irrelevant. Driving behavior and mollification is the primary objective. Under MMT you can make anything free so long as you have a cycle of taxing the rich and redistributing the money in a way that makes most people feel good.
If this sounds a little familiar it should, it is socialism with a nice slick wrapper on it. The liberals know that the term socialism is like the third rail on a track that will electrocute you, so they have now relabeled socialism as MMT.
As Margret Thatcher once said: “There is no such thing as ‘safe’ socialism. If it’s safe, it’s not socialism. And if it’s socialism, it’s not safe. The signposts of socialism point downhill to less freedom, less prosperity, downhill to more muddle, more failure. If we follow them to their destination, they will lead this nation into bankruptcy.”
She was correct then, and it is correct now. Most politicians lack an understanding of finance and markets, so they are easily led to support vote getting proposals that garner votes.
