MMT = The Great Society 2.0
The 1960s saw great social upheaval in the US as we know - some of it led to very important advancements in social justice, such as the Civil rights Act (LBJ is signing that landmark legislation in the photo above). So I’m a huge believer in social justice. I believe in helping those in need to get a leg up and get them on the path to economic stability and success. I give a good amount to charity and believe there should be programs to help those systemically being left behind, to have a chance.
Before I lose you on this, hear me out.
I am also a HUGE believer in the value of hard work and that hustling and busting your ass day in and day out should get you somewhere. It’s that some people need guidance and mentoring on how to do work smart alongside working hard in addition to needing financial help (more on that later).
We all know that there’s no free lunch - Milton told us as much.
Here’s another (less well-known) one from Milton:
“There’s nothing that does so much harm as good intentions.”
Modern Monetary Theory (MMT) is the idea of giving money to people so spend as they need without requiring anything in return. Period. Whenever I hear people talk about the virtues of MMT and how socialism isn’t a bad thing, I think of one question. “Can you live without your iPhone (or any other smartphone)?” Their immediate reaction is, “What does that have to do with what we’re talking about?”
That’s my opening to launch into my tirade about the virtues of capitalism (true capitalism – not the phony, crony capitalism shit we have now). Do you know how you’re beloved phone, where you pretty much conduct you entire life, including railing against capitalism, came about? It came about because of the confluence of ideas, innovation, technological advancement, capital funding and entrepreneurship. That can be possible in a repetitive manner, so it’s not a fluke, in capitalistic society more so than any other system.
But I digress.
MMT is nothing more than what has been attempted before and failed. It can lead to deficits, which don’t have a productive outcome unlike infrastructure building could provide. Those deficits lead to all the bad outcomes that we associate with the late Sixties and the Seventies, stagflation, crime, social unrest. We can’t print or borrow our way to prosperity.
I think the pendulum has already started to move in that direction. And that it’s only a matter of time before we see more economic morass, greater budget deficits, stagflation, higher lending standards, higher mortgage rates, lower property prices. Some of you may remember how undesirable the Village was in New York in the 1970s. We might end up getting back to that era in some parts of the country – and THAT will be the buying opportunity of a lifetime. Till then I’m focusing on real assets that can’t be printed en mass or lose their value through dropping demand because it becomes hard to borrow (think urban real estate).
“All this has happened before, and all this will happen again.”
What about the helping the needy part? I’m not political and this not intended to be a political blog. So all I will say is this. I agree with Eurasia Group’s Ian Bremmer. Instead of given people free money in their pockets through MMT, use the money to pay for universal education and healthcare. That will take care of very important basic needs and allow people to focus on pursuing economic freedom.
People aren’t inherently lazy, they’re just creatures of incentives. Find the right incentives to make more of us productive.
