The Fed Has Given MMT Proponents Ample Ammunition
The idea that the government can print money to spark the economy is not that much different than quantitative easing – with one big exception.
Modern Monetary Theory is a poorly conceived idea that might get its day in the sun. Thank – or blame - the Federal Reserve and its “extraordinary measures” monetary policy for laying the groundwork.
MMT can trace it origins back over 100 years, but it has gained renewed popularity in recent months as thanks to freshman Democratic Congresswoman Alexandria Ocasio-Cortez and economist Stephanie Kelton. In a nutshell, MMT is anchored on the belief that budget deficits don’t really matter. In other words, if a government or central bank is borrowing money in its own fiat currency, meaning a currency backed by nothing but the government’s good word, then it can “print” any amount necessary to cover its debts. As such, a government should create money to fund increased spending.