Modern Monetary Theory (MMT) Is a Reasonable Argument for a Terrible Idea

If we want to combat this pernicious idea, we need to separate the reasonable arguments from the utopian dreaming

Is it time for governments to take control of the money printers?

When you speak to proponents of Modern Monetary Theory (MMT) they begin with the usual proselytizing. We need to unshackle governments and central banks from a century or more of archaic thinking. It’s time to bust up the lazy consensus of an academic elite. We need to be free to explore exciting new policy options we were previously told were too exorbitant or a risk to our sovereign rating.

Then the conversation turns to the more prosaic issues of inflation and deficits. Here the MMTer changes tack. MMT really centers on some cold hard facts about how the monetary system works in practice. Of course governments cannot simply spend as much as they want regardless of the economic environment: politicians are still subject to economic laws. We needn’t abandon all fiscal norms and political safeguards, simply make some common-sense changes that acknowledge the reality of the global fiat currency system.

The latter form of the argument, while certainly more reasonable, is not the one that excites a general audience. MMT has a large number of hangers-on, and these tend not to be pure…