{"id":3117,"date":"2019-04-01T14:10:15","date_gmt":"2019-04-01T19:10:15","guid":{"rendered":"https:\/\/www.rixtrema.com\/blog\/?p=3117"},"modified":"2019-04-01T14:27:17","modified_gmt":"2019-04-01T19:27:17","slug":"everyone-wants-helicopter-money-dont-you-part-ii-of-mad-cats-free-dollars-policy-fat-cats","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/everyone-wants-helicopter-money-dont-you-part-ii-of-mad-cats-free-dollars-policy-fat-cats\/","title":{"rendered":"Everyone wants helicopter money. Don’t you? (Part II of Mad Cats, Free Dollars & Policy Fat Cats)"},"content":{"rendered":"

\"\"<\/a><\/p>\n

We finished part 1 of Mad Cats, Free Dollars & Policy Fat Cats with this quote that shows the core ideological tenet of so called Modern Monetary Theory: \u201cMoney is an <\/span>infinite public reserve<\/b> that has been choked off at its source. Unlike money\u2019s private users, moreover, only government wields the capacity to furnish all persons with meaningful employment and sufficient access to the common store of wealth.\u201d<\/span><\/span><\/p>\n

This view is actually not a very modern view, but we will spare readers the history of this idea. Let\u2019s examine why this idea is entertained by the society at large right now. There are two reasons for that.<\/span><\/p>\n

Reason #1<\/span><\/strong><\/h3>\n

We already discussed in part of 1 of this article\u00a0<\/span>HERE<\/span><\/a><\/span>. Abstract logical play with definitions that makes it very hard to argue, since MMT sort of invents new marketing terms like \u201cNet Private Saving\u201d (again, more in part 1). We showed the absurdity of \u201cNet Private Saving\u201d in part 1. But if one accepts MMT\u2019s terminology, it is internally consistent and logical. Even the usually eloquent proponent of sound money James Rickards of the Daily Reckoning had to admit:<\/span><\/span><\/p>\n

\u201cWhen I first encountered these arguments, I knew they weren\u2019t right. Both my gut feeling and my more rigorous approach to my own theory of money told me MMT was wrong. But I must admit, their arguments were more difficult to answer than I expected. I had a tough time uncovering the logical flaws.<\/span><\/p>\n

Their points are internally consistent, and they did have a point. After all, the Fed did create all that money and it didn\u2019t produce a calamity. Who\u2019s to say they couldn\u2019t do a lot more of it?\u201d<\/span><\/p>\n

James Rickards famously warned of dangers of hyperinflation in 2009 when Fed started QE and he turnout to be wrong. I myself have forecast inflation in 2010 as a result of Fed\u2019s policies and was criticized, because it did not happen, as I predicted.<\/span><\/p>\n

Reason #2<\/span><\/strong><\/h3>\n

And this leads to Reason #2 that MMT is gaining traction. It is the supposed success of Fed\u2019s QE policies. Federal Reserve created trillions of dollars to \u2018fight the crisis\u2019. Inflation did not happen. So why couldn\u2019t we create trillions more to give everyone some money? People\u2019s QE!<\/span><\/p>\n

And herein lies a paradox. Federal Reserve represented by Jerome Powell may argue against MMT, but he has no leg to stand on. Was it not Ben Bernanke who famously outlined a thought experiment of \u2018helicopter money\u2019 and in fact implemented it? And MMT is nothing if not helicopter money at its core. So, MMT is really the creation of the Fed. If QE works, why wouldn\u2019t MMT work? QE is for the rich and MMT is for the people, right? Besides, QE created inequality and we need to fix that.<\/span><\/p>\n