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August 15, 2019 | MMT (modern monetary theory) Misunderstood IMO!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian: http://kingdomecon.wordpress.com.

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Today’s article in the Wall Street Journal entitled “Modern Monetary Theory Is Ancient” by Jason De Sena Trennart reviews the theory as follows:

1. The government of the USA has a monopoly power over the dollar. Recognize this favorable factor.
2. Governments do not need to tax and then borrow. Governments should spend first to guarantee full employment.
3. Greater government spending produces greater prosperity. The Central Bank can cover any deficits (indefinitely).
4. Forget interest rates as the tool to control inflation. Tax the people and corporations if inflation occurs.
5. Peace and prosperity are the natural order of things. Forget budget deficits as a problem for U.S. economy.

Basically, MMT recognizes that our Central Bank can now create the dollar via typing numbers into the computer accounts of our Treasury. There is no limit to this process as the U.S. dollar is the reserve currency of the world. Our treasury can issue bonds indefinitely and borrow to fund spending. There is no issue with deficits or debt as the Central Bank can cover the deficits (indefinitely).

If inflation occurs, then the Congress can tax the people and corporations to reduce spending within the general economy. The Fed does not need to monitor interest rates as a tool to control inflation. Today, there is no inflation that is a problem. This means the Fed can allow borrowing to grow indefinitely to create consumer prosperity now.

MMT recognizes the reality of our digital monetary system. It recognizes that our Central Bank (the Fed) can multiply dollar denominations (indefinitely) by merely typing more dollar numbers into the check book of government accounts. If spending produces inflation then the government (Congress) can tax the people and corporations to reduce inflation. Today, inflation is not the problem!

There is no need to increase interest rates to monitor/control inflation. Inflation is not a problem now and if it does become a problem the proper tool is to tax the people (at that time). Prosperity can emerge with more dollar spending by government and the consumer. The politicians do not think that our problem is deficits and debt. This is a problem for countries that do not have a reserve currency role.

The U.S. dollar is the reserve currency of the world and this means the USA can continue spending (via this dollar) indefinitely without any serious consequences. If INFLATION emerges then the government can tax the people and the corporations to reduce this problem. Currently, inflation is NOT a problem for America. This is the mindset of MMT proponents (so it seems). This means spending can grow for now.

Is any of this thinking VALID? I would suggest that it is valid until our economy crashes. Spending is a function of multiplying the dollar for consumers and businesses until the entire system collapses. As of today, the system has not collapsed. Our dollar is strong and it serves as the RESERVE currency of the world. This means that America can continue to spend and borrow UNTIL the current system implodes.

Is implosion coming? Absolutely! The entire digital/virtual monetary system is a HOUSE of CARDS. Our enemies (Russia, China, Iran, etc.) will recognize the advantage which America has within economics. They will eventually desire equal benefits (spending and borrowing). But they can not do anything to change their victimhood as of today. They are all enslaved to the America hegemony over this planet.

So MMT could work for a few more days, weeks, months, years. The dollar can be multiplied by our Fed merely by typing more numbers into our government accounts. Spending can occur and politicians can promote Medicare for Everyone, Education for Everyone, a Universal Basic Income for Everyone. It’s all possible UNTIL the system IMPLODES! Our dollar is KING as of today!

Think on this situation to comprehend what our politicians are saying and doing. It’s understandable given the favorable situation given to America within economics. Eventually, all this will return to a mean. Then America will discover that their dollar is a figment of their imagination. It’s a unit of nothing living within nothing (our consciousness). Until then continue to borrow and spend and enjoy your prosperity.

I am: https://kingdomecon.wordpress.com.

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August 15th, 2019

Posted In: Kingdom Economics

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