July 12, 2021
Maybe you’ve heard of modern monetary theory. Basically, it argues that developed nations with their own sovereign currencies should be able to print as much money as they want, and federal deficits, however large, should not matter.
In other words, if you have your own currency, you can print as much fiat money as you wish. To me, it sounds wishy washy and reckless. But there’s comfort in knowing it’s not the primary policy paradigm.
Or is it?
In fiscal year 2020, the government ran the largest budget deficit in our nation’s history at $3.2 trillion. And even if the pandemic is winding down, deficits are projected to be more than $1 trillion a year for the next decade.
To his credit, President Biden doesn’t play a game of “make believe” that somehow in future years we will have a balanced budget. He just basically is forecasting multiple trillions of dollars of national debt, presumably as if there are no limits or potential fiscal cliffs.
Let’s remember, back in 2009 President Obama took over and the national debt was $10 trillion. When he left office eight years later, it stood at $19.4 trillion.
President Trump spent like a drunken sailor as well in his one term. By the end of fiscal year 2020, the debt was at $27 trillion (now it’s $28.5 trillion).
The bottom line is we added $18 trillion to our national debt in the last 11 years.
So how is this not modern monetary theory in action?