Why the Modern Monetary Theory Will Lead to Your Destruction

2020-12-08 09:23:31 - United States, New York, New York - (PR Distribution™)

The left side swears by the Modern Monetary Theory. It’s this far fetched idea that debt is unnecessary, and the government can never run out of money because they are the ones who create the money. But essentially this theory leads to false promise, one that offers short-term political benefits at the expense of hard to foresee economic costs. There are a ton of holes in the theory. For instance, the leftists believe that loans by banks themselves create money in accordance with market demands for money, meaning there isn’t a firm trade-off between loaning to governments and loaning to businesses of a kind that forces interest rates to rise when governments borrow too much. However, the way the loan system is set up, loans are often granted to the people who don’t really need the money but are wisely holding on to their own. The people who need the money the most, often won’t qualify for loans and have a more difficult time getting approved. Thus, loans aren’t necessarily the best way to measure market demands for money and can cause huge inflation issues for the economy. 

Another major issue that this theory exposes is the idea of putting the financial burden back on the people. In the typical economic setup, if the government needs to pay off debt, they can reach out for a loan and use lower tax rates to pay the loan back over time. However, the Democrats firmly believe that the debt of America should fall on the shoulders of the American people, particularly attacking the wealthy. They live by the idea that spending ALWAYS has to be paid for by taxes, yet they don’t want to apply the extra taxes to the middle class. Instead of opting to make it the government burden to pay off debt, they are pushing to drastically increase taxes for the rich. If we are going by the Democrats own theory, the rich aren’t the ones creating the debt in the market by looking for loans, it would be the lower and middle classes searching for the extra money. Afterall, only people who NEED the loans are the ones who are accepting them...why should the burden be placed on individuals that have created their own wealth and don’t need a handout?

Oh and did I mention, the whole idea of taxes on anyone would be contrary to the Modern Monetary Theory. Why would the people need to pay taxes if the government can just create new money as it spends? There would never be government-generated debt, to begin with, if this was true. So why would taxes even be necessary? When MMT advocates were asked what the role of taxes is in their plan, their reasoning was that taxes are one tool governments can use to control inflation. They take money out of the economy, which keeps people from bidding up prices. Ahhh, yet another hole in the theory, they’re admitting that yes, their economic plan does in fact cause hyperinflation. And their solution is to pick on the rich to pay for the problems that this plan will cause.

The ignorance of this plan stems from these leftist losers' lack of understanding of how the economy actually works. They are striving for some debt-free utopia, but in reality, debt is necessary for any economy. Economics Mitchell, Wray, and Watts all agree that in the long term, the only sustainable position is for the private domestic sector to be in surplus. As long as the US runs a current account deficit with other countries, that means the government budget has to be in deficit. Otherwise, you end up with issues like in 2001 when the recession hit as a result of the US fiscal surplus at that time forcing the private sector into deficit. 

At the end of the day, it has been proven and demonstrated that the economy works better when the government takes on the burden on America’s debt versus passing it off to the people and disguising it as a way to financial prosperity for the lower and middle classes. The fact of the matter is that the Democrats aren’t looking to empower people to create wealth and build happy, healthy, fulfilled lifestyles. Their goal is to keep the people from building wealth to create government reliance and thus have full control over you and your family. So it’s important that we educate ourselves and see the ignorance in their plans, otherwise, we are leaving ourselves susceptible to destruction. 

Ziad K. Abdelnour, Chairman, President & CEO of Blackhawk Partners Inc, is widely regarded as one of the world's top business leaders. In addition to being a best-selling author, he is also a founder and Chairman of the board of the Financial Policy Council

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