The Communists influencing Bernie Sanders and previously Biden

In a sane world, none of us should have to care about the views of Stephanie Kelton, prominent advocate of the economic delusion known as Modern Monetary Theory. But in a sane world, Sen. Bernie Sanders (I-VT) would have never appointed Kelton as chief economist when the left-wing extremist chaired the Senate Budget Committee. And President Joe Biden, as Democratic nominee in 2020, never would have admitted her to his campaign’s economic task force in May of that year.

So when Kelton and her coterie of socialists put out an hour-35-minute documentary detailing their defense of MMT, your resident economics columnist watched Finding the Money so you don’t have to.

MMT operates off the axiom that a government responsible for minting its own currency can always print more when necessary. Finding the Money spends extensive time claiming that money didn’t result as a medium of exchange or record of debt more efficient than direct bartering between individuals (in classical economics, the basic definition of a market). Rather, in the MMT worldview, money is a creation of government. And crucially because government is solely responsible for making money, it is also the rightful owner of money.

In practice, MMT is a word game for progressives to justify driving up exponential debt growth.

“You could take the National Debt Clock that scares everyone and just rename it the ‘U.S. Dollar Savings Clock’ and I think everyone would have a very different kind of reaction,” Kelton said in the film. “And so I think 95% of the problems that we have getting better policy is probably down to the words we use to describe what’s actually happening.”

Convenient, isn’t it? In Kelton’s telling, our $32 trillion in national debt does not consist of “real resources” owed, such as net interest payments to foreign bondholders or Social Security checks or military aid to Ukraine. Instead, “their deficit” is private sector “surplus” because only the government is capable of creating real wealth, according to MMT.

The “documentary,” if we can call it that, mocks mainstream Keynesians like Jason Furman, chairman of the White House Council of Economic Advisers for much of former President Barack Obama‘s second term. The film chides Furman for pointing out that public spending indeed crowds out private investments and that increased government deficits push the interest rates on Treasuries higher.

“How can he say that?” Kelton says in disbelief. “How can he say that knowing what we have been doing for decades?”

Beyond centuries of empirical economics, we can simply point to the past five years, as the annual deficit skyrocketed from fewer than $1 trillion to multiple consecutive years of $2 trillion or higher, and the corresponding and sustained surge of both long-term and short-term Treasury yields.

The doc only mentions MMT’s real-world test, the worst inflationary crisis in 40 years, under Biden, with 17 minutes to spare. That’s when Kelton gives the game away, saying, “You can actually spend money and reduce inflationary pressures.”

One of Kelton’s fellow travelers, Fadhel Kaboub, president of the Global Institute for Sustainable Prosperity, adds, “If [inflation is] coming from a shortage from the energy sector, we can reduce our consumption of oil with policies to conserve, drive less, fly less, no fees for public transit, work from home, shorter work weeks, and we can also increase the capacity of that sector to relieve some of the pressure and bottlenecks.”

Though MMT argues that the money itself isn’t a constraint, what about those “real resources”? What if, as now, an economy is operating at full employment?

“Then the resources have to be freed up or created,” Kelton said, graduating from mere socialism to a flirtation with full-on communism. “How do you do that? I think of Medicare for All as a huge opportunity in this respect. We have the biggest, most expensive healthcare system in the entire world, roughly 18% of U.S. GDP. If we were to transition to a leaner, more efficient form of healthcare delivery, it’s going save us a lot of resources.”

Kelton adds, “Eliminating the middle man. Defense, military-industrial complex! And we have this behemoth of a finance sector.”

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Rather than an ideology with political conclusions that follow, MMT is better understood as a progressive wish list reverse-engineered to explain away and distort economic realities into an incoherent framework. The goal is not even to justify the passage of the Green New Deal, the shared policy aim of all MMT adherents, but rather to collectivize all means of production.

Kelton and company do not care that when put to the real test of the past three years of multitrillion-dollar deficits, inflation has not constrained the deficit, and the Federal Reserve has proven unable to constrain inflation unilaterally. Rather, they care about making the case you that the government is responsible for creating your own prosperity and earnings, and in turn, it is the government that should own the means of production in a way that would make Karl Marx proud.