MMT, Modern Monetary Theorists (MMTers) contend correctly that their critics have not yet come to terms with the end of the gold standard in 1971. Since then there has been no requirement for a country like the U.S to back its currency with gold and there is no need for concern about debts they can print money to pay.
MMTers have included several well known economists going back as far as Abba Lerner who commented in the 1940s that “Government should spend whatever is required to meet its goals Deficits be damned.”
Recently support for MMT by prominent economists has been overwhelming with a notable exception being the influential former chief economics advisor to the I.M.F. Harvard Professor Kenneth Rogoff who branded Modern Monetary Theory Monetary Nonsense.
The U.S. Government has now indicated it will borrow a record breaking $2 trillion to help businesses and workers get through the Corona Virus induced recession and, according to the NY Times, “some of the country’s most ardent deficit hawks have watched the debt pile up and are asking lawmakers to spend more.
Even Professor Rogoff now says “Any sensible policy is going to have us racking up the deficit for a long time. If we go up another $10 trillion, I wouldn’t even blink at that now.”
The message from MMTer Stephanie Kelton, Stoney Brook University Professor, author and economics adviser to Vermont Senator Bernie Sanders 2016 campaign has been “First they ignore you, then they laugh at you, then they fight you, then you win.” After Professor Rogoff’s Volte Face we can expect comment on US debt accumulation will be be Print Baby Print .
No surprise then that I am being asked again “Should we own gold.” The answer of course depends on your motivation for wanting to own gold, if gold is reasonably priced, your strategy for managing the investment and of course the outcome of the December 2020 U.S Presidential election
The recently published book “The Deficit Myth” by Stephanie Kelton is a must read