Modern Monetary Theory Meets the Great Reset

Peter Smith02 Jan, 2021 5 Min Read
Nowhere to go but up!

Between 1930 when his two-volume magnus opus A Treatise on Money was published and his preparation of what became The General Theory of Employment Interest and Money, published in 1936, John Maynard Keynes had a very bad idea. His very bad idea formed the core of this latter, and much more famous book. Simply put, Keynes’s bad idea was that spending drove an economy. This idea had been eruditely pilloried by John Stuart Mill in the nineteenth century and -- kaput! It was gone.

But, hold your horses, bad ideas are not so easy to be rid of when they appeal to specious reasoning.

After all, who doesn’t like spending money? Of course, we know that if we spend too much ourselves, we will get into terrible trouble and end up in Queer Street. But suppose it’s the government spending money and, to boot, giving some to us. And, at same time, so-called economic experts are explaining that this spending will cure unemployment. Now that’s a bad idea whose currency persists. I expect it to be around in perpetuity.

So dumb only an egghead could love it.

Human history is replete with bad ideas. Slavery, bloodletting, Operation Barbarossa to name just three of very many. If we are lucky only one or two bad ideas hold sway at any one time. We are not so lucky. I will canvass four contemporary bad ideas plaguing our lives; or, at least, the lives of those susceptible to reason. And show how they have coalesced to form one grandiose idea hatched in a remote part of Switzerland.

  • First, to make a bad idea worse, Keynesianism has morphed, through an academic ginger group, into Modern Monetary Theory (MMT). This is Keynesian economics without restraint, allied with an unworkable employment-buffer scheme which looks for all the world like socialism. It appeals to Alexandria Ocasio-Cortez. That might give you a clue.
  • Second, we have climate alarmism. That’s not the bad idea in itself. The bad idea is the wind and solar farms and electric cars which are being foisted on us to solve ‘the problem’. It is not just the awful despoilation of the environment and the expense. It’s that it won’t work. The planet will not cool, except in its own good time. Of course, the renewable energy crowd know that. But that is another story.
  • Third, we have Covid. Again, that is simply the germ of the bad idea, if you will forgive the pun. The bad idea is to lockdown healthy people to defeat a virus that only attacks unhealthy people. Hmm. There must be sense to that if you look hard enough? No, in fact, there isn’t.
  • Fourth, we have critical race theory, which so far as I can tell is racism in another guise. Though in this case it is justified on account of white privilege. Sell that, why dontcha, to the millions of disadvantaged white people in the world?

You may have noticed that I haven’t mentioned the promotion of abortion on demand, gender dysphoria and men in frocks playing sport against women, or iconoclasm, or national self-loathing, or trigger warnings and ‘hate-speech’ on university campuses. All of these, and more, are redolent of contemporary bad ideas too. But one runs out of puff covering them all. In any event, it is the four I’ve canvassed which lead to Switzerland.

Follow the logic below. It is a stretch. But since when has that been an unjumpable hurdle for the leftist mindset.

Green New Deals whether of the AOC variety or of the slightly watered-down Biden/Sanders variety or even of the Boris Johnson variety are, shall we say, on the expensive side. Lots of things to be done and so little time with the planet we know and love on the brink of extinction:

  1. Undermining reliable sources of energy (to wit, coal, oil and gas) while subsidising unreliable sources of energy (to wit, wind and solar).
  2. Chasing internal combustion engines off the road while building a whole new infrastructure to power electric cars.
  3. Refitting many thousands of buildings to increase their energy efficiency.
  4. And, lest we forget, somehow reducing the belching proclivity of farm animals; or, alternatively, mandating mass switching to veganism.

None of this will come cheap. This is where MMT comes to the rescue; whether it is called that or not. Required, à la MMT, is a carefree approach to government spending and borrowing; all underwritten by central banks keeping their money-printing presses (figuratively speaking) at the ready.

MMT -- it's fun and better yet, it's free!

And, in case you don’t see the next connection, lockdowns have already provided a trial run. Governments have borrowed and spent big to keep the ship of state afloat after crippling their economies and throwing millions out of work. Financial restraint has been defenestrated. It will be a much more sellable proposition than it ever would have been to spend and borrow still more to underpin economies (MMT / Keynesian-style) and, at the same time, save the planet. And that isn’t all.

The emergence from lockdowns to a greener future provides yet another opportunity. And this is to lift those whose underprivilege has cruelly held them back. To be fair, innately overprivileged though they are, poor white guys and gals are not specifically excluded.

If you haven’t already guessed, the coalescence of four bad ideas have ineluctably led me to The Great Reset – and to its goal of producing a greener, more inclusive, more equitable world. This latest manifestation of the utopian-pipedream genre was unveiled in May 2020 by the World Economic Forum, which is made up of rich people and notables, passionate about saving the planet from fossil fuels, who fly into Davos Switzerland from their mansions or yachts each year in their private jets. You sense they know that they could run things much better than the hoi polloi ever could.

Prince Charles together with Klaus Schwab, the chair of WEF, presided over the great unveiling of The Great Reset:

There are reasons to believe that a better economic system is possible—and that it could be just around the corner. As the initial shock of the COVID crisis receded, we saw a glimpse of what is possible, when stakeholders act for the public good and the well-being of all, instead of just a few... Rather than chasing short-term profits or narrow self-interest, companies could pursue the well-being of all people and the entire planet. This does not require a 180-degree turn: corporations don’t have to stop pursuing profits for their shareholders. They only need to shift to a longer-term perspective on their organization and its mission, looking beyond the next quarter or fiscal year to the next decade and generation.

Building such a virtuous economic system is not a utopian ideal.

Can a cacophony of four bad ideas produce a harmonious good idea? Maybe for those living in the Davos bubble. Not for those living in struggle street; white, black or brown.

After a career in economics, banking and payment-systems management, Peter Smith now blogs on the topics of the day. He writes for Quadrant, Australia’s leading conservative online site and magazine. He has written Bad Economics, of which, he notes, there is much.

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2 comments on “Modern Monetary Theory Meets the Great Reset”

  1. An awfully written argument, apples and oranges: connecting Keynesianism with AOC who does not pretend to be a follower or have the perspicacity to lump together two disparate domains, social doctrines of the late 19th century - workers rights, labour unions, contracts etc., with par excellence globalism of the liberal economy. Green Deal may look appealing or harkening to the FDR’s Deal, but very few things are in common. Likewise, his austerity appetite is false since Trumpism and Republicanism today is anything that Milton Friedman - his ideologue, would agree or condone except in the case of police and military spending which is by any standard, at the moment, not bad but insane idea. Where was the author to comment 200 billion increase in military spending not long ago? Was it not a bad idea to bail out second time (after Bush and Obama) realestate companies which artificially ratchet up properties values. Or perhaps insane bailout of the cruise companies and airline industry. Where was his sense of fiscal responsibility then? Even now this bailout package is the pile of lies and fieces aiming at propping companies owned by the political lobbyist, 2-4 % of the population. What a bullshit article. Who is paying for this - Bloomberg, Wall Street. Hey they were in the package too 🤪😳

  2. Haven't you heard? Socio cultural priorities succeed economic considerations in the new administration. Only approved tech and political thought is allowed or you will be censored, doxed, fired, fined or jailed. Any assumption that monetary policy is for the good of the economy is no longer true. As with socialism, Democrat MMT primary purpose is to maintain privilege for ultra wealthy constituents - politicians/wallstreet/tech and to maintain a dependent underclass to lock in sufficient vote buying every 2 years.

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