Modern Monetary Theory (MMT), or Chartilism, is not as innocuous as it sounds, and America can trace her every current financial woe to it. Developed in the 1920s, and approved of by John Maynard Keynes, it became the hidden standard of our economy when we moved completely to a fiat money system and away from one backed by a commodity. In the simplest terms, MMT is a system in which the wealth creation of a nation is measured by government deficit spending rather than the goods or services sold for profit among its citizens. The only way this type of system is sustainable, is if the government taxes its citizenry to recover the already spent money. Proponents for this system argue that it is preferred because it allows for government deficit spending for (get this) fiscal stimulus in ways not possible under a commodity based monetary system.
For six months last year the Federal Reserve printed money to fund the already passed stimulus plan to the tune of $300 Billion. Additionally, they “bought” mortgage backed securities from the already bankrupt mortgage twins Fannie and Freddie. The Central Bank joined in the fun of buying both, and recently aquired debt by both in US Treasuries and Fannie & Freddie’s paper this past year is a whopping $1.25 TRILLION.
While MMT has been in practice since long before the US abandoned the Gold Standard, it has recently been purposely employed as the current Administration’s fiscal policy. Is it any wonder there has been no budget passed? The real question everyone should be asking is: “How much of my money have they already spent?”
The answer to that is one that most middle class Americans cannot afford to hear. The U.S. National Debt Clock puts each taxpayer’s share at more than twice the median annual income. Without an existing budget, and using MMT as a fiscal policy, Obama’s administration could spend the American taxpayer into several generations with no means of being held accountable. With MMT, the largest missing component IS accountability. Those spending the money are counting on you paying it, no matter how high the bill and no matter how long they continue to spend.
It is unthinkable for most middle class Americans that their taxes will increase significantly, but that is exactly what has happened, and will continue to happen. With the passage of program after program aimed at fiscal stimulus, the Patient Protection and Affordable Care Act, Financial Reform, the inflation of food prices and the looming cap and trade legislation, taxes will continue to rise to the point of your average family no longer being able to sustain their current existence. The continued cost of providing for the unemployed and the continued decline of all sectors of the housing market are affecting one in every five Americans. The hole that MMT has dug is a deep dark one, and we are still shoveling away with false hope of finding light on the other side, as long as we keep digging.
Most Americans today have no savings, are unable to put their children through college and couldn’t get a loan for a new home even if the money were still rolling in. The strangling of the US economy, the tightening of regulations on businesses small and large, and the general lack of consumer credibility, have ground national and individual prosperity to a halt. Each new piece of burdensome legislation passed by this Administration adds to a bill that the middle class will ultimately be paying for: or facing bankruptcy on a scale so massive as to collapse the economy completely.
The decline in home starts and record low existing housing sales , unemployment, consumer borrowing lows, and general unrest about the economy are leading to an inevitable Depression era for which there are no currently viable solutions to emerge from. For us taxpayers that means Obama’s probable issuance of a second massive “emergency Stimulus package” and an even dimmer fiscal future for personal prosperity. Make no mistake, there are clear causes of the current credit crunch and nonexistent savings accounts in Middle Class America, and we elected them to office.