{"id":302852,"date":"2021-07-19T22:20:00","date_gmt":"2021-07-19T19:20:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/outside-the-box-money-printing-is-a-flawed-experiment-thats-done-america-more-harm-than-good\/"},"modified":"2021-07-19T22:20:00","modified_gmt":"2021-07-19T19:20:00","slug":"outside-the-box-money-printing-is-a-flawed-experiment-thats-done-america-more-harm-than-good","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/outside-the-box-money-printing-is-a-flawed-experiment-thats-done-america-more-harm-than-good\/","title":{"rendered":"#Outside the Box: Money printing is a flawed experiment that\u2019s done America more harm than good"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a409acdbc67d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a409acdbc67d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/outside-the-box-money-printing-is-a-flawed-experiment-thats-done-america-more-harm-than-good\/#Investors_are_captive_to_Modern_Monetary_Theory_and_its_non-answers_to_economic_problems\" >Investors are captive to Modern Monetary Theory and its non-answers to economic problems<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/outside-the-box-money-printing-is-a-flawed-experiment-thats-done-america-more-harm-than-good\/#Satyajit_Das\" >Satyajit Das<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#Outside the Box: Money printing is a flawed experiment that\u2019s done America more harm than good<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Investors_are_captive_to_Modern_Monetary_Theory_and_its_non-answers_to_economic_problems\"><\/span>\n  Investors are captive to Modern Monetary Theory and its non-answers to economic problems<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000335843\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000335843\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       Investors are captive to Modern Monetary Theory (MMT) and its convenient non-answers to the vexed issues of economic stagnation, unsustainable public finances and debt.\u00a0 People\u2019s savings are underwritten by high asset prices, courtesy of this novel brand of economics.<\/p>\n<p> A state, MMT argues, does not finance its spending out of taxes or borrowing but by creating money. Nations cannot go bankrupt when it can print its currency. Therefore, a country with its own currency can run deficits and accumulate debt at almost whatever level deemed necessary.\u00a0<\/p>\n<div class=\"paywall\">\n       Little about MMT is new. Keynesian deficit spending has been used since the 1930s. A country\u2019s ability to print its own currency has been accepted since the end of the gold standard in the 1970s. Central-bank financed government spending via quantitative easing has been used extensively by Japan since 1990 and globally since 2008. <\/p>\n<p>MMT advocates that in the face of inadequate demand, governments spend to move the economy to full employment. This is the job guarantee which requires everyone who is willing to work to have one. An alternative, unpopular among MMT advocates, is for government-funded universal basic income (UBI), providing every individual an unconditional flat-rate payment irrespective of circumstances.\u00a0<\/p>\n<p>MMT ignores several issues. First, it is unclear where useful, well-paid work will come from and how jobs will be created. Government influence over the productive sector that produces actual goods and services is limited. The impact of employment-reducing <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> and competitive global supply chains is glossed over. It is unclear whether the deficit spending needs to be productive or how it will achieve an acceptable financial or <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social<\/a> rate of return.\u00a0<\/p>\n<p>Second, critics point to the risk of inflation. Large deficits financed by money creation exceeding economic production changes can lead to hyperinflation. MMT acknowledges the risk but only where the economy is at full employment or there is no excess capacity. Government, MMT-ers argue, can raise taxes or reduce spending to control inflationary pressures.<\/p>\n<p>Third, the idea only <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lies to states able to issue their own fiat currencies. It could not be applied to the European Union, where individual nations have ceded currency sovereignty to the European Central Bank. It is also unavailable to private businesses or households, unless the state underwrites private debt.<\/p>\n<p>Fourth, the exchange rate may be a constraint. Where a country borrows in its own currency from foreigners or engages in cross-border trade, investors must have confidence in the government, monetary authorities and the stability of the exchange rate. As periodic U.S. dollar<br \/>\n        DXY,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210598269\/delayed\" class=\"positive\">+0.20%<\/bg-quote><br \/>\n       weakness shows, excess deficits and money printing may cause financial markets to lose confidence and force a devaluation,. Businesses may not be able to import goods at affordable cost or service foreign currency denominated debt.\u00a0<\/p>\n<p>Fifth, there are operational challenges. In addition to creating the right jobs, it is necessary to set the natural rate of employment or the UBI level and structure. Measures used to set policy, such as unemployment, inflation rate, money supply statistics or output gaps, are complex to calculate.\u00a0<\/p>\n<p>Finally, the transition to MMT may create instability. An exchange-rate or inflation shock would affect existing investors and trade. Policymakers may be unable to control the process once set in motion. Where supply constraints are reached, excessive deficit-financed spending would result in inflation, higher rates and a currency correction. As with all policy, lags in the availability of data, which may be ambiguous, make management difficult. It is uncertain what would happen if MMT failed. The road back from any experiment is problematic and the difference between theory and practice is larger in reality than in concept.\u00a0<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>Governments and central banks have adopted elements of MMT by stealth. It underwrites elevated asset prices which, in turn, secure unprecedented levels of borrowing. <\/p>\n<p>Unfortunately, if printing money and deficit spending was all it took to ensure prosperity, then it is surprising that it hadn\u2019t been thought of and enthusiastically embraced earlier. Whether they recognize it or not, investors are now unwitting participants in an economic experiment that will affect the value of their investments and savings.<\/p>\n<p><em>Satyajit Das is a former banker. He is the author of \u201d<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.penguin.com.au\/books\/a-banquet-of-consequences-reloaded-9781761041921\" class=\"icon none\">A Banquet of Consequences \u2013 Reloaded: How we got into this mess we\u2019re in and why we need to act now\u2019\u00a0<\/a>\u00a0(Penguin 2021).<\/em><\/p>\n<p><strong>More:<\/strong> Prices are soaring and Americans aren\u2019t happy about it. Don\u2019t worry, says the Fed.<\/p>\n<p><strong>Plus: <\/strong>Worried about inflation? Here\u2019s how investments did in the 1970s<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Satyajit Das\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Satyajit_Das\"><\/span>Satyajit Das<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-751F-E3661272AAC2%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#Outside the Box: Money printing is a flawed experiment that\u2019s done America more harm than good&#8221; Investors are captive to Modern Monetary Theory and its non-answers to economic problems Investors are captive to Modern Monetary Theory (MMT) and its convenient non-answers to the vexed issues of economic stagnation, unsustainable public finances and debt.\u00a0 People\u2019s savings&#8230;<\/p>\n","protected":false},"author":1,"featured_media":302853,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-302852","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/302852","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=302852"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/302852\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/302853"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=302852"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=302852"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=302852"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}