Modern Monetary Theory posits that the way that we think about the economy is largely incorrect, that money is merely a legal and social tool—a fiat-token that can be wielded (along with taxation) in order to rearrange and utilize scarce resources in an economy to their full potential. According to MMT, the question is not how we are going to “pay for” whatever projects—since monetarily sovereign governments can always print the money—but the real questions involve “real resource constraints” and how much monetary inflation can be utilized before price inflation gets too high (after which governments would tax money out of the system).

MMT has made a few good observations—the main issue is not the nominal dollar amount of money printed or deficit spending, but the effects that such policies cause. For Austrians, the issues are the impact of such policies on scarce goods, the price changes that pervade the structure of production as a result, and later price inflation. Further, MMT proponents often rightly call out the hypocrisy of political elites and others who disagree with MMT. MMT is often portrayed as crazy and so-called “fiscal conservatives” ask things like, “How are we going to pay for that?”

MMT rightly points out the hypocrisy of these phony “fiscal conservatives” and others who ridicule MMT only to then use MMT’s preferred methods to accomplish their goals—monetary inflation and credit expansion via the central bank, deficit spending, and taxation. MMT methods conveniently seem to “work” just fine when “fiscal conservatives” want them to, but not when MMTers propose using such methods for different policy goals. In 2019, Alexandra Ocasio-Cortez was quoted in an article in Forbes, titled, “The Green New Deal: How We Will Pay For It Isn’t ‘A Thing’—And Inflation Isn’t Either,”……….

Whether MMT or some other monetary theory-policy, both involve rejecting the subjective valuations of individual people only to replace them with the subjective valuations of political elites. As a supposed alternative, they urge the consumption preferences of political elites over private consumers in the name of serving the public. Proponents of MMT know full well that political elites use inflation and deficit spending to achieve ends which do not ultimately benefit the public, yet they assume that the same process can be used by others to achieve qualitatively different results.

Assuring us that these policies would be “isolated from the political cycle and political deliberations” because the programs would be “permanent and structural,” MMTers would have us believe they know the “right amounts” of new money and credit to be inflated into the economy and used on deficit spending. This can be done until “full employment” and full utilization of “idle resources” are used to full capacity. They know when to stop inflating and enact taxation to mitigate price inflation (never mind time, human reactions to inflation and taxation, and setting up a boom-bust cycle, etc.). They know which projects to choose. They know better than individuals why “idle resources” are idle and why labor is utilized to “full employment.” They know what the right prices ought to be, even given the changing conditions of supply and subjective demand. They also know the “right amount” of capital investment, investments, and credit controls. We are expected to believe that we would all be better off if these individuals were in charge and if we would just do as they say, not as we do.