"well, he would say that wouldn't he?" ... "yeah, well, he hasn't got an Economics PhD" ... "he's racist and doesn't believe in climate change."
We can already hear the whining from the uber-left's ivory tower as Fed Chair Jerome Powell unleashed some common-sense on the latest fraud being thrust upon Americans - that of Modern Monetary Theory (MMT).
As Bloomberg reminds, MMT argues that because America borrows in its own currency, it can always print more dollars to cover its obligations. As a result, the thinking goes, the U.S. can always run sustained budget deficits and rack up an ever-increasing debt burden. Helping grease the wheels for some MMTers is the expectation that the Fed would keep rates low to contain the cost of servicing America’s obligations.
With that in mind, Sen. David Perdue, R-Ga., asked Powell about the theory, saying its advocates back a “spend-now spend-later spend-often policy that would use massive annual deficits to fund these tremendously expensive policy proposals.” MMT advocates figure the Fed would be a partner in funding these programs through easy monetary policy.
Powell's response was brief and to the point:
“The idea that deficits don’t matter for countries that can borrow in their own currency I think is just wrong..."
“And to the extent that people are talking about using the Fed -- our role is not to provide support for particular policies,” Powell said.
“Decisions about spending, and controlling spending and paying for it, are really for you.”
Simply put, Powell explained that the increasingly popular theory espoused by progressives that the government can continue to borrow to fund social programs such as Medicare for everyone, free college tuition and a conversion to renewable energy in the next decade is unworkable and makes some "pretty extreme claims."
Earlier in the hearing Powell also noted that “U.S. debt is fairly high to the level of GDP -- and much more importantly -- it’s growing faster than GDP, really significantly faster. We are going to have to spend less or raise more revenue.”