Eurodollar University’s Making Sense; Episode 38; Part 3: It’s Not Modern, Wrong About Money, What’s The Theory?

———WHERE———

———WHO———

Twitter: https://twitter.com/JeffSnider_AIP
Twitter: https://twitter.com/EmilKalinowski
Art: https://davidparkins.com/

Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, tongue-tied by MMT. Artwork by David “Banquo” Parkins.

———WHY———

38.3 Stephanie Kelton: Modern Money, or just Theory?
Is there any room for money in modern monetary theory? Stephanie Kelton, the best known evangelist for MMT says yes. Jeff Snider, says no. Indeed, Snider maintains that MMT is more likely to lead to deflation and disinflation than hyperinflation – just look to Japan for proof.

[Emil’s Summary] Christine Lagarde, Janet Yellen and Stephanie Kelton are among the world’s best known political-economists. Lagarde, was France’s Minister of Finance, Managing Director of the International Monetary Fund, and is President of the European Central Bank – all firsts for a lady. Yellen, was America’s Chair of the Federal Reserve and is presumptive nominee for US Secretary of the Treasury – each a first for a lady. Kelton, was advisor to the Bernie Sanders 2016 presidential campaign, is a best-selling author, and is the most famous evangelist for modern monetary theory (MMT).

And now these remarkable three are in positions of power and influence to guide the world out of socioeconomic depression. It echoes the 1999 cover of Time Magazine featuring three men — Robert Rubin, Alan Greenspan, and Larry Summers — with the agitated headline “The Committee to Save the World”. Alas, this 38th episode of Making Sense continues the long tradition of unease found in the Western canon regarding the female triumvirate.

Yes, of course The Graces — Aglaea, Euphrosyne, and Thalia — were lovely… but there was the rumor about them spending so much time in the underworld. No need to comment on the Harpies – a triad of vengeful, winged sisters. And who can forget The Witches of Eastwick: Susan Sarandon, Michelle Pfeiffer and Cher? They put your podcaster off cherries for the rest of the 80s. But it is Shakespeare who provides us the incomparable trio: the Weird Sisters. Better understood today as ‘weyward’ or ‘weyard’, they were the Anglo-Saxon Fates responsible for divination and predictions – what we call “economics” in modern day. Don’t take this podcaster’s word for it – listen to the Bard:

<<Macbeth, Act 4, Scene 1:>>
Round about the cauldron go;
In the poison’d policies throw.
Media, that report narrative
Days and nights as quantitative
Sweat inflation running hot
Boil thou first i’ the charmed pot.

Double, double toil and trouble;
Fire burn, and cauldron bubble.

Soul of financial journalist
In the cauldron boil and mist;
UBI of newt and bank reserves,
Wool of bat and control of curves,
Adder’s fork and Janet’s QE,
Lizard’s leg and Kelton’s MMT,
For a charm of powerful trouble,
Like a hell-broth boil and bubble.

Zirp, nirp toil and trouble;
Economy burn, and markets bubble.

———WHEN———

00:05 Who was George Knapp and what did he write in his 1895 book The State Theory of Money?
02:47 Does government have a monopoly on money? At first blush, yes. But no, not at all.
04:14 Kelton states only government can bring money into existence. Is that the MMT thesis?
07:56 Day-to-day economic activity involves non-government money (e.g. laundromat tokens)
09:43 MMT will not lead to hyperinflation, as we’ve seen with near-MMT in Japan.
14:11 MMT believes in a closed, onshore monetary system; there be no offshore monetary monsters

———WHAT———

The Failure of the Printing Press Birthed MMT and the Printing Press: https://bit.ly/37wzozs
Knapp’s The State Theory of Money (1924 English translation): https://bit.ly/37z6IG0
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7

Eurodollar University’s Making Sense; Episode 38; Part 3: It’s Not Modern, Wrong About Money, What’s The Theory?

About the Author: Jeffrey P. Snider

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