The cult of instant gratification is well entrenched in our society. Once upon a time, it was common for people to save their earnings before making a sizable purchase. Patience is a virtue they used to say. Now, there is financing available for just about everything under the sun, and warehouses full of items are just a mouse click away from being delivered to your front door in 48 hours or less. Instant gratification is the norm, patience has been discarded.
This kind of thought has permeated into the upper echelons of government and is being cheered on by many Americans. They feel that all of societies ills can and should be healed, not years down the road, but now! The only thing slowing down our race to utopia is an outdated adherence to something called fiscal responsibility. It is frightening, but the younger generations, on some level, understand that the government can just create dollars out of nothing, but instead of calling for restraint and accountability, they are pushing for more spending, and more currency devaluation in the name of progress, hope, and equality. I say, the Keynesians have gone wild.
Enter Modern Monetary Theory or MMT for short. Here a basic definition from Investopedia, referring to governments which issue fiat currency like the U.S. Dollar. Put simply, such governments do not rely on taxes or borrowing for spending since they can print as much as they need and are the monopoly issuers of the currency. Since their budgets aren't like a regular household's, their policies should not be shaped by fears of rising national debt.
It is the very engine of all socialist planning. Unlimited dollars equate to unlimited opportunity to do whatever the heart desires or the mind can imagine.
The downsides to this theory are plentiful.
1. It presents the notion that national debt is irrelevant, but fails to mention the need to service that debt year to year. Currently, it costs the U.S. over half of our $700 billion annual Defense Budget to roll over the $28 trillion we currently owe. Those payments will rise sharply as all this new Covid Relief Spending come due.
2. Tying into Number 1, those newly created dollars are in fact “borrowed” from the Federal Reserve with interest. There is no free lunch.
3. Utilizing this Theory in the name of guaranteeing financial equality is incredibly short-sighted. Massive currency creation benefits the wealthiest Americans most, widening the gap between the richest and the poorest, not the other way around as intended.
Recently, I heard this anecdote which I believe sums up our current situation, “When you’re young, socialism is very enticing. After all, don’t you have a heart? But when you’re older, being conservative makes much more sense. After all, don’t you have a brain?”
Unfortunately, this has become Government Policy. No one wants to hear about “fiscal responsibility” when there’s free money being dished out. We’ve crossed a threshold which Alexander Tytler warned of, “A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.”
Or to put it in simpler terms, I’ll quote our third president, Thomas Jefferson. I only wish more people today could hear this message, “A government big enough to give you everything you want, is strong enough to take everything you have.”