It’s a few years since former gold bug and inflation hawk Alan Greenspan actually said: “The United States can pay any debt it has because we can always print money to do that!” Count that as my insane quote to kick this article off.
There are plenty of examples of governments and their central banks causing misery by blowing up their currencies with reckless printing (1789 France, Weimar Germany, Zimbabwe, Venezuela….), but scarily, Greenspan seems to have been in the vanguard of “Modern Monetary Theory (MMT), a new (IE recycled) leftist idea that a government can’t go broke stimulating its economy via the printing press.
Over at Zerohedge.com, an article on MMT contains a few excellent quotes that bear repeating:
Ronald Reagan used to say that there are two kinds of economists. The first, usually disliked by politicians, believe like Milton Friedman that there is no such thing as a free lunch. The second, very much liked by politicians, believe that if only the government were to spend more, growth would accelerate for the greater good of all. Reagan would then go on to say that the first kind tend to believe in God, and the second kind believe in Santa Claus. Unfortunately, Santa Claus doesn’t exist. (Which is bad news for the Democrat vote-buying schemes – Ed note.)
Richard Cantillon, an Irish economist living in France [at the time of the revolution], became the first scholar to explain the difference between the creation of money and the creation of wealth, and that the first did not automatically lead to the second. The “Cantillon Effect” states that , when government is intent on destroying the local currency, those who are the closest to the central bank will make money, while the rest of the population will end up on the losing side.
[The author of the article concludes:] MMT proponents know nothing about economic history, do not understand the nature of money, which is not a state monopoly but a common good, and believe unquestioningly in their theories without pursuing them to their logical conclusions. (Which are inevitably disastrous – Ed note)
Be afraid, be very afraid, of politicians who think a government cannot go broke printing money. God, and Friedman, think otherwise!