The Godfather of MMT Says the US Is Spending Like a ‘Drunken Sailor’
Warren Mosler on the troubling mix of high debt levels, large deficits, and orthodox monetary policy.
Warren Mosler, a former Democratic gubernatorial candidate for the US Virgin Islands, stands for a photograph on the QE IV passenger ferry boat.
Photographer: Scott McIntyre/BloombergThe idea of the US government spending money like a “drunken sailor” is a well-worn cliché in both financial markets and political spheres. Everyone from billionaire investor Stanley Druckenmiller to JPMorgan’s long-time CEO Jamie Dimon has deployed the phrase to describe the swelling federal deficit.
But you probably wouldn’t expect to hear the remark from anyone associated with the heterodox economics approach known as Modern Monetary Theory — let alone the movement’s ideological godfather. That’s because one of the main contentions of MMT is that when a government spends and borrows in its own currency, that debt shouldn’t be understood in the same way as private household debt, because there’s no risk of default. This, in theory, allows for a greater level of fiscal flexibility than what is commonly understood.