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IPFS News Link • Central Banks/Banking

MMT & The Fracturing Of The Free Lunch Crowd

• by Omid Malekan

There was plenty that I got wrong in that cartoon (as I've discussedbefore in the New York Times) but my general skepticism of playing money games to fix structural problems or fighting the business cycle has withstood the test of time.

That the second round of QE failed to deliver what was promised by the likes of Ben Bernanke was proven by the fact that we ended up needing many more rounds, and yet significant GDP growth, inflation or wage gains never materialized. What gains have showed up are obviously fickle, as proven by how quickly the Fed changed its mind on "undoing-QE" recently.

What QE did succeed in doing was exploding the wealth gap and inspiring populist uprisings. Central Bankers would like us to believe that when they channel free money to banks and billionaires they are really helping poor people (going so far as writing papers and making videos arguing as much) but unfortunately for them, reality doesn't agree. When Fed policy causes a jump in the stock market (as discussed hereherehere and here) and Amazon's stock surges as a result, Jeff Bezos benefits more than his minimum wage earning warehouse employees.