Frankenstein’s Money Press: How Washington Unleashed The Modern Monetary Monster

Once upon a midnight dreary, while I pondered, anemic and weary,
Over galore a quaint and funny floor plan of fiscal lore — 
While I nodded, astir napping, abruptly location came a tapping,
As of markets softly rapping, rapping astatine my ledger’s door.
“’Tis nan Fed,” I muttered, “tapping astatine my nation’s doorway — 
Only MMT, thing more.”

Modern Monetary Theory (MMT) emerged for illustration a laboratory research adjacent successful ambition and madness. MMT is nan thought that governments and cardinal banks tin people money and flood nan system pinch their respective rate without consequences, arsenic agelong arsenic nan velocity of rate successful circulation remains nether control. In 2019, nan mentation had begun to seep into nan political mainstream arsenic a intends to salary for ample authorities expenditures, specified arsenic The Green New Deal, by imaginable 2028 presidential candidate Alexandria Ocasio-Cortez. 

The brainchild of Stephanie Kelton, advisor to nan Bernie Sanders 2016 statesmanlike campaign, MMT underlines nan thought that, dissimilar a household, nan authorities tin disregard its fund entirely. In a TED Talk connected October 21, 2021, Kelton stated, “The national authorities is fundamentally different, dissimilar nan remainder of us, Congress ne'er has to cheque nan equilibrium successful its slope relationship to fig retired whether; it tin spend to walk more. As nan issuer of nan currency, nan national authorities tin ne'er tally retired of money, it tin spend to bargain immoderate is disposable and for waste successful its ain currency.” 

During nan onset of authorities lockdowns prohibiting commerce and nan pursuit of happiness, MMT saw nan ray of day. From outpouring 2020 to wintertime 2021, nan national authorities dispersed $931 cardinal straight to individuals successful nan shape of stimulus checks recovered nether nan CARES Act of 2020 and nan American Rescue Plan of 2021. This sum acold outweighs nan stimulus payments of nan 2008 banking crisis ($108 billion) and nan 2001 Dot-com Bubble ($36 billion). The Mises Institute reports nan Federal Reserve’s equilibrium expanse much than doubled betwixt 2020 and 2022, from $4 trillion to $9 trillion. Within 2 years, nan money proviso measured arsenic M2 grew astir 40 percent. In retrospect from 2000 to 2019, nan money proviso grew annually by six percent. The standard of that monetary experiment, printing dollars into a politically stiff system remains an unprecedented enactment of monetary description .

Like nan phrase, “two weeks to flatten nan curve,” nan caller economical catchphrase successful circulation was “transitory inflation.” Just for illustration nan governmental phrase, nan economical word “transitory inflation” was thing but short. The authorities was alert that expanding nan money proviso would consequentially summation inflation; nevertheless this would pass, and nan mean American request not worry. By 2021, then–Secretary for nan Department of Treasury, Janet Yellen stated, “I really uncertainty we’re going to spot an inflationary cycle, though I will opportunity that each nan economists successful nan management are watching that very closely.” Just a twelvemonth later, successful 2022, nan ostentation complaint peaked astatine 9 percent. In 2024, researchers astatine MIT discovered that, “42 percent of ostentation could beryllium attributed to authorities spending.” 

By its ain doctrine, nan Federal Reserve claims a dual mandate: “ 2 goals of value stableness and maximum sustainable employment.” Price stableness is measured yearly by nan Price Index for Personal Consumption Expenditures and should not drastically transcend nan bounds of 2 percent. As of August 2025, ostentation remains astatine 2.9 percent pursuing a dependable inclination of astir 2 years during which ostentation has hovered astir 3 percent. In different words, everything has go much costly since nan rate injections from 2020. Doubt is rising arsenic to whether nan Federal Reserve will moreover take sides its erstwhile ineffable 2 percent target, fixed nan precocious power of 3 percent. 

The fiscal load incurred wrong nan past 5 years has not ended. Consumers struggle to publication their economical landscape, muddled by nan authorities and Fed alike. The Consumer Sentiment Index which ranges from 0 to 200, recorded connected October 3, sits astatine 55. Since nan opening of nan year, nan dollar has decreased successful worth by 11 percent and could suffer different 10 percent by 2026. Over nan past 3 years, nan dollar has lost astir half of its purchasing powerfulness comparative to golden and 8.4 percent erstwhile compared to equipment and services. Speaking of gold, nan precious metallic has been hitting grounds highs of complete $4000 per ounce, astir a 33-percent summation since past year. Not unsocial successful nan climb, Bitcoin has risen from its 2020 worth of nether $10,000 to complete $100,000. All that stimulus money has been moved distant from dollars and into alternatives specified arsenic golden aliases Bitcoin.

The basal flaw of Modern Monetary Theory reminds america that money is simply a instrumentality and prices are signals. Currencies are chosen not because nan authorities deems them valuable, but because group spot worth successful them. The chaotic years since 2020 person shown a depreciating rate arsenic a consequence of devaluing nan dollar. The resonating inflation, a taxation without legislation, has not been transitory, but has possibly redefined nan modular of nan Federal Reserve. Five years later, nan experiment’s echoes stay successful higher prices, vulnerable confidence, and a cardinal slope trapped betwixt denial and governmental dependence. MMT promised prosperity without pain, yet it near Americans haunted by nan animal it awakened successful 2020. The existent monster was ne'er nan money itself, but nan belief that we could summon and bid it without consequence.