Is the Fed getting ready to embrace MMT???
The Fed and the federal government are working hand in hand to monetize the debt to keep the debt at bay and allow even more expansion in spending. At the current rate, the national debt is poised to be well above 40 TRILLION by 2030. However, the government can only monetize so much without a fallback plan...................here comes MMT.
From the article:
"The aim, set out in the Federal Open Market Committee’s statement, is to return the labor market to something like full employment and get inflation “to moderately exceed” its 2% target “for some time.”
Like the Supreme Court’s definition of pornography—they know it when they see it—it will be apparent when the Fed’s nebulous economic goals are in sight. Suffice it to say they’re a long way off. The 11 million recovery in payrolls is only half of the total job losses, while inflation remains well below the 2% target despite recent upticks. What’s important for investors to consider is what Powell didn’t say about the Fed’s explicit promise to keep interest rates pinned to the floor, with no increases envisaged all the way through 2023, while it continues to purchase $120 billion of Treasury and agency mortgage-backed securities each month. In effect, the Fed’s monetary policy will be implicitly supporting the federal government’s fiscal policy. By purchasing nearly $1 trillion of Treasury securities annually at the present pace, the central bank “monetizes” a significant portion of the debt issued to cover the federal government’s budget deficits.
Another name might be modern monetary theory, or a variant thereof. A basic tenet of MMT is that there is no limit to how much a government can borrow in its own currency. If the debt monetization boosts inflation, it can be curbed by tightening fiscal policy through tax increases or spending reductions."
So, the old adage gets a new addition: Roses Are Red, Violets Are Blue, Taxation is Theft, and Inflation is too.......................