A deeply wrong analysis.

If you own a tank, you have the physical ability to drive it damn near anywhere — on a road, off a road, through a stream, over your neighbor’s bushes, through his house, and over his children’s dead bodies. That is what owning a tank enables you to do. If you do those terrible things, however, you will be punished and, at the very least, they will take the tank from you.

Now imagine that the Martians have landed in the neighborhood, and your tank is the only way to fight them off. You say “My tank can fight them off, but I will have to crush your shrubs to do it.” MMTers (I have never seen “MMTists” used before reading this article) would say “Go for it,” but the author of this piece would say “No, that’s not possible, because tanks are not allowed to drive over shrubs in the USA or any modern democracy.”

Law students who paid attention to the jurisprudential aspects of their training understand the difference between a power and a privilege. The government, as MMTers define it existentially to mean the legally empowered monetary and fiscal authorities, if granted the appropriate permissions, can print money in unlimited quantities and the only economic risk of doing so is inflation of the currency. Therefore, the only reason for any law restricting the government’s power to print money is to prevent inflation.

Those laws may include the creation of an independent bank, a pay-go amendment to a Constitution, the power to tax, imposition of taxes, and/or anything else that the government chooses to do to tie its own hands. All MMTers have ever said is that the existential laws of economic physics, so to speak, do not require conservation of money in the way that the laws of “real” physics require conservation of momentum or energy. The government could, if it understood the implications of rising supplies and falling marginal costs, empower itself to print more money than it takes in, and the result would be positive for all concerned.

To reply to this claim by citing the ropes with which we have prudently restrained the monetary authorities, as if they were natural restraints, is wrong. The government, properly understood as whatever politics decrees it to be, can do whatever politics allows it to do within the laws of nature. King Canute cannot hold back the tides, and The MMTers’ government cannot, without destroying the currency, print more money than there are goods to chase. But the tank can run over shrubs if need be, not on the authority of the driver, but on the authority of those who make the rules that apply to the tank. So treating the existing rules as immovable obstacles is wrong.

MMTers do not deny the existing practical obstacles to implementing programs that take advantage of what MMT teaches. If the law says that taxes must be raised before money is spent, then that is what must be done, until it isn’t. MMT says only that the law needn’t be as it is. The law needn’t be any particular way, so long as the practice of creating money doesn’t cause inflation. To say the tank can’t run over the shrubs because it isn’t currently allowed to run over shrubs is wrong. And so is this article in the very same way.