CTUP co-founders Stephen Moore and Arthur Laffer point out in today’s Wall Street Journal how a new crackpot theory of endless borrowing wrecked the economy and the Biden presidency:
In 2020 the Democratic Party fully embraced Modern Monetary Theory. Ms. Kelton served as a top economic adviser to Sen. Bernie Sanders, runner-up for the party’s nomination, and later co-authored a report for the Biden campaign that served as a blueprint for its spending blowout. In 2021 MMT gave the administration and Democratic lawmakers an academic imprimatur for the avalanche of spending, four times as large as Mr. Obama’s stimulus 12 years earlier…
In a testament to MMT’s sway, 17 Nobel economics laureates signed a 2021 statement asserting that all this spending “will ease longer-term inflationary pressures.”
Never mind that the economy was already bouncing back as businesses reopened. Mr. Biden and the MMT crowd thought they had invented a perpetual-motion machine. Instead, they unleashed the worst inflation in 40 years.
Average weekly earnings of employees rose 15% between January 2021 and May 2024. But that was a loss in real terms, since prices were up 19%. Even with trillions in handouts, working Americans have seen their average real annual income decline by more than $2,300 in today’s dollars. To our knowledge, not one of those Nobel economists has issued a retraction.
