Modern Monetary Theory

New Economic Perspectives has published the poem Modern Monetary Theory by Pavlina R. Tcherneva.  I quote just enough of the poem to whet your appetitie and to have something to discuss in this post.

Pondering here from my academic station
Why has never before such a simple observation
Caused more confusion and consternation
Amongst the general population

That the government is the currency-issuing monopolist
Is not a radical idea, nor a hypothesis
It is a simple, nay, elementary fact
That is often so fervently attacked

A previous post When Will the White House and OMB Ever Learn About Sector Financial Balances? discussed another incontrovertible fact about MMT that people have a hard time accepting.

Now here is a fact that I have trouble with.  We are currently living in an economic “system” where there is significant unemployment and underemployment, there is money sitting idly in the hands of the rich because they don’t want to invest it, we have resources going unused, we have factories that are shut down,  we have lots of work to do on societal needs, we  have people who would like to buy stuff, we have factories that could make the stuff people want to buy, we have people homeless on the streets, we have foreclosed houses sitting empty, and yet the “system” cannot manage to bring all these pieces together to boost the economy and our general standard of living.  Why is it that we love this “system” so, but cannot tolerate the thought of an explanation of how this can all be fixed?

Would the cognitive dissonance explode our minds if we admitted that there is a solution in front of us to solve a lot of our problems, but we just don’t want to accept it?  Have we fallen in love with our oppressive system that we  just can’t bear  to part with it no matter how much harm it does?  Sometimes we see this behavior in other people and call it either “battered wife syndrome”, or the “Stockholm syndrome”.

Battered Woman Syndrome

According to Walker’s The Battered Woman Syndrome (p. 95-97, 1984), there are four general characteristics of the syndrome:

  1. The woman believes that the violence was or is her fault.
  2. The woman has an inability to place responsibility for the violence elsewhere.
  3. The woman fears for her life and/or her children’s lives.
  4. The woman has an irrational belief that the abuser is omnipresent and omniscient.
Stockholm syndrome

Stockholm syndrome, or capture-bonding, is a psychological phenomenon in which hostages express empathy and sympathy and have positive feelings toward their captors, sometimes to the point of defending and identifying with the captors. These feelings are generally considered irrational in light of the danger or risk endured by the victims, who essentially mistake a lack of abuse from their captors for an act of kindness. The FBI’s Hostage Barricade Database System shows that roughly 8% of victims show evidence of Stockholm syndrome.


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