Let's See Modern Monetary Theory Play Out Real Time

Now, as you read this, understand that when Dr. Shostak says "economic bust" he does not mean anything negative.

In countries such as Turkey and Argentina a tighter stance implemented by central banks has set in motion an economic bust. In Turkey the central bank has raised the one week repo rate to 10 percent from 4.5 percent while in Argentina the 3-month Treasury bill rate climbed to 25.89 percent from 16 percent in early January. In Argentina an increase in rates took place once the central bank aggressively curbed its monetary pumping, while in Turkey the central bank raised its policy rate.

The damage was done during the credit loosening, when people borrowed E-Z money and malinvested and misallocated it.  That there will be A bust is inevitable, like a pencil will fall if you let go.  Of course if a pencil drops you bend over an pick it up.  But when there is a bust, the problems are more severe, but pitch perfect to the amount of E Z credit extended.  The longer the Boom period, the harder the bust period.  So if anything, although Shostak has no use for the booms and what causes them, he would rather see a soon bust than a later bust, since there will be a bust, and the later the worse.

People will suffer in these countries, mostly the poor and middle class, and most people will suffer in unique ways, depending on their array of integrations into the distorted market.

Advocates of Modern Monetary Theory, or reheated hamiltonianism, troll this site to promote their agenda.  As the comments to this cited article note, the Argentina experience is a real-time acting out of the Modern Monetary Theory, and it's inevitable poverty in its wake.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post