Ultra-low interest rates have fueled growing support for Modern Monetary Theory, which holds that governments can simply print money and ignore rising public debt levels without having to face the consequences. It is a neat and tempting argument, as long as one ignores history and common sense.
SAN DIEGO – Was Alexander Hamilton a fool? Modern Monetary Theorists must think so. Hamilton, whose story is now sung by millions of schoolchildren, persuaded the young United States to absorb state debt, pay it back, and build a trustworthy reputation. “If we assume the debts,” goes a lyric from the musical Hamilton, “the union gets a new line of credit, a financial diuretic. How do you not get it?”
SAN DIEGO – Was Alexander Hamilton a fool? Modern Monetary Theorists must think so. Hamilton, whose story is now sung by millions of schoolchildren, persuaded the young United States to absorb state debt, pay it back, and build a trustworthy reputation. “If we assume the debts,” goes a lyric from the musical Hamilton, “the union gets a new line of credit, a financial diuretic. How do you not get it?”