Facts and figures speak for themselves. The policy of the Fed since 1987, centered on a sustained reduction in interest rates to zero in the last decade, an endless increase in the debts of the entire economy through cheap money and unbridled government spending, has only caused continued destruction. The destruction of practical expressions is growing gaps and social unrest, recurrent economic cycles of violent bubbles and their explosion, and ongoing erosion in democracy.
It did not generate real and sustained growth, but on Wall Street and Silicon Valley, and it benefited only the top decile, with those close to power, and with the big money pulling strings in Washington DC. But despite these facts, the urge to print money when it can be done is unquestionable. All the more so when it becomes clear that the central bankers have led us on a dead end and have no idea what to do next. At this stage, like any compulsive gambler, they will double the bet until the last penny, of the public of course.
Then we will reach the moment of truth, the last act of the play that began in 1971, when debt in increasing quantities, a pike-money representing wealth that has not yet been created, replaced the previous money, which represented real assets and was limited in quantity.
On the one hand, all the official forces in Washington DC, Brussels, Tokyo and Beijing, headed by the central bankers, will explain that only if the government prints more and more money as it wishes, and this time not as debt but from the foundations of the MMT. The economy will be free, the free universities, the pensions and the National Insurance Institute will be paid as promised, and the entire economy will move to green energy quickly and painlessly. On the other side will stand alone and without an echo in the media, the voice of logic and historical precedents, of the Roman Empire, China and France, who tried to activate the magic of the government that produces unlimited money and ended in total destruction, general and social.
MMT is already here. in Japan
The ultimate example brought by proponents of modern monetary theory is that of Japan, where the central bank holds 43 percent of the government debt of about 250 percent of GDP, and yet there has been no real inflation.
If we look at the pioneer of the unbridled money-printing craze, the Bank of Japan seems to be already implementing the MMT, but without calling it that name. Last year, the Bank of Japan’s balance sheet exceeded Japan’s GDP, about $ 5 trillion, and the bank’s “assets”, printed money and supposedly distributed as a loan, not only include 43% of government debt, but also corporate bonds and shares on the Tokyo Stock Exchange. Thus, the Bank became a major shareholder in 40% of the companies listed on the Tokyo Stock Exchange, most of them through ETFs, a total of 4% of the aggregate market value, making it one of the top ten holders of 1,446 of the 3,735 listed companies in Tokyo