SENATE RESOLUTION 182--RECOGNIZING THE DUTY OF THE SENATE TO CONDEMN MODERN MONETARY THEORY AND RECOGNIZING MODERN MONETARY THEORY WOULD LEAD TO HIGHER DEFICITS AND HIGHER INFLATION; Congressional Record Vol. 165, No. 71
(Senate - May 01, 2019)
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[Page S2576]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SENATE RESOLUTION 182--RECOGNIZING THE DUTY OF THE SENATE TO CONDEMN
MODERN MONETARY THEORY AND RECOGNIZING MODERN MONETARY THEORY WOULD
LEAD TO HIGHER DEFICITS AND HIGHER INFLATION
Mr. PERDUE (for himself, Mr. Braun, Ms. Ernst, Mr. Moran, and Mr.
Tillis) submitted the following resolution; which was referred to the
Committee on Banking, Housing, and Urban Affairs:
S. Res. 182
Whereas noted economists from across the political spectrum
have warned that the implementation of Modern Monetary Theory
(referred to in this preamble as ``MMT'') would pose a clear
danger to the economy of the United States;
Whereas, on March 4, 2019, former Secretary of the Treasury
Lawrence H. Summers said that--
(1) MMT is fallacious at multiple levels;
(2) past a certain point, MMT leads to hyperinflation; and
(3) a policy of relying on a central bank to finance
government deficits, as advocated by MMT theorists, would
likely result in a collapsing exchange rate;
Whereas, on February 26, 2019, Jerome Powell, Chair of the
Board of Governors of the Federal Reserve System, said: ``The
idea that deficits don't matter for countries that can borrow
in their own currency I think is just wrong'';
Whereas, on March 25, 2019, Janet Yellen, former Chair of
the Board of Governors of the Federal Reserve System,
disagreed with those individuals promoting MMT who suggest
that ``you don't have to worry about interest-rate payments
because the central bank can buy the debt'', stating:
``That's a very wrong-minded theory because that's how you
get hyper-inflation'';
Whereas the March 2019 report entitled ``How Reliable is
Modern Monetary Theory as a Guide to Policy?'' by Scott
Sumner and Patrick Horan of the Mercatus Center at George
Mason University found that--
(1) MMT--
(A) has a flawed model of inflation, which overestimates
the importance of economic slack;
(B) overestimates the revenue that can be earned from the
creation of money;
(C) overestimates the potency of fiscal policy, while
underestimating the effectiveness of monetary policy;
(D) overestimates the ability of fiscal authorities to
control inflation; and
(E) contains too few safeguards against the risks of
excessive public debt; and
(2) an MMT agenda of having fiscal authorities manage
monetary policy would run the risk of--
(A) very high debts;
(B) very high inflation; or
(C) very high debts and very high inflation, each of
which may be very harmful to the broader economy;
Whereas the January 2019 report entitled ``Modern Monetary
Theory and Policy'' by Stan Veuger of the American Enterprise
Institute warned that ``hyperinflation becomes a real risk''
when a government attempts to pay for massive spending by
printing money; and
Whereas the September 2018 report entitled ``On Empty
Purses and MMT Rhetoric'' by George Selgin of the Cato
Institute warned that--
(1) when it comes to the ability of Congress to rely on the
Treasury to cover expenditures, Congress is, in 1 crucial
respect, more constrained than an ordinary household or
business is when that household or business relies on a bank
to cover expenditures because, if Congress is to avoid
running out of money, Congress cannot write checks in amounts
exceeding the balances in the general account of the
Treasury; and
(2) MMT theorists succeed in turning otherwise banal truths
about the workings of contemporary monetary systems into
novel policy pronouncements that, although tantalizing, are
false: Now, therefore, be it
Resolved, That the Senate--
(1) realizes that deficits are unsustainable,
irresponsible, and dangerous; and
(2) recognizes--
(A) that the implementation of Modern Monetary Theory would
lead to higher deficits and higher inflation; and
(B) the duty of the Senate to condemn Modern Monetary
Theory.
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