The Loaded Gun of Modern Monetary Theory

Daddy Pig
14 minutes ago
3 min read

The Seduction of Easy Money

By Andrew Crowley, Rock The Vote NZ Party Leader

Modern Monetary Theory (MMT) has become the darling of heterodox economics. It promises governments that issue their own currency—like the US, Japan, Australia, and New Zealand—an escape from fiscal limits. “You can never go bankrupt in your own money,” say its advocates.

It’s a seductive idea. But seduction can be dangerous. At Rock The Vote NZ, we argue that MMT, if misapplied, threatens both individual sovereignty—the right of citizens to control their savings, wages, and choices—and national sovereignty—the ability of nations to defend their currency, resources, and independence.

What MMT Gets Right

Sovereign issuers can’t default in their own currency.
Taxes and bonds don’t fund spending; they drain reserves.
Inflation, not solvency, is the true limit.

These mechanics are largely accepted by mainstream economists. MMT is descriptively accurate about how money flows.

What MMT Gets Wrong

1. Inflation Risk Downplayed

MMT prescribes spending until full employment, then raising taxes to cool inflation. But inflation is a lagging indicator. By the time it bites, it’s politically impossible to reverse.

“Inflation is not just numbers—it’s the erosion of sovereignty in every household budget.”

Rock The Vote NZ warns: inflation strips citizens of control over their savings and wages, undermining individual sovereignty.

2. Currency Confidence Ignored

Small open economies like New Zealand import energy, technology, and goods. Excessive money printing weakens the NZ dollar, driving up the cost of imports. Bond markets punish fiscal recklessness with higher yields.

Protecting the currency is protecting national sovereignty. Without it, New Zealand risks dependency on external creditors and foreign suppliers.

3. The Job Guarantee Mirage

MMT’s flagship “employer of last resort” policy sounds compassionate but risks bureaucracy, inefficiency, and crowding out private enterprise.

Rock The Vote NZ believes in empowering individuals through choice and opportunity, not dependency on state make‑work schemes.

4. Debt & Interest Misrepresented

MMT claims deficits don’t matter. However, the reality is that interest payments are real transfers of resources. New Zealand now spends nearly $9billion on interest (compare with $3.2billion on defence, or $6.5billion on Law & Order. Printing to pay interest is an inflation tax on savers.

This punishes responsible citizens, violating individual sovereignty.

5. The Real Agenda

MMT proponents like Stephanie Kelton or Bill Mitchell, argue that MMT is key to funding and achieving a progressive agenda without deficit fears.

Ellis Winningham said “Without MMT, progressives will lose every, single election. Why? Because establishment economics (mainstream economics) which drives modern politics is not progressive.”

This captures the idea that Modern Monetary Theory (MMT) is essential for advancing progressive goals, as it challenges traditional economic constraints that limit bold policies like universal healthcare or a Green New Deal. Winningham, an economist and MMT advocate, often discusses how mainstream economics hinders progressives.

6. Political Blind Spot

MMT assumes governments will spend freely in recessions and tax aggressively in booms. History shows otherwise. Chronic deficits lead to inflation and currency devaluation.

Rock The Vote NZ believes that sovereignty requires discipline. Citizens must retain control over their earnings, and nations must guard against fiscal recklessness.

The Verdict from Economists

Paul Krugman: “MMT is right about mechanics, wrong about politics.”
Ken Rogoff: “Bond vigilantes will strike before inflation.”
Larry Summers: “Technically true, practically useless.”
RBA & RBNZ: Focus on inflation targeting, not MMT.

Bottom Line

MMT is useful for understanding monetary plumbing but dangerous as a policy playbook.

For Australia and New Zealand—import‑dependent, small open economies—MMT is especially risky. Japan’s unique deflationary culture is not a model we can copy.

At Rock The Vote NZ, we stand firm:

Individual sovereignty means protecting citizens from inflationary erosion of savings and wages.
National sovereignty means safeguarding the NZ dollar, resisting external shocks, and ensuring fiscal discipline.

MMT is like a loaded gun with a hair trigger. It’s technically true you can print money forever… until you can’t.