Ancient Monetary Theory

I’m reading a new book out by Amity Shales about the history of the Great Society and its origins and roots in socialism, unions and its aftermath as it spilled into Vietnam and beyond. One thing that stood out for me was that the period after Nixon took the U.S. off the gold standard really marked the beginning of what we now are calling “MMT” (AOC take a look back at your history books sometime). Nixon’s Sunday night move in 1971 to close the gold window was driven by a number of exogenous factors, some of which related to the social programs he was espousing (Yes Nixon). So, deficit-driven spending in close concert with the Central Bank is not anything new under the sun. What followed this period of “freer” dollar float however was new as the U.S. experienced skyrocketing inflation and double digit rates of interest.

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