Five Senate Republicans want Congress to denounce modern monetary theory, a doctrine gaining fans among progressive Democrats, as a menace to the U.S. economy.
The progressive theory, invoked by Rep. Alexandria Ocasio-Cortez, D-N.Y. — and the subject of fierce debate among thinkers on Wall Street and beyond — would result in bigger budget deficits and higher inflation, according to a non-binding resolution. It was backed by five Republican senators led by Georgia's David Perdue, a former Dollar General Corp. CEO.
MMT says countries that print and borrow in their own currency, like the U.S., can't go broke and don't need to worry too much about budget gaps when inflation is subdued, as it is now.
The idea has been cited by progressives as a way to pay for programs like the Green New Deal. It's been attacked as a recipe for hyperinflation by a series of financial heavyweights. And some investors and economists, from Olivier Blanchard to Bill Gross and Ray Dalio, have taken more nuanced views and sided with some elements of the theory.
Nobel laureate Paul Krugman has been among the critics. But he pushed back Friday against the Republican move on Twitter.