Tag: Econ Bro

Across the globe, governments emphasise the need to grow the economy. They display statistics as evidence of progress. They build roads, bridges and schools, and they call it development. They also enact regulations, collect taxes and redistribute resources. All of this occurs in the name of economic advancement. But what truly creates wealth?

Austrian economists argue that capital is more than just money, it is a living process in which private individuals set aside present consumption, conserve resources, and pour those resources into ventures they believe will yield increase later. That choice demands patience, sound judgment and - above all - ownership.

When Jean-Baptiste Say published his Treatise on Political Economy in 1803, he was not trying to be provocative. He was trying to be clear. In doing so, he ended up stating something both obvious and easy to forget: real economic activity begins with production, not consumption.

Some months ago, I exchanged views with Buddy Wells, one of South Africa’s more vocal supporters of Modern Monetary Theory (MMT). In our debate, he argued a familiar point. According to him, governments can print money to employ the jobless without causing inflation, as long as those being hired are not already doing anything useful.

The charts below, and others like them, are frequently used online and in presentations by economist and author Stephanie Kelton. She uses them to support the Modern Monetary Theory (MMT) claim that, contrary to conventional wisdom, government deficits are not harmful. Instead, she argues they represent a gain to the economy.

It is often purported that the road to hell is paved with good intentions. My online debate with South African Modern Monetary Theory (MMT) advocate, Buddy Wells, made me think about this wise saying. Mr Wells, of whom I have grown fond since our first interaction on X and who has been nothing but cordial in our debates, argued that following the policy prescriptions of MMT, the SA government can issue more currency to build more schools and employ more teachers.

Modern Monetary Theory (MMT) is an economic framework that proposes that countries that control their own currency can issue new currency to meet the needs deemed necessary by the government. Theorists argue that governments should issue currency to create jobs for the unemployed, to narrow the gap in wealth inequality.