This is the third post in a series on Modern Monetary Theory.  The first post introduced the theory, the second critiqued it, and this one explains the investment implications. Buy U.S. Treasury Bonds As discussed in my previous post, MMT is deflationary, not inflationary, so it should lead to lower interest

rates.  I believe the Japanese and EU experiments with monetary stimulus and asset purchases have born this out. Chart 1:  Japanese Stock Market, Government Debt and Central Bank Balance Sheet Source: Bloomberg In the chart above, the Nikkei 225 Index is the white line, the red line is Japanese…

This post continues my series on Modern Monetary Theory (“MMT”).  You can find my previous post, where I explained how MMT works, here.  In this post, I critique various parts of MMT theory. “Countries Don’t Go Bankrupt” This idea has been in circulation before.  Indeed, Walter Wriston, the CEO of Citibank, once went all-in

on it.  "Wriston's most remarkable achievement at Citibank was persuading Washington that lending money to governments in developing countries was nearly risk-free."[1]  About these loans, Wriston notoriously said, "They're the best loans I have.  Sovereign nations don't go bankrupt."[2] The truth, as anyone with even a…

For the past six months, Modern Monetary Theory (“MMT”) has been making heads explode all over the blogosphere and in the financial press.  Most of the commentary is from ride-or-die free market capitalists shouting about socialism and the End of Days.  Few seem to have taken the time to know

where MMT comes from or appreciate that (spoiler alert) the Federal Reserve has been practicing MMT for 10 years. Beginnings MMT has a precursor in what is known as Chartalism. The word "Chartalism" has its roots in the Latin word "charta" meaning a token or a ticket.  The term was…