The main argument of MMT is that any country that prints its own currency can’t go broke, so a country like the U.S. has a lot more room to deficit spend than normally thought, especially given low interest rates.
Turns out that billionaire investor Warren Buffett doesn’t love Modern Monetary Theory either. “I’m not a fan of MMT — not at all,” the Berkshire Hathaway Inc. chief executive officer said Friday in a telephone interview, adding that the deficit spending that’s part of the theory could risk “spiraling” inflation. “We don’t need to get into danger zones, and we don’t know precisely where they are.”
Buffett joins critics including Federal Reserve Chairman Jerome Powell, former U.S. Treasury Secretary Larry Summers, BlackRock Inc. CEO Larry Fink and DoubleLine Capital’s Jeffrey Gundlach, who called MMT “complete nonsense” that’s being used to justify a “massive socialist program.” Powell has said the concept of MMT is “just wrong.”
The main argument of MMT is that any country that prints its own currency can’t go broke, so a country like the U.S. has a lot more room to deficit spend than normally thought, especially given low interest rates. Adherents include progressive Congresswoman Alexandria Ocasio-Cortez, who has floated increased deficit spending to address climate change.
Buffett has criticized the fight over a debt ceiling, saying in 2011 that not raising the limit would be “asinine.” He reiterated that view Friday, contending that it’s a mistake to fight over the ceiling.
“It’s just ridiculous to be able to use the debt ceiling as a weapon in terms of other fights,” Buffett said Friday. “The problem with having a debt ceiling is that it can be used for extraordinary mischief or, in effect, the blocking of government.”
Still, he stressed reason. It would be unwise to have the ratio of debt to gross domestic product grow consistently, he said.