It was bound to come to this, and right on time too.

Outgoing ECB President Mario Draghi says the ECB Should Examine New Ideas Like MMT

European Central Bank President Mario Draghi said the Governing Council should be open to ideas such as Modern Monetary Theory, while noting they’re closer to fiscal policy and should be directed by governments.

​Draghi was responding to a question from European lawmakers about helicopter money and the best ways to channel funds to the economy in a way that helps inequality. He mentioned MMT and a recent paper by former Federal Reserve Vice Chairman Stanley Fischer -- the adviser on Draghi’s doctorate -- which said central banks should put money “directly in the hands of public and private sector spenders.”

​People's QE

Putting money directly into consumer's hands is a people QE, and ignoring government deficits on the theory they don't matter is one of the tenants of MMT.

These are objectively pretty new ideas,” Draghi said. “They have not been discussed by the Governing Council. We should look at them, but they have not been tested.”

Not Been Tested?!

That's not exactly true. Japan wasted trillions of dollars building bridges to nowhere and it solved nothing. The best one can say is Japan has not imploded yet.

Of course the MMTers will respond Japan did not do enough MMT, as if building more bridges to nowhere would actually solve problems.

RECOMMENDED ARTICLES

Dam the Rules, Tests Ahead

When you look at them closely, you realize the task of distributing money to one subject or the other subject, that’s typically a fiscal task,” he said. “It’s a government decision, not the central bank...It’s the political governance of these ideas that needs to be addressed.”

Draghi knows full well that both ideas he espouses testing are against the Maastricht Treaty on which the Eurozone was founded if they were done in a large enough size to matter.

But Draghi simply does not give a damn.

Why?

  • It's not his problem. His term ends October 31, 2019.
  • The Italian banking system is insolvent so we need new "creative" ways to fix things.
  • What better time than now to propose such actions when you can dump the new ideas on hand-picked replacement clown Christine Lagarde?

Fundamental Falsehood

One fundamental assumption of MMT (and an obvious false one) is that governments will do wise things with the money they create out of thin air.

History shows the asininity of that theory.

Mike "Mish" Shedlock

MMT Failing Miserably in Brazil

The "we owe it to ourselves" MMT nonsense failed in Japan and Venezuela. Brazil is an excellent case to watch.

Lacy Hunt Blasts MMT and Speaks of Hyperinflation If Implemented

In the Hoisington First Quarter Review, Lacy Hunt blasts MMT as "self-perpetuating" inflation.

$11 Trillion Debt Wave Shows MMT Doesn't Work

Proponents of MMT please note: Your proposal is failing in actual practice.

Nonsensical Global Worries Over Subdued Inflation: Yellen, Draghi, Kuroda

Central bank presidents at the Fed, the ECB, and Bank of Japan are all concerned over low inflation. The Fed wants to hike anyway, but the Bank of Japan will keep pursuing aggressive monetary easing. Meanwhile, asset prices are in the biggest ever bubble.

Italy’s New Prime Minister Puppet: Time to "Ringfence" Italy? MMT to the Rescue?

Giuseppe Conte is slated to become Italy's next prime minister. But he will not be in charge of anything.

QE Singularity: No Japanese 10-Yr Bonds Trade

No Japanese 10-year bonds traded on Tuesday. The BOJ is in perfect control. This should be nirvana. Why Isn't it?

Italy Openly Defiant of Eurozone Stability Pact, Deliberately and Knowingly

Eurozone officials and the ECB are in a quandary over Italy's deliberate defiance of budget rules.

Austria's Central Banks Says More QE is Counterproductive

Dissent within the ECB over QE is at unprecedented levels and rising. But what does "counterproductive" really mean?