Once upon a midnight dreary, while I pondered, weak and weary,
Over many a quaint and curious chart of fiscal lore —
While I nodded, nearly napping, suddenly there came a tapping,
As of markets softly rapping, rapping at my ledger’s door.
“’Tis the Fed,” I muttered, “tapping at my nation’s door —
Only MMT, nothing more.”
Modern Monetary Theory (MMT) emerged like a laboratory experiment equal in ambition and madness. MMT is the idea that governments and central banks can print money and flood the economy with their respective currency without consequences, as long as the velocity of cash in circulation remains under control. In 2019, the theory had begun to seep into the political mainstream as a means to pay for large government expenditures, such as The Green New Deal, by potential 2028 presidential candidate Alexandria Ocasio-Cortez.
The brainchild of Stephanie Kelton, advisor to the Bernie Sanders 2016 presidential campaign, MMT underlines the idea that, unlike a household, the government can disregard its budget entirely. In a TED Talk on October 21, 2021, Kelton stated,
The federal government is fundamentally different, unlike the rest of us, Congress never has to check the balance in its bank account to figure out whether; it can afford to spend more. As the issuer of the currency, the federal government can never run out of money, it can afford to buy whatever is available and for sale in its own currency.
During the onset of government lockdowns prohibiting commerce and the pursuit of happiness, MMT saw the light of day. From spring 2020 to winter 2021, the federal government dispersed $931 billion directly to individuals in the form of stimulus checks found under the CARES Act of 2020 and the American Rescue Plan of 2021. This sum far outweighs the stimulus payments of the 2008 banking crisis ($108 billion) and the 2001 Dot-com Bubble ($36 billion). The Mises Institute reports the Federal Reserve’s balance sheet more than doubled between 2020 and 2022, from $4 trillion to $9 trillion. Within two years, the money supply (measured as M2) grew roughly 40 percent. In retrospect from 2000 to 2019, the money supply grew annually by six percent. The scale of that monetary experiment, printing dollars into a politically frozen economy remains an unprecedented act of monetary expansion.
Like the phrase, “two weeks to flatten the curve,” the new economic catchphrase in circulation was “transitory inflation.” Just like the political phrase, the economic term “transitory inflation” was anything but short. The government was aware that increasing the money supply would consequentially increase inflation; however this would pass, and the average American need not worry. By 2021, then–Secretary for the Department of Treasury, Janet Yellen stated,
I really doubt we’re going to see an inflationary cycle, although I will say that all the economists in the administration are watching that very closely.” Just a year later, in 2022, the inflation rate peaked at nine percent. In 2024, researchers at MIT discovered that, “42 percent of inflation could be attributed to government spending.
By its own doctrine, the Federal Reserve claims a dual mandate: “ two goals of price stability and maximum sustainable employment.” Price stability is measured yearly by the Price Index for Personal Consumption Expenditures and should not drastically exceed the bounds of two percent. As of August 2025, inflation remains at 2.9 percent following a steady trend of roughly two years during which inflation has hovered around three percent. In other words, everything has become more expensive since the cash injections from 2020. Doubt is rising as to whether the Federal Reserve will even defend its once sacred two percent target, given the late dominance of three percent.
The fiscal burden incurred within the last five years has not ended. Consumers struggle to read their economic landscape, muddled by the government and Fed alike. The Consumer Sentiment Index which ranges from 0 to 200, recorded on October 3, sits at 55. Since the beginning of the year, the dollar has decreased in value by 11 percent and could lose another 10 percent by 2026. Over the past three years, the dollar has lost nearly half of its purchasing power relative to gold and 8.4 percent when compared to goods and services. Speaking of gold, the precious metal has been hitting record highs of over $4000 per ounce, roughly a 33-percent increase since last year. Not alone in the climb, Bitcoin has risen from its 2020 value of under $10,000 to over $100,000. All that stimulus money has been moved away from dollars and into alternatives such as gold or Bitcoin.
The fundamental flaw of Modern Monetary Theory reminds us that money is a tool and prices are signals. Currencies are chosen not because the government deems them valuable, but because people place value in them. The chaotic years since 2020 have shown a depreciating currency as a consequence of devaluing the dollar. The resonating inflation, a tax without legislation, has not been transitory, but has perhaps redefined the standard of the Federal Reserve. Five years later, the experiment’s echoes remain in higher prices, fragile confidence, and a central bank trapped between denial and political dependence. MMT promised prosperity without pain, yet it left Americans haunted by the creature it awakened in 2020. The true monster was never the money itself, but the belief that we could summon and command it without consequence.
