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Doug Pollitt: MMT's Stephanie Kelton meets the grifter of imperial France, John Law

Section: Daily Dispatches

9:21p ET Saturday, September 26, 2020

Dear Friend of GATA and Gold:

In his September letter for clients, Doug Pollitt of Pollitt & Co. in Toronto compares Modern Monetary Theory advocate Stephanie Kelton's new book, "The Deficit Myth," with a recent biography of a monetary theorist of three centuries ago, the infamous John Law, and concludes that the policies they pursued are essentially identical -- infinite money.

Law's policy brought down the government of imperial France in only four years in the 1700s. Kelton may not quite realize it, but the policy she advocates has been in force in the United States since long before she began writing about it. (Yes, the United States still issues debt instruments but debt that keeps growing rapidly, never can be repaid except in devalued currency, and is treated as money itself is no debt at all but the equivalent of new money, just as it was in Law's time.)

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Pollitt acknowledges that infinite money policy has had a much longer run in the United States -- almost 50 years, figuring its duration from the termination of the dollar's official convertibility to gold in 1971 -- that it had in imperial France and that it might continue a lot longer even as the dollar devalues gradually instead of collapsing.

While only a high school graduate, your secretary/treasurer, by virtue of closely observing for 20 years the racket called the gold market, would add something else the MMT people don't recognize and Pollitt doesn't mention. That is, MMT, essentially infinite money, gains endurance from, and indeed requires, something the French regency of Law's day lacked -- an efficient mechanism of surreptitiously suppressing commodity prices and pushing infinite money creation into financial assets so the devaluation of the currency is more or less concealed from the masses.

Futures markets in which the government intervenes behind the cover of intermediary brokers have done the job nicely, though at the enormous cost of destroying the market economy, impoverishing the working class, enriching the ownership class, and exploding economic inequality.

Documenting and publicizing this is GATA's tedious work, and since it is not respectable work, it would be a lot easier if respectable academics like Kelton suspended their theorizing long enough to join us in pressing the government with a few critical questions about its interventions. This wouldn't require writing a book. The questions would fit on one sheet of paper, and even widely reporting the government's refusal to answer them might shake the financial world far more than any theory.

Pollitt's letter is fascinating reading and with his kind permission it is posted in PDF format at GATA's internet site here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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