Traditional economics is wrong: Donald Trump has proved it

Headline buries the real lede. The thesis is that it proves the effectiveness of Modern Monetary Theory.

Except that's not really news. We've been deficit-spending for decades, which is what's happening now. MMT isn't supposed to be about deficit spending.

You're still supposed to tax in line with what you spend, in order to control inflation. MMT just dispenses with need to find lenders: anybody you buy from is a lender. The money itself is the debt.

If anything, there has been a weird conflict in the theory. Despite a vast increase in the money supply, inflation is under 3%, and that's caused mostly by oil shock rather than by monetary policy.

That puzzled me for years, but the answer is obvious: there is massive inflation. It's just confined to asset markets rather than consumer goods. Wages don't rise so consumer demand doesn't rise.

What MMT says is that the government should be taxing that enormous rise in the stock market, to deflate the bubble, but nobody seems to mind the bubble. Right now that bubble is funding data centers, and if those data centers turn out to produce actual value for somebody, then we're actually doing good. If not...

Conventional theory says that we should be taxing the markets to pay down the national debt. Nobody seems to have any appetite for that.