Congress has authorized $6 trillion in deficit spending to defeat the coronavirus. That’s more than the United States spent fighting World War II, when $4 trillion of government spending released the country from the clutches of the Great Depression.

Naturally, politicians and pundits debate whether the amount is excessive. But implicit in their seemingly routine deficit debate is a remarkable shift: Inflation has replaced debt — the old stalking horse for defeating progressive legislation — as the primary concern with deficit spending.

It’s a subtle change, with profound consequences. And it augurs the rise of a revolutionary approach to political economy, Modern Monetary Theory (MMT), as the dominant paradigm in the politics of money.

Like Keynesians of yesteryear, Modern Monetary Theorists urge government to achieve full employment through fiscal policy, even when it requires deficit spending. Their comfort with large deficits emerges from an understanding that an obsession with national debt is a relic of another time, the age of gold standards and fixed currency arrangements. Today, in the age of national monetary sovereignty and free-floating currencies, countries like […]