DAVID HENDERSON UNDERSTANDS THE FOLLIES OF MODERN MONETARY THEORY.

Last week, we called attention to Jarrett regency economic advisor Jared Bernstein, demonstrating how little he understood about modern monetary theory.

David Henderson watched the interview, and he caught something instructive.

I’ll ignore interviewer Stephanie Kelton’s statement (at the 0:06 point) that something “begs the question.” Kelton, by the way, is one of the leading proponents of Modern Monetary Theory.

Jared says, “The government definitely prints money and it definitely lends that money which is why the government definitely prints money and then it lends that money by selling bonds.”

You can tell by watching him that Jared is playing for time while he consults the hard drive in his head. It’s as if he’s saying to himself, “I know the answer; I can get this.”

Unfortunately, he doesn’t.

Curmudgeons understand that "begging the question" is framing it in such a way as to force the answer you want.  It's a common trick among the Woke, referring to a policy as "-phobic" or otherwise deploying a pejorative, the better to elicit agreement.  It's also possible to do that with monetary theory, referring to a policy as "inflationary" when it might not be.  A lot of people have shifted to the "begs the question" locution where "provokes the question" or "prompts the question" or "Can you explain?" are serviceable.

I wonder what it says about Stephanie Kelton, the patron saint of money printing, that the best she can do by way of an advocate for Weimar money to go with Weimar personnel policy is such a poseur.

First he conflates printing money and lending money. The Fed does print money. Score one for Jared. But it doesn’t lend that money. It typically uses that money to buy bonds that the Treasury has already printed and sold to the market. It does this in the form of open-market operations, something you can learn about even in an introductory Money and Banking textbook. My guess, by the way, is that Jared has never even studied an introductory Money and Banking textbook. You’ll see why I say that in a minute.

Second, the Fed does not “lend that money by selling bonds.” When the Fed sells bonds, it’s not lending. You might think it’s borrowing. But that’s not true either. Once it sells bonds, the owner of the bonds is owed money by the Treasury, not by the Federal Reserve. (Notice that Jared talks about the federal government without ever distinguishing between the Treasury and the Fed.)

But that's the way it goes.  And these are the poster children for Presidential Leadership and Governance by Wise Experts.  I'll give Mr Henderson the final word.  "It’s not as if Biden knew enough economics to ask Bernstein tough questions—or even easy ones."  All the Democrats have to do to hold onto the presidency is appear competent, and they're having trouble with that.