III 

117TH CONGRESS 

1ST SESSION S. RES. 136 

Recognizing the duty of the Senate to abandon Modern Monetary Theory 

and recognizing that the acceptance of Modern Monetary Theory would 

lead to higher deficits and higher inflation. 

IN THE SENATE OF THE UNITED STATES 

MARCH 25, 2021 

Mr. BRAUN (for himself, Ms. ERNST, and Mr. TILLIS) submitted the following 

resolution; which was referred to the Committee on Banking, Housing, 

and Urban Affairs 

RESOLUTION 

Recognizing the duty of the Senate to abandon Modern Monetary Theory and recognizing that the acceptance of 

Modern Monetary Theory would lead to higher deficits 

and higher inflation. 

Whereas noted economists from across the political spectrum 

have warned that the implementation of Modern Monetary Theory (referred to in this preamble as ‘‘MMT’’) 

would pose a clear danger to the economy of the United 

States; 

Whereas, in July 2019, Zach Moller, deputy director of the 

economic program at Third Way, wrote in a memo the 

problems associated with MMT, including that— 

(1) ‘‘Under an MMT regime, policymakers would 

need to respond to inflation by doing two of the most unVerDate Sep 11 2014 18:27 Mar 26, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6300 E:\BILLS\SR136.IS SR136

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popular things ever: raising taxes and cutting spending. 

. . . We can easily imagine divided government’s paralysis 

to fight inflation: Republicans refusing to raise taxes and 

Democrats refusing to cut spending.’’; 

(2) MMT ‘‘ends our central non-political economic 

manager’’ and ‘‘markets trust the Federal Reserve and, 

as a result, businesses and individuals have well-anchored 

inflation expectations. . . . To solve the challenges higher 

interest rates create, including a possible interest financing spiral, MMT generally says that the Fed will be 

tasked with keeping interest rates low by making the 

Federal government, through the Fed, the consistent (if 

not the primary) purchaser of bonds. This is a different 

mission for the Fed than it has now. The Fed would no 

longer be tasked with intervening to keep prices stable 

because it would be too busy buying bonds. Bond purchases by the Fed generally increase inflation. Thus, the 

Fed would no longer be an independent manager of the 

economy.’’; and 

(3) MMT ‘‘destroys foreign confidence in America’s 

finances. . . . Holders of U.S. debt (in the form of treasuries) expect stability in value, a return from their investments, and the ability to be paid back. MMT blows that 

up. Bondholders would no longer be assured a return on 

their investment, and it will no longer be as desirable for 

our creditors to hold U.S. debt.’’; 

Whereas, on May 17, 2019, Joel Griffith, a research fellow 

at The Heritage Foundation, wrote in an article entitled 

‘‘The Absurdity of Modern Monetary Theory’’ the following: ‘‘There is no free lunch. We will pay either 

through the visible burden of direct taxation, the hidden 

tax of inflation, or higher borrowing costs (as the government competes with businesses for available capital). 


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Such realities might not make for a great stump speech, 

but facing them squarely now can save us a lot of headaches down the road.’’; 

Whereas, on March 25, 2019, Janet Yellen, former Chair of 

the Board of Governors of the Federal Reserve System, 

disagreed with those individuals promoting MMT who 

suggest that ‘‘you don’t have to worry about interest-rate 

payments because the central bank can buy the debt’’, 

stating: ‘‘That’s a very wrong-minded theory because 

that’s how you get hyper-inflation.’’; 

Whereas former Secretary of the Treasury and Director of 

the National Economic Council Lawrence H. Summers— 

(1) on March 5, 2019, wrote in an opinion piece in 

the Washington Post entitled ‘‘The left’s embrace of 

modern monetary theory is a recipe for disaster’’ that, 

‘‘contrary to the claims of modern monetary theorists, it 

is not true that governments can simply create new 

money to pay all liabilities coming due and avoid default. 

As the experience of any number of emerging markets 

demonstrates, past a certain point, this approach leads to 

hyperinflation.’’; and 

(2) on March 4, 2019, said that— 

(A) MMT is fallacious at multiple levels; 

(B) past a certain point, MMT leads to hyperinflation; and 

(C) a policy of relying on a central bank to finance government deficits, as advocated by MMT 

theorists, would likely result in a collapsing exchange 

rate; 

Whereas, on February 26, 2019, Jerome Powell, Chair of the 

Board of Governors of the Federal Reserve System, statVerDate Sep 11 2014 18:27 Mar 26, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6300 E:\BILLS\SR136.IS SR136

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ed: ‘‘The idea that deficits don’t matter for countries that 

can borrow in their own currency I think is just wrong.’’; 

Whereas, on February 24, 2019, Matt Bruenig, founder of 

the People’s Policy Project, wrote in an article entitled 

‘‘What’s the Point of Modern Monetary Theory’’ that 

‘‘the real point of MMT seems to be to deploy misleading 

rhetoric with the goal of deceiving people about the necessity of taxes in a social democratic system. If successful, these word games might loosen up fiscal and monetary policy a bit in the short term. But insofar as getting 

government spending permanently up to 50 percent of 

GDP really will require substantially more taxes in the 

medium and long term.’’; 

Whereas, on February 21, 2019, Doug Henwood, a journalist 

and economic analyst, wrote in an article in Jacobin entitled ‘‘Modern Monetary Theory Isn’t Helping’’ that 

‘‘MMT’s lack of interest in the relationship between 

money and the real economy causes adherents to overlook 

the connection between taxing, spending, and the allocation of resources’’; 

Whereas, on January 28, 2019, in a question and answer session with James Pethokoukis of AEIdeas, Stan Veuger, 

visiting lecturer of economics at Harvard University, stated that, ‘‘if you take MMTers at their word in the most 

aggressive sense, then what you would see is a massive 

debt finance expansion of the welfare state with Medicare 

for All, with a jobs guarantee, and with concerns about 

inflation being deferred entirely to elected officials who 

would have to raise taxes to keep it under control. I think 

in a scenario like that, we do run a risk of going back 

to the 1970s pre-Volker style macroeconomics and I 

think that would be bad.’’; 


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Whereas, on January 17, 2019, Michael Strain, Director of 

Economic Policy Studies at AEI, wrote in an opinion article in Bloomberg entitled ‘‘Modern Monetary Theory Is 

a Joke That’s Not Funny’’ that ‘‘if you thought from the 

start that the whole idea sounded like lunacy, you were 

right, even if it’s possible to admit some sliver of sympathy for it’’; 

Whereas Paul Krugman, winner of the 2008 Nobel Memorial 

Prize in Economic Sciences— 

(1) on March 1, 2019, posted on Twitter a point-bypoint rebuttal to an article entitled ‘‘The Deficit Myth: 

Modern Monetary Theory and the Birth of the People’s 

Economy’’ by Stephanie Kelton, which concluded with 

Krugman tweeting that— 

(A) ‘‘Sorry, but this is just a mess. Kelton’s response misrepresents standard macroeconomics, my 

own views, the effects of interest rates, and the process of money creation.’’; 

(B) ‘‘Otherwise I guess it’s all fine.’’; and 

(C) ‘‘See what I mean about Calvinball?’’; and 

(2) on February 12, 2019, wrote in an opinion piece 

in the New York Times the following: ‘‘And debt can’t 

go to infinity—it can’t exceed total wealth, and in fact 

as debt gets ever higher people will demand ever-increasing returns to hold it. So at some point the government 

would be forced to run large enough primary (non-interest) surpluses to limit debt growth.’’; 

Whereas, on November 15, 2019, Jason Fichtner and Kody 

Carmody of the Bipartisan Policy Center wrote in a report entitled ‘‘Does the National Debt Matter? A Look 

at Modern Monetary Theory, or MMT’’ that— 


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(1) ‘‘deficits do have a role to play in public finance’’ 

but, ‘‘as interest rates rise, some private-sector projects 

no longer make financial sense and are forgone. Crowding out private investment ultimately leads to a 

misallocation of resources away from their most economically productive use, hampering economic growth. . . . 

The more we borrow today, the more expensive it will be 

to continue borrowing in the future. At some point, debt 

has to be paid back. There is no free lunch.’’; 

(2) ‘‘MMT underestimates other downside risks of 

debt’’ and ‘‘MMT advocates note that inflation is the 

only restraint on debt-financed spending. This leads some 

to conclude that under the theory of MMT, debt is not 

a concern, as governments can simply print more money 

to pay off debt. Such a theory is roundly rejected by academic economists on both sides of the political spectrum.’’; 

(3) printing money has costs, including a ‘‘loss of 

credibility for the government’’, an ‘‘inflation risk’’, and 

exacerbating ‘‘exchange rates’’; 

(4) ‘‘MMT assumes away politics’’ and puts ‘‘the 

onus of inflation control on Congress, the institution that 

lately seems worst-equipped to handle it. The Federal Reserve—which has spent a long time building extensive 

credibility in its commitment to fight inflation—would be 

largely sidelined.’’; 

(5) ‘‘even MMT admits that deficits and debt matter’’, noting that Stephanie Kelton has stated: ‘‘I would 

never take the position that we ought to move forward, 

passing legislation with no offsets, to do Green New 

Deals, and Jobs Guarantees, and Medicare for All. In the 

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ment over how much room there is to borrow without accelerating inflation.’’; and 

(6) it is ‘‘hard to pin MMT down on anything at all’’ 

due, in large part, to the fact that ‘‘prominent supporters 

of MMT have taken vague, sometimes contradictory positions: When politicians make claims about paying for the 

Green New Deal through MMT, stay silent, and when 

economists criticize this view, claim you are being misunderstood.’’; 

Whereas the March 2019 report entitled ‘‘How Reliable is 

Modern Monetary Theory as a Guide to Policy?’’ by Scott 

Sumner and Patrick Horan of the Mercatus Center at 

George Mason University found that— 

(1) MMT— 

(A) has a flawed model of inflation, which overestimates the importance of economic slack; 

(B) overestimates the revenue that can be 

earned from the creation of money; 

(C) overestimates the potency of fiscal policy, 

while underestimating the effectiveness of monetary 

policy; 

(D) overestimates the ability of fiscal authorities to control inflation; and 

(E) contains too few safeguards against the 

risks of excessive public debt; and 

(2) an MMT agenda of having fiscal authorities 

manage monetary policy would run the risk of— 

(A) very high debts; 

(B) very high inflation; or 

(C) very high debts and very high inflation, 

each of which may be very harmful to the broader 

economy; 


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Whereas the January 2020 working paper entitled ‘‘A Skeptic’s Guide to Modern Monetary Theory’’ by N. Gregory 

Mankiw stated: ‘‘Put simply, MMT contains some kernels 

of truth, but its most novel policy prescriptions do not 

follow cogently from its premises.’’; 

Whereas the January 2019 report entitled ‘‘Modern Monetary Theory and Policy’’ by Stan Veuger of the American 

Enterprise Institute warned that ‘‘hyperinflation becomes 

a real risk’’ when a government attempts to pay for massive spending by printing money; and 

Whereas the September 2018 report entitled ‘‘On Empty 

Purses and MMT Rhetoric’’ by George Selgin of the Cato 

Institute warned that— 

(1) when it comes to the ability of Congress to rely 

on the Treasury to cover expenditures, Congress is, in 1 

crucial respect, more constrained than an ordinary household or business is when that household or business relies 

on a bank to cover expenditures because, if Congress is 

to avoid running out of money, Congress cannot write 

checks in amounts exceeding the balances in the general 

account of the Treasury; and 

(2) MMT theorists succeed in turning otherwise 

banal truths about the workings of contemporary monetary systems into novel policy pronouncements that, although tantalizing, are false: Now, therefore, be it 

1 Resolved, That the Senate— 

2 (1) realizes that large deficits are 

3 unsustainable, irresponsible, and dangerous; and 

4 (2) recognizes— 


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1 (A) that the acceptance of Modern Mone2 tary Theory would lead to higher deficits and 

3 higher inflation; and 

4 (B) the duty of the Senate to abandon 

5 Modern Monetary Theory in favor of main6 stream fiscal and monetary frameworks. 

Æ 


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