Title: Recognizing the duty of the House of Representatives to condemn Modern Monetary Theory and recognizing that the implementation of Modern Monetary Theory would lead to higher deficits and higher inflation.
Policy area: Economics and Public Finance

Summary:
This resolution recognizes that (1) deficits are unsustainable, irresponsible, and dangerous; (2) the implementation of Modern Monetary Theory will lead to higher deficits and higher inflation; and (3) it is the duty of the House of Representatives to condemn the theory.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 1049 Introduced in House (IH)]

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116th CONGRESS
  2d Session
H. RES. 1049

Recognizing the duty of the House of Representatives to condemn Modern 
   Monetary Theory and recognizing that the implementation of Modern 
  Monetary Theory would lead to higher deficits and higher inflation.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 16, 2020

  Mr. Kevin Hern of Oklahoma (for himself, Mr. Budd, Mr. Norman, Mr. 
   Flores, Mr. Baird, Mr. Watkins, Mr. Bishop of North Carolina, Mr. 
Collins of Georgia, and Mr. Meuser) submitted the following resolution; 
       which was referred to the Committee on Financial Services

_______________________________________________________________________

                               RESOLUTION


 
Recognizing the duty of the House of Representatives to condemn Modern 
   Monetary Theory and recognizing that the implementation 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, on March 4, 2019, former Secretary of the Treasury Lawrence H. Summers 
        said that--

    (1) MMT is fallacious at multiple levels;

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

    (3) 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, said: ``The idea that deficits don't matter 
        for countries that can borrow in their own currency I think is just 
        wrong'';
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 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--

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

    G    (B) overestimates the revenue that can be earned from the creation 
of money;

    G    (C) overestimates the potency of fiscal policy, while 
underestimating the effectiveness of monetary policy;

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

    G    (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--

    G    (A) very high debts;

    G    (B) very high inflation; or

    G    (C) very high debts and very high inflation, each of which may be 
very harmful to the broader economy;

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

    Resolved, That the House of Representatives--
            (1) realizes that deficits are unsustainable, 
        irresponsible, and dangerous; and
            (2) recognizes--
                    (A) that the implementation of Modern Monetary 
                Theory would lead to higher deficits and higher 
                inflation; and
                    (B) the duty of the House of Representatives to 
                condemn Modern Monetary Theory.
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