[Congressional Record Volume 165, Number 71 (Wednesday, May 1, 2019)]
[Senate]
[Page S2576]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 SENATE RESOLUTION 182--RECOGNIZING THE DUTY OF THE SENATE TO CONDEMN 
  MODERN MONETARY THEORY AND RECOGNIZING MODERN MONETARY THEORY WOULD 
              LEAD TO HIGHER DEFICITS AND HIGHER INFLATION

  Mr. PERDUE (for himself, Mr. Braun, Ms. Ernst, Mr. Moran, and Mr. 
Tillis) submitted the following resolution; which was referred to the 
Committee on Banking, Housing, and Urban Affairs:

                              S. Res. 182

       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--
         (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;
       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 Senate--
       (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 Senate to condemn Modern Monetary 
     Theory.

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