Modern Monetary Theory justifies printing more money, Bitcoin is the counterargument

Mario Draghi, the outgoing president of the European Central Bank, mentioned the institution is open to Modern Monetary Theory-a fiscal and monetary framework that argues governments can keep printing money so long as inflation is in check.

Modern Monetary Theory proposes that governments with their own currency should disregard the accumulation of sovereign debt.

The theory says that instead of worrying about fiscal deficits, governments should print as much money as needed to bolster their economy, as long as high rates of inflation are prevented.

It's gaining so much traction that Mario Draghi said in a press comment that the decision-making body of the ECB, the Governing Council, is open to MMT. Even Ray Dalio-the co-head of the world's largest hedge fund, Bridgewater Associates-has given some interpretations of MMT his stamp of approval.

The billionaire investor wrote in a May that the current monetary policies of adjustable interest rates and quantitative easing are unproductive, necessitating the "Fiscal and monetary policy coordination" described by MMT theorists.

With prominent supporters in Dalio and Draghi, governments may take it upon themselves to print an excessive amount of money.

Peter C. Earle, a research fellow at the American Institute for Economic Research, said to Bloomberg that in an MMT-centric macroeconomy "Precious metals and cryptocurrencies would swifty rise in popularity and therefore [its] price." He suggested that when money printing is prevalent, precious metals and cryptocurrencies serve as "Inflationary hedges".

Macro analyst Alex Krüger wrote on Twitter that "Having elected politicians with control over both monetary and fiscal policy," which is what MMT describes, is a "Disaster waiting to happen." While failing to describe the side-effects of MMT, Krüger remarked that "Bitcoin and gold should benefit from this long-term underlying theme".

Unlike the dollar or euro, Bitcoin has a fixed supply cap of 21 million coins and its inflation rate is set by a decentralized protocol-scarcity and the difficulty of production are two key characteristics of a "Hard money."

"Bitcoin is about 'hard money,' MMT says hardness doesn't matter."