by Gary Alexander
May 13, 2025
Modern Monetary Theory (MMT) is a new term (since 1993) for printing paper money out of thin air, but coin-clipping is as old as time. In fact, a major milestone in fiat money took place 60 years ago, on June 3, 1965, when President Lyndon B. Johnson wanted to push all his federal chips in on “Guns and Butter” to fund the Vietnam War to the full, while sending men on rockets to the moon and expanding welfare spending to the max (ending poverty!) and inventing new entitlements (Medicare and Medicaid), which have made cutting federal spending practically impossible, as we have seen in the resistance to DOGE.
Inflation Has Soared 10-fold (and Gold is up Nearly 100-Fold) Since 1965
There’s a great deal of jawing about whether current politicians are “following the Constitution” these days, but I can read. I’m an editor by training, and when I read the Constitution, it does not authorize our un-backed fiat money, nor our unlimited “Guns and Butter” spending since 1965, which have thrown us into a $37 trillion debt hole and unprecedented 10-fold inflation. In fact, the Constitution prohibits it.
The Constitution did not vest our federal or state governments with any authority to issue un-backed paper money, which the Constitution termed “bills of credit.” The nation’s then-recent (1778) experience with worthless cardboard money during the American Revolution led to the highest inflation in our history, so Article I, Section 10 said: “No State shall…emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.” That’s about all the Constitution has to say about what real money is.
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