Larry Summers slams the left's Modern Monetary Theory as 'voodoo economics'


Larry Summers thinks the left's Modern Monetary Theory looks awfully familiar — and he doesn't want to see it again.
Summers' long resume includes leading Harvard University and the U.S. Treasury under former President Bill Clinton. But his relatively liberal view of economics didn't stop him from agreeing with former President George H.W. Bush's historic fight against deficit spending in a Washington Post op-ed published Monday.
MMT is the idea that because governments can literally print money, "they can spend as much as they like," Politico explains. "Inflation is the only obstacle" that should stop the presses, The Week details. MMT has reemerged with the rise of Democratic socialism, most recently when Rep. Alexandria Ocasio-Cortez (D-N.Y.) suggested it, along with tax hikes for the rich, could fund her Green New Deal.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Summers agrees that it's "ludicrous" to believe in that "tax cuts would always pay for themselves," he writes in the Post. Even Bush slammed this supply-side theory as "voodoo economics" during his 1980 presidential campaign. But "MMT is the supply-side economics of our time," Summers continues. And this "moment of economic and political frustration" is no excuse for "the more extreme wing of the out-of-power political party" to claim it's valid, he continues.
Summers then goes on to explain why "modern monetary theory is fallacious at multiple levels," citing foreign governments that tried and failed to make MMT work. Read all of Summers' opinion at The Washington Post, and read some more MMT skepticism at The Week.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Kathryn is a graduate of Syracuse University, with degrees in magazine journalism and information technology, along with hours to earn another degree after working at SU's independent paper The Daily Orange. She's currently recovering from a horse addiction while living in New York City, and likes to share her extremely dry sense of humor on Twitter.
-
Nashville dining: Far more than barbecue and hot chicken
Feature A modern approach to fine-dining, a daily-changing menu, and more
-
Music Reviews: Coco Jones and Viagra Boys
Feature "Why Not More?" and "Viagr Aboys"
-
Visa wants to let AI make credit card purchases for you
The Explainer The program will allow you to set a budget and let AI learn from your shopping preferences
-
Warren Buffet announces surprise retirement
speed read At the annual meeting of Berkshire Hathaway, the billionaire investor named Vice Chairman Greg Abel his replacement
-
Trump calls Amazon's Bezos over tariff display
Speed Read The president was not happy with reports that Amazon would list the added cost from tariffs alongside product prices
-
Markets notch worst quarter in years as new tariffs loom
Speed Read The S&P 500 is on track for its worst month since 2022 as investors brace for Trump's tariffs
-
Tesla Cybertrucks recalled over dislodging panels
Speed Read Almost every Cybertruck in the US has been recalled over a stainless steel panel that could fall off
-
Crafting emporium Joann is going out of business
Speed Read The 82-year-old fabric and crafts store will be closing all 800 of its stores
-
Trump's China tariffs start after Canada, Mexico pauses
Speed Read The president paused his tariffs on America's closest neighbors after speaking to their leaders, but his import tax on Chinese goods has taken effect
-
Chinese AI chatbot's rise slams US tech stocks
Speed Read The sudden popularity of a new AI chatbot from Chinese startup DeepSeek has sent U.S. tech stocks tumbling
-
US port strike averted with tentative labor deal
Speed Read The strike could have shut down major ports from Texas to Maine