With rates near zero or negative, Central Bankers’ tools are less effective. The public, wanting new solutions in the face of faltering monetary policies, will eventually elect leaders to enact “new” fiscal policies. One of the new policies being discussed, Modern Monetary Theory (MMT), is proposed as a panacea for jump starting segments of the economy. MMT involves the wholesale printing of money to satisfy government priorities and obligations.
The data reveals that deficits and debt do matter when it comes to economic growth. Current government debt is running at 175% relative to GDP levels. The chart indicates that when debt relative to GDP is this high, there is a negative impact on growth. Historically, at these levels, nominal GDP has risen at less than half the rate than when debt-to-GDP is low. The overall impact of high debt is stunted growth and subdued inflation.
Deciding how to give back is a very personal decision. Ultimately, you should support your community in a way that is important to you. Reflect on your purpose for giving and get started — whether that means volunteering your time, taking a hands-on fundraising approach, or donating monetarily.