Carl Icahn, who made his name as a 1980s corporate raider, is worried that Modern Monetary Theory (MMT) would wreck the nation’s fiscal soundness and spark ruinous inflation.
As such, the activist investor joins the chorus of prominent financial figures who dislike MMT, which is a cause célèbre of the Democratic Party’s left. Detractors range from uber-investor Warren Buffett, a Democrat, to Federal Reserve Chairman Jerome Powell, a Republican.
Icahn, who once was an advisor to President Donald Trump, told Bloomberg News: “You can print money up to a point, but after that point, it could become very dangerous. We don’t want to hit a wall that you can’t recover from. Once you get into an inflationary spiral, it’s very difficult to get out of it—and therein lies the danger.”
To be sure, the financial community is not unanimous on this point. Storied bond investor Bill Gross has said that the US could double its deficit without any problem.
The deficit has expanded under Trump, owing to the tax cut and higher military spending, among other things. The deficit is estimated to hit $1.1 trillion in fiscal 2020.
MMT holds that a nation that prints its own currency, like the US, has leeway to run larger deficits provided that inflation is tame. The idea is to use the extra money for measures such as the Green New Deal and social spending. Rep. Alexandria Ocasio-Cortez, a New York Democrat, is its most vocal proponent.
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Tags: Carl Icahn, federal deficits, Modern Monetary Theory, Warren Buffett