Modern Monetary Theory Explained: Why Unlimited Money Printing Could Backfire

A Common-Sense Look at Modern Monetary Theory (MMT)

What if I told you that the government could print all the money it needs and never go broke? That deficits don't matter. That debt isn't a real concern. And inflation—it's not caused just by money printing.

It may sound crazy, but that's the core of a rising economic theory called Modern Monetary Theory, or MMT. And it's not a fringe idea. Some politicians, academics, and influencers believe this is the future of money and how we should run the economy.

Also, some people in my comment section say that I don't understand economics, federal debt, or that my video on $0.23 of every dollar going to service interest on the US National Debt is fearmongering. Today, I want to break it down: what MMT gets right, where it goes off course, and why I think this thinking could lead us into big trouble.

By the way, my name is Noel Lorenzana. I'm not an economist, just a regular guy who spent many years watching how money actually works in the real world and why I believe this matters now more than ever.

What MMT Gets Right

Before we go any further, let's be fair. I want to present MMT as accurately and respectfully as possible. MMT isn't some fringe conspiracy theory. It's a real economic framework with serious academic backers.

It basically says that a government that issues its own currency, like the United States, can never really run out of money because it can always print more. According to MMT, we should stop thinking of the government like a household. Households have to earn money before they spend it. Governments don't. They can create money, so they spend first and tax later.

MMT also separates the concept of affordability from inflation. In their view, the only limit on government spending isn't a budget, it's inflation. As long as inflation is under control, spending can continue. According to MMT, inflation happens when total spending exceeds the economy's ability to produce goods and services. It's not just about the amount of money printed—it's about whether the money supply outpaces the total goods and services the economy can produce.

So MMT says the government can print as much money as it needs as long as inflation is under control, and it can manage inflation by raising taxes and reducing government spending.

Now, let me ask you: if that's all true, then why do we worry about deficits at all? Why doesn't the government just fund healthcare, infrastructure, education, and give everyone regular stimulus checks? I want to know what you think.

Where MMT Falls Short

Now, to be fair, some parts of this make sense. The U.S. doesn't need to borrow money the way a household does. And yes, we do have the tools to create money and stimulate the economy when needed. We've seen that with stimulus checks, pandemic aid, and quantitative easing.

But just because we can print money on demand doesn't mean we should. There are consequences. And that's where I start to diverge from Modern Monetary Theory, because in the real world, we've seen what happens when governments go too far.

Inflation, Reality, and the Fed

On the surface, MMT sounds great, even elegant, but in the real world, something breaks.

The main issue is inflation. According to MMT, the government can spend as much as it wants because it prints the money. And if inflation shows up, they say just raise taxes to pull money out of the economy.

But let's think about that. When was the last time Congress quickly raised taxes to cool off inflation? Exactly. During the pandemic, the government spent trillions. Inflation soared, and instead of raising taxes to fix it, we got more stimulus checks. Even now, prices are still high—groceries, rent, insurance, everything. That's not a theory. That's the real world. Once you flood the system with dollars, each dollar becomes worth less. Basic monetary supply and demand.

Another often-overlooked point: the U.S. government can't just print money at will. The power lies with the Federal Reserve—a separate, privately controlled, and largely unaccountable institution.

The Fed isn’t really federal, and it doesn’t have reserves in the traditional sense. It was arguably created in secret in 1913 on a private island by bankers and power brokers. Google “Jekyll Island” if you haven’t heard the story. When the government spends money it doesn’t have, the Fed steps in—not by printing coins or bills, but by creating money digitally and buying government debt through the bond market.

So when someone says the government can print unlimited money, they’re missing the full story. There’s a firewall between fiscal policy (Congress) and monetary policy (the Fed). But if those two forces ever aligned—Congress spending and the Fed printing on demand—that would eventually lead to hyperinflation, devaluation, and collapse. Look at history: Argentina, Zimbabwe, Weimar Germany. Unlimited money printing equals worthless money and unlimited pain.

Trust, Control, and the Real Game

Modern Monetary Theory isn't just about economics—it’s about control. With MMT, the government can spend whatever it wants until inflation shows up. Then taxes are used to cool it down. Under MMT, taxes aren’t for raising revenue—the government can create money as needed. Taxes are instead a tool to pull money out of the system and manage inflation, maintaining the value of the dollar.

In this framework, the IRS becomes an economic thermostat: too hot, raise taxes; too cold, the government spends more. All based on a theory.

The whole system depends on trusting the government to manage it perfectly—raise taxes exactly when needed, stop spending at the right time, and never go too far.

Why I Disagree with MMT

Even if we don’t follow MMT officially, we’ve been living a soft version of it. The national debt is exploding. Deficits are now permanent. The Federal Reserve is stuck in the middle, fighting inflation with one hand while quietly enabling it with the other.

When money becomes political, stability disappears. You get bubbles, bailouts, and breakdowns.

What if the government’s unlimited printing and spending turns out to be a giant mistake? What if inflation doesn’t stay manageable? What if the trust holding the system together breaks down?

You don’t need a PhD in economics to see it. The cost of groceries is persistently high. Housing prices are sky-high. Your savings keeps shrinking. This isn’t theory—it’s your life, your money, your future.

History shows us that when governments overspend and central banks enable it, it doesn’t end with prosperity. It ends with debt, inflation, maybe even hyperinflation, and a quiet erosion of everything people worked so hard to build.

That’s why I respectfully disagree with Modern Monetary Theory—not because I have all the answers, but because I believe in responsibility, limits, sound money, and protecting what matters.

If you feel like the numbers don’t add up anymore, if you feel like the money system seems rigged, you’re not crazy.

If you want to know more, check out my full video here. Don’t forget to like, subscribe, and consider supporting the channel with a membership. It really helps out. Thank you so much.

Until next time, take care, and see you in the next video.