Money like magic

Pierre Omidyar had the Midas touch. In 1995 he founded what became eBay. I don’t doubt that Omidyar worked hard, but his $11 billion fortune may be a case (compared to the typical toiler) of easy come, easy more—and that may mean trouble for the rest of us.

Stay with me for several paragraphs, please. Psychologists know some people who have inherited lots of money feel undeserving, and some who have earned billions almost magically feel smart enough to run everything. Marxists during the 1930s sometimes joked that the American working class was Democratic, the middle class was Republican, and the upper class was Communist.

Much of American journalism is coming under the authority of new, so-smart multibillionaires: In the past six years alone, Amazon’s Jeff Bezos has bought The Washington Post, Salesforce founder Marc Benioff bought Time, Laurene Powell Jobs (widow of the Apple founder) bought The Atlantic, and biotech billionaire Patrick Soon-Shiong bought the Los Angeles Times.

Those publications are all on the left, as is Omidyar’s $250 million investigative reporting group, First Look Media. Ryan Grim, an Omidyar Washington bureau chief, is among those pushing Modern Monetary Theory (MMT), the new hot term among Democrats. Grim’s boast: He and they are no longer “constrained by a mindset” that sees national debt as a problem.

Much of American journalism is coming under the authority of new, so-smart multibillionaires.

Grim quotes Stephanie Kelton, who advised the Bernie Sanders campaign: “The federal government cannot run out of dollars. … The federal government—as the issuer of the U.S. dollar—can create all the money that is needed to guarantee health care for all of its people.” Grim concludes his analysis with a 2011 quotation from former Federal Reserve Chairman Alan Greenspan: “The United States can pay any debt it has because we can always print money to do that.”

Greenspan designed his “zero probability of default” comment to offer reassurance after S&P’s downgrading of the credit rating of the United States. But Donald Trump said the same thing in 2016 when CNN’s Chris Cuomo asked him about the soaring national debt: “This is the United States government. … You never have to default because you print the money.”

Trump is right. Even Zimbabwe and Venezuela never had to default: Their dictators just printed more money. But I have a 10 trillion Zimbabwe dollar banknote that may be worth a penny—or maybe I could trade it for a similar number of Venezuelan bolívars.

Hyperinflation can’t happen here? Bill Mitchell, 67, the Australian economics professor (and reggae band guitarist) who coined the term “Modern Monetary Theory,” is an MMT guru. He seems fine with inflation as long as it’s not accelerating. He wrote in 2010, “If the price level or a wage level rises by 10 per cent every month … the inflation rate would be considered stable—a constant rise per period. If the price level was rising by 10 per cent in month one, then 11 per cent in month two, then 12 per cent in month three and so on, then you have accelerating inflation.”

Other MMT proponents say the United States should deliberately inflate the currency as a way to reduce the real value of our national debt and transfer money from creditors to debtors. Many newly elected House Democrats seem to be MMT fans: They hope to control the White House and all of Capitol Hill in 2021. Journalists need to sound the alarm on this, but they are unlikely to if socialism continues to gain popularity, and the most influential media companies are under the control of owners who hit a high-tech gusher and are also prone to magical thinking.

You’d think the failure of socialism and communism in Russia, China, Cuba, Venezuela, and other countries would be sufficient discouragement, but most Americans don’t know much about history, and most journalists don’t know much about economics.

Pierre Omidyar’s publicist in 1997 apparently fabricated the story that Omidyar started what became eBay so his fiancée could trade Pez candy dispensers. But the real story of how Omidyar gained a fortune is almost as magical: The first item sold on his site was a broken laser pointer. He did not think anyone would buy a broken device, but the buyer said he was a collector of broken laser pointers. Omidyar learned that even broken things have a buyer. But what about a broken economy?