“Hoover Had The Largest Peacetime Deficits In US History”; Economists Debate Money And The State

“He who controls the money supply of a nation controls the nation.” – James Garfield

From economic history to in-depth analysis of today’s financial plumbing, last night’s MMT Vs Austrian debate assessed the roles of debt and currency within the State.

In the Austrian corner was Bob Murphy, senior fellow at the Mises Institute. Across from him, Fields Institute researcher Nathan Tankus, made the case for Modern Monetary Theory (MMT). Moderating was Jack Farley of Monetary Matters.

Here were the key moments:

Austrians & The Great Depression: The Textbooks Lied

Did “free market excesses” cause The Great Depression? This is what Americans learn in public school. Murphy, however, provided counterpoints to the narrative. Principally, Herbert Hoover was not laissez faire:

“Contrary to what people may have heard, Herbert Hoover had the largest peacetime deficits in US history up to that point. And then FDR came and his new deal really just expanded upon what Hoover did.”

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— ZeroHedge Debates (@zerohedgeDebate) January 17, 2025

MMT & Central Planning: Carbon Taxes?

Government must curb people’s behavior. That is the argument from Tankus during his opening remarks, saying Climate Change necessitates a “massive mobilization of resources.” 

“The private sector and some fancy price game is not going to be the thing that  makes decisions about how our electricity grid works,” he said. “We kind of have to make choices on how our electricity grid works.”

According to Tankus, by shifting the understanding of money from conventional budget-constraint focus to the inflation-constrained view, these mass changes in human choices can be achieved.

“You need to make design choices to incentivize certain outcomes… we need public money to incentivize people to make choices.”

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— ZeroHedge Debates (@zerohedgeDebate) January 17, 2025

Asked how to deal with climate change without government, Murphy said he does not believe it is an existential threat nor would he put his faith in government if it were.

“If the governments of the world limited global warming to 1.5 degrees Celsius, that would be worse for humanity than doing nothing.”

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— ZeroHedge Debates (@zerohedgeDebate) January 17, 2025

Watch the full debate below:

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