Larry Fink, the CEO of the world’s largest asset manager, doesn’t hold a very high opinion of a controversial economic theory that has steadily gained adherents since its emergence on the Wall Street landscape last fall.
Proponents of so-called Modern Monetary Theory, or MMT, argue that a government that borrows in its own currency doesn’t need to worry about running up a deficit because it controls the money printing press.
‘That’s garbage.’ The BlackRock BLK, -1.06% CEO continued: “I’m a big believer that deficits do matter,” echoing comments made by Federal Reserve Chairman Jerome Powell, who was asked about MMT during congressional testimony last week. On Capitol Hill, Reps. Alexandria Ocasio-Cortez — a co-author of the Green New Deal — and others have been notable backers of MMT.
After a year of nearly 3% economic growth, the yield on the benchmark 10-year Treasury yield TMUBMUSD10Y, -1.44% stands at 2.68% as of early Thursday trade.Benign rates and a Fed that has signaled a wait-and-see approach to further hiking interest rates have helped lift the stock markets in the early part of 2019. The Dow Jones Industrial Average DJIA, -0.86% and the S&P 500 SPX, -0.68% have risen more than 10% thus far this year, and the Nasdaq Composite Index COMP, -0.
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