Adam, I enjoy your articles and consider them among the best on HD. I have much respect, but I believe your statement on MMT is just not correct. I don't believe the true proponents of MMT say that currency issuers "can print as much money as they wished without any fear of inflation." Quite the contrary, MMT typically warns that inflation is definitely a risk when printing money. In Stephanie Kelton's book The Deficit Myth, chapter 2 starts by saying the myth is that "Deficits are a sign of overspending" but the reality is "For evidence of overspending, look to inflation." That's quite different stance than you present. They key, as I understand it, is identifying times when deficit spending makes sense and when it doesn't. One statistic (among many) they would look at is unemployment. In times of low unemployment, like now, printing money can be inflationary, but not so much when unemployment is high. According to Kelton, during a recession people may lose jobs and companies may cut production and, in that environment, spending can safely increase. She points out that, "...the $787 billion fiscal stimulus passed in 2009 didn't cause an inflation problem." I know plenty of experts reject the theory, but has it been proven wrong? I'm not advocating for MMT. I'm not an economist and don't claim the level of understanding of such complex systems to make that judgement. I have my doubts about some aspects, but a lot of it makes sense to this layperson. It doesn't feel like an all or nothing proposition to me. I do find the MMT perspective interesting and realize that one must maintain a different perspective and an open mind when considering budgets of a currency issuer as opposed to budgets of a currency user. Thinking the two are the same is a mistake. The federal government is playing a very different game than we are with our household budgets. Thanks again for your articles. I appreciate your contributions.
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Adam, I enjoy your articles and consider them among the best on HD. I have much respect, but I believe your statement on MMT is just not correct. I don't believe the true proponents of MMT say that currency issuers "can print as much money as they wished without any fear of inflation." Quite the contrary, MMT typically warns that inflation is definitely a risk when printing money. In Stephanie Kelton's book The Deficit Myth, chapter 2 starts by saying the myth is that "Deficits are a sign of overspending" but the reality is "For evidence of overspending, look to inflation." That's quite different stance than you present. They key, as I understand it, is identifying times when deficit spending makes sense and when it doesn't. One statistic (among many) they would look at is unemployment. In times of low unemployment, like now, printing money can be inflationary, but not so much when unemployment is high. According to Kelton, during a recession people may lose jobs and companies may cut production and, in that environment, spending can safely increase. She points out that, "...the $787 billion fiscal stimulus passed in 2009 didn't cause an inflation problem." I know plenty of experts reject the theory, but has it been proven wrong? I'm not advocating for MMT. I'm not an economist and don't claim the level of understanding of such complex systems to make that judgement. I have my doubts about some aspects, but a lot of it makes sense to this layperson. It doesn't feel like an all or nothing proposition to me. I do find the MMT perspective interesting and realize that one must maintain a different perspective and an open mind when considering budgets of a currency issuer as opposed to budgets of a currency user. Thinking the two are the same is a mistake. The federal government is playing a very different game than we are with our household budgets. Thanks again for your articles. I appreciate your contributions.
Post: What Goes Up
Link to comment from November 5, 2023