Me: First off I advocate much greater money creation and I agree that MMT has the mechanics of money creation correct. I’m also for MMT’s primary insight, which most MMTers apparently aren’t actually aware of, which is that the money system could be entirely distributive. However, their thinking that significant inflation will not return, especially if/when the present mountainous governmental and private indebtedness is largely reduced, is overly hopeful because inflation has little or nothing to do with increasing the money supply and almost everything to do with the fact that human free will/action to inflate will always remain a strong motivation for enterprise in profit making systems…..unless you craft monetary policy that is strategically implemented at a specific place and time in the economy where both aggregation of costs and consumer inflation is expressed…and then that policy must be so significantly monetarily potent that no enterprise can opt out of it.
stf: “However, their thinking that significant inflation will not return,”
Um, they definitely did not say that. They just noted that it’s overemphasized relative to historical significance.
“inflation has little or nothing to do with increasing the money supply”
to that MMTers would say “duh”
“and almost everything to do with the fact that human free will/action will always remain a strong motivation for enterprise in profit making systems”
well, add that to the list of nominees for most vague and completely useless statements of the year.
Me: Aren’t there ad hominem and courtesy rules here?
MMT, like Keen’s disequilibrium/instability hypothesis and Michael Hudson’s Financial parasitism are all the leading edge research. The only thing they lack is the conciseness and clarity that comes from recognition of both the current and the new monetary paradigm. When they do recognize them is when they will be able to unite with each other and with other paradigm perceivers in a social movement that can herd the entire political apparatus toward monetary and economic sanity.
Anon: Still banging the old ‘all cost must be in price, all the time, no exceptions’ drum, eh Steve? That concept was obsolete in Keyenes day, in any variant.
Me: No, not at all. You can keep charging less than your costs….right up to the point of going bankrupt. And with ponzi finance and a lot of accounting legerdemain that can be quite a while.
And when the system becomes inherently ponzi, as it has been since before Keynes, because continual debt build up is necessary to avoid recession/depression as Steve Keen has re-discovered and also because the only systemic monetary paradigm allowed is Debt which even at 0% interest eventually overwhelms the ability to service debt….then you no longer actually have a legitimate system, just a con where Finance “owns the joint” and everyone has to “lie, cheat and steal” as Michael Hudson so aptly describes it.