mmt to stop inflation?
bloomberg on mmt:
"... MMT assumes that the Fed will play no role in fighting inflation. The MMT prescription for monetary policy is “leave the policy rate at zero and issue money as required.” So fiscal policy has to do everything...
...How does MMT propose to do this? Perhaps in due course by raising taxes, though MMTers have mixed feelings about this (to acknowledge the need for tax increases is to suggest that not everything can be afforded). Maybe with direct controls on prices, wages, profits and credit. Perhaps by examining spending minutely, program by program, favoring outlays that mitigate inflationary pressure (say by boosting labor supply) and avoiding those that worsen it (for instance by adding to demand in overstretched sectors)... In removing the Fed from the picture, MMT ignores lessons learned over the course of decades..."
bloomberg.com
krugman (not mmt) on inflation:
"...I'm going to be tracking this like everyone else. In the past, just the Fed's core inflation was good enough. I don't think that that will work this time, because we're gonna have special bottlenecks that will affect core prices as well.
I'm going to be looking at things like a couple of the Atlanta Fed indices. I'm going to be looking at sticky-price inflation. I'm going to be looking at trimmed-mean inflation, which would purge the bottleneck effects.
And to the extent that we can get information, wage contracts. It's going to be much harder than it used to be. A long time ago, long before you were born, we could do union contracts. There basically are no unions now, so that doesn't work anymore. But we'll be wanting to see if companies are building in the expectation of higher inflation into wage settlements.
The whole question is whether prices that are not changing all the time are being set with the expectation of inflation in the future. Whether we get this kind of leapfrogging process, which is what makes inflation — once embedded in the economy — hard to get rid of. Things like sticky-price inflation indices and trimmed-mean inflation indices are probably our best bet.
And, you know, talk to people. I'm going to be forcing myself to read the Beige Book these days, because I think, in some ways, it's going to be a better guide than the statistics are..."
businessinsider.com
kelton (mmt) transitory:
youtube.com |
