Was MMT Right About Inflation? | Stephanie Kelton (The Deficit Myth)

Venezuela monetary theory

A lot of her comments on here are a much more nuanced than her book. Things like the discussion on inflation channels and which are dominant is something which is given a lot more complexity than in the book, such that she allows that there are even contrary fiscal channels which have to be weighted and not just one story. I get a motte and bailey feel to the discussion, even given how very agreeable the interviewer was.

It doesnt help me be sympathetic to mmt when the 2 main proponents; Stephanie, and warren mosler are not likable people

MMT is a classic example of really smart people believing really dumb things. It takes really smart people to effectively convince themselves that such a bad idea is actually a good idea.

You should also discuss the improving ability of economic actors to collude on prices by buying memberships in internet price algorithms.

At the end, the main problem with MMT, as well as with Keynesianism is the political use of such theories by the "socialists of all parties". Without entering in the details of such theories, any economist defending an increase in public spending is going to be supported by 95% of the political spectrum. The part of the limits and dangers that both theories also explain will be conveniently forgotten, and the effects of such excesses will come with some delay, when a scapegoat can be found, what is perfect for the short term objectives of politicians, that is, to be elected. Vote me for spending now in schools, healthcare, social security, defense, infrastructures.... oh, inflation? This is due to oil/Ukraine war/banks/bottlenecks/greed of shop owners...

Inflation has disappeared. Tell that to people who pay 20 percent more for everything since Covid. They act like we are back to normal. Scarcity of supply chains not affected by 2 trillion in free money. Come on now.

If you deport Mexican, there will be no workers to build houses. USA is in trouble!

She is right. All the hindsight analysis was just trying to find their narratives to what is already happening. Put the hindsight 20/20 guys back to before pandemic we see their underwear.

I enjoyed her lowkey roasting you

Ask Javier Milei

We had 40% inflation as a result of low interest monetary policy, 8 Trillion of Trump debt and 2 TRILLION of Biden debt in one year and the rich don't care because the inflation helps them. She claims that the 36 Trillion of debt is a myth. Wow.

Prices are administered.

Fantasy economics

Well Biden spent 8 trillion dollars beyond what the USA took in revenue during his 4 years

Currency is not money

The money spent sevicing debt is WASTED MONEY. That never comes back. It keeps getting BIGGER and BIGGER. Dangerous theory.

Sad so right and so wrong

Why wouldn't any American economist love MMT? It allows the goverment to go into spending rampage and socialize the bill to the lenders around the globe. And what would be their alterantive? Fiscal discipline? If Americans had to pay for the costs of their own government, their living standard would drop to the levels compatible with the productivity of their society, which would have unbearable political cost.

The funny thing is that the lenders are fully aware there is no most remote possibility of USA ever repaying the debt. But what options do they have? Jumping out of that gigantic Ponzi scheme? That would cause the initernational monetary system to immediatelly fall apart, taking along with it their economies and evey other investment option they had. It is better to keep kicking the can down the road.

Except for conditions of hyperinflation, the effects of a general increase in the price of goods and services are either none at all or quite significant based on individual (or household) circumstances. Owners of a residential property may or may not enjoy incomes that increase at a rate equal to the general rate of inflation. But, the potential resale value of their property (and, specifically, the land component of their property) is more than likely to increase at or above the general rate of inflation. Why is this the case? Because land is a natural asset with an inelastic supply. Every parcel of land has a potential annual rental value, with a tendency to increase over time in regions experiencing an increasing population. Also, where the effective rate of taxation on land is low, the net imputed (or actual) rental value is capitalized into higher and higher prices, which actually results in the attraction of investors not for production but to hold land for speculation.

It would be interesting if this topic could be revisited. The USA spends a significant amount of its budget on interest payments.

MMT makes sense since the government can print money, but there have to be equilibriums.

Government debts are different than household debts, 100% agree.

Something is very wrong, the government has become itself the biggest wealth transfer tool to the advantage of financial institutions and big business and to its own disadvantage and the population it is supposed to represent. This lady is very hard to listen to when we are witnessing the greatest robbery going on in the human history.

This is like arguing against Gravity. At some point you will ultimately fall to the ground. The best way to learn economics is to start with “Economics in One Lesson”. It lays down simple principles with simple explanations. MMT folks point to an equation and fancy word-thinking and nobody ever understands what they are talking about. Simple concepts are easy to explain.

Never underestimate the roll of fake media like Fox and the rest of the republican ecosphere in people's perception of things.

You should have worked on the supply side of the equation. Solid industrial manufacturing policy and passing anti-price gouging regulation what was needed. Stimulus was needed only for the poorest people.

Short answer: No. She was dead wrong.

Kelton is amazing. I have no idea how she walks around with all that concrete in the space where her brain should be.

If democrats say it and believe it then you know it is false.

Sorry man, I didn’t learn nothing from this interview
It’s all nonsense economically
Like they all saying goes like this
Pay me now or pay me later a lot

I wouldn't say that a large population of people restricted from earning money, for years, had more money to spend just because they got a stimulus check once that couldn't even cover most rents for one month.

Are there any positive advantages noticed between Australias mandatory voting and the U.S. voluntary voting. Does one system produce a more sensible outcome?

She's correct it was all supply side shocks and cooperation raising prices where ever they could even if their supplies were not interrupted - they reacted exactly as Behavior Economics predicts!

2 trillion is just the amount of the total U.S. work force per month. So the stimulus didn't cover loss wages!

Fascinating how supply pushes inflation because price doesn’t stop people buying things they want.

Social Justice Activist LARPs as an economist for 1 hour.

Does she know what she is talking about?

One of the key tenants of how MMT explains away inflation is as follows: Inflation will occur if there is spending that is not put towards "productive ends". There is untapped labor potential in the unemployed and therefore, if we throw money at that labor potential, we will get a productive output which would offset any potential for inflation. The OBVIOUS problem with this thinking is that the unemployed even are capable of providing value with their labor or that the jobs produced by the government for these people will be "productive". The reality is that the vast majority of this spending is totally unproductive and therefore creates inflation and is a burden to the productive economy. Look at how USAID has been spending billions on total nonsense. This spending increases the GDP and creates jobs but does nothing to improve our real wealth and simply is taking from those productive members of society and giving it to the bureaucrat.

MMT is complete bunk

Ok Stephanie,.... since we had supply side issues from the beginning... then WHY THE HELL ARE WE STIMULATING DEMAND???? That's the cause of the inflation, you misdiagnosed what the economy needed.

Much overlooked in the inflation story pre-Covid is the ferocious housing inflation that was running for ten years, pushing up minimum wage demands in high-cost cities and an ostensible “worker shortage” (of people who couldn’t afford rent).

I don't think we are experiencing a natural inflation. I think the issue is with supply and demand. As the supply goes down, the price goes up, appearing to be inflation when in fact it is just the natural fact of supply and demand. It is also people demanding better pay. But the more people are paid, the more they are capable of spending, and therefore the higher the prices businesses will charge. The biggest issue right now is the low supply of available housing where people want it. Because of that, they are able to jack up the prices of housing. And when you are spending a lot more on housing, if you are a business, you have to charge more for your products. If you are a consumer, you have to pay more for your products.

As far as the debt goes, people make a comparison between a person's debt and the government's debt. The difference is that a person only lives around 100 years while the government could last millions of years in theory. So the idea that we have to pay off the debt as soon as possible doesn't make any sense. I agree like they say the issue is more with the interest payments. We have to be able to make the interest payments.

MMT is not a theory but a fantasy, the fantasy being that the government will spend wisely and not cause inflation

I think this woman is in an ivory tower cuz i dunno if US citizens’ lives have improved at all…🤷🏻 she is just on tv and not on the streets so inflation hasnt hit her

I wish it would apply to my personal debt.

Next crash will be bigger.

The problem with all this discussion is that inflation isn't the biggest problem and neither is unemployment. The biggest problem and you briefly mentioned it, is inequality. Those with massive assets are magnifying inflation because they are able to multiply their yearly returns far beyond inflation by leveraging their large assets and the connections that come with them. The super wealthy continue to grow their wealth far beyond the 2% pace of inflation, leaving more critical assets under their control, the major reason this doesn't show in inflation is because its in the form of stocks and investments which aren't included in CPI. This has gotten to the point where they have now run out of normal assets to buy and are actively buying governments (Hi Elon), Media outlets (Hi Elon again, and Bezos), and other core institutions that help countries continue to represent the masses rather than the few and slide into the autocratic/dictatorship well-known models.

MMT needs to find ways not to fight inflation, but to redistribute wealth precisely as a counterbalance to the natural redistribution from the poor to the rich that occurs in late stage monopolistic capitalism. During covid far too many of the funds provided ended right back into the hands of the few so where it mattered most, unfortunately, it failed. If MMT cannot do this then taxes may be the obvious elephant in the room and we will have to drastically raise it on the rich while decreasing on the unwealthy. We know deficits really don't have much negative impact now so if we bring in far less revenue through this tax change, its irrelevant, that money was created by the government in the first place. They have no need to collect taxes, and never did, they have need to balance inequality and maintain balance in the economy, and perhaps they also collect taxes to incentivize people to work, but the money itself is their own creation and they can create more at their own whim.

Taxes can redistribute all the same, bringing in revenue to the government is redundant when they and banks with their permission create the money supply, and in fact debt to GDP will likely improve as money circulation becomes more healthy and the economy heals. The real question is are economist and the government too late and will people have to go to the streets when major democratic republics are purchased and quickly abolished. The funny thing is I think writing this now and looking around we already probably know the answer to that question.

She is a Lefty Loser Donkey doer. MMT trashed our economy! That package was a money laundering scheme for Donkey party and did nothing to move this country forward!