The IMF says, Inflation has peaked, the supply side is recovering; so interest % rises were what? - Politics Forum.org | PoFo

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#15263565
Inflation has peaked, the supply side is recovering, and the interest rate rises were for what?
Wednesday, February 1, 2023

Bill's Introduction
So the IMF has come late to the transitory inflation party. What was obvious months ago is now at the forefront of IMF forecasts. Better late than never I suppose. It is becoming clear that most indicators are still not predicting a major demand-side collapse in most nations. Growth has moderated slightly and the forward indicators are looking up. At the same time, the inflation data around the world is suggesting the price pressures have peaked and lower inflation rates are expected. Real wages continue to fall, which means that the inflationary pressures were not being driven by wages. So no wage-price spiral mechanism at play. And PMI data and related indicators (such as shipping costs, etc) suggest the supply constraints which drove the inflationary pressures are easing. So has all this been the work of the interest rate rises imposed on nations by central bankers (bar Japan)? Not likely. The rising interest rates and falling inflation are coincidental rather than causal. Which means the damage to low income debt holders and the bank profits boom from the higher rates was for what?


What were the central bankers thinking?

...snip...

Bill does not say this, so I will. The central banks should roll the interest rates back down quickly. This will help the many gov. fight off right wing attacks. In the US this would help the Dems protect democracy from the Repuds who want to tear it down. It would reduce the chance of an unnecessary recession, which the world doesn't need with a war going on. Who wants us to lose this war?
IMHO YMMV

Link -> http://bilbo.economicoutlook.net/blog/?p=51204

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#15263567
"Coincidental rather than casual."

:lol: :lol: :lol:

Did MMT become a religion recently or was it always the case?

Interest rates should not come down anytime soon and if we 're back to normal in the summer, then they should come down slightly but not where they used to be before.

They should never go back to where they used to be before this crisis, .ie to near zero levels. without near zero interest MMT has no functionality and should be discarded for the nonsense that it is.

MMT is the real culprit of this crisis and one would expect that after so much hurt caused, its adherents would not be advertising it anymore.
#15263587
I agree MMT feels like a religion.

Having said that, I wouldn't say MMT is the main culprit of the current inflation. I think that title goes to the pandemic itself, the closures were one of the main drivers of monetary policy and even epidemiologists weren't able to clearly predict when could they stop being necessary back in 2021. This type of uncertainty clearly affected monetary policy, even more so since the decision was to err on the side of the quarantines being necessary for longer than they were to avoid the economic fallout of not adjusting monetary policy accordingly.
#15263589
My view is that MMT and QE after 2008 is what has led us to this inflationary crisis. I view the pandemic and the Ukraine crisis as mere triggers rather than causes.

This is better observed when one compares the UK with Germany, US, Japan, etcetera.

The UK brags about having the lowest interest rates in the planet and the most generous QE since 2008. It's inflation is now double than the rest with no signs of easing. Headline CPI inflation is still 10.8%.

This makes it quite obvious in my view.
#15263651
noemon wrote:"Coincidental rather than casual."

:lol: :lol: :lol:

Did MMT become a religion recently or was it always the case?

Interest rates should not come down anytime soon and if we 're back to normal in the summer, then they should come down slightly but not where they used to be before.

They should never go back to where they used to be before this crisis, .ie to near zero levels. without near zero interest MMT has no functionality and should be discarded for the nonsense that it is.

MMT is the real culprit of this crisis and one would expect that after so much hurt caused, its adherents would not be advertising it anymore.

Admin Edit: Rule 16

I'm a lay MMTer. I don't see it as a religion. So, please inform me about how MMT and religion share some elements.

OTOH, I do think that mainstream economics is in many ways like a religion. The main way is that MS econ-ists can't be moved from their conclusions. There is no evidence that they will accept as disproving some part of their theory. Like the 200K euro experiment in 2014 that proved that banks create money with every loan has not been accepted as proof that all the other theories of how banks lend money are wrong.
Also, how MS econ is based on assumptions and then prove the theory. In religion they start with 1 assumption, i.e., that every word in their book is true, and then use things in that book to prove things.
So, both MS econ. and religions start with unproved assumptions. Note, many of econ's assumptions are obviously false or might be true in the theory but are not true in the economy the theory is being applied too. An example is where the theory assumes a perfect market with no monopoly power and then applies the theory to the US market where oil corps, tech corps, and Amazon do have monopoly power over about 30% (my guess) of all private to private sales in the US.
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#15263653
noemon wrote:My view is that MMT and QE after 2008 is what has led us to this inflationary crisis. I view the pandemic and the Ukraine crisis as mere triggers rather than causes.

This is better observed when one compares the UK with Germany, US, Japan, etcetera.

The UK brags about having the lowest interest rates in the planet and the most generous QE since 2008. It's inflation is now double than the rest with no signs of easing. Headline CPI inflation is still 10.8%.

This makes it quite obvious in my view.


With all due respect, as a lay MMTer, I can assure you that no founding professional MMTer ever approved of QE. None. AFAIK, MMTers thought QE was a big mistake. This was so because QE is all about bonds, buying bonds from banks to give them reserves to be able to loan out, when MMTers have always known that banks don't lend out reserves. MMTers were calling for the Gov. to deficit spend to stimulate the economy; not to have banks have more reserves. So, MMT is about using fiscal policy not using monetary policy.

Where did you get the idea that MMTers are all on board with QE?

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#15263657
In terms of inflation, MMT is QE on steroids.

Source: https://www.fraserinstitute.org/blogs/m ... ive-easing

Under MMT, the central bank simply creates money for the government with no expectation of being paid back. The latter action is proverbial “helicopter money” equivalent to the central bank dropping money from the sky onto the lawns of Parliament for politicians to spend at will. MMT can therefore be seen as an ongoing policy to fund government with the central bank effectively accepting a funding obligation role with funding obligations essentially dictated by government.

The expansion of the money supply by permanently implementing MMT clearly raises more of an inflation risk than does QE.
#15263658
Steve_American wrote:With all due respect, as a lay MMTer, I can assure you that no founding professional MMTer ever approved of QE. None. AFAIK, MMTers thought QE was a big mistake. This was so because QE is all about bonds, buying bonds from banks to give them reserves to be able to loan out, when MMTers have always known that banks don't lend out reserves. MMTers were calling for the Gov. to deficit spend to stimulate the economy; not to have banks have more reserves. So, MMT is about using fiscal policy not using monetary policy.

Where did you get the idea that MMTers are all on board with QE?

.


Well it depends on how you look at it and Noemon point is definately correct. QE by itself is way less inflationary what some MMTers advocate. The reason why QE tends to be less inflationary is because we are dealing with mostly investment and finance here and the QE very rarely turns in to helicopter money for the people. I am definately not a specialist on this but this is my understanding as of now. Basically we exchange different noneliquid products for deposits which make banks more liquid while investers have an easier time investing in a nutshell. But ultimately still this is just investment money that gets shuffled around in different banks so its impact on every day products like food, cloths, oil and so on is relatively little compared to just printing money and then using that money as social spending or just giving it away as helicopter money.

You can't deny that Covid assistance went way to far for way too long which heavily contributed to the current inflation in the world. And the main reason was that helicopter money was dropped down.
#15263661
QE is "helicopter money" like MMT, QE is managed by the banks and governments via bonds so that a management mechanism exists to monitor and manage the process.
MMT is the zero-interest-rate theoretical extremity upon which QE itself rests. MMT's extremity of helicopter money with no process whatsoever(pure printing and literally dumping it out of a helicopter) is merely the theory behind QE.

QE is MMT in practice and the popularisation of QE after 2008 was down to MMT economists.

Back to reality, MMT requires near-zero, zero or minus interest-rates to operate. It also claims that interest rates have no effect on inflation.

Both of these assertions are provably & demonstrably wrong.

US, Japan, EU raised interest rates higher than the UK and inflation eased a lot quicker than the UK. There are about another million examples throughout history of interest-rates having a direct causal relationship with inflation.
#15263675
noemon wrote:In terms of inflation, MMT is QE on steroids.

Source: https://www.fraserinstitute.org/blogs/m ... ive-easing


With all due respect, IMHO it depends on that it is that is having its price inflated.
IMO, QE does more to inflate the prices of homes and corp. stocks.
OTOH, MMT will have more effect on the prices of food, cloths, and gasoline.
It seems like you only think that CPI type things can be inflated.

However, MMTers have always said that inflation is the check on excess gov. fiscal spending.

Also, I'd rather the Gov. has errored on the side of giving cash to people to buy food and pay rent than letting children have their brains stunted by poor nutrition in a short pandemic, even if this led to 7 to 11% inflation for a year or 2.

Also, the only time the MMT like spending has occurred has been between the spring of 2020 and early 2023. This is because MMT rejects QE as being MMT. Do you think this is incorrect?
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#15263680
noemon wrote:QE is "helicopter money" like MMT, QE is managed by the banks and governments via bonds so that a management mechanism exists to monitor and manage the process.
MMT is the zero-interest-rate theoretical extremity upon which QE itself rests. MMT's extremity of helicopter money with no process whatsoever(pure printing and literally dumping it out of a helicopter) is merely the theory behind QE.

QE is MMT in practice and the popularisation of QE after 2008 was down to MMT economists.

Back to reality, MMT requires near-zero, zero or minus interest-rates to operate. It also claims that interest rates have no effect on inflation.

Both of these assertions are provably & demonstrably wrong.

US, Japan, EU raised interest rates higher than the UK and inflation eased a lot quicker than the UK. There are about another million examples throughout history of interest-rates having a direct causal relationship with inflation.


Actually the cash provided to the people in the pandemic did have someone managing the distribution. It was the Gov. and the states through the use of laws. So, how is this different from the banks and Gov. doing the same with QE?

I'm not aware that Japan raised its interest rates at all. My MMT guru is Prof. Mitchell. He was in Japan and wrote blogs about how the BoJ refused to raise interest rates. So, here your 'fact' is not correct. He also wrote the blog above about how raising the interest rates didn't have any effect on inflation. "It was coincidental, and not causal."
. . . The economy of the US is still growing and people are still borrowing so the recession has not started yet. Also, Gov. spending it up because it is buying ammo and arms to replace those sent to Ukraine. You are assuming that just raising rates will cause inflation to slow. Did this happen in the 1970s? No it didn't. We had stagflation because inflation didn't slow at all as the Fed raised rates. Inflation slowed later when a recession really took hold.
. . . Do you have anything to say to convince me that in this case raising interest rates caused inflation to slow, and it wasn't that the supply chains are getting untangled and corps have reduced their price gouging?
.
#15263681
JohnRawls wrote:Well it depends on how you look at it and Noemon point is definately correct. QE by itself is way less inflationary what some MMTers advocate. The reason why QE tends to be less inflationary is because we are dealing with mostly investment and finance here and the QE very rarely turns in to helicopter money for the people. I am definately not a specialist on this but this is my understanding as of now. Basically we exchange different noneliquid products for deposits which make banks more liquid while investers have an easier time investing in a nutshell. But ultimately still this is just investment money that gets shuffled around in different banks so its impact on every day products like food, cloths, oil and so on is relatively little compared to just printing money and then using that money as social spending or just giving it away as helicopter money.

You can't deny that Covid assistance went way to far for way too long which heavily contributed to the current inflation in the world. And the main reason was that helicopter money was dropped down.


Yes, I can deny that. There is little correlation between many nations that spent a lot in the pandemic and had inflation and many nations that spent a little and had more inflation. The scatter plot is scattered all over it with no correlation seen. The amount of inflation depended on things like the nation's exposure to supply chains breaking down and the monopoly power of it corps, etc., etc. It didn't depend on the amount of cash spent because of covid.
. . . Again, the San Fran FED report said that 0.3 percentage points of the then 7% inflation was caused or linked to the covid spending. 0.3/7 is 0.0428. So, 0.3 is just 4.28% of 7%. IMHO, anything between 4 and 5% causal is not THE cause. It is a very minor part of the actual causes. Argue with the SF FED. Google it and argue with their report. The SF FED is not a bunch of MMTers.
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#15263685
Steve_American wrote:
Yes, I can deny that. There is little correlation between many nations that spent a lot in the pandemic and had inflation and many nations that spent a little and had more inflation. The scatter plot is scattered all over it with no correlation seen. The amount of inflation depended on things like the nation's exposure to supply chains breaking down and the monopoly power of it corps, etc., etc. It didn't depend on the amount of cash spent because of covid.
. . . Again, the San Fran FED report said that 0.3 percentage points of the then 7% inflation was caused or linked to the covid spending. 0.3/7 is 0.0428. So, 0.3 is just 4.28% of 7%. IMHO, anything between 4 and 5% causal is not THE cause. It is a very minor part of the actual causes. Argue with the SF FED. Google it and argue with their report. The SF FED is not a bunch of MMTers.



His Covid statement is pure politics, so I can agree with you there.

My impression is we have wandered out past the edge of what we know with any certainty. It's why I've been on the sidelines. On top of that, there are confounding variables, like the drop in oil, ag, and fertilizer supplies, that threaten to overwhelm the discussion. I feel a bit like a mouse in a bowling alley, just trying to avoid getting run over.
#15263769
late wrote:His Covid statement is pure politics, so I can agree with you there.

My impression is we have wandered out past the edge of what we know with any certainty. It's why I've been on the sidelines. On top of that, there are confounding variables, like the drop in oil, ag, and fertilizer supplies, that threaten to overwhelm the discussion. I feel a bit like a mouse in a bowling alley, just trying to avoid getting run over.


Exactly. There are many warning signs of coming reductions in food supply. And, oil and natural gas are in short supply because of the war in Ukraine. We just saw that reductions in supply in capitalism are supposed to be met with increases in price. The low water level in the Mississippi River is a sure sign of low rain fall in the breadbasket of America. In the past low rain fall has caused food price increases.
. . . Fighting such supply side price increases by the Fed raising interest rates does nothing to reduce prices, and can increase prices if corps feel a need to cover their increased interest expense. However, this will hurt poor people and benefit rich bankers.
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#15263772
Steve_American wrote:Actually the cash provided to the people in the pandemic did have someone managing the distribution. It was the Gov. and the states through the use of laws. So, how is this different from the banks and Gov. doing the same with QE?

I'm not aware that Japan raised its interest rates at all. My MMT guru is Prof. Mitchell. He was in Japan and wrote blogs about how the BoJ refused to raise interest rates. So, here your 'fact' is not correct. He also wrote the blog above about how raising the interest rates didn't have any effect on inflation. "It was coincidental, and not causal."
. . . The economy of the US is still growing and people are still borrowing so the recession has not started yet. Also, Gov. spending it up because it is buying ammo and arms to replace those sent to Ukraine. You are assuming that just raising rates will cause inflation to slow. Did this happen in the 1970s? No it didn't. We had stagflation because inflation didn't slow at all as the Fed raised rates. Inflation slowed later when a recession really took hold.
. . . Do you have anything to say to convince me that in this case raising interest rates caused inflation to slow, and it wasn't that the supply chains are getting untangled and corps have reduced their price gouging?
.



You are right about Japan, and I agree with you about Covid(non Covid QE surpasses Covid QE by double digit factor), but you are still very wrong to trust MMT.

My argument does not change because of Japan. UK, US and EU are quite sufficient to demonstrate my point. US and EU increased interest rates significantly and inflation dropped significantly, the UK on the other hand is major laggard with still the lowest interest rates and the highest inflation in the developed world.
#15263775
noemon wrote:You are right about Japan, and I agree with you about Covid(non Covid QE surpasses Covid QE by double digit factor), but you are still very wrong to trust MMT.

My argument does not change because of Japan. UK, US and EU are quite sufficient to demonstrate my point. US and EU increased interest rates significantly and inflation dropped significantly, the UK on the other hand is major laggard with still the lowest interest rates and the highest inflation in the developed world.


Actually, Japan is a good indicator that MMT is on the right track. It has a debt to GDP ration approaching 300%, and is currently under attack by speculators who are selling its bonds short to drive down the value of the yen in order to force the BoJ to raise interest rates on its bonds. Prof. Mitchell has said that this has been tried a few times before since 2000 and so far every time the speculators have been beaten by the BoJ. and lost a lot of money. During covid Japan did spend to support the people and yet, it has had very low inflation and strong bond sales at almost a zero interest rate.

Yes, inflation fell after interest rates were raised in the US and EU. They were already falling when rates were 1st raised. It is possible the MS econ-ists in the Fed pressured to get rates increased after they [b]privately[/b] predicted that inflation would decrease, so that they could point to the fact that they raised interest rates and then inflation fell as proof that their MS Theory is correct, when in fact it is just a con job. This is possible.
. . . You ignored my assertion that in the 70s it took years for increasing interest rates (that got over 15%, IIRC), before inflation was reduced. Yet, here you are asserting that now just several months is enough time and 4.75% is enough of a raise to force down inflation. Why is now so much different from the 70s?
. . . I asked for anything you could say to convince me that you are right, and all I got is you repeating your assertion that you are right. I gave you some words to back up my assertions up above and in this reply. You have said nothing to back up your assertions. Can you think of anything to say to back up your assertions?
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#15263819
Japanese society represents the most resilient people on earth and its economy and country is run better than a swiss clock.

It's not a country that can be emulated by others, nor an indication of MMT's applicability.

MMT is so obviously in error, even if its effect on inflation is marginal depending on the resilience of the economy, it still creates massive bubbles and is provably unsustainable.

Why is now so much different from the 70s?


Because the US is now energy independent, while it was not in the 70's.

For the US, an energy independent country, with the dollar as its reserve, and a robust economy which is bonus cubed, having an inflation rate of 10% is purely down to QE, which is mostly down to MMT. This clearly demonstrates the point. In every other country, same levels of money printing would be devastating as we have discussed before.
#15263926
I have numbered the points for reference.
noemon wrote:1] Japanese society represents the most resilient people on earth and its economy and country is run better than a swiss clock.

2] It's not a country that can be emulated by others, nor an indication of MMT's applicability.

3a] MMT is so obviously in error, 3b] even if its effect on inflation is marginal depending on the resilience of the economy, 3c] it still creates massive bubbles and is provably unsustainable.

...snip the question...

4] "Why is now so much different from the 70s?" Because the US is now energy independent, while it was not in the 70's.

5] For the US, an energy independent country, with the dollar as its reserve, and a robust economy which is bonus cubed, having an inflation rate of 10% is purely down to QE, which is mostly down to MMT. This clearly demonstrates the point. In every other country, same levels of money printing would be devastating as we have discussed before.


1&2] AFAIK, all Mainstream Economic Theories claim to be universal. If you are backing off this claim, then there is a new element that you have added to your burden. It is to prove or show that the "theory" you're using can be applied to the economy you are talking about. Neither you nor MS Econ has done this for the US. Right off there is a way that no MS theory can be applied to the US, it's that the US is not anywhere near a perfect Market, because it has a few sectors of the economy that are dominated by corps with monopoly pricing power. And these sectors are critical, eg. meat packing, food supermarkets, oil/gasoline, Amazon, and tech.

3a] Because you didn't give an example of an error in MMT, this is just repeating you assertions.
. . . Also, every MMTer totally rejects you attempt to conflate MMT and QE. QE was invented & applied by central bankers who rejected MMT at the time, at least in public. It is improper to conflate these 2 things. Please stop doing it. Keep them separate.
3b] I have proven many times that all Mainstream Econ Theories that are solely based in logic ad use a few false assumptions are just wrong because you can't use a false premise in any proof. Again, you just assert that MMT is in error.
3c] Capitalism is also unsustainable for many reasons. One is that profits for corps can't keep taking a bigger part of the entire national income, it will change before it reaches 100% of the income. Another is the limited resources. And a 3rd, is that climate change will crash the whole world's economy in less than 20 years.

4] At 1st glance this is a very good point. A deeper look points out the while the US economy is not dependent on imported oil; it is dependent on many imported things, like computer chips and parts to make things. So, the economy crashed during covid. Now, the supply chains are improving and so prices are falling.

5] Are you asserting the the members of the Fed read and believed MMT before 2009 and didn't tell any one? Because no MMTer pushed for QE. And yes, I and MMTers have always shouted that it takes more than a fiat currency. A nation must not owe money in any currency except its fiat one. And, it must be willing and able to float its fiat currency. Most nations owe the IMF in dollars. So, they can't use MMT. So, what? MMT is for the US and other nation that can use it. For you and me that is the US and the UK.

.
#15263931
MMT is the theory that debt does not matter and that governments should create unlimited debt to fund their expenses.


QE is MMT in practice. QE is the practical application of MMT. It creates debt in a relatively efficient way as long as interest rates are low as it allows central banks to buy back its bonds for less and give the profits to the government(effectively subsiding fiscal policy), but if interest rates go up the equation changes and then the expenditure doubles or triples. QE is simply a mechanism to monitor this process and ensure that there is a trail of the money printed.

The QE splurge post 2008 in the west is down to MMT theory.

Unlimited debt is provably, evidently and obviously unsustainable, high levels of debt, create extreme inflation, in any country that has applied it. It has even created massive inflation in the US that enjoys several bonuses that counteract that effect, which is totally bonkers.

Biden's trillions come at a cost. Not covid.

We have discussed this before and you have already conceded this before. The US, the primer superpower, Japan and perhaps Germany are the only countries that can sustain high levels of debt due to their global economic status. All the rest, are in reality devastated by this and a theory cannot be made from the exceptions. It's ridiculous.
#15264025
noemon wrote:MMT is the theory that debt does not matter and that governments should create unlimited debt to fund their expenses.

QE is MMT in practice. QE is the practical application of MMT. It creates debt in a relatively efficient way as long as interest rates are low as it [QE] allows central banks to buy back its [US] bonds for less and give the profits to the government (effectively subsiding fiscal policy), but if interest rates go up the equation changes and then the expenditure doubles or triples. QE is simply a mechanism to monitor this process and ensure that there is a trail of the money printed.

The QE splurge post 2008 in the west is down to MMT theory.

Unlimited debt is provably, evidently and obviously unsustainable, high levels of debt, create extreme inflation, in any country that has applied it. It has even created massive inflation in the US that enjoys several bonuses that counteract that effect, which is totally bonkers.

Biden's trillions come at a cost. Not covid.

We have discussed this before and you have already conceded this before. The US, the primer superpower, Japan and perhaps Germany are the only countries that can sustain high levels of debt due to their global economic status. All the rest, are in reality devastated by this and a theory cannot be made from the exceptions. It's ridiculous.


You included Germany in your list. MMTers say that all the nations that use the euro can't use MMT. The fact that you included Ger. in your list proves that you don't understend what MMTers say. You seem to have read more of what MS Econ-ists say that MMT says. But, MS econ-istd mostly lie about what MMT says. This is because they don't care about truth, like Trump they will lie to win. And, the MS media supports them in their lies, unlike it treated Trump.

IMHO, QE is the reverse of the US increasing its debt. This is because the Fed is a creature of the US Gov. It pays 9% of its revenue to the US Treasury, and its board of governors is appointed by the US Gov. MMTers treat the Fed as an arm of the Gov. They therefore don't see bonds owned by the Fed as part of the debt. Just like in a family, what the husband owes to his wife isn't part of the family's debt.
. . . In QE the Fed buys US bonds from big banks, mostly. The public reason for this was to provide more reserves to banks so they could lend more. However, this was strange, because bank can't lend reserves and create dollars with every loan. Loans create deposits that, a week later, are needed to meet the bank's reserve requirement. These 'deposits' may be in a different bank then, but banks can borrow over night to meet the reserve requirement.

The Weimar Republic did not sell bonds to buy the foreign currency it needed to pay the reparations. It just printed money. It did not go into debt. What are you thinking? You keep making assertions that I refute, and you keep repeating them without refuting my refutation.

You asserted that every nation that has gone very deep into debt has seen high inflation. Can you give me a list?
MMT only applies to nation that only borrows its own fiat currency. This mean no nation before 1971 counts because of the gold/dollar standard in place back then. Since then, what nation could this apply to? AFAIK, only to Japan and the US. And, you and I totally disagree that the inflation in the US after covid started was a result massive spending of dollars borrowed by selling bonds. I assert that the bond offsets the spending just as much as collecting taxes does. This is because almost always the bond holder wanted to save the money and so doesn't stop saving the dollars by borrowing against the bond. It is not possible to spend and save the same dollars. MMTers assert that it is excess spending that causes inflation. You have never shown how excess debt causes prices to increase.

From 1990 until 2019 the US massively increased its national debt by selling bonds, however its inflation rate was very low. This seems to contradict you assertion that massive debt will always cause massive inflation. During all those 20 years MS econ kept predicting high inflation, but it never happened.

MMT is in favor of unlimited debt, BUT grown at a reasonable rate. The reasonable rate bit, you don't seem to know or care about. It asserts that in 1979 no economist would have predicted that that next 40yearss would have seen inflation being high, but ending, followed by massive increases in Gov. borrowing with no high inflation. They would have predicted that a US national debt of $25.2 trillion in 2019 would have been impossible, because the economy would have collapsed long before 2019. Yet, that is not what happened. What happened is the debt grew a massive amount and nothing much bad happened. Note that, the GFC/2008 had nothing to do with national debt, it was caused by growing private debt. It took MS econ-ists by surprise because they (like you??) didn't see private debt as any sort of problem. They thought that private debt was offset by the loan contracts, so they cancelled each other out. They were and still are wrong about this.

It seems pretty clear that you and I are not going to agree. You say nothing that would cause me to change my opinion because mostly you just make assertions that I see as incorrect. I highlighted the only "fact" in the above post that I agree is true. I can't know why you don't see the truth of my statements, but I do provide some words to back up my assertions.

BTW, I assert the the US has a deficit problem because of the several tax cuts on corps and the very and super rich that the Repuds have passed without paying for them with spending cuts. The fact as shown by events are that these cuts do not pay for themselves in every year that follows. Trillions have been allowed to remain in the hands of the super and very rich that could/should have been taxed away from them. These trillions have not been used to increase economic activity in the US. They have been used to buy Congress, to invest overseas, and inflate asset prices.
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