Puffer Fish wrote:Well, if there are $2 Trillion dollars in the economy, and we suddenly print another $2 Trillion, do you think that's going to mean the society has more wealth?
Your right, it would take time for the economy to increase production to increase its wealth. It would not happen suddenly.
In the rest of that reply I wrote:
I can only try to explain it to you.
1st I'm not an expert. The final claims are not in doubt, only my understanding of how to get there may be wrong.
The expert founding MMTers assert that it is only the availability of labor and other real resources to the nation that limits how much it can spend.
For example, if the labor and other real resources are available to the nation, it can deficit spend to open a mine and mine a mineral or many, along with building a factory to make something and give it to the people for free. This will IMHO certainly increase the real wealth of all the people.
. . Doing this will increase the incomes and therefore the spending of the workers. This increased spending is included in the assumption that the real resources are available to the nation. The additional energy use to do it is covered by the same assumption.
. . In fact, the nation could sell the something to all the people who want it at a low price.
Do you agree that that would increase the real wealth of the nation? If not, why not?
The claim of MMTers is that this is also true when the deficit spending increases demand in the economy and the corps invest to increase output to meet that demand. [They assume a good economy with no monopolies, etc.]
So, the claim is that there are labor and real resources available to the nation that are going unused. The Free market doesn't use them because there is no demand (with money to pay) for whatever could be made out of those resources.
. . MMTers assert that the problem in such a nation is a lack of enough money to create the demand to buy more stuff.
OTOH, MMters all also agree that ACC is going to end civilization soon if we don't act now.
. . So, what they really want is to massively increase deficit spending on green stuff. Also, support the minimum needs of all the people while ACC is doing its thing.
At least, Prof. Bill Mitchell has said repeatedly that he doesn't care if some businesses can't make a profit after the MMT national Job Guarantee Program has raised the min. wage to over $20/hr. with full benefits. Note that, he is assuming that prices will increase and level off. And also that, workers will have more to spend and so small businesses will sell more and can charge more.
. . He asserts that prices will level off, because the national JGP will anchor the price level and not let inflation continue.
. . Also Soc. Sec. will pay more to keep up with prices, until they have leveled off.
And you, Puffer_Fish, ignored that part. This part was my main reply to you.
So, can you reply now?
Lurkers, MMT says that inflation will not happen if there are 3 conditions in or about the economy.
1] No corp has monopoly pricing power. This seems like an OK assumption because MS Econ assumes this to prove some of its conclusions.
2] There is unemployment in the economy. They include part time workers who want to work full time.
3] There are unused real resources in the nation or the nation can import them.
So far no one here has granted me those assumptions and then shown that inflation will happen if the Gov. deficit spends.
@Puffer_Fish, will inflation happen if a Gov. deficit spends $2T to just give all that money to Billionaires as a gift? If yes, why? And how?