• John
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    21 year ago

    that’s how they control inflation - by killing the economy, increasing unemployment, thus disciplining labour and suppressing wage increases and consumer demand. Instead of govt spending on programs, it gives money to bondholders, who hoard it until interest rates come down.

    Australia has leading scholars on MMT, which explains exactly what is going on, a very different story than you’ll hear in the Murdoch media.

    • @Meltbox
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      21 year ago

      Yes and no. I mean you can control inflation via expectations. Doesn’t seem to be the case so far. But in theory you could.

      But it’s definitely the most sure fire way.

      What I’m wondering is why are we so sure that deflation is always destructive. Sure deflation spirals are bad, but what evidence do we have that we must always have inflation?

      For example Japan seems to function alright despite a moderately deflationary situation. It seems that if expectations are in check deflation isn’t necessarily that bad. In fact you could argue that deflation would lead to people feeling they need to save less for old age as they would not expect prices to be higher when retiring etc.

      Plus is encouraging consumerism via inflation really that good of a thing?

      • John
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        11 year ago

        Japan has the loosest monetary policy in the world, negative central bank interest rates, huge debt, big public spending, yet inflation hasn’t been above 4% for 40 years.

        They also import all raw materials.

        Actual monetary inflation is pretty bad. Sell everything to hoard worthless tokens of exchange… clearly something broken.

    • sloonarkOP
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      21 year ago

      I’d be really interested to see policies based on MMT in practice.

      • @Meltbox
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        21 year ago

        You mean where they actually tax people and don’t just do the printing part? Yeah me too.

        I don’t love taxes but I do suspect the fastest way to crush inflation is up taxes and not interest rates. Although Im not a fan of how much interference there is in bond markets from rate setting. I don’t think it’s really that healthy either.

        I mean based on fed actions I think traders have stopped trying to do price discovery and treat rates as a simple given. But it’s really just a given because everyone has agreed it is. In theory if the market panics en masse the fed would eventually run out of ammo to control it. I think.