Inflation, taxes…the promise of MMT in action.

A couple of years ago I wrote about Modern Monetary Theory which essentially says just print and spend money and don’t worry about it, no new taxes necessary. However, as noted back in 2020:

Even the most enthusiastic advocates of MMT acknowledge the possibility of inflation if we reach the point where resources become scarce and we have full employment. At the same time MMT also suggests a guaranteed job for anyone who wants it. Hence full employment. But the answer is also simple. At the point inflation is a problem, just raise taxes.

So, we have been in a stimulus spending spree, unemployment is low and declining, some resources are scarce and inflation is through the roof.

What’s next? Higher taxes seem in order. The MMT advocates are right, it doesn’t work.

2 comments

  1. The MMT crowd sold an old bill of goods under a new name. Everybody knew that inflation would result from too many dollars chasing too few goods. Full employment didn’t matter if money was being distributed to stimulate the economy. Now we have to live with the remedies. First, interest rates must go up and then taxes will rise to help defray the outsized government spending. What a load of hooey that many in Congress spouted over the past 2 years.

    Liked by 1 person

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