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This isn’t MMTs claim. A claim they make is that high deficits aren’t per se inflationary. This is obviously true based on post-GFC numbers. Even today, the mainstream view is that high demand (not high deficits) is what’s driving elevated inflation. twitter.com/MichaelRStrain

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@TheStalwart

True--though: I think the more nuanced take is that deficits come from increased spending without tax, which means increased cash in capital markets --> more cash to spend --> increased demand (in USD terms). More generally, greater USD supply --> prices are bid up further

8:37 PM · Feb 6, 2022Twitter Web App

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and

Throw in the supply chain constraints so also theortically chasing fewer goods.

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and

100% It's not that there is some amount of inflation that is always bad. If we look at real estate for example it's hard to create more value there very quickly, so more dollars in circulation will lead to higher prices. So we have these two variables that effect each other 1/2

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and

Good take. Velocity of monetary expansion probably makes a difference as well. Post-GFC took longer to insert money, perhaps allowing asset prices to bind the inflation there. Top-down vs bottom-up capital injection also different. (Bank bailout vs direct to consumer stimulus.)

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and

I think what you are both missing is that its the relationship of cash supply to actual value available to buy. If cash can only buy seashells then the price of seashells inflates but if your tribe starts making tools out of seashells then there is a new sink for the cash.

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and

so I am not totally against the government using debt or inflation. The question is do they invest it in creating more value or do they just dump it on non-value creating things. Too often it is the latter.

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and

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