Reply to post: Re: Bonds

Hey, folks. Meet the economics 'genius' behind Jeremy Corbyn

G Mac

Re: Bonds

The key element of that in Tim's argument is:

"It's also, going back to our technical discussion, making M0 to spend: and as that MV=PQ again tells us, making M0 to spend *can* be highly inflationary."

I highlighted the 'can' - yes it can, but it doesn't automatically follow, as MMTers have pointed out to Tim, and, from memory, he acknowledges, but won't accept for the simple economic reasoning of 'I don't trust the government'.

(Which strikes me as a bit weird given how comfortable Tim must be with the number of nuclear weapons in the hands of the government.)

Be that as it may, it doesn't have to be inflationary - as long as the government isn't competing for *real* resources - commodities, people, etc, then inflation doesn't have to follow. Again, MMTers know this because they follow how money works in real-life, not just a theory on how it should work in a perfect world.

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