Re:It feels like America is running out of everything
by dragonwriter on Thursday October 07, 2021 @02:14PM
(#28790112)
> There must be some consequence to increasing the supply of money.
MMT holds to the orthodox monetary view that inflation/deflation result from expansion/contraction of money supply relative to output. MMT, despite its name, is quite orthodox in monetary theory.
Where it is (somewhat, though most orthodox voices I think would concede this point if cornered and unable to talk around the question) unorthodox in description is in theory of government finance, as it holds that fiscal constraints are a fiction (for a government operating in its own fiat), and that the only real constraints on government spending and its relation to taxes are not fiscal limitations of a finite purse but the monetary effects of money creation by spending and money destruction by extraction via taxes, etc.
But the real conflict between MMT practitioners and orthodox economics doesn't even seem to be on the empirical, descriptive elements of economic theory, but prescriptive/normative elements of policy recommendations made by adherents to the theory.
MMT holds to the orthodox monetary view that inflation/deflation result from expansion/contraction of money supply relative to output. MMT, despite its name, is quite orthodox in monetary theory.
Where it is (somewhat, though most orthodox voices I think would concede this point if cornered and unable to talk around the question) unorthodox in description is in theory of government finance, as it holds that fiscal constraints are a fiction (for a government operating in its own fiat), and that the only real constraints on government spending and its relation to taxes are not fiscal limitations of a finite purse but the monetary effects of money creation by spending and money destruction by extraction via taxes, etc.
But the real conflict between MMT practitioners and orthodox economics doesn't even seem to be on the empirical, descriptive elements of economic theory, but prescriptive/normative elements of policy recommendations made by adherents to the theory.