[Puffer Fish]

IIRC, it was wat0n who agreed that recently the MS Economic theories were changed so that only recent deficit spending is going to cause inflation. Do you agree with that?

I am not sure exactly what you are trying to say there.
Deficit spending is the major cause of inflation.

If we were to also include the cost of the Central Bank attempting to manipulate the economy and lower interest rates (losing the asset-worth held by their bank), into that "deficit spending" calculation, then yes, I think I could mostly agree with that statement of yours.

[Steve_American]

Indeed, and that cannot be persistent. It's why the typical Quantity Theory of Money Equation should be interpreted as a description of what happens in the long run. At any point in time, there can be deviations from that rule but the tendency will be spot on.

And it's so intuitive that it's been mentioned by all sorts of schools of thought - monetarists and new monetarists (e.g. Milton Friedman being one of the former) are just the most recent ones, but the concept goes back all the way to the 16th century and was restated in slightly different terms in Das Kapital (vol I). I honestly don't get why do MMTers have so much trouble with it, it's not controversial at all.

IMHO, the claim that inflation will happen "in the long run" is not valid.

I assert that "in the long run" some black swan event will always happen to cause inflation and that when this happens MS economists will blame the inflation on the increased money supply and not on the black swan event. An example is, covid caused shutdowns and supply chain problems that caused shortages, and MS economists harped on the covid stimulus spending and not on the shortages,

It is well known that shortages always cause price increases unless blocked by Gov. regulations.
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[Steve_American]

Well, if there are $2 Trillion dollars in the economy, and we suddenly print another $2 Trillion, do you think that's going to mean the society has more wealth?

Your right, it would take time for the economy to increase production to increase its wealth. It would not happen suddenly.

In the rest of that reply I wrote:

I can only try to explain it to you.
1st I'm not an expert. The final claims are not in doubt, only my understanding of how to get there may be wrong.

The expert founding MMTers assert that it is only the availability of labor and other real resources to the nation that limits how much it can spend.

For example, if the labor and other real resources are available to the nation, it can deficit spend to open a mine and mine a mineral or many, along with building a factory to make something and give it to the people for free. This will IMHO certainly increase the real wealth of all the people.
. . Doing this will increase the incomes and therefore the spending of the workers. This increased spending is included in the assumption that the real resources are available to the nation. The additional energy use to do it is covered by the same assumption.
. . In fact, the nation could sell the something to all the people who want it at a low price.

Do you agree that that would increase the real wealth of the nation? If not, why not?

________________________._____________________________________________

The claim of MMTers is that this is also true when the deficit spending increases demand in the economy and the corps invest to increase output to meet that demand. [They assume a good economy with no monopolies, etc.]
So, the claim is that there are labor and real resources available to the nation that are going unused. The Free market doesn't use them because there is no demand (with money to pay) for whatever could be made out of those resources.
. . MMTers assert that the problem in such a nation is a lack of enough money to create the demand to buy more stuff.

OTOH, MMters all also agree that ACC is going to end civilization soon if we don't act now.
. . So, what they really want is to massively increase deficit spending on green stuff. Also, support the minimum needs of all the people while ACC is doing its thing.

At least, Prof. Bill Mitchell has said repeatedly that he doesn't care if some businesses can't make a profit after the MMT national Job Guarantee Program has raised the min. wage to over $20/hr. with full benefits. Note that, he is assuming that prices will increase and level off. And also that, workers will have more to spend and so small businesses will sell more and can charge more.
. . He asserts that prices will level off, because the national JGP will anchor the price level and not let inflation continue.
. . Also Soc. Sec. will pay more to keep up with prices, until they have leveled off.
Etc.

And you, Puffer_Fish, ignored that part. This part was my main reply to you.

So, can you reply now?

Lurkers, MMT says that inflation will not happen if there are 3 conditions in or about the economy.
1] No corp has monopoly pricing power. This seems like an OK assumption because MS Econ assumes this to prove some of its conclusions.
2] There is unemployment in the economy. They include part time workers who want to work full time.
3] There are unused real resources in the nation or the nation can import them.

So far no one here has granted me those assumptions and then shown that inflation will happen if the Gov. deficit spends.

_______________________.__________________________________________

@Puffer_Fish, will inflation happen if a Gov. deficit spends $2T to just give all that money to Billionaires as a gift? If yes, why? And how?
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[Steve_American]

Lurkers, it has been 3 or 4 days since I posted the just above reply. Puffer_Fish has not replied, but has made other posts to this page.

He is ghosting me. He asked me nicely in this thread and in a PM to prove to him that a Gov. like the US Gov. can deficit spend and increase the wealth of the people without causing inflation.

The above was my reply. He just quoted a tiny part to reply to and ignored the main part. I reposted the main part and asked him to reply. He has not.

It seems like he can't think of a reply. Does this help you understand that my econ. theory is better than his?

Note that his theory was formulated when the US (and so the world) was still on a modified gold standard. It was not changed even a little when the dollar became a full fiat currency, meaning the Gov. can create as many dollars as it wants to without running out of gold. Also, meaning that it debt isn't really a debt, because the main reason for debt which was to protect the nation's gold supply is done, and because the Gov. could choose to pay all the bonds that come due with electronic dollars, just like it pays all the interest on the debt with new electronic dollars.
. . . Since 1971 when Nixon ended the gold standard, it has mainly been Repub. Pres. who have done most of the deficit spending. This shows me that they know that my theory is correct. It is the Dem Party that acts as if the old theory is correct. Clinton even balanced the budget for a few years, which my theory says is what caused the dot com bubble recession in 2001. Reagan started with a debt of very close to $1 trillion and grew it to between $3T and $4T depending on what bonds count as debt (mostly those held by the Gov. in the form of the Soc. Sec. Admin. I think they should be, because now we are selling new bonds to pay the SS Admin. as they come due and the SS Admin. needs the dollars.). So, Reagan came close to quadrupling the debt in his 8 years. The biggest percentage increase by any Pres. ever.
. . . Also note, the really high inflation was before Reagan was elected, and so before he could start spending like a drunken sailor. Inflation finally stopped in about 1990, because OPEC stopped raising the oil price.
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[Steve_American]

Lurkers, it has been 3 or 4 days since I posted the just above reply. Puffer_Fish has not replied, but has made other posts to this page.

He is ghosting me. He asked me nicely in this thread and in a PM to prove to him that a Gov. like the US Gov. can deficit spend and increase the wealth of the people without causing inflation.

The above was my reply. He just quoted a tiny part to reply to and ignored the main part. I reposted the main part and asked him to reply. He has not.

It seems like he can't think of a reply. Does this help you understand that my econ. theory is better than his?

Note that his theory was formulated when the US (and so the world) was still on a modified gold standard. It was not changed even a little when the dollar became a full fiat currency, meaning the Gov. can create as many dollars as it wants to without running out of gold. Also, meaning that it debt isn't really a debt, because the main reason for debt which was to protect the nation's gold supply is done, and because the Gov. could choose to pay all the bonds that come due with electronic dollars, just like it pays all the interest on the debt with new electronic dollars.
. . . Since 1971 when Nixon ended the gold standard, it has mainly been Repub. Pres. who have done most of the deficit spending. This shows me that they know that my theory is correct. It is the Dem Party that acts as if the old theory is correct. Clinton even balanced the budget for a few years, which my theory says is what caused the dot com bubble recession in 2001. Reagan started with a debt of very close to $1 trillion and grew it to between $3T and $4T depending on what bonds count as debt (mostly those held by the Gov. in the form of the Soc. Sec. Admin. I think they should be, because now we are selling new bonds to pay the SS Admin. as they come due and the SS Admin. needs the dollars.). So, Reagan came close to quadrupling the debt in his 8 years. The biggest percentage increase by any Pres. ever.
. . . Also note, the really high inflation was before Reagan was elected, and so before he could start spending like a drunken sailor. Inflation finally stopped in about 1990, because OPEC stopped raising the oil price.
.

@ Puffer_Fish.

Lurkers, it has been over a month since I posted the just above reply. Puffer_Fish has not replied, but has made other posts to this site.

He must not be capable of a reply.
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