Happy New Year! I’ve enjoyed writing this newsletter and expect to have a lot to say on a wide range of topics in 2022. Last year, I devoted a lot of space to the legislative process and how the “pay for game” gummed up the debate over President Biden’s economic
In Canada, when the first Trudeau govt embarked on fighting inflation with interest rates after wage and price controls, I wrote to them and pointed out that they were trying to use gasoline to put out a fire.
It was my belief then and now that in addition to other unfair impacts, higher interest rates contributed to higher prices at every step of the supply chain as businesses experienced higher credit costs for manufacturing and shipping their products to retailers who also experienced higher credit costs while awaiting the market to clear their “shelves.” Those higher credit costs would find themselves a part of prices forcing another cascade of effects on labour costs and hours of work.
I could see that to reduce the credit charges, retailers will clear their shelves by lowering prices but that will have limits.
Thanks! Your clearly written perspective on inflation is quite helpful. The various news channels either sensationalize inflation or revert to simplistic sophistry.
Am a very big and vociferous supporter of MMT, but I'm not a macroeconomist, and need to understand MMT better so as to explain it to others, especially online.
Thus, in general, I ask, If MMT is descriptive and not prescriptive, isn't it severely limited? Like the plumber wading in waist-high water in your basement, would he just say, Yep, your basement's flooded, three feet deep, but his guess as to the cause is no better than anyone else's?
You admit that the hills are chockablock with solutions to higher inflation, but that MMTers are more or less guessing, too, because MMT can really only deal with preventing inflation, not eradicating it. That's like the plumber saying, Well, I told you to get all new plumbing; now it's too late; I'm not sure what to do. I'll try some things; maybe something will work.
Claudia Sahm said to "be wary of Larry (Summers)," but he's looking pretty good right now: He said that huge cash outlays are guaranteed to cause significant inflation. He was right.
As a layman, I'll probably always be at least slightly in the dark, and I have more questions and comments, but for now let me say that I really appreciated and learned from your latest submission, the best yet. I've read it twice, trying to glean all its insights, and saved it for future re-reading. And I have your book full of my yellow highlighted sections for perusal. Macroeconomics is complex, but essential: We've got to get out the perennial hole too many Americans suffer in, including, of course, children. This can't wait.
Superb as always. Huge challenge to end a pandemic; MMT offers the strategic framework we could devout our resources and make enormous progress, i.e. govt financed vaccine and logistics to get shots in arms, pretty sweet. The enormous constraint that endemically stymies shared advances remains us. Servant leadership would do us some good. Thank you Stephanie K for your leadership.
In Canada, when the first Trudeau govt embarked on fighting inflation with interest rates after wage and price controls, I wrote to them and pointed out that they were trying to use gasoline to put out a fire.
It was my belief then and now that in addition to other unfair impacts, higher interest rates contributed to higher prices at every step of the supply chain as businesses experienced higher credit costs for manufacturing and shipping their products to retailers who also experienced higher credit costs while awaiting the market to clear their “shelves.” Those higher credit costs would find themselves a part of prices forcing another cascade of effects on labour costs and hours of work.
I could see that to reduce the credit charges, retailers will clear their shelves by lowering prices but that will have limits.
Thanks! Your clearly written perspective on inflation is quite helpful. The various news channels either sensationalize inflation or revert to simplistic sophistry.
Am a very big and vociferous supporter of MMT, but I'm not a macroeconomist, and need to understand MMT better so as to explain it to others, especially online.
Thus, in general, I ask, If MMT is descriptive and not prescriptive, isn't it severely limited? Like the plumber wading in waist-high water in your basement, would he just say, Yep, your basement's flooded, three feet deep, but his guess as to the cause is no better than anyone else's?
You admit that the hills are chockablock with solutions to higher inflation, but that MMTers are more or less guessing, too, because MMT can really only deal with preventing inflation, not eradicating it. That's like the plumber saying, Well, I told you to get all new plumbing; now it's too late; I'm not sure what to do. I'll try some things; maybe something will work.
Claudia Sahm said to "be wary of Larry (Summers)," but he's looking pretty good right now: He said that huge cash outlays are guaranteed to cause significant inflation. He was right.
As a layman, I'll probably always be at least slightly in the dark, and I have more questions and comments, but for now let me say that I really appreciated and learned from your latest submission, the best yet. I've read it twice, trying to glean all its insights, and saved it for future re-reading. And I have your book full of my yellow highlighted sections for perusal. Macroeconomics is complex, but essential: We've got to get out the perennial hole too many Americans suffer in, including, of course, children. This can't wait.
Thanks again!
Superb as always. Huge challenge to end a pandemic; MMT offers the strategic framework we could devout our resources and make enormous progress, i.e. govt financed vaccine and logistics to get shots in arms, pretty sweet. The enormous constraint that endemically stymies shared advances remains us. Servant leadership would do us some good. Thank you Stephanie K for your leadership.