Looking Back at How I was Looking Ahead
Back in February 2021, I sat down with Ron Biscardi, the CEO of iConnections to talk MMT, the incoming Biden administration’s policies, capacity constraints, the problem with relying on interest rates to fight inflation, and more. I don’t think many people have seen it, so I thought I’d post it here.
A couple of months later, I wrote a longer piece about inflation risk and how policymakers could manage inflationary pressures in ways that don’t involve raising interest rates.
I got some pushback from a number of economists at the time. In their view, I had overlooked the simplest and most obvious way to deal with any inflation problem that might arise. “[Any] inflation threat from overheating can be contained by monetary policy,” said Paul Krugman, who poked fun at “MMTers [who] don’t believe in monetary policy.” But in recent days, Krugman has decided that rate hikes might not be the right tool after all.
It’s a good thing. As I said, we all need to think harder about inflation. I talked about it on a recent episode of my new MarketWatch podcast with co-host Jeremy Olshan.
It seems, unfortunately, that the Biden administration are … ahem… ‘unable’ to use policies like negotiating lower drug prices or making sure *everyone* can benefit from free child care to offset inflation on other things and rising cost of Gas. When I say “unable” I find it hard to believe that the administration is not using the corporate Democrats (most notably Manchin & Sinema) as cover for their own lack of enthusiasm for more progressive policies. They didn’t really try hard at all to get them in the final version of the BBB Bill which says it all really. So, the intransigence of said Senators did Biden & the leadership a favour. Their past record tells us as much and it also says a lot that the second most costly item in the bill is the SALT Tax provisions, but nobody is wringing their hands over whether that’s “paid for” or not.
It’s a massive, intentional, missed opportunity. The voters (or rather *non* voters) will punish the Dems in the Mid Terms and 2024.
Dr. Kelton, how does the EEU (Euroland) increase it’s money supply? It is not as apparent as the MMT explanation of the US primary source and method of increasing the primary money supply.