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I don't remember anyone talking about "new economics", I remember people speculating inflation was due to supply chain disruptions due to the pandemic, and that

• nickff 5y ago
  >"I don't remember anyone talking about "new economics"" Lots of people have been talking about how modern monetary theory (MMT) means that the USA can 'print money' (increase the money supply) without fear of inflation.
  • imtringued 5y ago
    That's just a strawman. MMT just means that the government runs its own bank and will never run out of money. Regarding inflation, with MMT you can buy anything that the economy can produce, that's it.
    • zsmi 5y ago
      > that's it. That can't possible be it. There must be some consequence to increasing the supply of money. I don't admit to knowing what that consequence is but there is no way the story is, "we make more money. the end"
      • deleted 5y ago
        [deleted]
      • wyre 5y ago
        I understand MMT is the increase in money supply is accompanied by an increase in taxation and by taking the money back out of the economy slows inflation. I think the caveat is that politicians can supply money into the economy (increase their chances of re-election), but will be reluctant to raise taxes in an effective way (to not decrease their chances of reelection).
        • CryptoPunk 5y ago
          Unless the government burns or locks away the money it taxes - in which case all effects of MMT are muted - it is going to just lead to inflation from government expenditures. There is no way to escape the price impact of increasing the money supply, as prices are always set by supply and demand.
      • skrtskrt 5y ago
        MMT does not say that you can't cause inflation by increasing money supply. It does say that the government that controls the currency (monetary sovereignty) never has to default. I think people may be mixing up the increasing popularity of MMT with the idea that we have been "pumping money into the economy" for years without the official measures of inflation ticking up much, at least until very recently. I don't think the average person buying cars, trying to rent/buy housing, or send their kids to college would agree with the official narrative of low inflation however.
      • dragonwriter 5y ago
        > 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.
      • Pokepokalypse 5y ago
        yes, the consequence is; those who are more easily able to accumulate the money, will still hoard and stash all the excess.
      • yyyk 5y ago
        MMT is one of those persuasions that can only exist in America, same as Libertarianism on the other political end. In any non-American 'monetary sovereign' country, printing too much money will crash the exchange rates (this is not merely a consequence of inflation - some of the processes involved are independent). It's a slightly different casual mechanism than the neoclassical one, but still the result is a de facto government default. The USA however holds the world's reserve currency, and the normal restraints indeed don't apply anywhere as much. This however does not mean there are no restraints. Fortunately the country has never gone full MMT, so we'll never find out empirically.
    • baggy_trough 5y ago
      What are the side effects when you "buy anything that the economy can produce"?
  • smhenderson 5y ago
    Mind elaborating on who "lots of people" are?
  • iammisc 5y ago
    Yes, I've read many articles on MMT and about the supposed ability to print interminably and never cause inflation. That is what I was referring to by 'new economics'. I've read a few articles that even admit such a thing has never occurred before but this time it's different (TM).