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People not being able to afford things is the point of raising taxes to curb inflation. When people can't afford things they don't buy things and that's what lo

People not being able to afford things is the point of raising taxes to curb inflation. When people can't afford things they don't buy things and that's what lowers inflation.

rich_sasha 5mo ago
But there's a time mismatch, at least at typical government action timeframes. Quarterly inflation looks high, meaning people are already out of pocket. Tax goes up at the same price levels, making people more out of pocket. Inflation reduces, hopefully, but that doesn't mean prices go down - people remain out of pocket. Then, you hope, wages catch up, but that whole cycle can easily take a year. Elections are on average 2-3 years away. Midterms in USofA 1 year away.
- nostrademons 5mo ago
  The point of economics is to give people what they can have, not to give them what they want. High inflation in a MMT context means that the economy as a whole wants more than it can have. The reason for the inflation is that people are bidding against each other for scarce goods; you've injected more means to pay than exists means to produce. The way you cure it [1] is by reducing demand, which you do by decreasing the means to pay. MMT proposes doing this by increasing taxes; monetarism proposes doing it by increasing interest rates. But in both cases, the whole mechanism for solving the problem is people going without things that they want, which will almost always be unpopular. [1] When you can't increase production capacity, which in a macro full-employment context means increasing productivity, which is outside the scope of MMT or most other schools of macroeconomics.
  - rich_sasha 5mo ago
    I get that (at least the theory, as with UBI, I'm not convinced). My point is rather that this is like treating broken bones with a hammer. Maybe it works, but the pain of it might well be unbearable.
    - eggprices 5mo ago
      Do you have a better idea?

People not being able to afford things is the point of raising taxes to curb inflation. When people can't afford things they don't buy things and that's what lowers inflation.

rich_sasha 5mo ago

But there's a time mismatch, at least at typical government action timeframes. Quarterly inflation looks high, meaning people are already out of pocket. Tax goes up at the same price levels, making people more out of pocket. Inflation reduces, hopefully, but that doesn't mean prices go down - people remain out of pocket. Then, you hope, wages catch up, but that whole cycle can easily take a year. Elections are on average 2-3 years away. Midterms in USofA 1 year away.

nostrademons 5mo ago
The point of economics is to give people what they can have, not to give them what they want. High inflation in a MMT context means that the economy as a whole wants more than it can have. The reason for the inflation is that people are bidding against each other for scarce goods; you've injected more means to pay than exists means to produce. The way you cure it [1] is by reducing demand, which you do by decreasing the means to pay. MMT proposes doing this by increasing taxes; monetarism proposes doing it by increasing interest rates. But in both cases, the whole mechanism for solving the problem is people going without things that they want, which will almost always be unpopular. [1] When you can't increase production capacity, which in a macro full-employment context means increasing productivity, which is outside the scope of MMT or most other schools of macroeconomics.
- rich_sasha 5mo ago
  I get that (at least the theory, as with UBI, I'm not convinced). My point is rather that this is like treating broken bones with a hammer. Maybe it works, but the pain of it might well be unbearable.
  - eggprices 5mo ago
    Do you have a better idea?