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In 2009, there was a crazy, wild-eyed passion spreading among conservatives and the Teabagger.  Here are some choice quotes from prominent conservatives and teabagger favorites.

Glenn Beck and Ron Paul

Ron Paul:  [snip] So the bailout is a disease, it’s contagious, it’s ongoing, and the result of this will be the destruction of the dollar, which to me means runaway inflation, and political chaos. It’s very, very dangerous.

Glenn Beck: OK, hang on, because you are saying “runaway inflation”. You’re meaning Weimar Republic, wheelbarrow full of money type of stuff to buy a loaf of bread. Is that the kind of inflation you are talking about?

Eric Cantor
Finally, we must ensure that vast government spending doesn't lead to rampant inflation in the future. At $825 billion, this Democrat stimulus proposal causes us great concern. While the Fed remains rightfully concentrated on fighting deflation, uncontrolled spending and borrowing will most ultimately lead to inflation if the spigot is not turned off in time. That could trigger a flight of foreign capital and a steep drop in the purchasing power of the dollar for the American consumer. As interests rates rise to keep foreigners financing our debt, the pain dealt to businesses and families alike promises to be sharp.

Michele Bachman
Make no mistake. This stimulus bill has very little to do with stimulating the economy and helping the average American . This is a bailout for big government. And let's get ready. We are looking at massive tax increases and we are looking at massive inflation or both. In fact, we could be looking at hyperinflation.

Arthur Laffer (The "Father of supply-side economics" or Reaganomics)
With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs -- such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid -- are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.

But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

We are a couple of months away from the close of the third year of the Obama Administration.  Before that we will mark the 4 year anniversary of the start of the Great Recession(Dec 2007).  And, most importantly we've just finished our third fiscal year in a row of having more than a trillion-dollar budget deficit.

So based on all the hyperbole of conservatives, and the fact we've had such huge budget deficits, one might think we were facing huge bouts of inflation.  So let's take a look at the inflation rate for the last three years.
As you can see, since the stimulus and other government spending brought us out of a recession, month to month changes bounced around between .4 and negative .2 and only briefly went higher than .5 percent.  However, is that a lot?  Let's compare it to the previous years.  Let's take at the data since January 2001.


As you can see, after officially exiting the recession, inflation has actually been consistently lower than in the earlier, non-recession ,years.  The only spike you see was from earlier this year and was almost entirely driven by energy costs.  How do I know?  Let's lay over the cost of energy in general and gasoline into the graphs.


Remember these are month-to-month changes.  As you can see, the energy costs went up so much higher and faster that I had to adjust the scale of the graph to show the increase.  General Prices(blue line) barely looks like a bump while Gas Prices(Red) and general energy costs(Green) went up about 10 times as fast.  So those price increases weren't driven by general inflation, they were driven by an increase in energy costs.

So in spite of these billion and trillion-dollar budget deficits, how has there been such low inflation? Didn't Weimer Germany prove that always happens? The assumption that a large budget deficits will automatically lead to high inflation is deeply ingrained in our politics.  Based on the last 3 years, you would think that this belief would be re-examined.   And yet, republicans and conservative allies are still warning that the sky is falling inflation is coming. The whole theory of oncoming inflation is based on the flawed quantity theory of money.  A theory rendered even less relevant since it was developed when we were still on a gold standard.

So what is an alternative explanation? Does this mean that government can spend and spend without consequence?  MMT (which evolved from keynesian economics) provides an alternative economic framework for understanding why a government can have a trillion dollar deficit 3 years running and still have inflation that is lower than it was when deficits were less than 400 billion.  First of all, inflation comes from spending money, not creating it.

As long as all spending is matched by an equal increase in the amount of goods and services produced by an economy, that spending won't be inflationary.  Here's the macro economic implications:  During a recession dollar savings tends to increase - i.e. people tend not to spend their money.  People are afraid of losing their job, and businesses are afraid to expand, leading to reinforcing recessionary effects. One thing that doesn't change right away is the capacity in the economy. Therefore, when people save dollars, they open up room for the federal government to deficit spend money that won't be inflationary.  In fact, if the government doesn't spend it'll cause deflation which is really bad for an economy.

To better understand the macro economics, let's take a look at a micro economic example: Presumably, even during a recession, a factory that produced 100 cars yesterday, can still produce 100 today. If all the people in the economy bought 100 cars yesterday, but only bought 99 today, then that means that the government can come in and buy an extra car and it won't be inflationary because the factory can produce it.  Now, of course I'm not suggesting that the government start asking factories how much it can produce and directly buy what it doesn't sell. Instead, I'm just trying to give a micro example of what is happening across an entire economy. The economy has excess capacity that the people producing the items aren't buying because they are saving their dollars.

The take away is that the federal government has the ability to have deficits until the economy can no longer increase the amount of goods the economy is capable of producing, then inflation happens.  The size the budget deficit can be depends on many things.  One of the things as explained above is the rate of private savings which tends to be higher during recessions.  That is why the federal government can run a trillion dollar plus deficit 3 years running and the economy can still have a lower inflation rate than when it was running sub 400 billion dollar deficit.

Cross Posted From Our Dime

Much of this analysis is based on Modern Monetary Theory (MMT). It's a (relatively) new "Post-Keynesian" economic school of thought.  If you're interested in learning more, please follow our group, Money and Public Purpose.  Also, there is a small, but growing MMT wiki that is worth checking out.  I'm also starting a facebook page as another avenue to get people's attention.

Originally posted to Money and Public Purpose on Thu Dec 01, 2011 at 06:00 AM PST.

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Comment Preferences

  •  Excellent diary (4+ / 0-)
    Recommended by:
    katiec, raines, Gary Norton, kevinpdx

    Interesting to note that all through the 1930s Republican concern trolls warned that the New Deal would cause hyperinflation and destruction of the currency. they must have been so disappointed. It wasn't until the massive defense spending of WWII that the dollar even inflated back to 1929 levels.

    A sampling:

    •  VERY different circumstances (0+ / 0-)

      First the government could not print more money without having the gold on hand needed to back it (albeit fractionally) - this was why FDR confiscated gold and revalued it.

      Second without an FDIC you had very real DESTRUCTION of money as banks failed.  People lost savings.   They also lost faith in banks.

      Third - as a result of above people took their savings OUT of banks and literally buried cash on mason jars or put it in the mattress.  This took money OUT of circulation - DECREASING the velocity of money.

      Fourth - you had currency wars occurring where nations actively tried to devalue their currency to gain advantage over other nations in exporting goods.  You had very real inflation in some nations as a result.

      Fifth - The US was NOT carrying a huge national debt at the time

      Sixth - government spending was used to fund PRODUCTIVE efforts via the WPA and CCC.  You GOT SOMETHING in exchange for the spending that occurred.  

      Paraphrased -

      FDR borrowed money form Americans to put other Americans back to work so they would spend money on goods made by other Americans, putting MORE Americans back to work.  Now we are borrowing money from foreigners to pay AMericans NOT to work so they can continue to buy goods made by FOREIGNERS, keeping FOREIGNERS employed

      The US still had a huge - if underutilized - industrial base in the 1930's - an economy where things of tangible value were made, where value was created or added.   That economy could be ramped up easily - and expanded greatly - for WWII.   It was possible to pay back the debt that was incurred by FDR fighting the Depression and WWII.  Keep in mond that people earned a great deal during WWII but spent little.

      Today we have a huge debt load to start - and lack the ability to expand our economy in a way that makes it possible to grow fast enough to pay off that debt.

      Like it or not, inflation IS here and will get worse.   Your dollar buys half what it did in 2000 and will buy even less in 2020.  And while somethings like iPods may go down in price - you can't eat an iPod.  Meanwhile a package of hot dogs is now $4.459, a pound of bacon is $7.59 and a rib roast a luxury at more than I will spend.  ANd my local property taxes have tripled in the time I've been here (my  income sure hasn't kept pace with that).   I'm still choking on college costs for my children - which have gone up at an obscene rate.

      So delude yourself into thinking all will be well and there's no inflation, that it will not be a're wrong.

      One of the reasons ofr the 'Arab Spring' was the rise in the cost of food.  Inflation is real, worldwide and getting worse.

      Life isn't fair but you should try to leave it fairer than you found it.

      by xrepub on Thu Dec 01, 2011 at 07:10:32 AM PST

      [ Parent ]

      •  Difficult to know..... (1+ / 0-)
        Recommended by:
        Dustin Mineau

        if inflation of commodities like gas and food is more a result of a combination of out of control speculation and increasing scarcity/security (peak oil and glabal warming), or increasing money supply.

        Increase tuition is definitely a result of policy.

        And policy relating to monsato, etc. Has also impacted food security....

        Just think our current combination of mixed deflation and inflation is not to be explained by a theory of inflationary reductionism where all is reduced to blaming increase in money supply.

      •  Response (0+ / 0-)

        Responding to each point.
        1.  You say government couldn't create money back then, but then you show that it just changed the structure and did exactly that.

        2.  That is very true.  We didn't bail out zombie banks in 1930s and let them fail.  It would've been better if we'd let them fail in 200809 and instead used the bailout money for direct job creation and infrastructure investments.

        3. If banks aren't lending money and just letting it sit in their vault, how is that any different from sitting under someone's mattress?  Today banks aren't lending and people aren't spending.  Therefore bank reserves are rising and aren't being lent out.

        4. Today, our largest trading partner is artificially trying to keep their currency low.

        5.  The U.S. has always carried a huge debt.  And the huge debt post WWII was even larger than it was today and it didn't cause massive hyperinflation in the late 40s and 50s.

        6.  I agree.  We should have a WPA or CCC style programs to fund infrastructure and direct job creation.  That would be less inflationary than giving away money.

        Finally, you keep using food as an example of inflation and claim that it is a world wide problem.  If the price of food is going up world wide and(as you admit below) the price of other items are decreasing, the problem is that... the relative price of food is... RISING!  If a certain product's price is going up while others going down, the problem isn't inflation(which is a general rise in prices), it's something else.  If global food prices are rising, you can't fix it by decreasing the amount of money.  You might lower food prices, but you're going to lower the price of everything else and will just as likely cause unemployment as you are to decrease food prices.

        Our Dime: Understanding the Federal Budget

        by Dustin Mineau on Thu Dec 01, 2011 at 07:52:13 AM PST

        [ Parent ]

      •  Republican hope (1+ / 0-)
        Recommended by:
        Dustin Mineau

        ...springs eternal. Inflation any day now! That view has remained rock-solid. But, this time, it's different?

        The credit contraction effectively reduced the money supply, which is why inflation has remained low despite all the supposed "printing" of money in the naive view of the money supply.

        FDIC was created in 1933.

        As for the gold standard, here's another one from Warburg, where he decried the Roosevelt Administration's desertion of the gold standard:

        PHILADELPHIA, Nov. 22--Immediate abandonment of President Roosevelt's gold-control monetary program and the establishment of an international gold standard, "improved and modernized," were advocated here tonight by James P. Warburg, New York banker. ...

        It represented his opening public appeal in a campaign to arouse a "latent majority" against a monetary theory which he declared "could not work in practice even if the theory were correct."

        "It is up to the latent majority, who have been silent so far, to let the President know that the American people is ready to face whatever suffering there may be in a slow, orderly process of recovery," he said, "and that it does not side with the vociferous minority which is clamoring, as all such minorities have always clamored, for an easy way out of present difficulties, regardless of cost in the future."

        More than 1,500 persons applauded Mr. Warburg, the last speaker in a symposium in which Professor Irving Fisher of Yale defended President Roosevelt's policy as "substantially right." Senator Thomas of Oklahoma asserted that the dollar must be cheapened, and Dr. F. Cyril James, Assistant Professor of Finance at the University of Pennsylvania, called for an immediate return to the gold standard as a starting point toward restoring "a complete public confidence in the dollar."

        I find that remarkable in the acknowledgement that FDR has abandoned the gold standard (always a fetish of Republican monetarists) as well as an early usuage of the "silent majority" meme--and here I thought Nixon invented that.

        Prof. Fisher advocated a policy of "reflation" which held that deflation was the big worry, as it is now and which would have been a big problem if reflationary measures were not taken in 2008 and later.

  •  Steve Keens.... (0+ / 0-)

    are you familiar with Keens?  I've only recently come across him.  He says he's going to address mmt on his blog sometime in the near future, especially in regard to (I think I have this right) mmt claim that private bank lending does not produce new money, or however it is phrased.

    I have read that bill Mitchell has said that mmt horizontal money addresses this?

    Hope you can decipher what I am trying to talk about.

    •  keen on mmt (0+ / 0-)

      i'm not up on the latest, but i asked steve a similar question re mmt a little over 3 years ago; so i'm obviously interested to read whatever steven finally writes.... but i'm also not holding my breath.

      in the mean time, you might be interested in a friendly debate between steve keen and bill mitchell. the relevant links are listed at mmt wiki.

      although there are some definitional issues (what is money? etc) and as a result there is a lot of "talking past" each other, nevertheless the comments threads are interesting (see especially comments by jkh and stf).

    •  Bill Mitchell is correct (0+ / 0-)

      MMT does already address "bank money".  The approach MMT takes to understanding money creation is two fold.  First is the so-called vertical creation.  The government spends money into creation at the top, private parties exchange it in the middle, and then at the bottom government drains the money from system by taxing it out of the system.

      The second is the horizontal creation of money.  This is what other approaches call "bank money" or "lending into existence".  It is part of the "middle step" in the vertical approach.  Private interests exchange money by hoarding and leveraging it.  It's what banks do.  They take a 100$ and make it a thousand dollars by continuing to leverage it by loaning out a fraction of it.  That creates money; however, that money must eventually be paid back.  When it is paid back, the money disappears.

      L. Randall Wray described this in detail as early as 1998.  The picture below is from his ground-breaking book "Understanding Modern Money".  The picture explains why MMT economists use the terms vertical and horizontal money.  The part I circled is the horizontal money Bill Mitchell was talking about.

      MMT vertical and horizontal money

      Our Dime: Understanding the Federal Budget

      by Dustin Mineau on Thu Dec 01, 2011 at 08:18:13 AM PST

      [ Parent ]

  •  REAL inflation is higher than official numbers (1+ / 0-)
    Recommended by:

    BOTH political parties have learned to lie like mad about things like inflation, unemployment and GNP......


    Thanksgiving dinner cost 14% more this year than last and food prices are higher every time I go shopping - even as package sizes get smaller (stealth inflation).  My bar od Dial soap now has a big scoop out of the back instead of being rectangular.

    Denying the problems that come with a greatly increased money supply and higher national debt load does nto help.  The Republicans are hypocrites about this but there is truth in concerns about inflation and an ever growing debt load.

    We are seeing deflation in the things you don't HAVE to buy - houses, cars and other big ticket 'optional' purchases are continuing to go down in price.  Meanwhile the things you NEED to buy are increasing - food and energy (gasoline may go up and down but I choked at my first home heating oil bill of the season).

    The only reason you haven't seen even higher inflation is that much of the excess money dumped into the system courtesy of the Treasury is locked up as bank reserves - though much of it has gone into propping up the stock market.  You don't really think the market would be at current levels without all the 'free money' available to financial institutions?

    In general, people are spending less - and spending what they do spend on 'bargains' - items with greatly discounted prices.  Saving rates have gone up - if only because people don;t have the same access to unlimited credit that they had previously.   Credit is MUCH harder to obtain - try to get a mortgage now or try to get a small business loan.  Banks are NOT letting money get into circulation.

    BUT all that excess money being created out of thin air IS causing inflation and will be causing more. The Treasury and Fed WANT inflation and are trying to have a constant controlled level (lots of luck keeping that genie under control in the long run).   It is easier to pay off all the debt we have incurred if you pay it back with inflated money.

    At some point, when people realize that their money buys less and less, that their savings are losing buying power at an ever increasing rate, they will look for other options.  To an extent this is why the stock market has gone up and why commodities markets have seen increases - people are looking for some return on their money - and an interest rate of 0.01% on savings is a joke.

    At present the velocity of the money in circulation is still low because people are NOT spending but just wait..... As in Argentina, Brazil, Russia, Yugoslavia, Zimbabwe, Weimar Germany.... if people lose confidence in the paper money issued by a government, and decide they no longer want to hold that money - watch out. The increased VELOCITY of money is what sets off hyperinflation.  It becomes a game of 'hot potato' - get rid of money as fast as possible because it buys less tomorrow.......   China and other nations are already reducing their $US holdoings - converting paper dollars into tangible assets.  China is buying mining concerns, farmland in Africa, long term energy contracts.....    

    The FEDERAL RESERVE now holds more US debt than anyone else - truth is we cannot sell the debt that Treasury puts up for auction now  That is another ominous sign.....

    This is not a right/left or Republican/Democrat issue.  Bush really gave the inflation rock a push downhill - but Obama's policies have been more of the same.....  

    When you increase a nation's money supply faster than the economy grows, you have inflation.  Period.  We've managed to export much of our inflation so far de to the $US status as the world's reserve currency but have no fear, inflation is real and will be getting worse.

    We'd have been better off with a real jobs program - requiring that people do SOMETHING productive a la CCC or WPA in exchange for long term unemployment.  Borrowing (eg printing more money) for these benefits IS inflationary.  ANY money given out without a corresponding increase in productive effort and results is.   I'm not saying government help is not needed BUT  Keynes believed governments should save during good times to pay for the help needed in bad times.  We do NOT save.  We do not put away our figurative grain in times of plenty.  We only spend.  There is evidence that in a DEBTOR nation, increased government spending can have not just a decreasing effect on total GNP but actually have a  a NEGATIVE effect.   Higher debt load costs, inflation and decreased private spending on productive efforts as a result.

    The irony is that most people WANT inflation as it reduces their debt load (which is why governments like inflation).   But those that have savings are screwed and those that depend on fixed incomes or who have incomes that do not rise as fast as the rate of inflation are hurt.   But if you are a farmer with a mortgage you LOVE inflation (hence the free silver movement) because it reduces your debt while the prices you can charge for your produce go up.  Sadly, few are in the position where their incomes keep up with the rate of inflation.

    Life isn't fair but you should try to leave it fairer than you found it.

    by xrepub on Thu Dec 01, 2011 at 06:48:18 AM PST

    •  Lots of typing, lots to respond to (0+ / 0-)

      First of all, let me relieve your fears of hyperinflation.  Inflation right now is low because the velocity of money is low.  If we didn't increase the amount of money in the system we would be seeing massive deflation which is really bad for an economy.  If the velocity of money did suddenly increase, the amount of taxes the government collects would increase and eventually that deficit would turn into a surplus and all that "created" money would be taken out of the system.  Hyperinflation only happens when the government refuses to collect taxes for either political reasons or is incapable of doing so.

      Also, you point out how some things are going up in price and others are going down.  Well, that's how economies tend to work.  Inflation, as usually defined, is the result of a general rise in prices.  The prices you talk about: food & energy, have more to do with speculators and the financialation of so many agricultural products.

      Also, If the fed did suddenly tighten up the money supply and deficits were balanced, there is no guarantee that money would exit the food, energy, or financial markets.  It is just as likely that the money might exit the real economy instead and just increase unemployment.  To make money exit those markets is going to require changing the way those markets work.

      Finally, we do agree that the government should be spending on things that increase productivity.  I agree there.  However, that doesn't mean that I'm worried about inflation or the nation going broke if it doesn't.

      The federal reserve holds dollar debt because it is trying to make the interest rate low.  It has nothing to do with failed treasury sales.

      Our Dime: Understanding the Federal Budget

      by Dustin Mineau on Thu Dec 01, 2011 at 07:26:48 AM PST

      [ Parent ]

  •  Is that month-over-month change? (0+ / 0-)

    Most of the sources I've seen have pegged year-over-year inflation around 3.5% for 2011.

    One of the sources.

    I'm inclined to buy Motley Fool's analysis, that the Fed's current policy of paying interest on reserves is encouraging banks to horde cash.  Sooner or later, they're going to unload that cash, and things are going to get ugly.

    Still, I agree, so far the hyperinflationists have been dead wrong.

    •  These are month-over-month changes (0+ / 0-)

      I don't find year-over-year are as good when dealing with a short time period.  If you use year-over-year, it does look like inflation is above 3% for the first time in a few years, but that's because of the spike in energy costs from earlier in the year.  By looking at month-to-month, you see that twice in the last 4 months we've actually had deflation, not inflation.

      Also, when you look at the inflation rate from the previous 2 decades, you'll see that an occasional year-over-year rate has not been uncommon.  Again, that is when budget deficits were much lower.  Once again, showing a very poor correlation between inflation and budget deficits.

      Our Dime: Understanding the Federal Budget

      by Dustin Mineau on Thu Dec 01, 2011 at 07:57:49 AM PST

      [ Parent ]

  •  Have to disagree with two points (0+ / 0-)

    First, the source of the data is not trustworthy.  The government investigated the results of its own policies, and found them to be awesome.

    Second, the assumption in the "The Useless Quantity Theory of Money" link that increase in demand leads to increase in supply (adding a third factory shift).  What if there's no capacity for increase in supply?  I.e. all shifts are running at full capacity.  What if the increased demand causes raw materials to run low, precluding any hope of increasing production capacity?  The way I see it that's more where we are now...

    •  Good Questions (1+ / 0-)
      Recommended by:

      To question data from the government isn't bad, but to dismiss it out of hand is also bad.  The data provided has been collected by low level bureaucrats at the federal reserve and bureau of labor statistics for decades.  The data has been reliable and never seriously contended before, you must be able to make a case why now and for what purpose.  Further, If you think the data is being fudged by political pressure, why would they fudge inflation numbers?  Would it not be better to fudge the reported unemployment rate?

      Second, you make a good point and is the point of MMT.  As long as their is spare capacity in the economy, increased federal spending won't necessarily be inflationary.  If there is no spare capacity, then yes, increased deficits will cause inflation.  We are in total agreement there.

      Where we are in disagreement is if the current economy has spare capacity.  Right now we have a huge unemployment rate which shows that there is space labor capacity.  There might be natural resource limits in the world, but the size of the budget deficit isn't going to change that.  If there is a real shortage of oil or copper, than we should be using some of that spare labor to support science and infrastructure improvements that either conserve or find alternatives to those shortages.  There is no good reason to have so much excess labor capacity(unemployment).

      Our Dime: Understanding the Federal Budget

      by Dustin Mineau on Thu Dec 01, 2011 at 09:05:50 AM PST

      [ Parent ]

      •  Also, it seems to me that mmt is.... (1+ / 0-)
        Recommended by:
        Dustin Mineau

        primarily addressing the system we have (rather than the dominant neoclassical fantasy), so that policy can work better within the constraints of facts on the ground regarding our monetary system.

        It hasn't yet adressed, that I know of, the question oh whether our current regime is the best in confronting environmental limits.

        Though I have seen suggestions oh how to utilize our current monetary regime (when properly understood), in a way that promotes a more democratic and sustainable economy.  It's really this project that sparked my interest in mmt to begin with.

        And while I have no understanding of how mmt could morph into some sort of no growth economy, I get how it could be used as a bridge from smart growth to a yet to be discovered no growth regime, if the latter becomes necessary.  

      •  Conservation and technology have limits (0+ / 0-)

        Conservation merely slows the rate of use of limited resources, and technology eventually hits practical limits, such as communication not being able to be faster than instantaneous.

        Also, I don't trust the unemployment or inflation data at its face because the metrics have been altered, fudged, misreported, etc.  For example, "the" unemployment rate doesn't include people who are "discouraged".  I hear the government has incentive to underreport inflation because social security cost-of-living increases are supposed to be related to it but I'm not sure if that's true.

        I do see the point that increasing the money supply doesn't necessarily lead to inflation.  But it seems more like a "how we get there" issue rather than a "where we're going" problem; as long as piling debt on top of debt is the strategy, it's going to implode eventually, one way or another.

        •  under reported (1+ / 0-)
          Recommended by:

          The number of unemployed reported by the media doesn't include "discouraged" workers - you are correct.  However the BLS DOES collect that data.  They call it "U6" where the more common reported is "U3".  So it's not low level bureaucrats fudging the numbers, it's the media deciding to report it.  We know that there are "discouraged" workers because of the BLS statistics.  So again, I don't think that's evidence against the accuracy of those numbers.

          There is no reason to fear public debt exploding.  The only restriction on federal spending is inflation.  As long as we deal with inflation by cutting spending and raising spending when it DOES occur - we don't have to worry about how big the deficit is right NOW during a continuing depression.

          Our Dime: Understanding the Federal Budget

          by Dustin Mineau on Thu Dec 01, 2011 at 10:49:37 AM PST

          [ Parent ]

  • - Occupy Economics.... (1+ / 0-)
    Recommended by:
    Dustin Mineau

    new site/movement for economists to support heterodox economics and economic justice.

    Just thought you might be interested.

  •  Interesting diary... (0+ / 0-)

    So what was it that happened in Weimar that resulted in hyperinflation? That may help those of us trying to understand what's going on now and why the chicken littles are wrong about the current threat of hyperinflation.

    Just another faggity fag socialist fuckstick homosinner!

    by Ian S on Thu Dec 01, 2011 at 10:12:12 AM PST

    •  I don't know everything re. W Rep..... (1+ / 0-)
      Recommended by:
      Dustin Mineau

      but, the war had destroyed a lot of it's productive capacity/infrastructure, zimdabwe had destroyed much of it's agricultural potential, so in both cases you had too many dollars chasing too few goods and/or the economy couldn't productively absorb all the nre money.

      In germany there was stuff relating to exchange rate regarding war reparations which also contributed, though I don't understand the specifics.

      But according to both mmt and many economic historians, cases of hyperinflation are more complex than money supply alone.

    •  Weimer (1+ / 0-)
      Recommended by:

      I could go on a long diatribe about Weimar, but I'll state the my position succinctly.  The problem with Weimarwas that they continued increasing spending past full productivity.  Right now we aren't at full productivity.  MMT advocates that we deficit spend until at full productivity and then STOP!  Right now we are simply not at full productivity and therefore SHOULD spend more(or lower taxes).

      Our Dime: Understanding the Federal Budget

      by Dustin Mineau on Thu Dec 01, 2011 at 10:55:14 AM PST

      [ Parent ]

  •  Dustin..... (0+ / 0-)

    like that you,re using strong diary titles.

    Keep up the good work.

    Still think a diary called "sanders gives some lovin to mmt".

    I'm wildly learning impaired, which is why I don't diary.  Spelling is spool painful.

  •  On inflation and its dangers (0+ / 0-)

    Here are some good links:

    There are a lot more. Also, this post hasn't pointed out that we can spend much more than we collect in taxes without running a technical deficit and while also repaying our debt. We must reject arguments that assume that if we spend more than we tax we will either add to the deficit or run up the debt. Neither consequence is necessary. Both can be avoided if the President will use proof platinum coin seigniorage (PPCS).  See:

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