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Culture War Roundup for the week of January 22, 2024

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I think too many people in power have learned from MMT how money, banking, and government finance actually works, so it would probably take a few generations for people to forget those again for debt-hysteria to strongly return

This seems like a fringe opinion. Countries that have "figured out how money works" and lean into debt-financed government spending tend to end up like Argentina or Turkey.

We've just experienced an episode of high inflation due to government stimulus. If anything, we've learned just how dangerous MMT can be.

Why would returning to historical levels of deficit/GDP be considered hysteria?

We've just experienced an episode of high inflation due to government stimulus. If anything, we've learned just how dangerous MMT can be.

I'm not sure the government stimulus is the best single explanation for the high inflation of the last few years. If you want to blame the government, then I think overreaction to COVID would be a better angle of attack, since a recent Indicator episode looked at why there is a disconnect between ordinary Americans, who claim to be miserable, and economists who say that despite what Americans say in polls they're spending more like they're happy (high spending on travel, etc.), and it concluded that a lot of indicators of Americans being happy with the economy are actually due to pent up COVID spending. Basically, people didn't get to go on vacations for a year or two and now that things have opened up they have a bunch of money saved up that they're still spending, in spite of inflation.

If this explanation is correct, it might mean the government stimulus is part of the saved up money that Americans are now spending, but I somehow doubt that one time payments of $600 per person in December of 2020, and $1000-$3000 in 2021 are the best explanation for a sustained increase of prices across the economy. That just doesn't seem like a parsimonious explanation of what we're observing.

If this explanation is correct, it might mean the government stimulus is part of the saved up money that Americans are now spending, but I somehow doubt that one time payments of $600 per person in December of 2020, and $1000-$3000 in 2021 are the best explanation for a sustained increase of prices across the economy. That just doesn't seem like a parsimonious explanation of what we're observing.

This spending was financed by government debt. Debt that that wasn't paid off. In a standard Keynesian model a sustained increase in the level of government debt leads to a sustained increase in the price level all things equal. Monetary factors also matter a lot, but the Fed was also being expansionary and allowed inflation to increase rapidly and didn't want to tighten policy and cause deflation, since that would lead to a recession in the standard Keynesian model.