/biz/ - Business & Finance

>>29936970
look man, I hate MMT as much as the next guy but at least explain it properly.

MMT posits that the only inhibitor to what a government can spend is inflation - they need to keep inflation under control. Therefore the tax system becomes their primary policy lever (instead of overnight target rates set by the Fed at the moment).


On face value especially when looking at the QE used by the US, it can be tempting to think the US does not answer to the typical laws of inflationary forces - you've had next to none since QE began (excluding asset prices). However, if the government WERE to merge the Fed and Treasury, and openly welcome a MMT framework, you'd see a complete collapse in the global financial system's faith in the US economy and the USD. Theres a lot of suspended disbelief out there.


>it doesnt need fiscal stimulus
>it doesnt even need to tax

Government spending IS fiscal stimulus/impulse. And taxes would be used dynamically in a MMT regime. MMT theory says taxes would be negligible if there is not enough inflation, and punishing if there was. One of the main flaws of MMT is that the Treasury/elected government is not independent, so they can manipulate the public into siding with them right before elections etc, by giving tax cuts.


So does this mean there'll be hyperinflation?
If they go down the MMT route, you bet your ass there will be. I can't stress enough how much of the dollar's value is linked to it being the global reserve asset, and once the dollar starts falling, you not only have domestic inflation but your cheap chinese imports will skyrocket in prices as well.