How do you react to the metaphor "running the printing presses"? Most probably have a -ve emotional response triggering inflation fears. But one could just as easily picture a +ve image of a utility running pumps to supply needed water to society. patrioticmillionaires.org/2017/07/25/lik…
Saying we shouldn’t deploy the currency (run the press) to meet public needs is like saying the utility shouldn’t run the pumps to supply water, or the military shouldn’t be fully deployed to defeat an invasion. It’s what it is designed to do.
Of course, the utility shouldn’t flood the city, nor should it connect its pipes only to businesses and wealthy neighborhoods & make everyone else carry water for (or rather from) the rich. This doesn’t mean the pumps should stop running - it means they should serve the public.
Economists seem to have a LOTR approach to inflation. Lord Of The Rates - one (interest) rate to rule them all, one rate to guide them. Inflation is this large macro thing that is beast that is controlled by the rate of power. But the causes of inflation are many.
The main inflation problems in the west are arguably best addressed by changes in law or regulation (e.g. to reign in or refocus the credit channel), or by a public service (public health & education), or by changes to local housing policies etc.
The simplistic central bank interest rate approach is at best a blunt instrument but really a cause of much collateral damage (unemployment etc) while failing to target (or even identify) the root of the problem.
And likewise, the simplistic “raise taxes to fix inflation” is also falling into the same trap. Why do we suppose inflation is to be fixed by a tax increase when another policy might be the better instrument? Have we first verified that the inflation level in question is harmful?
The point of all this is that we need to stop throwing the “i” word around so loosely and do the good and hard work of governing well. Put public purpose & rising living standards at the top of all economic analysis, and work back from there, & put inflation back in its place. //
