Thread by @FadhelKaboub

#MMT & #Inflation One more time for the people in the back (or without a search engine). #Thread
Read this @FTAlphaville piece by @stf18 @NathanTankus & @rohangrey: ftalphaville.ft.com/2019/03/01/155…
Here's my way of framing the conversation. 1/n

https://twitter.com/MichaelRoddan/status/1289357721540497411

If you've been in a coma for the last 12 years, you need to catch up on your central banking a bit:
"Fed has no reliable theory of inflation, says Tarullo" on.ft.com/3hXmj5N
2/n

In other words, mainstream econ has no idea what causes inflation, let alone how to deal with it. #MMT does. As an MMTer, I am obsessed with the risk of #inflation. 3/n

While mainstream econ says Gov spending is constrained by tax "revenues" and "borrowing" capacity, #MMT shows that fiscal policy space is much larger than that (it's not unlimited). It is constrained by potential inflationay pressure. #Inflation risks materialize in two ways. 4/n

The 1st source of #inflation is related to shortages in productive capacity (skilled labor, technology, materials etc). We can deal with this type of inflation via strategic investments, industrial policy, education & vocational training,R&D etc (millions of good paying jobs) 5/n

The 2nd source #inflation has to do with abusive market power & price setting behavior (aka Administered Prices, think Big Pharma, Big oil/gas, Real estate, Health insurance, etc.). They raise prices because they can (and SuperPAC-funded regulators let them get away with it) 6/n

This kind of inflation is not going to be dealt with by reducing spending. Instead, we deal with it by taxing & regulating their market power out of existence before you even see a hint of #inflation. And on #MMT & taxation, UBI, JG etc. read this. 6/6

https://twitter.com/FadhelKaboub/status/1287774564538359808?s=19