The #MMT Case for Progressive Taxes

Naked Capitalism has the article The #MMT Case for Progressive Taxes

If recent decades’ inflation rates are any indication, the U.S. is nowhere close to the point where spending exceeds the capacity of our real resources (mostly people) to produce, “supply” more stuff — the point where inflation starts to bite.

MMTers (like myself) should ask themselves why it is that all that deficit spending has not caused consumer price inflation? A little Keynesian economics explains this quite well. In the absence of enough consumer demand caused by the growing wealth and income inequality, there is absolutely no reason for the rich to invest in more production capacity. What they do “invest” in is financial derivatives, stock buy backs, and general vulture capitalism. Stock and some asset prices do get inflated. The Fed has injected way too much liquidity in the private economy exactly because injecting this liquidity is a weak monetary tool when strong fiscal tools are called for. If, by some strange chance, there is call to invest that liquidity hangover in the real economy, there could be high inflation. I hope the Fed and the government have a plan to suck that excess out of the economy fast enough. I don’t see what they could do that would be politically feasible.

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