Stephanie Kelton has a substack post Unfinished Business.

Earlier today, I joined CNN host Fareed Zakaria to talk about deficits, inflation, and whether we’re focusing on the wrong things when we debate the price of the Build Back Better agenda and how to “pay for” it. I knew ahead of time that we would have only 5-6 minutes to cover a lot of ground, and I did my best in the short time we had.

Here was my reaction.

Totally inadequate response. Instead of wasting time trying to say that the inflation people see isn’t what they think, you should have spent all your time explaining what is the cause of the inflation that they do see. As I see it, the supply chain that we have that depends on “just in time delivery” may be efficient under normal circumstances, but it is very fragile in the face of the unexpected. The disruption to the supply chain from the pandemic is now showing up even as we are making feeble attempts to restart the economy. We need to take steps to fix the supply chain situation. I have seen a report that the backup at the ports of entry is just the tip of the iceberg. We don’t have the warehouse space to even store the goods if they went through the ports with no backup. These are problems that need solving, but they may be outside your area of expertise.

For years I have been warning MMT proponents to stop dismissing inflation just because there has not been any inflation up to now. Instead MMT should have discussed why there was no inflation before, and what would have to change to see inflation rise. Up until know there has not been enough consumer demand to raise consumer prices. The oligarchs, who have been receiving trillions of dollars that the Fed has pumped in, aren’t the ones who buy consumer good. The oligarchs take excess money and put it into the stock market, which has been rising. (Stock market price inflation).. Now that consumers have started receiving a little money from the government/Fed, they are trying to buy more, but the supply chain is in a big mess. The disrupted supply chain wasn’t so much of an issue as long as the consumers couldn’t afford to buy things. You could also point out that when workers couldn’t go to work they couldn’t produce the supply of goods that was needed. The external supply from China was also being disrupted.

This resort to economic reports from “experts”, is not going to convince the many people who have become skeptical of all experts lately (and with good reason). Explain things in understandable ways without resorting to playing the credentials game.

I also note that MMT has always said that all the historical hyper-inflations have resulted from supply disruptions. This is what is going on, so MMT has always had an explanation. Now is the time to bring it up. Also explain that MMT is not able to predict unexpected supply disruptions. But MMT proponents should have been looking out for their occurrence when they happen. MMT should have been able to predict this inflation as soon as they saw the huge supply disruption caused by the pandemic.

NSFWCorp has the article When Congress Busted Milton Friedman (and Libertarianism Was Created By Big Business Lobbyists) of November 2012.

And yet — in the words of Larry Summers, “Any honest Democrat will admit we are all Friedmanites now.” Of course, there are no honest Democrats. And there are no honest economists. And these are the people who are framing our politics, the people who have told Greece and Spain they have no choice, and the people who today are making sure that the number one item on Obama’s and Congress’s agenda is cutting Social Security and cutting Medicare and cutting “entitlements” — and the only thing that divides the elites in charge of this mess is “how much of these moochers’ lifelines can we cut?”

I have long known that Milton Friedman was a con artist, but until this article, I did not fully understand what drove him. The trouble is that his sham philosophy drove Barack Obama to be such a disappointing President.

Naked Capitalism has the article Jim Chanos: China’s “Leveraged Prosperity” Model is Doomed. And That’s Not the Worst.

Jim Chanos: In 2013, we put a slide in our presentation for investors and talks that was very controversial – especially for Chinese nationals. It showed President Xi Jinping in emperor’s garb. People thought we should take it out, that it was offensive. At the time, Xi was widely seen as just the latest in a series of technocrats who had risen through the ranks — one who would follow along with Deng Xiaoping’s reforms. It’s “capitalism with Chinese characteristics.” It’s okay to get rich as long as the country prospers.

But a few things made us think, no, this guy is different. His first speech in China after becoming president was critical of the Soviet Union for being soft on perestroika. They should have crushed it when they had the chance, he said. Xi then set up an institute to study the Soviet Union’s collapse. That was a red flag to us that he was going to be more hardline than people thought. He went on to do an anti-corruption drive, which people dismissed as a typical settling of scores that Chinese leaders do. But it actually extended beyond that. A couple of years later, he began talking in Puritanical terms about social issues. Again, that was different. Nobody had cared about that stuff for 20 years. Do what you want as long as you don’t question the party. Next, we had the book collecting his speeches and writings, which people could be seen carrying around. He started showing up in military events dressed in Mao jackets. This symbolism isn’t lost in China.

We noticed all this, but the real switch occurred in 2019 when he started going after celebrities like Jack Ma [co-founder of Alibaba]. At that point, it was clear that this president was not stepping down at the end of 10 years. He was taking a much harder line on the “flowers of capitalism,” if you will, than past presidents. In 2021, all of this exploded into the open. There’s been initiative after initiative. Redistributing wealth to the masses. Going after other leaders. Overlaid on top of this is the Evergrande saga.

Here was my reaction to the post.

Why not ask Michael Hudson what he thinks? Chanos has a distinctly western view about everything China. Michael Hudson has a more inside view. I think it has been MMTer Steve Keen who has been concerned about private debt in China for many years. For a while, I didn’t realize his concern was strictly about private debt, not government debt. Chanos does not recognize that the increasing USA belligerence may be driving China’s reaction. He doesn’t realize that China’s crackdown on private capitalists may be an attempt to avoid the mistakes of the USA. You can always put a western perspective on everything happening in China. It is just possible that the Chinese perspective might be the more realistic one. I certainly don’t know for sure what the future holds. Michael Hudson would certainly have a better perspective than I have.

Stephanie Kelton as posted on her blog The Lens the article We Need to Think Harder About Inflation.

Here is one excerpt that summarize on of the points the post is making.

It’s not that MMTers don’t “believe in monetary policy” (whatever that means). It’s that we believe it’s unrealistic to think that the central bank can steer our colossal macro ship by periodically nudging the overnight interest rate around in search of alignment with some mythical r*. It’s that we agree with former Fed governor Daniel Tarullo, who candidly professed that “the Fed has no reliable theory of inflation.” It’s that we share Jeremy Rudd’s skepticism about the role of “inflation expectations” as driver of actual inflation, and we question the very idea that rate hikes necessarily mitigate inflationary pressures.

As for the article as a whole, this is something I have been trying to tell proponents of MMT to do for years. Dismissing inflation as no worry when there was no inflation was not a good idea. There needed to be a discussion of why there was no inflation, and talk about what could change that would allow inflation to occur. I think this post talks about and tries to correct what I thought was missing from the discussion.

YouTube has The Hill video Economist, Stephanie Kelton, Explains How Spending MORE Is The Solution To Inflation.

Stephanie Kelton, professor of economics and public policy at Stony Brook University and author of The Deficit Myth, details the economics behind supply shortages sweeping industries across the nation.

I haven’t watched The Hill since Krystal and Saagar left. Putting Ryan Grim on to fill the space was another negative. However, if they are going to have Stephanie Kelton on, I watched. Pretty quickly she mentioned the magic words that I had hoped for “just in time” manufacturing. Over the last 30 or so years the idea of “just in time” has spread around the world. Manufacturers realized that they were spending a lot of money in warehousing the supply of raw materials and other inputs to the manufacturing process. If they could get the inputs delivered “just in time”, they could eliminate the cost of putting the inputs into a warehouses and then taking them out when they were ready to use them. Taking out the buffer zones of warehouses saved money, but it made the system more fragile to any interruptions of the “just in time” deliveries. We are now seeing the results of this added fragility. The pandemic put a big kink in the supply chain.

Nassim Nicholas Taleb talks about making things anti-fragile. However, in the short term it is more expensive to protect yourself from fragility. “Free” market competition makes it harder to choose anti-fragility. Banking regulations used to require banks to carry a certain level of reserves to protect against bank runs. That buffer has been cut to the bare minimum and perhaps below that minimum.

Warren Mosler has posted White Paper: Modern Monetary Theory (MMT). Originally created on Created on Feb 22, 2019.

The purpose of this white paper is to publicly present the fundamentals of MMT.

I don’t know how you will take this presentation. Since I have been learning about MMT for quite a few years now, I may have a different take on it than newcomers might have.

This is the easiest to understand explanation that I have seen about taxes, government spending, borrowing, deficits, and surpluses.. It is on YouTube as the video MMT for You and Me (consolidated).

You may not believe any of it, but the explanation is impossible to refute. Warren Mosler is a successful investor and owned a bank at one time. Warren knows how it works, whether you want to believe him or not.