Inflationary Pressures in the Time of Covid-19: MMT as a Theory of Inflation
I have just started reading this December 2021 paper Inflationary Pressures in the Time of Covid-19: MMT as a Theory of Inflation.
Abstract: According to Modern Monetary Theory (MMT), the only constraint on public spending for a currency issuing authority like the United States government is inflation. This paper develops an alternative understanding and analysis of economic inflation through the lens of MMT in the aftermath of the Covid-19 public health crisis and consequential economic shutdown and reopening. It argues that conventional explanations of inflation remain ideologically constricted to an outdated social theory and conceptual framing. As such, public policy responses to contemporary price increases are limited in scope and incapable of neither effectively stabilizing prices nor avoiding the worsening of social inequities and harm. The paper will first develop MMT’s insights about inflationary pressures as a theory of qualitatively determined resource use, costs, and political coordination, as opposed to a collapse in the value of money from excessive public spending. An analysis of price pressures throughout 2021 is then provided by examining supply chains, industry specific shocks, and market power. Lastly, inflation is explored in the context of an ongoing planetary climate and environmental crisis with deep implications about the future of sustainability, economic development, and price stability.
Here are some snippets I have gleaned from the first 10 page out of 40. There is so much more already in the first 10 pages.
MMT describes how monetary economies work and prescribes how to best apply public policy and investment based on productive capacity, available resources, and price stability.
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Currently, the political process of price setting is overwhelmed by neoliberal disinvestment, corporate greed, and monopolization, but it does not have to be this way.
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The “crypto” agenda often comes in the form of appeals to the ideological superiority of “hard money”, meaning finite and scarce, but other times has a more ambitious objective to replace public fiat altogether with private actors such as Facebook’s Diem. 36 This is especially pernicious when it takes the form of new developments in monetary imperialism as is the case with El Salvador further privatizing its economy over to fintech 37 or billionaire vultures 38 seeking to take over Puerto Rico’s energy grid with crypto after Hurricane Maria.When public money is reduced to the constrained function of taxing and spending it represses it true world-building capacity and lends itself to the exploits of powerful private interests. By contrast, MMT sees money as an instrument of generative production and reproduction with many more positive-sum and qualitatively unique results than the mainstream orthodoxy allows us to see.