So where is all the inflation? FAKEMMT says we can have more and more Gov’t keystroked money because we don’t have inflation. When we do get inflation we WILL have the political cost to simply stop creating money. In this post I will show you where all the monetary inflation is.
For those who do not understand MMT description I will explain a couple of key concepts in a very simple way. Think of the economy as a balance sheet with Govt created $ out od thin air allows Govt to spend. Thus
Gov’t debt = non govt savings. True.
So $22 trillion of US Govt debt must have caused inflation by now if the statment
“Inflation is always and everywhere a monetary phenomenon.”
So why is inflation on 2%? The statement must be wrong than. Right? No. The statement is absolutely correct. We just have not completed the model just yet. So let us continue. In the same way that the economic balance sheet forces the statement to be true that Govt debt = non govt savings to be true. You must once again apply the same concept to the private sector. Breaking down into two key sectoral balances that are omitted from MMT despite being MMT logic.
Moving forward with money flows, dollars can only exist in one of two places within the private sector.
Productive – household income/savings
unproductive – businesses profit/savings
Thus income is spend or saved and profit is saved and invested. If the productive economy saves and does not spend there cannot be business profit/savings to be invested. The economy breaks down and collapses. Thus for an econony to thrive households must spend their income and DISSAVE inorder for Businesses to have profit/savings. It cannot be any other way for an economy to grow and thrive. It is mathematically impossible.
Therefore the most vital piece of the puzzle is where does the productive household income/ savings come from to fund business profit/savings? Govt Deficits or from investment from the unproductive part of the economy, business profit/savings?
If deficits are funding households and there is no inflation, that means that businesses are not reinvesting back into households, thus hoarding deficits and inflation in asset prices and imports.
If on the other hand businesses are reinvesting back into the productive household part of the private sector and deficits are excessive it will be automatically picked up by headline CPI.
So where is all the inflation? In profit/savings for the top 5%, Speculating in asset prices Stocks, bonds, real estate etc.. the current inflation indicator was not designed to pick up this type of inflation. That is why nothing FAKEMMT proposes leads to the 95% owning more treasury savings bonds. Because only the top 5% have the profit/savings to buy them. As such, FAKEMMT can market and fool people into believing more deficits are “OUR” (95%) savings and higher interest rates are “OUR” income and we can afford trillions more to pay for all the free stuff and fake jobs untill inflation hits.
The true economic reality is excessive trillions of $ deficits per year FAKEMMT pushes are really for more inequility, more profit/savings for the unproductive top 5% part of the private sector. NOT “OURS” (95%). OURS gets stuck with the public and private debt. That is why $22 trillion into this experiment OUR savings are with the top 5%. Eventially when OUR 5% decide to no longer buy OUR (95%) public and private debt. They will take their money and go else where. Then and ONLY then when our nation has been looted. Will we see inflation as the dollar will collapse, productivity will collapse and it will be OUR responsibility to deal with rising taxes, running budget surpluses, cutting spending etc.. Badically the MMT solution they call “OFFSETING” code for IMF, EU Greek style AUSTERITY!
So you see my friends the answer to “Inflation is always and everywhere a monetary phenomenon.” Is very much true. There is nothing Modern about promising political freebies paid by Gov’t vote for us and when the time comes we promise to pitchfork the evil rich NOT YOU. The same voodoo economics promised to the Greeks, Italians, Spanish cyprians and Portugueses why they should enter the EUR. Who are now being looted and suffering high unemployment trying to run Austerity. Only then, for us, it will not be due to political reasons but rather real macro economic reasons. In the same way the Soviet Union collapsed trying to apply #FAKEMMT “progressive Neo Marxist values”.
Educate yourselves and do not fall victim into believing the FAKEMMT Neo Liberal marketing and free lunches. No soveirghn currency issuer can print value for its currency! Economic history is littered with such examples. The word fuckery by the FAKEMMT acedemics that a Govt can never go bankrupt is true but it in fact hyper inflate and the currency rendered worthless. Ask anyone from Venezuela, Zimbabwe, Argentina, they will explain to you how their country was looted and the 95% got stuck “PAYING FOR IT” in the end!