We are sorry to report that the AFR’s US correspondent has been kidnapped by aliens and felt the cold kiss of a rectal probe today:
Australia’s treasurer hunkers on the top floor of his department’s Langton Crescent HQ in Canberra putting final touches on the government’s finances.
…The reason? Inflation has reappeared, seemingly out of nowhere after decades of respite. Years of unfettered deficit spending funded by central bank money “printing” has produced an overheated economy.
…A visit by US President Alexandria Ocasio-Cortez several years earlier convinced parliament to strip Martin Place of its interest rate-setting powers.
This is some whack combination of monetarist black fantasy and simple false analogy. About as realistic as my own headline.
The world does not have an inflation problem. We’ve printed trillions to try to create one and gone absolutely nowhere. If we did have higher inflation we’d all be better off with the current onerous debt load foisted upon us by blood-sucking monetarists getting nicely eroded away by rampaging wages. It ain’t coming.
Neither is any removal of central bank powers. Nor is MMT on the verge of killing the private sector, plunging us into the Weimar Republic or killing unemployment (sadly).
MMT is a tool. It can be used for good or bad. Just like traditional monetary or fiscal policy.
In the circumstances of secular stagnation it makes perfect sense to use it. Especially since it can address wealth imbalances, aid deleveraging and prevent trade wars, all while lowering unemployment. If it works then wind it back.
No aliens, no probes, no fallacies.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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