Though a lot of hot money was poured into the trade in the last quarter of 2020, there is still much reluctance on the part of economists – always prone to a spot of Under-consumption fallacy – to wholly embrace the idea that prices are beginning to rise and that the path ahead is likely to be an inflationary one. That path will inevitably not be smooth, nor its ascent uninterrupted, but it is hard to see where we slow the climb or take a different turning – or even that sufficient will exists to choose that alternative were it ever to come up on our satnav.
A recent Wall St Journal article gave vent to a scare-story full of Underconsumptionist claptrap, carried under the catchy headline: “The Coronavirus Savings Glut”. Ironically, and only a day later, the paper ran a second piece entitled “How Coronavirus Upended a Trillion-Dollar Corporate Borrowing Binge and Kicked Off a Wave of Bankruptcies
On March 15th, the Eurozone branch of the Throw-more-money-at-it lobby were making themselves heard, calling for the ECB to run the printing presses for a limited (author pulls down lower eyelid with index finger) period as a supplement to the to the €120 billion in extra security purchases already made to that point. [NB total ‘assistance’ to April 17th had reached to €275bln in RP, €148bln in securities, and €126bln in FX swaps for a total of €550bln in five short weeks].We responded:-
MMT has recently enjoyed a sudden resurgence in popularity. but, like so many other systems which claim to reveal previously undiscovered truths, it turns out to be nothing more than a retread of a number of age-old fallacies, only appealing because it seems to promise the Provider State unlimited power to interfere in our lives. We discuss its failings here.