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View Diary: Austerity isn't dead... but it should be (132 comments)

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  •  Much of what you say is true (2+ / 0-)
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    ozsea1, OrdinaryIowan

    However, I would like to point out one important concept:

    If the money supply and velocity increase, its not a guarantee of inflation as long as its accompanied by a corresponding increase in the production of goods and services (like we would see with a lowering of the unemployment rate).  This is why, we MMTers assert that we almost never need to worry about DEMAND pull (supply shock inflation like health care, college tuition, oil induced inflation of the 70's is always a possibility that needs to be watched for) inflation until the economy is operating at full capacity and employment.  This is also the basis for why we believe that we can have full employment and price stability given the right Govt maneuvers (Job guarantee for example).  We could set the price of labor by employing all the unused labor resources and let the supply of Govt guaranteed work float.....as long as we do this on the low wage end of the pay scale so as not to bid up labor and add to inflationary pressure.

    "The Earth is my country and Science my religion" Christiaan Huygens

    by Auburn Parks on Sun Apr 28, 2013 at 12:16:43 PM PDT

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