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Economics

Modern Monetary Disasters

May 16, 2019 Sebastián Edwards

The experience of Latin America should serve as a clear warning for today’s Modern Monetary Theory enthusiasts. In a variety of countries, and at different times, fiscal expansions that were financed by printing money spun catastrophically out of control.

LOS ANGELES – Modern Monetary Theory (MMT), a seemingly new approach to economic policy, has become a hot topic, gaining support from leading US progressives such as presidential candidate Bernie Sanders and Democratic Representative Alexandria Ocasio-Cortez. But MMT enthusiasts should heed lessons learned in Latin America, where policies based on similar ideas inevitably ended in economic catastrophe.

According to MMT’s supporters, the US Federal Reserve should print large amounts of money to finance massive public infrastructure projects, along with a “job guarantee” program aimed at ensuring full employment. A major increase in public-sector debt, MMT backers claim, does not represent a danger for a country that can borrow in its own currency, as the United States can.

This unconventional view has been criticized by Keynesians and monetarists alike. Many respected academic economists, including Paul Krugman, Kenneth Rogoff, and Larry Summers, say that MMT makes little sense.

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0 Comments on this paragraph, 43 Comments on this article

Abdella Abdou Aug 21, 2023

The discussion here indicates that there is no agreement on what MMT is much less on what its impact might be.
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Nonso Okonkwo Jun 13, 2019

The central tenet of Modern Money Theory is axiomatic, Government can not default on debts denominated in its currency, all Government deficit is Money printing, selling of Govt debt is to convert liquid bank credit(money) into illiquid Government credit( bonds) which pays an interest which in most cases a little above inflation rate, inflation rate is the main factor that determine Government interest rate. The implementation of it is wrong. One cannot rely on Taxation to regulate inflation because there will always be tax leakages, avoidance. The better way to clamp down inflation stemming from inflationary deficits is to export the inflation. Globalisation is the means in which developed countries export inflation to developing countries by virtue of their currencies being reserve currencies. Supply side economics should rigourously promoted, Companies in America should be allowed to shift production of Goods and services to areas in the world where it can be cheaply produced enabling import deflation. Allowing more countries to participate in Globalisation in which Dollar and Euro would be the key reserve currencies, The Output in the MV=PO would no longer correlate to the US economy alone but the Global economy. M= Reserve Currency (Dollar) P= Price Level, O= Global Output. Increased Trade deficit caused by this implies Demand leakage, as the Government is running high deficit, that sum is leaking out due to spreading all over the world to developing countries which are usually fast growing, these economies will absorb the inflation
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Lawrence Michael Jun 9, 2019

The predominant problem - apart personal egotistical agendas tied into personal or cartel benefits - seem to be a cognitive fatigue with an ever increasing complexities in operations and the necessarily further vulnerabilities they present via human fragility (knowledge-efficacy-values). Given the ever-increasing interdependence and lateral innovative aspects that attend globalization riding information technology - the need for easy summaries are fashionable and will remain so - even though the need for policy makers charged with national/statist responsibility to get a panoramic view of what's at stake gets increasingly complicated and difficult while the quality of those that make it to policy-makers already tend to attend the democratic deficit in a new fashion and unfortunately in qualitative aspects. The horizon for technocrats and not democrats seem to loom more attractively for most already lost upon the basics of objectives, visions and rationales of statecraft, when not burdened with rank ignorance. Or plain criminal cartels and their take-overs of the system of governance in a worse nightmare many ordinary folks seem to be well resigned to. All together, the cumulative war of attrition against the state and policymaking or governance by the criminal cartels seem to slowly weigh against the state and governance even as the global scale seem to weigh heavily in favour of the cartels. No wonder marking religion as an attractive option for far too many in an age of betrayals, as it may seem. Trying Environmental Analytics seem to do away with a lot of the fears even as we seek to look at economics and trade with governance as a moss-effect. Or how moss grows. At the ground levels of micro basics - upon which the larger visions can be build upon, with neutral AI designs the only solution.
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Michael Norman May 30, 2019

Amazingly bad analysis. Author conflates Latin American countries that ran up debts in foreign currency to what MMT proponents said and have been saying about sovereign money states where those conditions don't apply. Apples and oranges. He clearly has not read or understand anything about MMT. I graduated from UCLA and have a degree in economics from that school. What kind of economics are they putting out now?
- Dylan Cisarik Sep 25, 2019
  
  my thoughts exactly. this is the kind of lazy analysis i'd expect published in reason magazine, not project syndicate
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Clint Ballinger May 25, 2019

"MMT, or some version of it, has been tried " Every nation in the world is working "under MMT". MMT is just the accurate description of modern economies. Also, you seem to assume the accounting of spending using bonds somehow is different than if a government just directly spent the tax-credit unit into the economy. It's not. A currency issuer that spends (creates) tokens into the economy and then creates promissory notes for those tokens may just as well spend more tokens directly into the economy. Bonds are vestigial and accounting nonsense for a currency-issuer.
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Andrés Galia May 23, 2019

Mr . Edwards mentions in his article to support his ideas the Argentine case during the Kirchners' administrations. He missed to mention what is going on there now with a new government that is market friendly. Here is a summary quoted from an Argentine newspaper, Ámbito Financiero:

"The Macri administration dismantled the best legacy: "de-indebtedness". In four quarters the twin imbalances reached over 11% of GDP. In the first quarter of 2018 the country risk was amplified, and financing was stopped.

"Faced with the incision of credit, the threat on the exchange rate and reserves - with stagflation - the Government was about to move from debt to default in only 30 months. No serious country asks the IMF for help. We fell back into the technocracy of the IMF. Characterized by believing that economic rationality should replace the policy of negotiations. For the average economist -without another formation-; the State is a mere implementer of public policies."
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Andrés Galia May 22, 2019

How about the money the European Central Bank printed to save the banks and the money the FED printed to save the big corporations?
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Andrés Galia May 22, 2019

Es una lástima que Edwards refiriéndose a la Argentina se limite a mencionar el período que abarca al gobierno de los Kirchner. El gobierno que sucedió al de Cristina Kirchner puso en práctica las teoría que él parece adorar, y el resultado es que de una inflación del 25% anual y una relación deuda-PBI de las más bajas del planeta, el país está con una inflación de más del 50% anual, una relación deuda-PBI de las más altas del planeta, índices de desocupación y pobreza por las nubes y al borde del default. Un gobierno que se sostiene por la decisión del FMI de prestarle dólares para que el Banco Central los rife a los que los fugan del país.
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IVAN ORLANDO ROJAS YANGUAS May 21, 2019

Bolivia en los años 80 tambien fue un buen ejemplo, generando una de las 10 mayores hiperinfalciones de la historia económica (36.000%). No obstante creo que existe una diferencia no tan sutil en todos estos ejemplos. El incremento en la masa monetaria fue a cubrir un déficit fiscal que en su mayoria constaba de gasto corriente, es decir fue a incrementar directamente la demanda agregada. ¿Existirá alguna diferencia si el incremento en masa monetaria es utilizado en el potenciamiento de la oferta, por ejemplo para la industrialización de un producto estratégico que posea ventajas competitivas y comparativas para el comercio internacional?
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Kerry Pechter May 21, 2019

Aaaarggghhhh!!! This is so frustrating. Can people stop mischaracterizing MMT and its significance? Before MMT, no response was ever formulated or articulated whenever people like John Boehner said, "When people have to tighten their belts, the government must tighten its belt," or when George W. Bush said, "The government is broke," or when people repeat the nonsense that sovereign debt is "bankrupting our grandchildren," or when the American people are told they can't afford Social Security or health care. After 2009, the Fed's ability to produce trillions of dollars to rescue the banks put a lie to all of all those remarks, and MMT's proponents--and only MMT's proponents--could explain that our financial system actually works. MMT says that the American people--not the private banks--actually own their own money supply, and that they need to better understand all the possibilities and the grave responsibilities that go with that. Of course, it's entirely predictable that the money power, as it used to be called, would send forth its experts to kill MMT in the cradle.
- Kerry Pechter May 21, 2019
  
  That should say "how" our financial system actually works, not "that."
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Michael Heng May 21, 2019

MMT is likely to work under the following conditions: (1) very low inflation, (2) no crowding out of private investment, (3) huge pool of unemployed. These three conditions exist in the USA. Moreover, the infrastructure is crumbling, airports in need of repairs and expansion, and dams in danger of collapsing. It certainly makes sense (lots of sense) to spend money on maintaining dams than to let them burst and destroy nearby cities.
Let us remind ourselves that economics is an empirical science. The reasons above are certainly not sufficient to decide the debate.
The best is to test the idea through practice. The experiences cited by the author are, sorry to say, not convincing. There are all cases from Latin America, a region for a long time in the past well known for its corruption, poor governance and dysfunction politics. The institutions are different, the conditions are different, the culture is different.
The USA has the enviable conditions of being a large country with a large economy. Why not do the following incrementally, study the results and learn? Begin small scale to repair a stretch of highways in bad conditions with fiat money. After the project, with well paved roads and safe bridges, collect tolls from the users, like what is done in many countries. (Why is America so unique that tolls cannot be collected?)
If the exercise leads to signs of runaway inflation, then stop. If the results are favorable, and with enriched experiences, proceed to do more.
What is missing in debates on MMT is the role of discipline to be exercised by the State. I hope to read suggestions on how to handle this issue. Thanks.
BTW, how is what I propose so different from the following arrangement. A construction company with good reputation issues low interest infrastructure bonds. The repayment is from the tolls collected from the users.
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Waleed Addas May 21, 2019

I somehow still believe and think that revisiting Fisher’s identity will give us a new and profound insight and a principle of equivalence relationship that has not been addressed before: this is by understanding the linkage between factor inputs productivity with demand for money or velocity, which is crucial to keeping the house in order—any house for that matter (hint: mV=¥N) is my derivation; m=M/P ; N factor inputs ; Q is value of real national output and ¥ is factor input productivity - let’s test it!
- Kerry Pechter May 22, 2019
  
  These "models" are sand in the eyes of ordinary people, diversionary tactics of the money power. Mumbo-jumbo intended to confuse and subjugate most of us, justify horrendous policies, distract us from the real world with meaningless abstractions. Most economists and their formulas are tools of oppression. The scrim should come down, the lies called out. That's the fire that MMT lights, and that's why it scares so many people.
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Burk Braun May 21, 2019

Please, please read some MMT theory by Bill Mitchell. That should straighten things out. The metric that this school uses for fiscal policy (spending) is inflation. So shouting things like "Zimbabwe" or "Venezuela" is an intellectual disgrace. It also means that the debt doesn't mean much if inflation is low. I think we all agree that the US should have spent more in the wake of the 2008 recession, and that is one point of the MMT analysis.
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David Punabantu May 21, 2019

As the saying goes "there are many ways to skin a cat". When it comes to "printing money" there are two ways, physically printing and recycling. Any government budget reflects a certain percentage of the GDP. Tax 101 shows that a budget represents "x" percentage of the GDP over a period of 12 months. If the budget was to be collected over 12 months then if "x" , the budget, represented 100 percent of the GDP, the tax rate would be 8.3 percent per month. Take the South African 2019/20 Budget. The SA budget is 33.3 percent on the expenditure side of the national budget. Collecting 33.3 percent of the GDP of 2019 every month means a monthly tax rate of 2.775 percent. The reality on the ground is taxes in the SA budget are higher. If the SA budget was to consume the entire GDP then the monthly rate would be 8.3 percent. As taxes are above 8.3 percent per month a different scenario occurs. As taxes are above the 8.3 percent threshold, the government will collect the budget, spend it, re collect it, spend it, recollect it, spend it in a cyclical pattern many times in a single budget year, hence leaning to the left. In effect it will be like Keynesian economics and the printing of money except instead of printing physically, the printing is done by recycling it. Taxes thus become compounded. Government tax at 30 percent in the first cyclical or month would extract that value leaving 70 percent. Then in the next cycle extract another 30 percent leaving 40 percent. The next 30 percent extraction in real terms is facing 40 percent left of the economy and in real value terms is 70 plus percent. It is just within the first three cycles that the right leaning economy exists. The next cycle extracts 30 percent on a 10 percent left of the GDP meaning the tax in real terms is 300 percent. There is no room for the private sector. Once the value is extracted of savings, investments of ordinary people the whole nation government borrows against a "fiscal and economic crisis" as the purchasing power of the Rand collapses. Once all the GDP is consumed by the fourth cycle the economy enters the informal phase as it shifts from the formal phase. Like E=mc2 meaning half matter half wave, the economy is half formal and half informal. Collecting taxes in the informal zone is like trying to stop "light" because the properties of the economy have changed and so have the rules. Get mathematicians to show how many budgets is SA going to go through in 2019 and it wouldn't be one budget that lasts a calender year but we'll above 20 budgets in one calender year as government recycles it.
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Michaël Malquarti May 20, 2019

What a weak article, especially coming from a university professor!

The only point I might agree with is that it is not very clear what MMT is, but probably because I haven’t spent enough time studying it and because so much nonsense is written about it.

For the rest, the comparison with Latin America is either intellectually dishonest or the result of plain incompetence. Take Chili for example. Without spending more than 5 minutes researching what happened during those years, one can note that: inflation was already reaching 35% before Allende came to power, not the sign of a well-functioning economy to start with; Allende started a socialist-type reform (nationalisation of almost all banks and large industries, agricultural reform with redistribution of land, price fixing, etc.), which is probably better at explaining a possible economic collapse than some vague comparison with what MMT’s proponents recommend; the country underwent a massive exodus of capital even before Allende did anything, which is hardly something that will support the currency; in 1973 (the year mentioned in the article with regards to the eye-catching 400% inflation measure), the country underwent a coup leading to Allende’s death; etc.

We will not solve today's economic issues with lazy and fallacious arguments, but with a humble and curious attitude towards new ideas.
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Anton van der Merwe May 20, 2019

This article misrepresents MMT. As soon as the term 'printing money' is used you know the writer is not being honest. What MMT states is the simple fact that governments that issue their own currency with a floating exchange rate cannot be forced into default by, for example, a sudden stop in funding that sends interest rates soaring. It also states very explicitly that the main risk of deficit spending is inflation, and that fiscal policy should be tightened if inflation increases. The main point of MMT, as I see it, is to encourage the use of fiscal policy to maintain demand, especially when inflation is below target. Under these circumstances (low inflation/deflation, and insufficient demand) deficit spending should be pursued without worrying about the size of the accumulated government debt.
- Kerry Pechter May 22, 2019
  
  MMT's main point is not to "maintain demand," as if demand for video games or BMWs and the demand for clean air are somehow interchangeable. The point is to get stuff done that people need, like health care, a healthy environment, shelter and healthy food, and to understand that the artificially-maintained scarcity of money should not be an obstacle to that. It's about recognizing the virtuous cycle of currency, debt and taxes. As corny as this sounds, it's about holding people sacred instead of money.
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John Doyle May 19, 2019

Mr Edwards. why did you not study MMT before putting pen to paper? Or perhaps you have been "encouraged" by someone to try putting it down?MMT is not susceptible to the sort of criticism mounted by you. You think is is a left wing theory and chose your target nations based on that. MMT is theory like Gravity is theory, neither left or right But it is not your flawed theory It is just an explanation of how money works today. It is eminently possible to get it wrong just like today, but the questions will differ if you come from an MMT base. All the hyperinflations you mention were not based on existing economics, but on POLITICAL forces. The money spending comes after a trigger event. In Venezuela the political shift to the left got the USA off side and sanctions have led to the troubles today.
- Anton van der Merwe May 21, 2019
  
  Samuelson admitted that the notion that in a fiat currency system governments need to raise money through through taxes in order to spend it is a useful myth to provide fiscal discipline. The truth, of course, is that quite obviously base money needs to be created ('printed'), by spending, before it is retrieved by taxation.
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- Len Charlap May 20, 2019
  
  Right. In addition, since oil is Venezuela's only significant product, the drastic falls in its price and the decrease in production contributed to higher prices.
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Len Charlap May 19, 2019

Here is a brief explanation of why MMT is important.

There's this little equation or if you prefer, rule of thumb:

P = (MV)/S

where P is prices , M is the amount of money in the economy, V measures the frequency that money changes hands usefully, and S is the amount of the amount of stuff, goods and services, we can produce in some time period.

One of the myths that leads any discussion of taxes astray is the idea the taxes pay for government operations. If someone proposes a federal government program, the first question asked is, “How do we pay for it?” This idea is believed by practically everyone. In fact, so thoroughly do they believe in it, they never offer any facts or even arguments to support this belief. "Everybody knows!" I understand that they believe this because it is true that they must pay for the stuff they buy. This belief, however, is responsible for not only many of our economic problems today.

The reason these "kitchen table" economic ideas are wrong for the federal government are because there are significant ways the finances of the government differ from our family finances.

One is that (through the FED) the federal government can create as much money as it needs out of thin air. I am fond of saying that the US government will run out of money the day after the NFL runs out of points. Unless you have a printing press in your basement, you cannot do this.

Because of this fact, the government does not need your money to pay for government operations. It has an infinite supply. We do have to be careful since too much money chasing not enough stuff will cause prices to go up. We may get excessive inflation. Well, one way to avoid that is for the government to take some back, to tax it back. We may not, however, have to have high taxes.

The above equation shows that prices are proportional to the amount of money (times its velocity) in the economy, but they are also inversely proportional to the amount of stuff we can produce. If we spend the new money in a way that facilitates more production that will yield more money chasing more stuff which does not lead to excessive inflation.

Note that if S is constrained, if production cannot be increased, then increasing M will lead to excess inflation. Some reasons the economy may be constrained are shortages (oil in the early 1970), a sea blockade and lack of enough arable land (Weimar), taking farms from the people who knew how to run them and giving them to those who did not (Zimbabwe).

Why is this important?

Using the "kitchen table" ideas, if we want free child care, say, and it costs $X, then we have to tax or borrow $X dollars to pay for it. If we use the way the finances of our government actually work, we have to see how much free child care would increase the value of our production which is probably quite a bit since it would allow more people to work. When we do the figures, it may turn out that if we have to raise taxes at all, it may be a lot less than $X.

The point is that we are asking the wrong question. "How do we pay for it?" The right question is "How much will it increase our production?
- John Wilson May 22, 2019
  
  Absolutely correct in all that you say.
  
  The point being that newly printed money needs to be put to productive use first. If it is not, and it is "helicoptered" to the public at large and spent without a corresponding increase in production then inflation will inevitably ensure (to much money chasing too few goods). It really is that simple!
  - Len Charlap May 23, 2019
    
    Let me just add John that it is difficult to add money without increasing production since adding money increases demand and businesses are usually eager to increase production to meet increased demand.
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Len Charlap May 19, 2019

As Paul Friesen writes, "Injecting money when the economy is at full capacity will just create inflation. " This is one of the main tenets of MMT although they usually refer to a "constrained economy." The author of this piece does not appear to know this.

LG Phillips point out another ignored principle of MMT Mr. Edwards seems ignorant of. Private debt is most larger and more dangerous than public debt. Note that the federal deficit measures the amount of money sent by the federal government to the private sector net of taxes. When it decreases, private debt rises. When it turns enough negative for a while (surpluses) disaster strikes:

The federal government has balanced the budget, eliminated deficits for more than three years, and paid down the debt more than 10% in just six periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. The debt was paid down 29%. 100%, 59%, 27%, 57%, and 38% respectively. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929. This accounts for all 6 of our depressions (6 quarters of a decrease in per capita GDP).

From 1996 to 2008 (except for a brief period in 2003), the current account deficit was larger than the federal deficit, so net, money flowed out of the private sector. As in the above 6 cases, private debt exploded. We would have had a depression as above if not for a FED able and willing to pour TRILLIONS into the banking sector but the result was not pretty.
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Colin Doyle May 19, 2019

« In Chile, the money supply grew by 360% in 1973 alone, .......In Peru in 1989, money growth was 7,000%, and ....In Argentina in 2015, ......the annual rate of money creation surpassing 40%. »
Whatever the label on the economic theory, these bogey-man examples are too extreme to be useful. In the discussion of how to implement economic expansion, while maintaining control of inflation, it would have been better for Sebastian Edwards to write that here are examples of what happens without checks and balances in economic management. Unfortunately for his argument, MMT does not propose such floodgate expansion of money supply in a developed economy.
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Alan Luchetti May 18, 2019

“MMT, or some version of it”?

How can anyone take such incomprehending imprecision seriously?
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Paul Friesen May 17, 2019

MMT does get one thing right - that a country that borrows only in its own currency and has its own central bank can never really run out of room to borrow more. The central bank can always just print more. Governments that get into serious trouble with it do so because either they themselves or others in the economy borrow in foreign currency.

There are even times when heavy government borrowing is good policy. If there is a shortfall of demand, central banks need to inject more money into the system to increase demand. And if the private sector does not borrow enough money to fix the shortfall even at zero interest, government should step in to borrow money and spend it, just to get demand up to the point where there is full employment.

But the fact that governments can spend this way at any time without running out of money is no reason for them to do it under normal circumstances. Injecting money when the economy is at full capacity will just create inflation. It will cause the currency to drop on world markets. And it will not result in more output or any other good thing. Inflation becomes like a tax, but it is a tax on holding money.

MMT seems to be just the other end of the political spectrum from the austerity proponents who were so vocal during the last recession. It makes no sense to say that governments should never borrow. It also makes no sense to say that they should keep borrowing more all the time. It should depend on the economic circumstances. When circumstances change, policy should change.
- Alan Luchetti May 18, 2019
  
  Issuers of fiat currency don’t borrow when they issue bonds. Their currency is their liability. Just look at their official balance sheets. “Selling” a bond is changing the composition of the government’s liabilities, not adding to them.
  
  The misnomer survives from a time when commodity currency was an asset in the hands of the government as well as the economy.
  
  This is one of the ways that MMT is a realisation, not a proposal. Other hangover words like treasury, funding and debt also misdescribe the workings of our financial systems. MMT is clarity, not profligacy.
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Peter Verkooijen May 17, 2019

Of course MMT can "work", but it is literally just communism/feudalism; the logic of fiat money to its ultimate conclusion. Government/the ruling elite has the monopoly on money creation, sets the price of everything, ends up owning everything and with "universal basic income" there will be no live outside of the system.

The money printing of the last decade(s) has caused massive inflation, in the stock market, house/asset prices, healthcare costs, education and student loans, zombie companies, misallocation of investment, government jobs, etc. This has caused increasing inequality, but majorities in western societies depend on this inflation, have built their lives around it.

MMT is the unavoidable next step after Obama's stimulus+QE and Trump's "just print the money". The result will be more inequality, more stagnation, more injustice, diminishing individual liberty and social mobility. But it will "work" for much of society. The Soviet Union made it "work' for 70 years, living on in a new form under Putin. America can easily drag this out for over a century without turning into Weimar or Venezuela.
- paul33 May 21, 2019
  
  Agree, MMT is a progression in the use of fiat money to drive more demand / growth. Eventually the injustices / inequality (aka material resource mis-allocation) will force the policy mistake or series of policy mistakes, where as Latin America experienced it ends with too much money chasing too little goods. In Sydney there's an article in the SMH on 21 May 2019 about a hairdresser that charges A$700 for a hair cut / styling (normally it currently costs between A$30-$50). We laugh now, but it's part of the beginning that says there's too much money sloshing around the system. Agree, depending on a country's situation, and population, this can take decades to propagate. But propagate it will !
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🌊🌊🌊LG Phillips May 17, 2019

Wow this laughably bad. Strawman upon strawman. Starting with, MMT do not say Fed should "print large amounts of money to finance govt spending." They don't *say* it, but one would be on more solid ground to argue they're against the Fed being left to regulate the economy All By Itself (which is status quo), wherein the Fed via its banking system prints 9x's at least more money to finance private sector spending on all manner of higher risks.

Who's set a limit on this"money printing" in the private sector? Which is magnitudes bigger than anything proposed in the public sector, whether it's GND, M4A, JG. Nobody. "Payday lending" is money printing. VISA/MC is money printing. Home equity loans are money printing. NOBODY in politics fixates on the private sector's "deficit" even though it's among the MOST IMPORTANT ECONOMIC SIGNALs we have...immeasurably more important than tsy debt.

The experience of USA America should serve as a clear example of how much real world failure In Our Own Country we're prepared to escuse away by strawmanning against imaginary MMT.
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B Wilds May 17, 2019

I totally agree with Jim Grant, the illusion that inflation as he puts it, is "resting" has been propelled forward by the Fed's policy of low-interest rates and easy money. This does not mean inflation will not awaken with a vengeance.

The hyperinflation that occurred during the Weimar Republic and the speed at which inflation suddenly destroyed the currency dovetails with some of my thoughts on currency trading today. It confirmed that inflation can stem from a growing lack of faith in a currency, or all currencies, rather than just a lack of available goods.

As inflation takes root the goods available for sale often contracts as sellers retreat from the market awaiting higher prices which creates a self-feeding loop. The speed at which this can happen and the fact it could occur across the globe is explored in the article below.

https://brucewilds.blogspot.com/2019/03/hyperinflation-seldom-occurs-but-can.html
- 🌊🌊🌊LG Phillips May 17, 2019
  
  James Grant?
  Q) When was the last time one of his predictions came true?
  A)Still Pending.
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Colin Haller May 16, 2019

You don't "try" Modern Monetary Theory, as this article states. It's how monetarily sovereign states have already been operating since the collapse of Bretton Woods and Nixon's abandonment of the gold standard.

It's difficult to lend credence to anything else written here given this fundamental misunderstanding.

The coherent description of MMT you are looking for is here:

https://www.macmillanihe.com/page/detail/Macroeconomics/?K=9781137610669

Accept no substitutes.
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Paul Friesen May 16, 2019

There really is no free lunch. If you are in favour of spending more on infrastructure, help for the poor, and other government programs, as I am, you also need to be in favour of higher taxes. We have seen too many politicians promising to do wonders, increasing spending on everything without any tax increases. Will we ever learn that it does not work?
- John Doyle May 19, 2019
  
  Paul, Taxation does not today fund Federal spending. Raising and lowering taxes is a monetary operation to adjust interest rates and limit the total amount in circulation
  - Alan Luchetti May 23, 2019
    
    You are talking as if a government receipt in a fiat currency regime were a transfer of an asset rather than an extinguishment of a liability. It's hard to imagine a more fundamental economic misconception, and you don't have to an MMT adherent to know a fact that is this fundamental and elementary.
    - John Doyle May 23, 2019
      
      Not sure where you are coming from Alan? I said nothing about asset transfers. Just taxation. A payment by government is both a debt settlement and a currency creation manoeuvre. [monetary sovereign governments only]
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  - Len Charlap May 20, 2019
    
    Right. And Paul doesn't seem to realize that if adding money to the economy increases production, prices may not rise. You make more widgets, the price goes goes down. Only if something is constraining the economy, limiting production, do we get excess inflation.
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