Does MMT have an inflationary bias?

> Uncategorized > Does MMT have an inflationary bias?

Does MMT have an inflationary bias?

from Lars Syll

A view yours truly often encounters when debating MMT is that there is an inflationary bias in MMT and that its framework ignores expectations.

It is extremely difficult to recognize that description. Given its roots in the writings of Keynes, Lerner, and Minsky, it is — to say the least — rather amazing to attribute that view to MMT.

Let me just quote one source to show how ill-founded the critique is on this issue:

defMMT recommends a different approach to the federal budgeting process, one that integrates inflation risk into the decision-making process so that lawmakers are forced to stop and think about whether they have taken the necessary steps to guard against inflation risk before approving any new spending. MMT would make us safer in this respect because it recognizes that the best defense against inflation is a good offense. We don’t want to allow excessive spending to cause inflation and then fight inflation after it happens. We want agencies like CBO helping to evaluate new legislation for potential inflation risk before Congress commits to funding new programs so that the risks can be mitigated preemptively. At its core, MMT is about replacing an artificial (revenue) constraint with a real (inflation) constraint.