The biggest fallacy of all in MMT is that it causes inflation or hyperinflation. That's not what happens in a generational Crisis era, like today, when almost everyone is in debt. Today the country and the world are in a classic deflationary spiral, and anyone counting on inflation is going to be badly hurt.
MMT is the ultimate form of drug addiction.
It's like a drug addict who has already lost his home, his family and his job, and who needs to take more and more drugs to feel ok. Taking more and more drugs only postpones and worsens the problems he has to face, but it may be the best choice for the time being because it postpones the problems he has to face. In the meantime, he keeps hope alive. Maybe he'll win a $10 million lottery, so he'll be able to use the money to get off drugs, and get his home and family back. Keep taking drugs, and keep hope alive as long as possible. If something can't go on forever, then it won't.
So that's why so many economists and politicians hope for and predict inflation. Just as a drug addict might hope for winning the lottery, economists and politicians hope hyperinflation, which is their version of winning the lottery, since hyperinflation wipes out debt. It's a dream fantasy.
When people have tons of money, then they buy lots of things, creating inflation.
But people have NO money today. They have the opposite. Instead of tons of money, they have tons of debt, which is the opposite. They have tons of interlocking debt.
They do not have the money to spend or the desire to spend, so there won't be hyperinflation. You have a clue what's going on when the federal government is tying its bailouts to requirements to spend. If the government has to force people to spend there won't be inflation. If people won't spend, then there'll be deflation, the opposite of inflation.
The way the economy will fail is when somebody's margin call or somebody's bankruptcy triggers a chain reaction of debt payment failure. That's what a deflationary spiral is, as one bankruptcy triggers another one. This is what I used to refer to as the Principle of Maximum Ruin: The maximum number of people are ruined to the maximum extent possible. Inflation is a fantasy.
From the point of view of Generational Dynamics theory, hyperinflation can only occur in generational Awakening and Unraveling eras, as in the case of Germany's Weimar Republic or Zimbabwe. In a generational Crisis era, when all the bills come due, it's not inflation but it's a massive deflationary spiral that occurs. If I have enough time left, then at a future date I'll write about the theory of how all this works. I can't get into it now, because this article is long enough as it is.
MMT is the ultimate form of drug addiction.
It's like a drug addict who has already lost his home, his family and his job, and who needs to take more and more drugs to feel ok. Taking more and more drugs only postpones and worsens the problems he has to face, but it may be the best choice for the time being because it postpones the problems he has to face. In the meantime, he keeps hope alive. Maybe he'll win a $10 million lottery, so he'll be able to use the money to get off drugs, and get his home and family back. Keep taking drugs, and keep hope alive as long as possible. If something can't go on forever, then it won't.
So that's why so many economists and politicians hope for and predict inflation. Just as a drug addict might hope for winning the lottery, economists and politicians hope hyperinflation, which is their version of winning the lottery, since hyperinflation wipes out debt. It's a dream fantasy.
When people have tons of money, then they buy lots of things, creating inflation.
But people have NO money today. They have the opposite. Instead of tons of money, they have tons of debt, which is the opposite. They have tons of interlocking debt.
They do not have the money to spend or the desire to spend, so there won't be hyperinflation. You have a clue what's going on when the federal government is tying its bailouts to requirements to spend. If the government has to force people to spend there won't be inflation. If people won't spend, then there'll be deflation, the opposite of inflation.
The way the economy will fail is when somebody's margin call or somebody's bankruptcy triggers a chain reaction of debt payment failure. That's what a deflationary spiral is, as one bankruptcy triggers another one. This is what I used to refer to as the Principle of Maximum Ruin: The maximum number of people are ruined to the maximum extent possible. Inflation is a fantasy.
From the point of view of Generational Dynamics theory, hyperinflation can only occur in generational Awakening and Unraveling eras, as in the case of Germany's Weimar Republic or Zimbabwe. In a generational Crisis era, when all the bills come due, it's not inflation but it's a massive deflationary spiral that occurs. If I have enough time left, then at a future date I'll write about the theory of how all this works. I can't get into it now, because this article is long enough as it is.
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