MMT

In studying economics/abundance, I seem to be coming back to 2 concepts that I believe about how to move forward towards a post-scarcity utopia (tagged as "economy of plenty" in this blog):

1. The Federal Reserve can create money and spend it to make life better for anyone without having to worry about hyperinflation because
2. Inflation is caused only by supply-side shortages, not the amount of money in circulation (monetarism). I mentioned this here and here.

I've been very pleasantly surprised to find that this is indeed part of a rapidly growing, heterodox economics theory: Modern Monetary Theory, or MMT.

The Wikipedia article linked to above I don't think is very good. A couple of months ago I watched this video, which probably came up in an article in my RSS feed. I think it's very good and easy to understand.

Here's a quote from a slide from the 19:32 mark:

If Congress does not spend more money into the economy than our real resources, our productive capacity (our capacity to produce) can handle, then there is no inflationary risk.

So I think their "real resources" are my "supply-side". Yay, FTW!

I think maybe MMT may be passing somewhat of a tipping point. Here's my hero Paul Krugman arguing with MMT proponents - and disappointingly, worrying about inflation - a few weeks ago. Here's Larry Summers doing the same maybe a week later but in even stronger terms - "a recipe for disaster".

The old school just really doesn't seem to want to think outside their boxes. I guess that's business/academia as usual.

Studying economics/abundance has been really frustrating. So much of modern, orthodox economic theory seems bogus, as is detailed in, say, "Doughnut Economics". The microeconomics-based DSGE modeling seems to be a bad case of physics envy, and has so many simplifying assumptions baked in that its conclusions are worthless. It sure seems to me like it would not be that hard to write a good simulation of the economy, but I think that there is just not enough understanding of what the real underlying principles are. Well, I think the ideas of MMT are definitely an encouraging breath of fresh air. Now just need to convince Krugman.