There is this pervasive idea that MMT promotes limitless spending and I'm not sure where it comes from

Right. The theory says you can (should?) spend until you hit the "inflation ceiling," then use taxes to drain liquidity.

But what we saw in 2020-2022 was that we hit the ceiling at 100mph. The "tax it away" solution proved to be a political fantasy. No politician is going to hike taxes on the middle class to cool down the price of eggs.

My understanding (I'm not an economist) is that MMT is currently viewed as a "fair-weather theory." It explained why we could spend during a liquidity trap, but offered no viable steering mechanism once the engine overheated.

In my mind, this puts it in the same box as Keynesianism. Both theories are politically convenient because they offer politicians an excuse to pander. But those politicians aren't willing to do what their pet theory would require once the emergent crisis has passed.

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throw0101a 13 hours ago | parent | next [-]

> But what we saw in 2020-2022 was that we hit the ceiling at 100mph.

Except that 2020-2022 was not (completely) about fiscal/monetary problems that could be fixed with fiscal/monetary solutions. A good portion of the spike was because of 'outside' factor(s), e.g.:

* https://en.wikipedia.org/wiki/Russo-Ukrainian_war_(2022–pres...

What would extra taxation do to help that? There are various types of inflation, categorized by 'root cause', and 'too much money' is not the source of all of them:

* https://en.wikipedia.org/wiki/Inflation#View_post-2000_to_pr...

* https://en.wikipedia.org/wiki/Cost-push_inflation

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jjk166 13 hours ago | parent | prev [-]

> But what we saw in 2020-2022 was that we hit the ceiling at 100mph.

The 2020-2022 inflation spike wasn't due to following MMT based spending policies though. Slamming the brakes at 100mph may certainly have bad consequences, but driving at 100mph in low visibility conditions was the problem, not braking before you hit something.

The fact is everyone knew the combination of supply chain disruptions, remote work, and the changes in spending habits would eventually produce inflation, and yet we kept pumping money in. Every economic school would have advised against that course of action. MMT only calls for spending to keep pace with economic growth, not to run the money printers as fast as you can.

Economic theories, like scientific theories, are successful if they correctly predict what will happen if you do X. If the theory of gravity predicts that you will fall to your death if you jump off a cliff, it's not a failure of the theory of gravity that it doesn't tell you how to levitate after you've already jumped.

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CWuestefeld 10 hours ago | parent | next [-]

Economic theories, like scientific theories, are successful if they correctly predict what will happen if you do X.

In addition, an economic theory can only be useful if the actions that they dictate can actually be put into practice; if nobody's going to follow what the theory tells you to do, then it's of little use at all.

This is the big problem with both MMT and Keynesianism: they're both great figleafs for politicians to wear when they want to spend in order to pander. But when the theory tells them that the situation has changed and they need to change their actions accordingly, they don't heed the need to raise taxes (MMT) or slash spending (Keynes).

Unless we really do the thing, then pointing at a given macroeconomic theory is just an excuse.

	▲	jjk166 10 hours ago \| parent [-]
		> In addition, an economic theory can only be useful if the actions that they dictate can actually be put into practice; if nobody's going to follow what the theory tells you to do, then it's of little use at all. That is not a requirement for a theory to be useful. The fact that not using it has a cost is proof of its utility.

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Obscurity4340 12 hours ago | parent | prev [-]

Why is remote working considered inflationary?

	▲	jjk166 10 hours ago \| parent \| next [-]
		Remote working itself isn't inflationary, but transitioning from office to remote is. Remote workers can get high paying jobs in low cost of living areas and can generally job hop with less friction so salaries rise, spending that would have gone to commuting expenses and daytime childcare is now disposable income, people spending more of their time at home causes them to invest in larger or nicer homes. More money getting thrown at fewer items causes prices to rise.
	▲	rsync 12 hours ago \| parent \| prev [-]
		I don’t think it is. In fact, all else being equal, switching to work from home should be deflationary. You spend less on gas, less on eating out, less on movement and activity in general… The transition to work from home may very well be inflationary… But the end result seems quite obviously deflationary to me.