I agree with most of this except for your characterization of the MMT position which explicitly connects inflation to fiscal policy: that cost push inflation occurs at the boundary of real resource (including labor) availability with the solution being to tax demand out of the system.
Certainly your observation about “where the money went” during the post Great Financial Crisis period is correct: asset inflation, in part because of the low tax regime especially in the upper segments of the income and wealth distributions where relative propensity to spend is low in goods but high in assets — and this problem only gets worse as inequality rises.
Eg wrote “I agree with most of this except for your characterization of the MMT position which explicitly connects inflation to fiscal policy: that cost push inflation occurs at the boundary of real resource (including labor) availability with the solution being to tax demand out of the system.”
My understanding of MMT (which is limited) is that when government spends money, it creates it, and when they collect taxes, they destroy money. It’s the same for debt, money is created by new loans and destroyed when loans are paid back. That’s as far as my understanding goes.
They talk about other things that I do comprehend, but the upshot is they seem to believe that one can often finance economic stimulus with deficit spending without consequences. Now obviously we have run deficits for all but a handful of years over the last half century and for big stretches of that time we have had low inflation. I came up with my “money balance” model in order to provide some framework for thinking about inflation because my research into American secular cycles finds inflation (or the fear of it) playing a significant role, so I need to get some sort of a handle on it.
Twenty years ago this stuff was all theoretical. But we are in the soup now, sooner or later if we don't get our collective heads out of our asses, the shit is going to hit the fan, and we get state collapse or civil war or arming insurgency or any of the other things that can befall declining states.
The only thing I would add to this excellent analysis is that culture of any kind, including SP/SC is CREATED by people, but all people are not equal in the creation of culture, and the power to influence/shape culture is not constant over time.
This raises interesting questions (which are beyond the scope of your current research, but interesting nonetheless) such as how and why did power shift in the early 1930's to allow FDR to set in motion so many laws, rules, and regulations that supported the flourishing of SC (suppressing the SP of the 1880's to 1930), and what how and why did power shift in the late 1970's to allow Reagan to begin the process of deleting/changing those laws and rules to begin to favor SP over SC. Moreover, what factors contributed to the Democrats under Clinton and Obama to continue to solidify SP rather than counteract it.
I agree with most of this except for your characterization of the MMT position which explicitly connects inflation to fiscal policy: that cost push inflation occurs at the boundary of real resource (including labor) availability with the solution being to tax demand out of the system.
Certainly your observation about “where the money went” during the post Great Financial Crisis period is correct: asset inflation, in part because of the low tax regime especially in the upper segments of the income and wealth distributions where relative propensity to spend is low in goods but high in assets — and this problem only gets worse as inequality rises.
Eg wrote “I agree with most of this except for your characterization of the MMT position which explicitly connects inflation to fiscal policy: that cost push inflation occurs at the boundary of real resource (including labor) availability with the solution being to tax demand out of the system.”
My understanding of MMT (which is limited) is that when government spends money, it creates it, and when they collect taxes, they destroy money. It’s the same for debt, money is created by new loans and destroyed when loans are paid back. That’s as far as my understanding goes.
They talk about other things that I do comprehend, but the upshot is they seem to believe that one can often finance economic stimulus with deficit spending without consequences. Now obviously we have run deficits for all but a handful of years over the last half century and for big stretches of that time we have had low inflation. I came up with my “money balance” model in order to provide some framework for thinking about inflation because my research into American secular cycles finds inflation (or the fear of it) playing a significant role, so I need to get some sort of a handle on it.
Twenty years ago this stuff was all theoretical. But we are in the soup now, sooner or later if we don't get our collective heads out of our asses, the shit is going to hit the fan, and we get state collapse or civil war or arming insurgency or any of the other things that can befall declining states.
The only thing I would add to this excellent analysis is that culture of any kind, including SP/SC is CREATED by people, but all people are not equal in the creation of culture, and the power to influence/shape culture is not constant over time.
This raises interesting questions (which are beyond the scope of your current research, but interesting nonetheless) such as how and why did power shift in the early 1930's to allow FDR to set in motion so many laws, rules, and regulations that supported the flourishing of SC (suppressing the SP of the 1880's to 1930), and what how and why did power shift in the late 1970's to allow Reagan to begin the process of deleting/changing those laws and rules to begin to favor SP over SC. Moreover, what factors contributed to the Democrats under Clinton and Obama to continue to solidify SP rather than counteract it.
Thank you for the kind words.
This article addresses the ca 1930 shift:
https://escholarship.org/uc/item/42p5m46m
I think I will produce a Substack version of this for my next post, but with additional commentary.
I discuss the 1970's transition here
https://mikealexander.substack.com/p/how-the-new-deal-order-fell
As for why Clinton supported SP (or Eisenhower's support for SC) this is touched upon here.
https://mikealexander.substack.com/p/political-evolution-in-the-us
thank you for these links to your works, I've started reading the first one and find it very interesting and helpful.