Interest Rate Discount

In recent Twitter discourse (or should that be childish spats?) a few MMT’ers are sniping at other MMT’ers on how to best conduct social discourse. To be clear, I don’t think there are major disagreements in MMT analysis, but the emphasis on the politics varies form person to person.

Thus, we get wbmosler who emphasises how the US economy is on a mild boom or bull run, thanks to interest rate hikes. Others prefer to emphasise the crippling effects of the interest rate hike son the poorest, who are forced to use credit just to eat and stay warm.

I also sometimes get criticized for “defending Mosler.” but this is balderdash. I try to defend what I think is correct, and ridicule what I think is stupid. I get it wrong sometimes, which is called being human, but I don’t try deliberately to be wrong.

That said, some nuance is called for if you support Warren’s discourse. That’s what this post addresses. It is “dated” because this is 2023 immediately post-COVID supply shock era, so all the inflation is coming from supply constraint, not wage demands. That’s a very important qualifier on everything in this post.

Generally I think moderate to high inflation is a good thing but only if it is being driven by the lowest wages rising. This of course hardly ever occurs in the real world today, so we hardly ever see good quality inflation. This matter a lot because inflation a continual rise in the price level) has many causes, it is not just a money supply dynamic. (Inflation never really is helicopter money, because government deficits inject currency for public purpose, even if it is terrible purpose — like funding wars; and bank credit injects currency for private investment, again not always good purpose, but it serves someone’s interest.)

We do see helicopter money effects though. A right-wingnut might say, “Yeah, those welfare moochers and Queens!” But that’d be completely wrong. A huge amount, in the trillions, of helicopter money is dropped into the economy (in the USA, NZ, Canada, UK,… plenty of nations) through Treasury bond issuance. Most of the welfare goes to people who already have money in direct proportion to how much money they already have.

Gotta keep those poor billionaires happy, right? Bloody “job creators” they are, right? LOL.

The Interest Rate Boom Discourse

The Interest Rate Crash Discourse

TODO:
I got side-tracked by more pressing concerns.
Will come back to this article later, or if 
a donor helps fund the write-up. $100 for a 
day or so of groceries and rent and electric ought 
to do it.