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> The money supply has almost quadrupled in the last 10 years, yet inflation has been low.

Explained by "traditional" (e.g., Keynesian) economics already:

* https://en.wikipedia.org/wiki/Zero_lower_bound

When QE was introduced, the US political Right went ape shit talking about inflation. Krugman (for one) predicted it would be fine because of interest rates, citing Japan as an example:

> Everyone knows about the infamous open letter warning Ben Bernanke not to engage in quantitative easing, lest he cause inflation and currency debasement; many are also familiar with the remarkable unwillingness of that letter’s signatories to admit, after more than four years of low inflation and a rising dollar, that they were wrong.

* https://krugman.blogs.nytimes.com/2015/02/12/qe-truthers/

If the private sector is not spending, then the public sector (gov't) should to take up the slack in a lack of demand:

> The problem, of course, is that you can’t cut interest rates below zero (if you try, lenders will just hoard cash.) So the Fed simply can’t do what the rule says it should.

>

> This is why we need a huge fiscal stimulus, unconventional monetary policy, and anything else you can think of to fight this slump. Quite literally, the usual rules no longer apply.

* https://krugman.blogs.nytimes.com/2009/01/17/zero-lower-boun...

There are a finite amount of resources in an economy, and when an "infinite" amount of cash goes after that, you start to big up prices: inflation. I don't think that mainstream (Left-leaning) are against deficit spending to boost the economy; it's just that many of them don't see MMT is adding to what they've already been saying.




>you can’t cut interest rates below zero

Well, he was wrong on that point.

>Crazy as it sounds, several of Europe’s central banks cut interest rates below zero in 2014, and then Japan followed. By mid-2016, some 500 million people in a quarter of the world's economies were living with rates in the red

https://www.bloomberg.com/quicktake/negative-interest-rates


> Well, he was wrong on that point.

He revisits the point:

> We now know that interest rates can, in fact, go negative; those of us who dismissed the possibility by saying that people could simply hold currency were clearly too casual about it.

* https://krugman.blogs.nytimes.com/2015/03/03/how-negative-ca... * https://krugman.blogs.nytimes.com/2015/03/06/the-below-zero-... * https://krugman.blogs.nytimes.com/2016/02/12/the-political-e...

The Great Recession was really an "interesting" time for economists: one usually can't run experiments on macroeconomic theories / hypothesis. :)


What exactly keeps you from implementing a negative interest rate?

I.e. some form of tax on held cash?


Nothing. It’s already been done. Sweden and the ECB used them for a few years.


Okay. I thought that was the case, and frankly, it's the only mechanism that even comes close to making MMT make some sort of sense, since that could act as a monetary black hole... I think.




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