that’s how they control inflation - by killing the economy, increasing unemployment, thus disciplining labour and suppressing wage increases and consumer demand. Instead of govt spending on programs, it gives money to bondholders, who hoard it until interest rates come down.
Australia has leading scholars on MMT, which explains exactly what is going on, a very different story than you’ll hear in the Murdoch media.
I’d be really interested to see policies based on MMT in practice.
You mean where they actually tax people and don’t just do the printing part? Yeah me too.
I don’t love taxes but I do suspect the fastest way to crush inflation is up taxes and not interest rates. Although Im not a fan of how much interference there is in bond markets from rate setting. I don’t think it’s really that healthy either.
I mean based on fed actions I think traders have stopped trying to do price discovery and treat rates as a simple given. But it’s really just a given because everyone has agreed it is. In theory if the market panics en masse the fed would eventually run out of ammo to control it. I think.
It will kill inflation, reducing the amount of borrowing by raising the cost will reduce business investment
Central banks want to see more unemployment and reduced spending by consumers with disinflation as a result
UK and US both have elections next year, so they’ll want to be able to drop rates fast and juice the economy in time
