[RobertoG]

>>" If MMT doesn't predict inflation as a result of arbitrary creation of currency, then it seems we can conclude MMT is incorrect."

That is not at all what MMT says and I don't understand how an honest reader of the MMT literature would arrive to that conclusion.

What they say is that public debt and public deficits are irrelevant (there goes your "outlandish true" of balanced budgets) but they also say that inflation is the most important constraint in public spending.

>> And that's obviously true, to the extent that people are willing to accept that money in exchange for their goods and services (an extent which is not infinite)

In the MMT framework, there is always demand for the currency in what taxes have to be payed. That's obviously true. That doesn't mean that inflation is not a factor.

By the way, most cases of hyperinflation in history, including the infamous Zimbabwe, are due to a supply shock (http://bilbo.economicoutlook.net/blog/?p=3773).

[nonidentified]

> public debt and public deficits are irrelevant

Translation: Countries can incur as much debt as they want, because they can "print" their way out of it without harmful consequences.

> inflation is the most important constraint in public spending

Translation: People's economic suffering is the most important constraint in government spending.

> most cases of hyperinflation in history, including the infamous Zimbabwe, are due to a supply shock

Translation: Most cases of hyperinflation in history were due to economic crisis.

Hyperinflation is due to creating far too much new money. Enough to foster price increases of at least 50% per month. Economic crisis does not necessitate doing that.

By the way, in the case of Zimbabwe, it was the government economic mismanagement that created the economic crisis that you blame for the monetary mismanagement. From your article: "From an economic perspective though the [government] farm take over and collapse of food production was catastrophic." Then the government chose to try "printing" its way out of the problem. Hyperinflation wasn't mandatory, it was a consequence of reckless behavior.

> how an honest reader of the MMT literature would arrive to that conclusion

The only substantial concession to inflation risk I've seen in the MMT literature is in conditions of "full employment." Feel free to set me straight if that's not correct.

Empirically speaking, inflation follows injecting money into an economy, and inflation is quite harmful. It seems MMT resists at least the first conclusion, if not both.

While we're on the topic of honesty, doesn't MMT feel like an economic "get rich quick" scheme to you?

[simula67]

> What they say is that public debt and public deficits are irrelevant (there goes your "outlandish true" of balanced budgets) but they also say that inflation is the most important constraint in public spending.

I heard this story in a debate between an MMT economist and an Austrian economist

Imagine a husband and wife having the following conversation :

Husband : Let's go and buy a new mansion, a Lamborghini and a private jet

Wife : Are you sure we have enough money to do all that ?

Husband : Well, if we don't, I can always pick up my shotgun and hold up the nearby bank

Wife : Are you crazy ? You could go to prison. Or get shot by the police

Husband : Well, I know that. But I just wanted to point out that not having enough money was irrelevant. Going to jail or getting shot was the most important constraint from spending all that money.

[hn0]

This misses THE central point of MMT, the fundamental difference between currency issuer (souvereign authority) and currency user (households, firms, regional governments, etc).

[RobertoG]

I'm not sure that your metaphor illuminates the issue at hand.