What is your opinion? Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/Modern Monetary Theory (MMT) Inflation Causes: MMT posits that inflation can be caused by excessive federal deficit spending, which increases aggregate demand beyond the productive capacity of the economy. When too much money chases too few goods, prices rise, leading to inflation.
Inflation Control: MMT advocates for using fiscal tools, such as taxation and government spending adjustments, to manage demand and control inflation. It also supports the use of monetary policy, including interest rate adjustments by the Federal Reserve, to help control inflation. By raising interest rates, the Fed can dampen borrowing and spending, reducing inflationary pressures. Mitchell’s Monetary Sovereignty Inflation Causes:
According to Mitchell’s concept of Monetary Sovereignty (MS), all inflations are caused by shortages of key goods and services, not merely by aggregate demand exceeding supply. This perspective emphasizes that inflation results from supply-side constraints, such as disruptions in production, supply chain issues, or shortages of essential commodities.
Inflation Control: Mitchell’s approach argues that federal spending should be directed at alleviating these shortages to control inflation. For example, investing in infrastructure, technology, and education can increase productive capacity and address supply constraints. It opposes the use of interest rate hikes to control inflation, arguing that increasing interest rates raises business costs (e.g., higher borrowing costs), which can exacerbate inflation rather than cure it.
Key Differences Source of Inflation: MMT: Focuses on demand-pull inflation due to excessive spending. Monetary Sovereignty: Emphasizes cost-push inflation due to supply shortages.
Policy Tools for Inflation:MMT: Uses both fiscal policy (taxation and spending adjustments) and monetary policy (interest rate changes) to manage inflation. Monetary Sovereignty: Advocates for targeted federal spending to address supply shortages and improve productive capacity, rejecting interest rate hikes as counterproductive.
Implications for Economic Policy Fiscal Policy: Both MMT and Monetary Sovereignty agree that the federal government, as a monetary sovereign, can use fiscal policy effectively to manage the economy. However, the focus differs: MMT: Balances between managing demand and supply. Monetary Sovereignty: Focuses more on addressing supply-side issues directly.
Monetary Policy: MMT: Supports the use of interest rate adjustments alongside fiscal measures. Monetary Sovereignty: Criticizes interest rate hikes, suggesting they increase costs for businesses and can worsen inflation, advocating instead for supply-side interventions.
Practical Examples Supply Shortages: During the COVID-19 pandemic, supply chain disruptions led to shortages of key goods, contributing to inflation. Mitchell’s approach would advocate for targeted investments to resolve these shortages, while MMT might consider both demand management and supply-side measures.
Interest Rate Policy: In periods of high inflation, MMT might support interest rate hikes to cool down demand, whereas Monetary Sovereignty would likely oppose such measures, focusing instead on increasing supply through strategic spending.
Conclusion Understanding the nuanced differences between MMT and Mitchell’s Monetary Sovereignty can lead to more informed and effective economic policies.
While MMT incorporates both demand and supply considerations and supports a combination of fiscal and monetary tools, Mitchell’s Monetary Sovereignty places greater emphasis on addressing supply-side constraints and rejects interest rate hikes as a tool for controlling inflation.
Both perspectives offer valuable insights into managing modern economies, highlighting the importance of context-specific approaches to economic policy.
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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Good post Rodger. Interest rate hikes benefit the banks and punish the consumer. Stupid. Consider that my policies of a 50% discount/rebate at retail sale and 50% interest gift to the banks/debt jubilee to consumers would mathematically eliminate any inflation by reducing the cost of every consumer product by 50% and any “big ticket” item by 75%. Now those policies are the real kind of monetary policy. Also, between the time of such policies being proposed and enacted you’d want to also enact policies like any arbitrary non actual cost increase 1 year before the date of enactment of the 50% discount/rebate at retail sale would be taxed at a rate of 100%. Also, such policy 1 year before enactment would enable producers to increase productive capability etc. in order to reduce/eliminate shortages.
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Of course, the dittoheads at Cato would have us believe that not only are MMT and MS one and the same, but that both are “luxury beliefs”:
https://www.cato.org/blog/debt-delusion-why-modern-monetary-theory-luxury-belief
But truly the austerity and artificial scarcity they support are the real “luxury beliefs”
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Thanks for your comment. The article was filled with the usual, i.e. lots of opinion but no proof. You’ll notice the claim that federal deficit spending causes inflation but doesn’t demonstrate with historical data, that this is true. The reason: It isn’t true.
It’s always the same with the deficit nuts. They always say that the continuing deficits are “unsustainable,” but here we are, sustaining and sustaining, as the so-called “debt” keeps growing.
And then they have the gall to claim they are being realistic. We’ve been hearing the same old “ticking time bomb” claim since 1940 for 84 consecutive years. Wrong then and still wrong. See: https://mythfighter.com/2024/06/27/historical-claims-the-federal-debt-is-a-ticking-time-bomb-updated-june-21-2004/
I discuss the false inflation claim at: https://mythfighter.com/2024/07/16/if-excessive-federal-deficit-spending-causes-inflation-how-do-you-explain-this-graph/
I do not know what more evidence it will take to show them the light.
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Indeed, you are correct as usual, Rodger. You’re very welcome 😊
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Roger, for a novice like me who strongly believes that our current
economic system values money more than life, your theories have provided
valuable information that has guided my thinking for decades. It is
encouraging to see that ChatGPT, an AI tool, is able to grasp the
similarities and differences between Monetary Sovereignty and MMT,
thereby making these complex economic theories more accessible to a
wider audience.
However, as an octogenarian with fading cognitive abilities, I find that
both MMT and MS could benefit from a simpler approach to make a
significant appeal to the general population. It’s crucial that these
movements gain more popularity to support the necessary changes to
correct our current economic dilemma.
In this regard, I’m deeply concerned about the potential fading of MS,
given its reliance on your individual support. Will it be a ‘voice in
the wilderness’ without your continued backing?
Thank you for your dedication to MS.
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Good concern Jeff, as I am just about to be a nonagenarian, so time is limited.
I don’t know that I can make it simpler than Greenspan did: Alan Greenspan: “There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”
Hillel the Elder, a famous Jewish religious leader. said something like, “The Torah is the Golden Rule. Everything else is explanation”
Monetary Sovereignty, boiled down to its essence is this: The federal government is the only entity on earth that never can run short of U.S. dollars.
Everything else is just explanation.
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CharGPT is wrong.
Sent from AOL on Android
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AI needs to subscribe to Mythfighter and read through all your posts. Although, as you say, MMT and MS are kissing cousins, AI starts off by claiming there are these major differences between the two (without any evidence to back its claim), then concludes there are nuanced differences between the two. Which is it AI?
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Where is the mention of my guaranteed job that you can’t fire me from for always being late?
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Warren Mosler has recently been critical of interest rate hikes as inflationary. Maybe ChatGPT needs to update its digital database?
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Yes, the AIs are not reliable. I use them often to find sources that otherwise would be a real slog to find — sort of a high-tech Yellow Pages. Here’s a mini example. I wanted to phone Amazon, but they hide their phone number so you really have to search through their website to discover it. So, I simply asked, Copilot, “How do I phone Amazon?” Within two seconds, it gave me a phone number that actually worked. AI is good at questions like, “who said_____” or “what did Biden say about _____?_
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The deficit nuts cannot accept the truth about what causes inflation. Being found wrong in an argument causes embarrassing silence. So, they and their ilk go away refusing to recognize modern breakthroughs in economics that would, if enacted, reverse the world’s tendency to want to self-destruct.
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Rodger, nearly 10 years ago you posted this wonderful article here by Philip Pilkington.
https://mythfighter.com/2014/08/19/the-vast-difference-between-the-effect-and-the-real-purpose-of-federal-taxation/
Fast forward today, Mr. Pilkington is embracing the austerity cult in Britain.
https://x.com/philippilk/status/1817512669991063761
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What a shame. Very simply, austerity for a Monetarily Sovereign government = economic suicide and the widening of the Gap between the rich and the rest.
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