If interest rates are lower than inflation rates, wealth is redistributed from private creditors to public debtors. A wealth tax would have a similar effect. As a result of Covid-19, government debt is rising rapidly. The probable cost will be higher taxes, higher inflation, more austerity or eventual default.
Modern Monetary Theory, ammpol.wordpress.com/mtwo , October 2020
Modern Monetary Theorists say that a government of a state with its own currency can create money by spending, and if the result is extra economic growth, it can get the money back as taxes. But instead there may be problems with inflation or financial capital flows.
Modern Monetary Theory, ammpol.wordpress.com/mtwo , 2014 and 2019.
The Bank of England’s decision to raise interest rates is the first since 2007. The cost of borrowing remains extraordinarily low, and has probably encouraged a misallocation of scarce resources. Normalisation is an unprecedented challenge.
The crash of 2008 , June and November 2017.
Before 2006, to meet their inflation targets, central banks created excessive liquidity to balance the deflationary effects of Chinese trade.
The Crash of 2008, December 2012.
The stagflation of the 1970s called into question the effectiveness of government intervention in the economy.
“Inflation”, ammpol.wordpress.com/ammiim.
The Positive Money campaign isn’t targeting the kind of banking which was a factor in the 2008 financial crisis, and won’t stop the creation of money by private banks.
Monetary sects, March 2014.
Tags: Monetary policy
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