|
Hyperinflation doesn't come via our faith or non-faith in the value of the currency. We don't, on the whole, barter with it and make individual economic judgements at the micro level like that. It comes from resources becoming scarce, leading to a bidding war to secure those resources (or price gouging by opportunistic capitalists). Toilet paper prices are inflated right now due to resource scarcity, not people having too much money.
We may experience inflation or hyperinflation due to an external shock to the economy, such as a supplier of raw materials used in production collapsing due to the virus. However that won't be because too much money was printed, it will be because of the external shock. MMT advocates keeping a tight control of the money supply relative to the amount of resources available.... Just that under normal circumstances, under conditions of labour unemployment, there is a lot more 'fiscal space' for increased money supply and government involvement in the economy.
You can use MMT in our situation to do things like:
- Keeping businesses solvent via government grants, to keep people on the payroll.
- Giving people money to make essential purchases during great depression-levels of unemployment.
- Ensuring the producers of essential resources (food/medicine) are fully operational at this time, either via state ownership or covering loss in profits
- Freezing or paying off debts, rents, loans etc at a time of unemployment. This can ensure private banks don't collapse due to all their clients becoming insolvent (or maybe you want them to collapse since they are often predatory and engage in financial speculation)
But careful attention must be paid to the balance of money supply and real resources. This is the key to avoiding inflation at this time. This is why I'm weary of words like 'stimulus'. Stimulus without resources will lead directly to inflation
|