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Modern Monetary Theory Got a Pandemic Tryout. Inflation Is Now Testing It.


The problem is that the alternative to a Fed response is, at the moment, not obvious. The Biden administration’s attempts at tamping down price increases — longer port hours, release of strategic petroleum reserves, calling out corporate price gouging — have mostly tinkered around the edges of the issue.Those kinds of precise moves to counter inflation are what M.M.T. economists would recommend, though. Ms. Kelton laid out other suggestions M.M.T. economists have made in a recent blog post. Among them: Medicare for All, cutting the Pentagon budget, repealing some tariffs and unclogging the ports.Not exactly “easy peasy,” to borrow a phrase of hers.“M.M.T. was already pretty marginal,” said Jason Furman, a Ha …

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