<story><title>US Federal Reserve raises interest rates for first time since 2018</title><url>https://www.theguardian.com/business/2022/mar/16/us-federal-reserve-interest-rates-inflation</url></story><parent_chain><item><author>IncRnd</author><text>&amp;gt; ...and that the primary risk once the economy reaches full employment is inflation, which seems to be precisely what has happened, no?&lt;p&gt;Certainly, there is inflation. There isn&amp;#x27;t full employment.</text></item><item><author>hn_throwaway_99</author><text>Here are the first two paragraphs on the MMT Wikipedia article:&lt;p&gt;&amp;gt; Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox[1] macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires.[2][3] MMT is opposed to the mainstream understanding of macroeconomic theory, and has been criticized by many mainstream economists.[4][5][6]&lt;p&gt;&amp;gt; MMT says that governments create new money by using fiscal policy and that the primary risk once the economy reaches full employment is inflation, which can be addressed by gathering taxes to reduce the spending capacity of the private sector.[7] MMT is debated with active dialogues about its theoretical integrity,[8] the implications of the policy recommendations of its proponents, and the extent to which it is actually divergent from orthodox macroeconomics.[9]&lt;p&gt;Regarding this being a &amp;quot;test&amp;quot; of MMT, I don&amp;#x27;t see why. The first part of the first sentence of that second paragraph, &lt;i&gt;MMT says that governments create new money by using fiscal policy and that the primary risk once the economy reaches full employment is inflation&lt;/i&gt;, which seems to be precisely what has happened, no?</text></item><item><author>andreyk</author><text>An interesting aspect of this is that the endless printing of money in the last few years was a sort of stress test of modern monetary theory, which has been seeing lots of discussion in those same years. I never quite understood how this theory would work while avoiding inflation, and what&amp;#x27;s happening now seems to at least be related - &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.nytimes.com&amp;#x2F;2022&amp;#x2F;02&amp;#x2F;06&amp;#x2F;business&amp;#x2F;economy&amp;#x2F;modern-monetary-theory-stephanie-kelton.html&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.nytimes.com&amp;#x2F;2022&amp;#x2F;02&amp;#x2F;06&amp;#x2F;business&amp;#x2F;economy&amp;#x2F;modern-m...&lt;/a&gt;&lt;p&gt;Conceptually the answer in the theory is to suck up the excess money with taxes, which of course is not going to fly in the US. But maybe this inflation will make that more viable in the future:
&amp;quot;Ms. Kelton and her colleagues make clear that the pandemic relief packages did not follow one of M.M.T.’s key tenets — they did not try to account for resource constraints ahead of time. In an M.M.T. world, the Congressional Budget Office would have carefully analyzed possible inflation ahead of time, and lawmakers would have tried to offset any strain on available workers and widgets with stabilizing measures and tax increases.&amp;quot;</text></item></parent_chain><comment><author>drexlspivey</author><text>Unemployment &amp;lt; 4% is basically full employment. People that are changing jobs are temporarily unemployed. Another metric you can use to reach the same conclusion is that # of job openings &amp;gt; unemployed work force</text></comment>
<story><title>US Federal Reserve raises interest rates for first time since 2018</title><url>https://www.theguardian.com/business/2022/mar/16/us-federal-reserve-interest-rates-inflation</url></story><parent_chain><item><author>IncRnd</author><text>&amp;gt; ...and that the primary risk once the economy reaches full employment is inflation, which seems to be precisely what has happened, no?&lt;p&gt;Certainly, there is inflation. There isn&amp;#x27;t full employment.</text></item><item><author>hn_throwaway_99</author><text>Here are the first two paragraphs on the MMT Wikipedia article:&lt;p&gt;&amp;gt; Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox[1] macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires.[2][3] MMT is opposed to the mainstream understanding of macroeconomic theory, and has been criticized by many mainstream economists.[4][5][6]&lt;p&gt;&amp;gt; MMT says that governments create new money by using fiscal policy and that the primary risk once the economy reaches full employment is inflation, which can be addressed by gathering taxes to reduce the spending capacity of the private sector.[7] MMT is debated with active dialogues about its theoretical integrity,[8] the implications of the policy recommendations of its proponents, and the extent to which it is actually divergent from orthodox macroeconomics.[9]&lt;p&gt;Regarding this being a &amp;quot;test&amp;quot; of MMT, I don&amp;#x27;t see why. The first part of the first sentence of that second paragraph, &lt;i&gt;MMT says that governments create new money by using fiscal policy and that the primary risk once the economy reaches full employment is inflation&lt;/i&gt;, which seems to be precisely what has happened, no?</text></item><item><author>andreyk</author><text>An interesting aspect of this is that the endless printing of money in the last few years was a sort of stress test of modern monetary theory, which has been seeing lots of discussion in those same years. I never quite understood how this theory would work while avoiding inflation, and what&amp;#x27;s happening now seems to at least be related - &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.nytimes.com&amp;#x2F;2022&amp;#x2F;02&amp;#x2F;06&amp;#x2F;business&amp;#x2F;economy&amp;#x2F;modern-monetary-theory-stephanie-kelton.html&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.nytimes.com&amp;#x2F;2022&amp;#x2F;02&amp;#x2F;06&amp;#x2F;business&amp;#x2F;economy&amp;#x2F;modern-m...&lt;/a&gt;&lt;p&gt;Conceptually the answer in the theory is to suck up the excess money with taxes, which of course is not going to fly in the US. But maybe this inflation will make that more viable in the future:
&amp;quot;Ms. Kelton and her colleagues make clear that the pandemic relief packages did not follow one of M.M.T.’s key tenets — they did not try to account for resource constraints ahead of time. In an M.M.T. world, the Congressional Budget Office would have carefully analyzed possible inflation ahead of time, and lawmakers would have tried to offset any strain on available workers and widgets with stabilizing measures and tax increases.&amp;quot;</text></item></parent_chain><comment><author>OGWhales</author><text>MMTers argue that government spending at full employment will cause inflation, not that there must be full employment for there to be inflation.</text></comment>