MMT proponent L. Randall Wray wrote just this past October:
On the surface, the data from Argentina look awfully good—among the top performers in the world over the past decade. And she’s apparently done it without a run-up of either private sector or government sector debt. In other words, Argentineans have bucked the trend among developed countries, that saw (mostly) tepid growth fueled almost entirely by debt.He then dissed reports of high inflation:
As already discussed, the official numbers are around 10% but unofficial measures put it as high as 25%. People that I think are reasonably credible argue that the official number is too low, but the actual number is probably substantially below 25%.Here's one of the reasons he and Krugman have to downplay the real extent of the inflation. He writes:
More importantly, if prices are rising at a 25% pace that means real GDP is vastly overstated. Indeed, it must have been falling at a very rapid clip.
He's absolutely correct here, the "magnificent" GDP growth that he hails along with Krugman, never happened if the price inflation is as bad as it currently appears. The GDP growth was simply price inflation.
Then, he goes on to say that even if inflation is at 25%, it's no big deal. Get a load of this (my highlight):
If inflation really is running at 25%, so be it. Does that make Argentina’s central bank the worst in the world? I don’t think so.
I realize that people hate inflation. Economic studies actually find that the negative economic effects of moderate inflation are small—and by moderate I mean in the range of 10% to 20%; one famous study by orthodox economists even found only small effects up to an inflation rate of 40%.Wray then proceeds to throw supply and demand out the window by claiming that price controls work:
It is relatively easy to formulate a policy to bring down inflation (although implementing the policy will be more difficult). Despite what you hear all the time, wage and price controls work.
Got that? 40% inflation is no big deal and, by the way, if it is bothersome, don't blame the central bank, just slap on price controls.
Welcome to the world of MMT economics.
(ht David Burns)