That's indeed the question. I do have sympathy with Austrian economics in that regard as it argues that allowing the market to puke out excesses is important to avoid bubbles. If investors can always be certain that the deflation phantom will be fought with deficit spending they might become complacent. So for me MMT's ideas are primaril…
That's indeed the question. I do have sympathy with Austrian economics in that regard as it argues that allowing the market to puke out excesses is important to avoid bubbles. If investors can always be certain that the deflation phantom will be fought with deficit spending they might become complacent. So for me MMT's ideas are primarily a tool to understand what is happening, not what should be happening. I feel like deficit spending as a liquidity driver is insufficiently understood by most as they tend to focus on the perceived risks that come with it. Eventually it will be understood, that might be the time to reduce risk in the portfolio. I am also entertaining the scenario right now that we will see a rebound in tax receipts that will shrink the deficit.
That's indeed the question. I do have sympathy with Austrian economics in that regard as it argues that allowing the market to puke out excesses is important to avoid bubbles. If investors can always be certain that the deflation phantom will be fought with deficit spending they might become complacent. So for me MMT's ideas are primarily a tool to understand what is happening, not what should be happening. I feel like deficit spending as a liquidity driver is insufficiently understood by most as they tend to focus on the perceived risks that come with it. Eventually it will be understood, that might be the time to reduce risk in the portfolio. I am also entertaining the scenario right now that we will see a rebound in tax receipts that will shrink the deficit.