Remember all those “Free money” stimulus checks the government sent you? You are now worse off.

This comes as a surprise to the technocrat aristocracy that promised us we could print money and inflation would only be temporary.

The spike inflation has been obvious for 18 months now, as I documented in the past (dozens of posts, overall):

Modern Monetary Theory is a crack pot concept, promoted by an economist, that says, basically, we can print however much money we need. In response, the economy will grow even faster and pay for the debt. Democratic Marxists (they are beyond socialism) support MMT and believe we can print whatever level of funding is needed for expansive government projects. In their view, printing money grows the economy, so everything is actually free. It’s the perpetual motion machine of monetary policy.

With high inflation now running rampant, MMT theorists are arguing that well, we didn’t do MMT right. If we had only done MMT right, then we would not have high inflation. This is the same argument used in other situations: Yes, we did lockdowns for Covid that did not work – but if we had done lockdowns right … Yes, 19 of 24 communist countries have given up on communism, but that’s because they didn’t do real communism, correctly … it’s always the same excuse. In short, MMT is great – when times are good – and when times are bad, well, then the political leaders just didn’t do MMT right.

Some of these advocates suggest we can control inflation by putting in place government mandated price controls. Every place that has ever done that ends up with worse problems.

MMT promoters insist if only our technocratic aristocracy was given more power, they could know everything about the economy’s supply and demand requirements, and could precisely deliver that which was needed, when needed.

“With all the respect in the world to my friend Joe Manchin, it’s not right to say that what we’re doing is contributing to inflation because it is exactly the opposite,” Pelosi told anchor George Stephanopoulos on ABC’s “This Week.”

Pelosi: ‘It’s not right’ for Manchin to say ‘what we’re doing is contributing to inflation’ (msn.com)

The only tool for taming inflation is to jack up interest rates making “the cost of money” more expensive. This reduces the borrowing of money, reducing the amount of money being spent, thereby reducing demand (in a simplified explanation). Demand for new mortgages slides down as interest rates go up. Lower demand means an increase in supply and the market clearing price should stop climbing or even fall.

Inflation is a monetary issue – printing money devalues each dollar – that leads to “prices increasing” because each dollar is worth less. The media breathlessly reports that businesses are “raising prices” without noting that prices are going up because the value of the dollar is sliding.

Government debt is not a perpetual motion machine. Eventually, it gets paid – either by taxing everyone through devaluing their dollars held, or by increasing taxes. As interest rates rise this year, watch for tax hikes (or perhaps new “Fees”) to kick in in 2023 (after the 2022 elections).

By EdwardM