Keith Evans
3 min readNov 1, 2019

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For one thing, technical feasibility and resource availability impose potential constraints, as you yourself have pointed out in this thread.

Second, under certain circumstances, inflation can impose a potential constraint. No serious MMT writers deny this, although they correctly point out that conventional economists often exaggerate how close we are to the inflation constraint,

These are not separate items. What is normally thought of as “monetary inflation” (across the board price increases caused by increasing the money supply) is not possible with a fiat currency with a floating exchange rate. While some commodities, such as energy, have a universal impact on pricing, as we saw in the oil embargo, they still do not qualify as demand-pull (monetary) inflation.

Individual resource and labor/skill shortages may cause pricing to increase on items in short supply, or that experience supply chain issues, but only those items will rise in price as market forces will always increase production to capture demand up to 100% of potential prior to raising prices, eg. a wheat shortage will increase the price of bread but will have no impact on corn products.

Deficit hawks should look to bank lending if they wish to keep prices stabilized as the government is always the price setter for its spending within the constraints of resource availability. As injections of public money become anemic people become more dependent upon bank credit money, but without the ability to net retire loans that can only be done with public money. This drives the constant need for GDP growth to roll over private debt and the asset bubbles and inflated financial instruments that are so volatile.

Third serious MMT writers acknowledge that the US government has self-imposed constraints on spending imposed by law. They may think those self-imposed constraints are ill considered, but as long as they are there, they must be taken into account in setting budget priorities.

Yes, there is the debt ceiling, which Trump’s antics over his border wall funding have made mostly a farce in the public’s eye. Its utility since we left the gold standard is only as a source of political drama. Most don’t realize that it has no effect on military spending within any theater of war that is Congressionally authorized. War, HUD, and disaster costs are shielded from budget constraints, or “off the books” as Bush put it when confronted about the cost of his Iraq invasion.

Once a war is authorized Congress gives the power of the purse over to the Executive for any related costs and the Fed just makes sure the checks don’t bounce without the requisite issuing of Treasury debt other deficit spending requires. As long as we allow such broad interpretation of this exception as to include “the war on terror” we will not see any meaningful reduction in American imperialism, especially in the Mid-East. The ability to spend on the MIC without any real transparency is too great a lure for fraud and corruption to expect self-policing by any entity.

Money creation that funds the wars is searchable, but only with a deep dive into Pentagon spending receipts and a comparison to its budget as appropriated by Congress. Mark Skidmore, a Professor of Economics at Michigan State University, did just that and discovered $21 Trillion in such spending above appropriations for the military since 2000.

It’s difficult to deny “paid receipts” in excess of the national debt that lights everyone’s hair on fire, but the Pentagon did make a couple of attempts to obscure the number as accounting errors. If this is true we know where we can go to find funding for any public benefit for a couple of years. This article should have been the story of the century for our entire media establishment, but, as far as I know, Forbes was the only one to report it in any depth before it was buried.

If this level of spending can be done without adding to the Treasury debt then we surely have no problem spending on the things we need, healthcare, education, infrastructure, etc to retain America’s leadership status in the future. Congress only needs to add two sentences to any bill to circumvent the requirement to match the expenditure with Treasury bonds. Or, we can do away with Treasury bonds entirely if necessary to avoid the propaganda fodder they offer. They are not, and never have been a “funding” mechanism.

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Keith Evans
Keith Evans

Written by Keith Evans

Meandering to a different drummer.

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