Policy for Full Employment and Price Stability

In this chapter we will examine policy that will promote full employment with price stability. Most economists believe that full employment and price stability are inconsistent. Indeed, unemployment is seen as a “tool” to be used to promote price stability. In this chapter we first examine MMT’s approach to full employment. We will argue that it is possible to pursue full employment in a manner that actually enhances price stability. In the next chapter we examine high inflation and hyperinflation. Many critiques of MMT argue that if the principles of MMT were followed (in particular those that follow from the functional finance approach of Lerner) the result would be runaway inflation. We will dispel those fears.