Inflation and Sovereign Currencies

In this chapter we will examine the MMT view of inflation and hyperinflation. The usual belief is that budget deficits and full employment are prone to cause inflation if not hyperinflation. Many critics even argue that following MMT is necessarily inflationary—the path to ruin. Let us first see how inflation is defined. We then turn to hyperinflation and to fears that quantitative easing might spark inflation. We will examine the claim that MMT policy was adopted during COVID and that the relief packages fueled inflation beginning in 2021. Finally we turn to MMT’s views on policy to promote price stability.