> I had to stop reading after this. This is not how inflation works and it borders on the preposterous to surmise that CBs can monetize deficits without creating inflation because there is excess supply in one market.
I think the government doesn't have to run deficits, it can always tax the money back out of the economy. (The only problem is nobody likes that, for some reason. People seem to prefer inflation to taxation.)
It's actually more honest, because it better shows what actually happens. Government prints money, (hopefully) invests into places that benefit the society as a whole, and then taxes the excess money back from wherever they ended up, destroying them (by not spending them again).
I think the government doesn't have to run deficits, it can always tax the money back out of the economy. (The only problem is nobody likes that, for some reason. People seem to prefer inflation to taxation.)
It's actually more honest, because it better shows what actually happens. Government prints money, (hopefully) invests into places that benefit the society as a whole, and then taxes the excess money back from wherever they ended up, destroying them (by not spending them again).