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Only if all real resources are fully employed, is it quite clear that addition of new money will cause inflation rather than real gdp growth. But, its critical to remember that its the Flow of money rather than the Stock which will cause inflation and that flow depends on both the stock of money (money supply) And the Velocity of circulation of money. BTW ...


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First of all, the headline of this post "Is modern monetary theory sustainable?" is really misleading and shows how common it is to misunderstand what MMT is hence it's important to describe here what MMT is. Therefore i have edited the post to remove references to MMT. "they all seem to be simply printing their way out of any issues with ...


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Have a look at CentralBankNews.info.


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What was the annual real growth rate in the US from 2010 to 2015? I presume you mean growth rate of output. You can see the quarterly real growth rate in the US from 2010 to 2015 below (source Fred) with average quarterly growth rate being 0.6%: According to the Quantity Equation the US therefore had a yearly real growth of more than 13% in this period? ...


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If the demand curve SHIFTS to the right (due to a thriving economy and an increase in transactional demand for money) and the central bank keeps the money supply the same, the result would be deflation? Yes, this would result in deflation ceteris paribus. In fact Mankiw Macroeconomics 8ed also mentions that in passing on pp 335, but you are right it does ...


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MMT is propounding to be a theory. A theory can't be sustainable or unsustainable. However, I think you meant to ask if the policy proposals of MMT-ers would be sustainable so I will answer assuming that is your question. Now MMT is not a proper scientific economic theory* as it is not rigorously defined (Mankiw 2020), so it is not actually clear what MMT ...


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Yes inflating asset prices does not count as an inflation generally speaking although your friend's explanation is incorrect. Fed is not an authority that decides how inflation is defined. Inflation is generally in academic literature simply defined as (Lebow & Rudd, 2016) Inflation measurement is the process whereby changes in the prices of individual ...


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here are several reasons for that. First, if we look beyond the simplified version Philips curve, to the more appropriate modern version of Phillips curve we discover that what matters is not just inflation but that inflation is higher than expected inflation. For example, following Romer Advanced Economics pp 261, the Phillips curve will look like: $$\pi_t= ...


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To clarify the use of notation this reference shows the definition of slope change where delta notation is used to indicate a finite difference calculation: https://www.mathsisfun.com/calculus/derivatives-introduction.html As a thought experiment if one holds $V = 1/k$ and $Y$ constant then: $\frac{\Delta M}{\Delta t} = kY\frac{\Delta P}{\Delta t}$ which ...


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There are multiple answers to this question. In any model you can always make a thought experiment where you hold certain variables fixed. So one answer, although not very satisfying one, is that you can view it as a thought experiment. For example, in physics distance traveled equals velocity times time or $D=tv$ and you can always make a thought ...


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Banks lend because it is profitable for them to lend out money. Banks do become less profitable in low interest environment, but they are still empirically able to maintain profitability, although there is evidence that goes hand in hand with some increase in risk taking (e.g. see Bikker & Vervliet 2018). Consequently, the direct answer to your question ...


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FRED graph called Velocity of M2 Money Stock shows that the money stock M2 does not hold a constant ratio to flow of nominal GDP: https://fred.stlouisfed.org/series/M2V This article Money, Credit, and Velocity (May 1982) makes statements concerning velocity of money that may be inaccurate when considered over long periods of time, however, it accurately ...


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