by How to cope with inflation Less well worked out is a technique of dealing with the other responsibility of the creator of money – the responsibility for maintaining its value. The key points here are not in the direct supply of money, or even in the regulation of the level of spending. The key points are in the determination of wage rates and in the determination of rates of markup of selling prices over costs … Higher wages relatively to prices are necessary for long-run prosperity but raising wages will do no good because they will only lead to higher prices and inflation. The dilemma can be resolved only by the government going to work on both money wage determination and on markup rates. Both are problems of monopoly and as such are
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How to cope with inflation
Less well worked out is a technique of dealing with the other responsibility of the creator of money – the responsibility for maintaining its value. The key points here are not in the direct supply of money, or even in the regulation of the level of spending. The key points are in the determination of wage rates and in the determination of rates of markup of selling prices over costs … Higher wages relatively to prices are necessary for long-run prosperity but raising wages will do no good because they will only lead to higher prices and inflation.
The dilemma can be resolved only by the government going to work on both money wage determination and on markup rates. Both are problems of monopoly and as such are inevitably destructive of a free economy. Markup rates must be reduced by antimonopoly measures … The most important help to the government in this will be the policy of maintaining full employment which will make it profitable for business to work with smaller markups.
Most proponents of MMT argue that the aggregate demand impact of interest rate changes is unclear. Their effect depends on intricate and complex relations (especially distributional) and institutions, which makes it realiter impossible to always be able to tell which way they work. Public budget deficits and higher interest rates may cause inflation to go up — or go down. And if so, the neoliberal dream of the efficacy of central bank inflation targeting is nothing but a fantasy.