Some of MMT now being taken seriously by ECB chiefs

Short excerpt from the FT (hope they do not mind). In a nutshell, printing (read keystroking) money in countries in deflation does not produce inflation.

Mr Draghi has created something novel — a “contingent safe asset” if you will. If you comply with the fiscal rules in the eurozone, you are eligible for bond-buying programmes carried out by the ECB, and are therefore as good as credit risk-free. Markets understand this. Whenever Italy’s populist government threatens to breach the rules, for example, yields on Italian government bonds rise. When the government toes the line, yields fall. The European Commission does not need to utter a word.

MMT, then, brings into stark relief the institutional contingency of the risk properties of assets. We saw this clearly after the financial crisis. When faced with deflation, money-printing countries face no fiscal constraints, but countries in Europe do. This observation remains tangentially relevant to the politicisation of fiscal policy in America, but it remains pertinent to the eurozone.

As “super Mario” approaches retirement this November, it highlights the importance of his legacy. The eurozone now has a mechanism to deal with fiscal freeriding and has clear conditions for the creation of safe assets. He may have saved the eurozone not once, but twice.

Full article here