Another point that might help you understand

the govt is source of price level and is a price setting monopolist when it spends

so inflation is a function of govt paying higher prices

thats not to say that shortages don’t cause inflation but that inflation itself is not evidence of shortages but it is evidence of govt paying higher prices (which can be due to shortages but also other things like contractual indexing, bargaining mistakes, fraud, market power of sellers [who can induce artificial or technical shortages], etc) .

Hey Schmidt

I am trying to be respectful/helpful but I was alarmed by her recent comments.
To answer your question, the Fed is like the kid in the back seat of a car with a fake steering wheel, while Congress is in the driver’s seat driving the car.
I like to say that the Fed sets the base inflation rate, which is the fed funds rate which when annualized closely tracks with 1 yr treasuries. This inflation has nothing to do with shortages.
Now, the Fed has it all backwards because they ignore the interest income channel and forward pricing. So when they lower rates to raise inflation, they are doing the opposite and vice versa.
But let’s get to my point:

Congress can tax the wealthy and do big spending programs and the CBO could score it budget neutral. But if they are taxing those with the highest propensity to save, then they are not “freeing up” resources for the “big spending.” If there is a shortage due to govt competing with the private sector for resources, prices go up unless govt cancels the spending.
If they had scored for inflation, they would know that the taxes need to be different or some other structural/macro prudential policy is in order if the resulting inflation is undesirable/unacceptable.
Note, scoring for inflation is not my original idea, it’s been heavily promoted by academic MMTers. I’m just regurgitating.

When you pay federal taxes, you are not paying for the federal govt to get the funds it needs in order to spend. In reality, and as is clear from a closer look at the order of operations, the tax is about altering your behavior, as you can’t spend or save those funds, and you had to do something to get the dollars to pay the tax.
I know it sounds cryptic and there’s a lot to unpack with what I’m saying. But the overall point is that something very different from the “taxpayer” supplying the funds for the government to spend is going on. So it’s not about you paying taxes to pay for other people’s food stamps. That’s not how it does or how it even could work.

All dollars are either spent or lent into the economy first by the federal government or its agents. Then, after incomes are received, taxes or debts owed to the federal govt can be paid, and/or debts owed by the federal govt can be purchased (and local/state govt can then tax/borrow and then spend).

Remember, the tax is about altering your behavior. The point is not the revenue. Revenue is not the goal of the tax.

Corporations are invariably creatures of the state, and like the govt that created them, they should be LIMITED to public purpose.

UBI is inherently inflationary.

But not all basic or non basic income schemes are bad or disruptive, especially when limited in nature, e.g. social security for disabled or retired or meager benefits for unemployed.

Criticism of a job guarantee on the lines that it would be ‘make work’ could just as easily be applied to all government employment, as that’s what many anti-gov right-wingers claim now. The WPA and CCC programs during the Depression were not thought of as ‘make work.’ Those folks worked their tails off.

But the point of the MMT JG is not the work done per se but that the workers ‘transition’ to ‘normal’ employment. That’s how it’s anti inflationary bias works. So while we want to see tangible gains for society from the work done, that’s an add-on benefit. The point is to get people back in the private sector.

Once one recognizes that the involuntary unemployed are part of the size of government, the JG becomes the limited government thing to do.

I’m not look at the politics of it.

The time to set this program up is when unemployment is low.

The official U3 bls rate undercounts true unemployment.

Monthly employment data continues to show a significant portion of those taking jobs didn’t show up in U3 the day before.