The scale of underemployment in the economy is massive, and the unemployment data simply does not reflect that. Until that slack is picked up there is no chance of inflation.
So., is it possible to have inflation without full employment?
Is there full employment in Venezuela? Zimbabwe? Do they have inflation?
Ah, well, inflation is possible without full employment then, isn’t it?
But of course those are places that can’t do the miracle of MMT.
Hmm – in the UK in 1984 inflation was 8% and unemployment 12%.
So, err, the insistence is, well, it’s P³, isn’t it?
Haldane has predicted that the UK is like a coiled spring, just waiting to spend. As I have said before, maybe he and his rich mates in the City are. But they are not representative of the population at large. As data on the sectoral balances used in my talk for Keele last night shows, consumers took more than five years to recover their confidence after 2008.
And as every economist has been shouting, was in fact shouting back then, recessions resulting from a financial market – or resulting in – crash take much longer to recover from.
But neither of us see the Phillips Curve kicking in right now with upward inflationary pressure resulting, simply because the data on which those who use that curve to make inflation predictions are pumping false unemployment and consumer optimism data into their models.
But the inflation predictions aren’t based upon the Phillips Curve. They’re based upon the money supply…..
That’s not an inflationary environment. And QE is going to be with us for a long time to come.
Err, yes, that’s the worry, that QE is inflationary…..