I agree that the Fed’s financing of the Covid-related fiscal largesse was responsible for the bulk of the higher inflation that followed. However, I do not believe that the Biden administration adopted a(n) MMT policy. IMHO, the Fed alone, bears responsibility for the largest absolute and percentage creation of credit, figuratively out of thin air, in its history. The Fed’s monetary mischief throughout its establishment has had profound political ramifications. Its failure to maintain monetary growth in 1930 turned a recession into a depression, resulting in the New Deal. The Fed’s excessive credit creation in the face of the negative oil supply shock of 1973-74 doomed the Carter administration. The Fed’s failure to maintain monetary growth during the S&L crisis of 1990-91, doomed the Bush I administration. The Fed’s excessive monetary growth in the second half of the 2000s provided the “gas” that inflated the housing bubble. That played a role in the 2008 presidential election. And, as I mentioned at the outset, the Fed’s excessive credit creation in response to the Covid-induced negative supply shock played a major role in the 2024 presidential election. Yet, the Fed is never held accountable for its monetary mischief.
I agree that the Fed’s financing of the Covid-related fiscal largesse was responsible for the bulk of the higher inflation that followed. However, I do not believe that the Biden administration adopted a(n) MMT policy. IMHO, the Fed alone, bears responsibility for the largest absolute and percentage creation of credit, figuratively out of thin air, in its history. The Fed’s monetary mischief throughout its establishment has had profound political ramifications. Its failure to maintain monetary growth in 1930 turned a recession into a depression, resulting in the New Deal. The Fed’s excessive credit creation in the face of the negative oil supply shock of 1973-74 doomed the Carter administration. The Fed’s failure to maintain monetary growth during the S&L crisis of 1990-91, doomed the Bush I administration. The Fed’s excessive monetary growth in the second half of the 2000s provided the “gas” that inflated the housing bubble. That played a role in the 2008 presidential election. And, as I mentioned at the outset, the Fed’s excessive credit creation in response to the Covid-induced negative supply shock played a major role in the 2024 presidential election. Yet, the Fed is never held accountable for its monetary mischief.