The Financial Times published an article on Friday with this headline:
The economy is too weak for inflation to return
They commenced by noting that:
It has been almost 40 years since the US and most of Europe grappled with serious inflation. Over the past decade the greater risk on both sides of the Atlantic has been that prices will fall.
I agree with them. What I do not agree with is their next sentence, which said:
Since the coronavirus pandemic, however, rampant spending by central banks and governments has led to expectations that change is afoot.
They noted the increase in gold prices, and broad money supply (but failed to note that massive decline in the velocity of circulation of only, rather implying that they do not think that an issue any more) before saying:
The threat of widespread and persistent price rises matters now more than ever. Inflation exacerbates social divides, affecting the worst off the most. It also weighs on confidence and decision-making – hardly ideal in an environment where businesses are understandably hesitant.
They speculated that:
As lockdowns ease, prices could jump. Businesses may want to make the most of pent-up demand as rules on social distancing are relaxed. Shocks to supply chains could bump up costs.
And at that point their sense of reality kicked back in. As they then noted:
But if those pressures are to prove persistent and dangerous, wages must rise, too. A driver of double-digit inflation in the 1970s was that expectations of price rises were so entrenched that ever-higher prices were met with ever-louder calls for higher wages. A hallmark of the low inflation era, meanwhile, has been low wage growth, despite low unemployment. That has left inflation largely confined to asset prices, with the full impact of central banks' money printing still to be felt in the cost of everyday goods and services.
Quite so. The destruction of workforce power - a deliberate result of neoliberal policy - has delivered this legacy.
But as they noted there has been another factor: and that has been the desire for low inflation and low-interest rates. Central bankers would like to claim that the elimination of inflation is all their own work. But as the FT noted it was not: it took political will, for example, to allow QE, with its impact on this process. And it will take continuing will to continue to deliver low rates. As they note:
Some governments have locked in low borrowing costs by issuing bonds that will not mature for another 30, 50 or even 100 years, but not all have been so wise.
Quite so. Those that have done so - and those who could do so - will reap the rewards of locking down the issue of so-called debt for such periods. But as MMT notes, this policy is deliverable with interest rate control using QE and the regulation of rates on central bank reserves which in combination can guarantee zero effective interest rates in near perpetuity. Low interest rates are fundamental to a strong economy.
But then the FT concluded their piece saying this:
When the time comes for central banks to raise rates, this generation of policymakers – like their forebears – will face pressure. If they buckle, then inflation could finally return.
And yet, quite bizarrely, they gave not a hint as to why those higher rates or that inflation should return, at least in a form that any type of fiscal or monetary policy can control.
So let's deal with this issue, because it's something people ask about modern monetary theory (MMT), which they believe will give rise to inflation risk because they claim more debt will be issued.
So, let me start with some simple facts.
First, as the FT notes, we have not had a serious inflation issue for 40 years.
Second, serious inflation requires wage inflation, and that is now almost unknown, and with maybe five plus million unemployed likely in the UK soon inflationary wage pressure is not going to be seen for a very long time to come.
So third, the real risk is deflation.
And fourth, debt is not a risk: if QE has done anything (and what it has achieved is debatable) it has definitely proved that debt is a choice and not a necessity.
And, fifth, nor is there a risk of stagflation, last really seen in the late 70s, because that required a) an external price shock b) attempts to hold exchange rates steady rather than to let them float, which is the essential reaction that we now know is necessary in such situations, and c) the cycle of inflation compensating pay rises that were normal in the 70s and have not been since, all of which mean that inflation for this reason is now very unlikely.
Finally, sixth, the inflationary effect of interest rate rises, which were once commonplace, can also be avoided now for the reasons noted already.
So where does the FT think the risk of inflation is hoping to come from? I genuinely have no clue. All they are assuming is that one day either it must, or the desire to raise rates will occur anyway, and neither appears to have any economic logic to it.
In fact, that final FT comment is much like the commonplace reaction from all MMT critics that 'you wait, it will create inflation' when a little inflation might be exactly what we need to avoid the risk of deflati0n. What it really suggests is the presence of an author ‘enslaved by some defunct economist'.
I am not saying inflation could not happen. I am saying it is incredibly unlikely to happen in any foreseeable future, just as it has not happened in any serious way in the lifetime of most people now alive in developed economies.
And in that case I ask the obvious question, which is why do some seek to dictate economic policy on the basis of the remote possibility of inflation when the need for current employment opportunities is so very obviously the real pressing policy priority? To put it another way, why is inflation paranoia allowed to trump the possibility of delivering work, hope and the chance for people to deliver their potential? Could it be that some are so frightened that this would liberate labour to deliver whilst proving that capital is not the factor in short supply that they will do anything to maintain the existing structures of power?
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
I think what you have said isn’t a very good answer if you want people to trust MMT. I’d even go as far as to say that it totally undermines your and MMTs argument.
1. MMT is saying we can control inflation by taxes in theory. Yet you have just acknowledged nobody knows how to do this in practice. By inference, you are saying that we should try and untested economic theory out in the real world, without even knowing how one of the major aspects of the theory work. Let’s just hope and pray basically.
2. You have just dismissed inflation as unlikely, but again that is an incredibly poor answer. Just because it is unlikely doesn’t mean it can’t happen and it is important to know what to do when it can happen.
It also doesn’t answer the stagflation question I was asking in more general terms. You have focused solely on the UK, but economic theories should work in general. MMT claims that you won’t get high high inflation as long as unemployment is high.
Yet around the world there are currently a large number of countries with both high inflation and high unemployment – as well as their own currency which I understand is a pre-requisite as well. Not just tiny countries either. Four of the top 20 countries in the world by GDP currently have high inflation and high unemployment rates.
If this major claim by MMT is obviously false – which we can see it is just by observation – then what does that say about MMT as a whole?
Between these two points alone, the arguments MMT makes immediately become incredibly unconvincing. Claiming that the theory is sound, but then admitting that no-one knows how one part works and another part isn’t true in practice doesn’t seem to make it a sound basis for managing an economy. Would you as a politician want to try a giant and highly risky experiment using the economy of a country as a basis, in full knowledge that not only may the theory be incorrect, but even it’s proponent’s don’t understand how to answer some of the most important points?
First, let me point out that you could not consistently spell your email address in your comments. This always implies trolling, and I strongly sense it is happening here.
Second, your comments are quite bizarre.
First, at no point have I said taxation cannot control inflation. In fact, what I can and will say is that it is the only mechanism that we now have available to us to achieve this goal: interest-rate changes cannot now do so, not least because any increase in interest rates now would tip the whole economy into massive recession, even worse than that we are going to have. So, tax has to fulfil this task, even if imperfectly. But, and I stress the point very strongly, that whatever imperfection tax might have in this role it is a vastly more sophisticated and appropriate instrument for the task than changing interest rates, which were the bluntest and crudest of possible instruments available, which also had the enormous disadvantage of penalising those who borrowed and advantaging those who saved, with the overall consequence (Or was it objective?) of increasing inequality. I accept that tax could be refined for this task, and I am working on how, but to presume that changing interest rates could either a) work or b) was better is absurd.
And second, as I have noted, inflation is not happening and as the FT agrees, is not going to happen. So why plan for it? Is it also a criticism of yours that MMT might not work if every computer failed forever? That’s about as likely.
As for stagflation, I have answered the question: it does not exist in the economies where MMT can work. MMT does not pretend to be universal. It is a theory that explains how the excono9my works when there is a central bank, an own currency and no need to borrow in foreign currency. That is a real world scenario, bit not a universal. Saying that we must have universal answers is quite absurd.
So there is nothing false about MMT. It answers real questions. And answers them well. Unless of course you ask it to address situations that do not exist, which is what you are doing.
You must be very desperate
1. You claimed taxation can control inflation, but nobody knows how to do this in practice.
“I simply think (1) is a non-issue once it is understood, but it is not understood at present”
This is rather important if you are going to manage an economy based on this idea. You would have also thought that in the relatively long period of time MMT has been around someone might have thought to answer this critical question. The fact that nobody has, or in your own words even been able to suggests a massive issue.
Interest rates might be a blunt instrument, but at least we know how the interactions with inflation and the economy work. Tax itself is a very complicated issue because they don’t apply in a linear fashion – people modify their behavior for example.
2. Inflation in the UK is not happening at the moment. Claiming it will never happen again is not a sound way of planning an economy in the long term. It also sounds very much like a lazy excuse for not bothering to properly address the issue. Just saying “why plan for it” is highly irresponsible, and frankly as a political economist you should know governments don’t operate in this manner and saying you can just ignore such things is frankly ridiculous.
I understand that MMT only claims to work when a country has it’s own currency, central bank and no need to borrow in foreign currency. However that can be said for India, Russia and Mexico, and a large host of smaller countries which all have their own currency, own central bank and don’t need to borrow in foreign currency.
Yet in many of these countries you see high unemployment and high inflation. Which MMT claims is impossible. So the real world is telling us quite clearly that there is a problem with MMT.
If MMT were correct in it’s claims about inflation, you would also expect inflation and unemployment to be highly negatively correlated. If unemployment goes down, inflation starts to rise. Yet in the real world more often than not unemployment and inflation are positively correlated – both increase or decrease at the same time. What is 100% certain is that the correlations are not fixed, which is an assumption MMT makes.
Defining when MMT will work in such a narrow fashion makes it less and less credible. There are clearly many countries in the world which fit the MMT criteria, yet when they display economic results which suggest MMT is wrong, you quickly dismiss them. You would have thought that if MMT was a solid theory, it would be applicable in all circumstances where it’s basic criteria are met. But instead the list where MMT could work according to you is very small. Maybe just the UK and the US. Which makes me think the proponents of MMT are hiding the fact that the theory itself is not workable or practical.
Going back to point 1. to finish. I find it astonishing that you are trying to push a system of economic management on the country and literally don’t have a clue, by your own admission, of how a very significant part of it (in this case using taxes to control inflation) would work in practice. What are you planning to do? Guess? It’s a joke.
With respect (and read that as you will) you are simply reiterating po8ints I have addressed
And to suggest that Russia, Mexico and India are like the UK is farcical
I also note you have reverted to claiming the Phillips Curve works
Frankly you are wasting my time
So what if MM^T only works best in well-developed economies? It’s never been claimed otherwise. You may have noticed that a solution is needed for them. But apparently you do not want opne.
And I reiterate, of course I could control inflation with tax. VAT could do the job overnight. I only don'[t like it because of its regressive nature. But that’s a wholly different issue which is why I say it could be improved upon.
So when it comes down to it, like almost all MMT opponents, you deny what it says, ignore the explanations, make up false demands and then claim it could not work
Politely, that’s trolling, as I suspected
How has Japan controlled inflation and maintained full employment for 20 years?
AFAIK Japan is being run by the MMT playbook.
It would seem so
So why Toby did Donald Trump use MMT to pull the rich folk’s trick of giving themselves more money and trying to justify it using the old Neoliberal Supply-Sider tax reduction trick if nobody knows how to control inflation? Think about it? Is supply-siding just another version of QE which did cause asset inflation and we know from the Great Depression and Great Recession asset bubble blowing isn’t a great idea except for sociopaths!
“I also note you have reverted to claiming the Phillips Curve works“
He literally claimed the exact opposite.
It is MMT that assumes that the Phillips Curve holds.
You clearly gave nit read MMT
I read his comment correctly
“it has not happened in any serious way in the lifetime of most people now alive in developed economies.”
Argentina and Turkey are developed countries (they are members of the G20) and have had high inflation in recent years so that statement is just not true. The same could be said of India.
As you are also well aware, they are decidedly transitional in this context and not comparable to the UK
Respectfully, don’t try to make a fool of yourself
Can I ask you to explain what a transnational country is please. Thanks
Why?
I can’t see reference to one
MMT has a got a lot of people’s backs up. People with vested interests who want society to think that their Government is powerless to do anything for them.
Raising false fears about inflation based on the lies told about taxes. And inferring that when the Government goes into debt, it must be paid back by the people (how on earth can you issue money to people if only to take it back? What a load of bollocks).
MMT is certainly making those vested interests nervous:
Making
Morons
Tremble
Poor dears……………….
Errr.. sorry to disappoint but this isn’t a situation of the “good” overcoming to “entrenched evil”..it’s more simple than that, people don’t believe in it because it is flawed..
I agree the Govt can print to find expenditure , I agree the bond markets are irrelevant as any supply of sellers is mopped up by QE, I agree the country’s debt doesn’t have to be paid back, I agree tax doesn’t directly pay for public services ( but it is massively disingenuous to say they are not linked when they clearly
are).. i am sure there are lots of other things I agree with
BUT
at the point of inflation higher tax won’t control inflation it will lead to a govts removal from office.
Inflation has not been a problem for 40 years because central banks have made its control a priority after the damage of the 70s and early 80s.. that’s not the same as it never coming back, it can and will if governments and central banks allow it to
At the point of full employment and inflation when higher taxation is so toxic at the polls it removes a govt from office..the choice of higher taxes or cutting government expenditure is recessionary. Recession and inflation is stagflation
Although the government bond markets are toothless (in the face of QE), the currency market and corporate bond markets are not. Excessive printing will lead to rising borrowing costs and a fall in the currency.
Do we trust big government to be able to “fine tune” the economy to avoid inflation by prudent management at the printing presses? Of course we don’t. Public respect and confidence in politicians of all persuasion is at an all time low..
Plenty more counter arguments but that will do.
And for the record, I do not gain or lose by this neoliberalism v MMT argument (as you like to build it), I am not part of the establishment, I went to a comprehensive school and run my own heating business after studying electrical engineering at university (currently off work through an injury).
So I don’t buy it. And please don’t make the come back remotely political or class based. I was born working class and have worked 40-50hr weeks doing proper labour all my life..there is nothing more grating than the so called “educated set” trying to score points by claiming to represent us!! The last election result would suggest I am in good company!!!
And if you read chapter 2 of Stephanie KJelkton’s book you will see that inflation is at the heart of MMT’s concern
But let’s stop the nonsense here – because nonsense it is
What you are saying is that you do not like government and that you’ll sacrifice millions of people to unemployment rather than have the government provide them with a job
And I think that’s callous indifference to the human condition to pander to your ideological obsessions that reveal an indfi9efgfernec to the human condition
You’re now being banned: this is not a place where far right obsessions are played out and that is what you are seeking to present in deeply stereotypical fashion, including the fact that not once have you offered a hint as to how you would control inflation if it were ever to happen (and no, interest rates could not be sued without trashing the bankimng system)
Explain Japan.
Actually you are very wrong.
The reason why people do not believe MMT is possible is because everyday in our media the usual lies and orthodoxy/received wisdom about money is rammed down people’s throats. Even the politicians do not get it because they too have been inducted into faulty flawed thinking.
I ask you this: In a country Who Governs? Who rules?
The authority that can print sovereign money that’s who. The Government, Yet this is denied by the flawed thinking and so called ‘knowledge’ that is rammed down people’s throats every day. MMT IS sovereignty. Right!
MMT maybe outgunned at the moment, but it is not as flawed as the bullshit that has been ruining our lives all these years.
And on these issues I see that you say nothing – no alternatives, no self awareness just a sly acceptance. The enlightenment obviously passed you by. Well, it’s still alive and well and up for a fight.
I was watching the first episode of Succession last night (seems good so far). I had the realisation that inflation is obsessed about so much because it decreases the power of wealthy people.
There’s a scene where one of the brothers vying for his Dad’s company offers a young boy the chance to get a million dollar cheque, if he can hit a home run in their family baseball game. The boy’s Hispanic parents appear to be employed by the wealthy father.
The boy fails to run home, having being caught out at last base.
The vying brother then proceeds to tear up the cheque in front of the boy, and his two parents, in an outrageous and vicious display of his power.
The father, company owner, then secretly hands the kid a $10,000 watch, which he’d just received as a gift from the son in law who had been fielding the base. This initially seemed to be kindness, but in reality the kid had no use for an expensive watch, and the father didn’t want the thing anyway – it being previously explained that he feels disdain for physical things. Presumably money is all that matters to him.
It struct me then that the only reason that any of these people have this power is because of the value of their capital. They don’t care about what their money buys, only what power it can give them over other other people.
And that’s why wealthy people care about inflation so much. Not because it reduces their purchasing power (who cares about that, as a billionaire?) but because it reduces their power over other people who they employ. That’s what matters. The value of money is a complete sideshow, it’s all about keeping the power they have gained, at whatever cost to workers and society.
Thank God for Toby he has written of my concerns far more eruditely than I ever could.
First off, inflation is coming. Maybe you can’t see it but I do every time I go shopping. The thought that costs of additional sanitizers, social distancing and increased staff numbers won’t be passed on by supermarkets seems stranger. These are not benevolent societies.
But far more extreme is the inflation coming from demographic change. Interest rates and unemployment have been low because of the increased numbers of workers. China and fall of the Berlin Wall massively increased the supply ofWestern goods with a new far cheaper workforce.
That work force has become increasingly like our own and want the things that the west has. This turns suppliers into competitors for good and service. At the same time the U.K. has an ageing population and a younger generation ill equipped for the digital economy.
As you insist, MMT describes the economy as it really is. Well up to a point Lord Copper. Tax rises will stave off inflation? First the transmission mechanism is too slow. Second As you say VAT is highly regressive. And third. It will not work when only imposed on super rich, the rich or merely the wealthy. Under the MMT world you suggest we’d have rampant inflation and massive tax rises. I’m sorry PSR, but itll be me and you that suffer, not the super rich super villain you had in mind
You correctly point out that QE hasn’t led to inflation. Given the aftermath of the GFC of course it didn’t. It was designed to prevent deflation and thankfully it did.
Having read economics at uni I have revisited some of my text books also read some Steve Keen and Stefanie Kelton. I’m sorry. It’s snake oil. And worse, whatever you said about the rich and powerful being afraid of it, we know it’ll be tried. I only hope not anywhere near me.
I guess I am probably banned.
You are
For simply being rude
And if that’s what university taught you then you should ask for your money back
Although I would add that research shows that university economics degrees do have the effect of removing most students empathy
What nonsense this is. You really haven’t been keeping up have you?
If monetarism was so good, why has inflation still been a constant pain for Tory Governments despite promoting unemployment and low interest rates? Why? Because they also reduced taxation – the cooling agent for money swilling around in the system (usually in Tory times as credit/debt). Basically because they are tax blind.
Deploying tax as a cooling agent in MMT theory would not be a blunt instrument. If MMT were also able to see an uplift in wage rates, taxation could be be tolerated by society but make no mistake – it’s the larger sums of money we need to be taxing as it just finds itself being used for speculation and causes inflation in certain asset classes (as well as undermining our democracy).
MMT might also enable the tax system to be completely over hauled but make no mistake you cannot have MMT without taxation. That taxation can be fair and proportionate which it is not at the moment.
And like Toby you completely miss out the the sovereignty issue behind MMT – it empowers Government to do its real job – create a society and economy for everyone to benefit – not just those who fund a particular party that represents a particular mind set which is what we have now.
There are well over a dozen taxes to play with
The Monetarist approaches to controlling bank credit creation is:
a) a money target
b) Overnight Interest Rate control
which are both non-solutions.
Not only are they non-solutions, they are deliberately non-solutions. They don’t want to restrict credit growth.
The entire neo-liberal project consists of preventing Governments creating their own money and substituting it with bank credit money that extracts rent from the real economy.
An additional bonus is the inability then of Governments to create full employment which has the desired effect of suppressing wages.
Before Margaret Thatcher the BOE controlled credit growth by directly controlling credit growth.
The BOE “Corset”
“A form of quantitative control was reintroduced in 1973 in the
form of the Supplementary Special Deposit Scheme, also
known as the ‘Corset’. It imposed penalties on banks whose
interest-bearing deposits grew faster than a pre-set limit. The
Corset was abolished in 1980.”
I imagine that, if we face a no deal Brexit cliff edge at the end of the year, there will be a short-term spike in inflation. Which will prompt the likes of the FT to claim: “We told you, inflation is an ever-present threat.”
That risk has already been allowed for in exchange rates – which have collapsed
I do not think it is very hard to understand that it should be the job of the state to run the economy at full employment and that it should do so by adjusting state spending and state taxation accordingly. If there is significant unemployment or significant unwanted inflation then the state is not doing the job. What we may need to do is some ability to make more frequent changes rather than just once a year in a budget. Lord Adair Turner in what was a very MMT lecture in Dublin in 2016 (I think) didn’t call it MMT, but did argue that a job of the BoE monetary policy committee should be to decide each month how much money to add or subtract from the Chancellor’s overdraft account. So if the economy is a bit slow they could add £50 billion, if inflation is a bit too high then remove £50 billion. The chancellor would then have to adjust the spending and tax plans accordingly. It is also very important as to what the state buys and what it taxes. For example if house prices are shooting through the roof then you need a tax that addresses that, for example higher transaction tax or a windfall tax on the capital gains, etc. You won’t control a house price boom by taxing alcohol, for example. Equally building council houses could have a very large multiplier on the economy while spending the same amount via grossly inflated PFI contracts would achieve much less and divert most of the funds to the very wealthy. Gordon Brown spent loads of money, but most of it was just higher wages for state employees which would not achieve much other than higher imports and more holidays abroad. Paying a doctor twice as much does not get any more patients treated, even if the doctor is happier for a short period (though the evidence shows that pleasure with a pay rise fades very fast and it is soon just the ‘normal’).
If you are interested in the talk I can track it down on YouTube. He talked about Japan for a long time and how the 250% of GDP ‘National Debt’ was not a problem and would never be repaid as the Bank of Japan would eventually write off most of it.
I have not looked so much at foreign trade, but I think the issue with countries like Turkey, Argentina and Russia is probably a high propensity to import. While the state can issue currency at will, if the recipients then tend to want to use that currency to import foreign goods then there may well be a problem especially if foreigners are not happy to hold that currency for any period. There will also be a problem if they try to peg the domestic currency (which Argentina had a habit of doing) or seek to cover imports with borrowing in foreign currency by either the state or private sector. Turkey, for example, has massive private sector borrowing in dollars which is now very difficult to repay. The advantage for the UK is that most people are happy to accept payment in pounds and in many cases will also be happy to hold a sterling balance. Obviously the USA is best placed for that with the Chinese sitting on several trillion dollars of US IOUs. Trump is a bit of an idiot since if you can import trillions of dollars worth of goods from China and all you have to do for them is give the Chinese a digital entry in the Fed accounting system, what is not to like? So long as the Chinese just sit on the cash your imports are effectively free.
I think FT is scaremongering, like crying out Weimar Republic. Just read that BoE forecasts negative inflation for August and expects zero inflation for the year.
As I understand it, the Weimar Republic’s problems with hyperinflation were caused by the punitively excessive compensation terms of the Versailles Treaty, which were insisted upon by the French, and strongly criticized by Keynes, and by private bank lending that ran totally out of control.
However the hyperinflation was dealt with, but it was the later massive deflation that created the space for the rise of Hitler and the Nazis.
Finally, I remember reading recently that proposals to moderate the punitive terms of Versailles were kiboshed by advice to the contrary given to Woodrow Wilson by J.P. Morgan.
Plus ca change……
Albrecht Ritschl is an invaluable source on the Weimar catastrophe. It is a good example of the international ‘wisdom’ of poilticians, economists and “statesmen” not adequately understanding what they are doing, or the real consequences of their decisions. In that sense it is all too familiar.
I have selected this extract from Ritschl, ‘Reparations, Deficits, and Debt Default: The Great Depression in Germany’, (2012), because it explains the unfolding international manoeuvres to produce the monetary tragedy in crisp summary form:
“The main observation is that the quick succession of reparation arrangements, each with its own incentive problems and borrowing constraints, created distinct macroeconomic policy regimes. After the gold-based stabilisation under the Dawes Plan of 1924 and a short-lived adjustment crisis, Germany experienced recovery led by large short-term capital inflows. This enabled Germany to pay reparations on credit — an effect soon named the transfer problem, which had been predicted by Keynes and which was discussed controversially with his critics at the time (Keynes, 1922; 1929; Ohlin, 1929). The same capital inflows also allowed Germany to maintain large current account deficits. With monetary policy largely constrained by the Gold Standard, fiscal policy adopted a neutral stance. While it avoided major deficits, it also failed to generate the surpluses needed to effect reparation transfers, a fact which Keynes’ detractors were quick to point out (see Rueff, 1929; Mantoux, 1946). With tighter terms of reparation payments looming under the Young Plan and a substantial amount of accumulated foreign debt, Germany experienced a sudden current reversal in early 1929, accompanied by the first of a series of public debt funding crises. As a consequence, fiscal policy switched to austerity and forced deflation in the summer of 1929. This change came at the hand of the Reichsbank, Germany’s central bank that had been made independent of the government in 1922 and put under international control in 1924. Violating the letter but arguably not the spirit of its statutory rules, the Reichbank in mid-1929 began offering short-term credit to the government but imposed a programme of severe budget cuts, which was adhered to through 1931. The open outbreak of the budget crisis was delayed through an international stabilization loan in connection with the Young Plan, which however imposed similar conditions on fiscal policy (see Ritschl, 2002).”
Given the current high levels of consumer debt a good dose of inflation might be no bad thing so long as incomes can keep up.
Also while inflation generally has been low, there have been significant increases in the price of essentials, food, fuel & housing
Good or bad, I can’t see it happening