So if I understand correctly, MMT says that, when the economy has slack (and therefore unemployment) in it, the government should print money to buy stuff until inflation appears, and then should collect taxes to quench inflation. I see three problems - two major and one minor.
First, spending and taxes are controlled by Congress. MMT would therefore ask Congress to manage the economy. That seems like an incredibly bad idea. If you think Congress has done a good job of running the rest of the country, it might sound reasonable. But given Congressional approval numbers, nobody actually thinks that.
Second, this assumes that following this approach will get us to full employment at the same time or before it gets us to inflation. That sounds reasonable... but what if it's wrong? What if, say, the constraint on the economy is physical stuff rather than people? We might be able to have the government hire people to do jobs that don't require any stuff... if they're watching for this kind of problem and respond appropriately. Again, though, it's Congress that's going to be controlling this. Do you really trust them not to mess it up?
Third, a minor note: When inflation starts, shut of the spending, don't just raise taxes. Otherwise, you have the economy hitting the limits, government using a lot of the output of the economy, and what's left for the non-government getting taxed. It would be better for the government to release some of the resources that it's using, and if inflation continues, then tax.
Mostly the economy has built in automatic stabilizers such as unemployment compensation. Recession = less tax receipts = more unemployment, food stamps, etc = bigger deficits untill the deficits are big enough to stimulate growth again.
It would be good to get rid of the debt ceiling which is a ridiculous prop. Congress can do that. Secondly it would be good to give the federal reserve or other independent policy makers the ability to control payroll taxes to stabilize the economy in a pro-cyclical fashion. When the economy is booming, and we want to curtail inflation , increase payroll taxes, when the economy soft, lower payroll taxes.
First, spending and taxes are controlled by Congress. MMT would therefore ask Congress to manage the economy. That seems like an incredibly bad idea. If you think Congress has done a good job of running the rest of the country, it might sound reasonable. But given Congressional approval numbers, nobody actually thinks that.
Second, this assumes that following this approach will get us to full employment at the same time or before it gets us to inflation. That sounds reasonable... but what if it's wrong? What if, say, the constraint on the economy is physical stuff rather than people? We might be able to have the government hire people to do jobs that don't require any stuff... if they're watching for this kind of problem and respond appropriately. Again, though, it's Congress that's going to be controlling this. Do you really trust them not to mess it up?
Third, a minor note: When inflation starts, shut of the spending, don't just raise taxes. Otherwise, you have the economy hitting the limits, government using a lot of the output of the economy, and what's left for the non-government getting taxed. It would be better for the government to release some of the resources that it's using, and if inflation continues, then tax.