Discussion on Modern Monetary Theory and Fiscal Policies

Modern Monetary Theory (MMT) has been a significant topic since 2017, suggesting that fiscal policy has virtually no limits except for inflation control. However, the real-world implementation of pulling back on fiscal spending when nearing inflation limits seems unlikely due to political motives favoring increased spending to gain votes. Tighter Fed policy is suggested as a necessary offset to loose fiscal policies. The recent stance by the Fed indicating the delay in rate hikes reinforces the continuation of a reflation trade under loose fiscal and monetary policies.