Today many people fear that as our government continues to hand out huge amounts of money to ease the effects of the pandemic-induced lockdowns this will inevitably lead to similar austerity measures down the road, with the added concern that because of the size of deficit being generated, the price, the austerity could even more severe.
But Modern Monetary Theory says that austerity does not need to follow deficit spending. Modern Monetary Theory says that a government able to print its own currency, should under such circumstances. Why not? Well there is a the “why not” and that is inflation. So yes, inflation can become a problem when there is too much money in the economy. But if this is well managed, the problem can be avoided.