The post "CMMT - Cate's Modern Monetary Theory" (on Seeking Alpha; free registration required) by Vincent Cate attracted a fair number of comments on the Mike Norman Economics web site. In that post, he presents what he calls CMMT - Corrected Modern Monetary Theory - and he argues that this correction allows MMT to explain hyperinflation. One could probably argue that MMT - as well as mainstream economic theory - do not have standard models that deal with hyperinflation. But that is for the same reason that those bodies of thought do not have standard models to estimate the impact of barbarian incursions along the frontier. It is not to say that foreign incursions do not matter - as the Western Roman Empire can attest - but that such an event is not a serious concern for the industrial economies at present.Bond Economics
I will not attempt to deal with the mechanics of Vincent Cate's model. It appears to based on the quantity theory of money, and it is easy for the reader to validate that the quantity theory has little empirical support. Instead, I want to discuss the theory of hyperinflations.
A MMT View On The Theory Of Hyperinflations
Brian Romanchuk
