Untrue, hyperinflation has been a carefully studied phenomenon by many economists and historians. And all the cases of history show that the overproduction of money is always the result and not the consequence of a crisis of hyperinflation.
Baring implacable supply side reasons, it's impossible to have hyperinflation when you've social and political stability and when the government is able to properly tax its own currency.
To claim that that would apply only for the US is to claim ignorance on history, recent and old. There have been many countries throughout the centuries which have practiced fiscal stimulus in order to achieve their various ends, either for peaceful/civilian purposes or for war purposes.
Here's a list of countries which engaged in fiscal stimulus and maintained growth and price stability:
Japan, France, Italy, Germany, China, Romania, the UK, Russia, Paraguay, Iran, South Korea, Ancient Rome (and it worked when they were able to maintain political stability and properly defend their boarders), Thailand, and there are many others.
The fact of the matter remains that the automatic fiscal stabilizers work counter cyclically to correct the economy. So when there's a shortage of AD, it works to enlarge the deficit, when there's a surplus of AD, it works to shrink the deficit. Private debt to GDP is always higher than government debt to GDP and fiscal deficit to GDP. Why don't you see hyperinflation when there's a private expansion? Because there's adequate spare capacity to be used. But you guys argue that when the government does it, in order to cover the private sector spending shortfall (because saving desire is so much higher as a result of the high cost of serving the private sector bank debt), that's going to be automatically and a priori inflationary.
And I explained, it can't be so long as the automatic stabilizers are there. Obviously, sound governments would want to target the GDP output gap and nothing more than that. If you reduce the marginal tax rate from where it is to 5% or 1% and keep spending as it is or increase it, you bet your ass you're going to have hyperinflation. But that's not what antiausterity people are talking about.
A crisis of insufficient or excess demand will ALWAYS be solved via fiscal policy, in the former case via increased fiscal deficit, the latter via lower fiscal deficit, balanced budget, or surplus. And in the times we're living in, we're living in a crisis of inadequate aggregate demand, not lack of resources, not lack of spare production capacity, not lack of labor.
Please reevaluate your stances; you're basically arguing that endogenous money creation at interest by the bankers is noniflationary, but exogenous money creation at interest or 0 interest by the government is inflationary. Please detail the reasoning for this outside of ideological beliefs. Why is it noninflationary when government pays billions and billions in interest on its debt to bankers? And why would it be inflationary if government where to pay those billions to households instead of bankers? Why is it noninflationary when a new loan creates a new deposit? And why is it inflationary when the government fiscal deficit spends? The vast majority of money is created by the private banking system, not by the government. The CB targets a specific price range and allows the quantity of money to fluctuate in order to maintain that price objective. All the money that goes to paying taxes and buying government securities (government debt) all of it comes from government spending.
Why didn't Poland have hyperinflation when it ran 7%+ deficit in '10 and '11?
Why didn't Romania have hyperinflation when it ran 9% fiscal deficit in '10?
Here Warren Mosler takes a graceful stab at Krugman and neoclassical/neoliberal bullshit as well:
http://moslereconomics.com/2014/02/03/th...s-liberal/
By Paul Krugman
February 1 (NYT) — Matthew Yglesias says what needs to be said about Argentina: theres no contradiction at all between saying that Argentina was right to follow heterodox policies in 2002, but it is wrong to be rejecting advice to curb deficits and control inflation now. I know some people find this hard to grasp, but the effects of economic policies, and the appropriate policies to follow, depend on circumstances.
Yes, unemployment- source of the greatest economic loss as well as a social tragedy and a crime against humanity, is always the evidence deficit spending is too low. There is no exception as a simple point of logic. The currency is a simple public monopoly, and the excess capacity we call unemployment- people looking to sell their labor in exchange for units of that currency- is necessarily a consequence of the monopolist restricting the supply of net financial assets.
I would add that we know what those circumstances are! Running deficits and printing lots of money are inflationary
Why the undefined ambiguous empty rhetoric?
and bad
What does ‘bad’ mean here? For example, there is no evidence that inflation rates at least up to 40% hurt real growth, and more likely help it. Politically, however, it may be ‘very bad’. But those are two different things.
in economies that are constrained by limited supply;
Limited supply of what? Labor? Hardly! In fact, full employment is even more critical, if that’s possible, when there are limited supplies of other resources. Wasn’t Rome built without electricity, oil, bulldozers, the IMF, etc. etc.? OK, it took more than a day, but it was built. There is always more to do than people to do it. Economically, unemployment is never appropriate policy.
they are good things when the problem is persistently inadequate demand.
Unemployment is the evidence of this ‘inadequate demand’ which is necessarily created by taxation, the ultimate source of all demand for a given currency. In fact, taxation functions first to create unemployment- people looking for work paid in that currency. That’s how govt provisions itself- it creates people looking for jobs with its taxation, then hires those unemployed its tax created. What sense does it make for govt to create more unemployed than it wants to hire??? Either hire the unemployed thus created, or lower the tax!!!!!!!!!!!!
Similarly, unemployment benefits probably lead to lower employment in a supply-constrained economy; they increase employment in a demand-constrained economy; and so on.
With more that needs to be done than there are people to do it, the economy isn’t supply constrained until full employment. And nominal unemployment benefits are about the level of prices, wages, and the distribution of income rather than the level of potential employment, etc.
So sometimes the relationship and money looks like this, from the best economics principles textbook:

This is more about ‘inflation’ causing ‘money’ as defined.
But sometimes it looks like this:

This is more about partially defining ‘money’ as reserve account balances at the Fed but not securities account balances (tsy secs) at the Fed.
And just to repeat a point Ive made many times, those of us who understood IS-LM predicted in advance that the actions of the Bernanke Fed wouldnt be inflationary, while the other side of the debate was screaming debasement.
It’s not about ISLM, which is fixed fx analysis. It’s about recognizing that there is always precious little difference between balances in reserve accounts at the Fed and securities accounts at the Fed.
There’s something else to be said about Argentina and, it seems, Turkey namely, that were seeing a mini-revival of what Rudi Dornbusch and Sebastian Edwards long ago called macroeconomic populism. This involves, you might say, making the symmetrical error to that of people who think that running deficits and printing money always turns you into Zimbabwe; its the belief that the orthodox rules never apply. And its an equally severe mistake.
Unfortunately most of the ‘orthodox rules’ apply to the fixed fx policies in place when they were first stated, and not to today’s floating fx.
Its not a common mistake these days; a few years ago one would have said that only Venezuela was making the old mistakes, and even now its just a handful of countries. But it is a mistake, and we need to say so.
Yes, mistakes are being made by all of the headline economists and the global economy is paying the price.
More so, during the sovereign debt crisis in the EZ when the Periphery had higher fiscal deficits as % of GDP because of private spending shortfall caused by private debt deflation, why wasn't the euro devaluing or devaluing hyper-actively (hyperinflation)? Why is deflation (not inflation) threatening the Eurozone?
More so, why did 5 years of massive fiscal deficit spending and low interest rates in Nazi Germany between '33 and '38 saw the eradication of unemployment, real wage growth above 10%, economic activity, and all of this in a climate of price stability? Why wasn't there hyperinflation?