Recent inflation was primarily driven by fiscal spending, not the bank-lending credit booms of the 1970s. The Fed’s main tool—raising interest rates—is designed to curb bank lending. This creates a mismatch where the Fed is slowing the private sector to counteract a problem created by the public sector.

The endgame for unsustainable government debt is not austerity but monetization. Albert Edwards argues that political weakness and fiscal incontinence will eventually force central banks to print money to cover debts. This 'fiscal dominance' will mark a return to the double-digit inflation levels of the 1970s.

Despite voter concern over rising national debt, neither political party is incentivized to pursue deficit reduction. The necessary actions—cutting spending or raising taxes—carry immediate negative political consequences, making them highly unattractive policies, especially leading into an election.

Raising taxes or cutting spending are politically impossible for tackling the massive U.S. debt. The only acceptable route for politicians is to print more money, a "soft default" that devalues the currency and effectively acts as a hidden tax on savers and wage earners.

In a democracy with massive debt, reckless government spending becomes inevitable. The electorate will consistently vote for short-term relief (money printing, free programs) over the long-term pain of austerity, making fiscal irresponsibility a predictable outcome of human nature.

Politicians choose rate cuts because balancing the budget is politically unpopular and would trigger an immediate economic crisis. By lowering rates, they can "kick the can down the road," making massive government debt refinancing manageable. This intentionally fuels an "everything bubble" in assets as a preferable alternative to politically unpalatable fiscal responsibility.

The Fed was designed for a supply-side economy. In the current populist era, structural inflation is driven by political demands for wealth redistribution and 'fairness.' The Fed's tools only benefit the wealthy and cannot address this core political issue, rendering it powerless, much like it was in the 1970s.

MMT lacks the transparent, systematic framework of traditional economics. Instead of relying on models or testable hypotheses, its conclusions on debt and inflation are delivered as pronouncements from a small circle of proponents whose judgments change without a clear, replicable process.

Modern Monetary Theory's prescription to raise taxes when capacity constraints create inflation is theoretically sound but politically impossible. Democratically elected governments are congenitally unable to implement austerity after providing stimulus, creating a one-way path to uncontrolled inflation.