Won't this cause inflation?

The claim that “money printing causes inflation” conflates two different things: the act of government spending and the conditions under which that spending creates price pressures.

All government spending creates new money. This is how the monetary system actually works, regardless of what economic framework you subscribe to. The question is not whether government spending creates money, but whether that spending exceeds the economy’s ability to produce goods and services.

Inflation occurs when:

• Demand outstrips productive capacity
• Supply chains are disrupted
• Key resources become scarce
• Monopoly pricing power is exercised

The UK experienced high inflation in 2022-23 primarily due to energy price shocks and supply chain disruptions following the pandemic and Ukraine conflict, not because of excessive domestic demand or government spending.

MMT economists have consistently argued for targeting spending toward expanding productive capacity, addressing bottlenecks, and using taxation as one tool among several to manage demand when necessary. A buffer stock of employed labour in the form of a Job Guarantee provides a price anchor that reduces inflationary pressure.