# Ep. 149: The Connection Between Government Budget Deficits & Inflation

Page: https://stenobird.com/podcast/infi-the-future-of-finance-6015611/ep-149-the-connection-between-government-budget-deficits-inflation
Text version: https://stenobird.com/podcast/infi-the-future-of-finance-6015611/ep-149-the-connection-between-government-budget-deficits-inflation.md
Podcast: [InFi: the Future of Finance](https://stenobird.com/podcast/infi-the-future-of-finance-6015611)
Published: 2026-08-07T19:00:00+00:00
Episode link: https://e86540bd-c269-4e1c-9977-72fca5cd2809.libsyn.com/ep-149-the-connection-between-government-budget-deficits-inflation
Audio file: https://traffic.libsyn.com/secure/e86540bd-c269-4e1c-9977-72fca5cd2809/InFi_-_Ep._149_-_Bob_solo_on_Deficits.mp3?dest-id=3851883
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Duration seconds: 1746

## Resource

Bob uses a recent tweet from Steve Keen to weigh in on an old controversy. Government deficits don't cause price inflation per se, but they often encourage the central bank to create more money, which is inflationary. The distinction matters: a deficit is a fiscal phenomenon, but the inflation mechanism requires monetary policy—specifically, central bank accommodation of government borrowing. Bob unpacks why Keynesians, Austrians, and MMT economists talk past each other on this question, and where each school gets the causation right and wrong. Related: - https://x.com/ProfSteveKeen/status/2083718398119166163 - https://cdn.mises.org/Making%20Economic%20Sense_3.pdf - https://mises.org/quarterly-journal-austrian-economics/deficit-myth-modern-monetary-theory-and-birth-peoples-economy - https://www.youtube.com/watch?v=oaUlKM1z4kI - https://link.springer.com/article/10.1023/A:1027301323209 Chapters: 0:00 — Intro 0:20 — Steve Keen's tweets on deficits + What deficits are (and are NOT) 6:00 — The role of the central bank: monetizing the deficit 9:40 — Why "deficits cause inflation" is imprecise 13:10 — MMT vs. Austrian economics on money printing 16:50 — Real constraints vs. fiscal constraints 20:05 — Can a government ever run out of money? 23:30 — Historical examples of deficit-driven inflation 27:00 — What Steve Keen gets right (and wrong) 29:35 — The takeaway: deficits, money, and your wallet Watch the video version of this episode here: https://youtu.be/jDMoPoX54mw Subscribe to our YouTube channel: https://bit.ly/3XXfmGS Follow us on Instagram: https://www.instagram.com/infineogroup Follow us on Twitter: https://www.twitter.com/infineogroup Learn more about Infineo at: https://www.infineo.io Audio Production by Podsworth Media - https://podsworth.com

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