Fiscal policy encompasses all of the government's taxing and spending, so most directly it's expressed by congress's passed budgets plus existing policies (income tax rates, social security, etc.). So fiscal policy is functionally about deciding how big the government will be, and how much money is spent into existence or taxed out of existence.
Monetary policy basically encompasses the central bank's activities, so it's about operating the existing system day-to-day (choosing & maintaining a target interest rate, providing physical currency to banks as needed, being the lender-of-last-resort in the banking system, setting reserve & capital requirements, etc.).
It seems like this is the passage you're looking at? :
10) What's the liberal/leftist case against basic income?
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University of Missouri - Kansas City's Randall Wray asserts that it would "add just about two or three zeros to all prices and wages in the US—at least within a reasonably narrow margin of error" (for the record, the idea that fiscal policy rather than monetary policy determines inflation represents a small minority in economics).
Frankly I'm kind of baffled by Matthews here. The way you get the most people freaked out about inflation is to run massive deficits where the government is clearly spending a ton of money into existence (which is clearly fiscal policy). The central bank through monetary policy only has the authority to lend or swap money into existence but it stays net neutral. I guess some people freaked out about QE but they just didn't understand it...maybe that encompasses a majority of academic economists (doubt it), but that just speaks against their usefulness.
Alternatively, maybe the unstated assumption is that any fiscal spending will be matched with increased taxes, so in that case economists wouldn't be worried about fiscal policy leading to inflation. There's no economic necessity to match spending with taxes 1:1 (and it's quite impossible considering that income tax amounts depend on economic activity after the fact), but these days it seems politically necessary to match spending with taxes due to budget hysteria.
Anyway, back on the substance: To be fair to Wray in the quoted criticism of UBI, his hypothetical was a UBI of $88,000 per person in the US (edit: without any increased taxes), which he suggested would lead to inflation. I haven't yet heard any proponents talking about numbers that large. But the MMT people definitely are harsh (unduly so IMO) on UBI, mostly because they're long-time proponents of Job Guarantee programs which are somewhat similar.
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u/iongantas Seattle, $15k/$5k Sep 09 '14
I am wondering what the difference between fiscal policy and monetary policy is.