by Summary:
Risible. Of course, there is another choice: more deficit spending. Last week, I tried to educate myself on so-called “modern monetary theory.” Embraced by some Democrats, its central thesis seems to be that deficits are not nearly as dangerous as we’ve been led to believe. Here’s the case for that view, as best I can determine.“The biggest mistake we make is thinking of the federal government as a household” that has to repay its debt, says Stephanie Kelton, an economist at Stony Brook University and an adviser in 2016 to Sanders.The United States won’t default on its government debts, because it can always create more dollars — through the Federal Reserve — to honor U.S. Treasury bonds and bills, she says. She rejects the argument that the Fed might generate inflation by flooding the
Topics:
Mike Norman considers the following as important: MMT, MMT criticism, MMT critics
This could be interesting, too:
Risible. Of course, there is another choice: more deficit spending. Last week, I tried to educate myself on so-called “modern monetary theory.” Embraced by some Democrats, its central thesis seems to be that deficits are not nearly as dangerous as we’ve been led to believe. Here’s the case for that view, as best I can determine.“The biggest mistake we make is thinking of the federal government as a household” that has to repay its debt, says Stephanie Kelton, an economist at Stony Brook University and an adviser in 2016 to Sanders.The United States won’t default on its government debts, because it can always create more dollars — through the Federal Reserve — to honor U.S. Treasury bonds and bills, she says. She rejects the argument that the Fed might generate inflation by flooding the
Topics:
Mike Norman considers the following as important: MMT, MMT criticism, MMT critics
This could be interesting, too:
Mike Norman writes Jared Bernstein, total idiot. You have to see this to believe it.
Steve Roth writes MMT and the Wealth of Nations, Revisited
Matias Vernengo writes On central bank independence, and Brazilian monetary policy
Michael Hudson writes International Trade and MMT with Keen, Hudson
Of course, there is another choice: more deficit spending. Last week, I tried to educate myself on so-called “modern monetary theory.” Embraced by some Democrats, its central thesis seems to be that deficits are not nearly as dangerous as we’ve been led to believe. Here’s the case for that view, as best I can determine.
“The biggest mistake we make is thinking of the federal government as a household” that has to repay its debt, says Stephanie Kelton, an economist at Stony Brook University and an adviser in 2016 to Sanders.
The United States won’t default on its government debts, because it can always create more dollars — through the Federal Reserve — to honor U.S. Treasury bonds and bills, she says. She rejects the argument that the Fed might generate inflation by flooding the economy with too much money. To prevent that, inflationary pressures can be offset through higher taxes and interest rates, as occurs today.
The obsession with controlling government deficits hinders us in stabilizing the economy and promoting maximum employment, she contends. This may or may not be good economics, but it’s certainly expedient. No one likes to raise taxes and cut spending, and that may explain why benign neglect of deficits is now going mainstream.…
What’s missing from this picture is old-fashioned prudence.
Bond vigilantes.