It’s difficult to have a valid opinion on macroeconomics if, like me, you’re not an economist. That’s especially so considering that the world’s leading economists regularly disagree with one another regarding important macroeconomic principles.

A case in point is illustrated by Modern Monetary Theory. The roots of MMT go back to at least 1905, when German economist Georg Friedrich Knapp published “The State Theory of Money.” But its persona today is something like “new kid on the block that’s shaking things up.”

Some regard MMT proponents as in essence a cult. At the very least, it can be said with confidence that they represent a minority of economists.

Among that minority is Stephanie Kelton, an economics professor at Stony Brook University on Long Island. She’s fairly recently emerged as something of a rock star, if such a thing exists in the world of economics. She’s on TV all the time. She has been an adviser to both Senate Democrats and the Bernie Sanders presidential campaign.

Stephanie Kelton

This article arose from a recent lecture by Kelton at Stony Brook that was open to the public, and a subsequent email exchange I had with her.

As noted, I can’t vouch for the validity (or vice versa) of her economic theories. But they are flat-out fascinating. If you fear that the ever-swelling U.S. national debt is a road to fiscal Armageddon, these theories offer an alternative picture: the debt not only does no harm, it’s actually a gargantuan economic stimulus.

The cornerstones of Modern Monetary Theory are that sovereign governments that are the sole supplier of national currency (like the United States) can issue as much currency as they want; have unlimited ability to fulfill promised future payments; and cannot go bankrupt.

As everyone knows, the U.S. government’s promised future payments prominently include the big so-called “entitlements”: Social Security, Medicare, and Medicaid.

In her lecture, Kelton ran a short video containing clips of leading politicians — an equal number of Democrats and Republicans — insisting that the pace of growth in the national debt is unsustainable. Observed Kelton, “They say that Washington can’t agree on anything. That’s baloney.”

But they’re all wrong, she added. She presented a cartoon from 1937, decrying that the national debt had reached $36 billion, followed by examples showing how that opinion never wavered over the decades as the debt grew and grew while America nonetheless prospered.

“Today the gross national debt is $21 trillion and continues to grow,” she said. “The cartoonists, pundits, warnings, and hysteria are still with us. The sky is always falling. They’re scaring us with stories about how it’s unpatriotic, how it’s burdening the next generation, how it’s dooming us to a future of higher taxes, how it’s a catastrophe for the nation.”

Kelton said that what she’s trying to do is “get us to the point where we can open a nice bottle of wine, read the headline that the national debt is at an all-time high, and feel at peace with the world. Because there is no reason to panic.”

People are confused, she said, when they try to compare a household budget — where you get into big trouble if you consistently spend more than you earn — with the government’s deficit spending. “The government can no more run out of money than a carpenter can run out of inches or the scorekeeper at the Stony Brook football game can run out of points,” Kelton said.

The federal deficit, she pointed out, represents the money the government spends into the economy that it doesn’t tax back out. “But guess what?” she said. “The economy has a record as well. It’s the surplus that was created as a result of the government’s deficit spending.” In fact, the bigger the federal deficit, the bigger the surplus for the economy.

She showed a screen with a recent Wall Street Journal headline — “Trillion-Dollar Deficits Could Be the New Normal” — where the word “Deficits” faded out and was replaced with “Surpluses.”

“Don’t you feel better now?” she asked the audience.

The national debt, according to Kelton, is nothing more than the aggregate value of all outstanding Treasury bonds. It’s merely “a historical record of all the dollars that were spent into the economy and not taxed back that are held in the form of Treasuries.”

And if you’re an investor, “they’re very nice to have. They’re safe. They’re liquid. They’re free of default risk. They help you diversify your portfolio. And they pay interest.”

Listening to the lecture, there was lots of information to absorb, and I wasn’t sure I understood everything. So I sent Kelton an email asking: If the government can’t run out of money, why does it need revenue?

Her answer was startling, to my non-economist mind.

“The federal government does not need revenue,” she wrote. “It literally holds the super-patent (if you will) on the U.S. dollar, as Alan Greenspan has explained many times. The government doesn’t need our money. We need their money. Taxes do a lot of things, but providing the government with the money it needs in order to spend isn’t one of them.”

Imagine that.

Money issued by the government is intrinsically worthless, she noted. So, she posed a question: Why should anyone accept that money in exchange for real goods and services? And answered it: people have to accumulate enough of it to pay a variety of taxes. So, currency is essentially a tax credit that functions to monetize the economy.

“If the government added money to the economy but never subtracted any, it would diminish the value of the currency,” she said. “Inflation is the obvious result.” And it’s inflation, rather than a runaway national debt, that’s the real bogeyman — “every central banker’s public enemy number one.”

There’s an economic cycle, she pointed out in the lecture: Congress authorizes a budget. The president signs it. Federal agencies are told how much money they have to spend, and they begin spending it. People receive income as a result of the government spending, on which they pay taxes, and which they can use to buy government bonds, thereby increasing the national debt.

Taxes have other functions too, she noted: to redistribute wealth, to influence some behaviors (like tax incentives for “going green”) and disincentivize others (e.g., taxes on tobacco). Also, taxes are important revenue for state and local governments, which are not currency issuers and definitely can go broke.

I also asked Kelton why, if sovereign currency issuers can’t go broke, have so many European and South American governments teetered on the brink of insolvency in recent years?

Answer: A country “can always pay any obligation that comes due in its own currency. But it can get into trouble when it borrows in currencies it does not control. Argentina and Venezuela borrowed U.S. dollars, Italy borrowed euros, etc. It’s the same reason Detroit and Puerto Rico are in trouble: they’re currency users, not currency issuers.”

One thing a country should absolutely not do, according to Kelton, is aggressively try to pay down its debt. “Here’s a historical lesson,” she said. There have been seven times in U.S. history when the government ran surpluses and commenced paying down debt. Each time, the result was a severe recession or a depression.

Referring to the most recent such occasion, when the government was running a surplus in the latter days of the Clinton Administration and began to pay down debt, “look what happened to the private sector’s financial position. It went deeply into the red.”

Households in effect borrowed too much money on the back of the dot-com bubble and then the housing bubble. But that didn’t and couldn’t last: deficit spending isn’t sustainable when households are doing it. But it’s perfectly sustainable, for decades or centuries, when it’s the federal government that’s running up debt.

So, Kelton concluded, what can we afford? When Bernie Sanders was putting forth his aggressive economic agenda — a trillion bucks for infrastructure, free college tuition for all, Medicare for all — his opponent, Hillary Clinton, was calling it fantastical and out of reach, Kelton recalled.

“In D.C., there is a great deal of pressure to pay for things,” she said. “I wish we were having a very different kind of national debate. There’s nothing to prevent the federal government from creating as much money as it wants and paying it to someone.”

For Kelton, the “how to pay for it” question is a huge, destructive missed opportunity.

“As if that’s the most important question to begin with,” she said. “You’re not debating the merits of the proposal. Because of that question, we never end up having the really important debates.”

Do you feel better now?

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57 responses to “‘The Federal Government Does Not Need Revenue’”

  1. While I understand what she is saying, I think her premise is false because as soon as others don’t accept the currency, which could happen here, then you have a monumental failure. Oh, the surplus during the Clinton administration was basically due to short term rates being lower materially than the longer term rates, and the government exchanged/sold short term notes to replace the long term ones. Worked in the short term, but eventually cause future deficits. That is how many banks in the 70’s got into trouble too.

  2. She said that the national debt is a total of the outstanding treasury bonds issued. The government must pay interest on those bonds, and that amount could exceed a healthy expenditure level elbowing out other programs such as earned entitlements to citizens and defense spending.

    • Well, but her point is that the government can issue any amount of currency it chooses. To pay interest on the bonds, to pay for entitlements, and anything else. It’s pretty tough to get past her argument that people have been scared about the national debt for 100 years and there really have not been any ill consequences whatsoever. What’s the event that’s going to happen that will change that? In fact, the more interest the government pays on Treasuries, the more money goes into (and bolsters) the economy. I wrote the article, I confessed in it that I couldn’t vouch for Modern Monetary Theory, and I couldn’t get every point she made into the article. But she’s very persuasive and she’s got the ear of a lot of economic and political leaders.

      • I think I’m right in saying that Britain has had a deficit since 1694 (?) We’re in a mess at the moment, but it’s not because of the deficit it’s because our politicians are barking mad.

        • Zimbabwe’s debt was not issued in it’s own currency. Therein lies the key-as was mentioned in the article, which it seems you did not actually read.

  3. I totally agree with Louis Sanford. This idea has been debunk many time. I remember being in class in the mid 70’s with a world expert telling us the same thing. I pointed out that while a country can not go internally bankrupt, it can differently go externally bankrupt. Laugh out of class. Then the first Russian bankruptcy. Years later while setting in the same same class and same instructor (I was a faculty member then) and the instructor told the class that he was telling every back then that the free lending to countries was wrong. Take a good look at the weaker EU countries that are in economic trouble. Bankruptcy occurs when you can not pay your debts and you can no longer borrow the shortfall. This can happen to the U.S. Something I hope our leaders and policy makers understand; and get back to real economics and not fad economics.

    • “EU countries that are in economic trouble…”
      Those countries use the Euro; therefore they are currency users, not currency issuers. I don’t think you understand the concept.

    • How can that happen to the US? They do not borrow in other currencies.

      Most US debt is held domestically remember.

      The only thing I can see happening is massive depreciation of the currency vs other currencies and so imports become expensive.

  4. Did you read the whole article? Yes, you can go “externally bankrupt,” in your words, but only if you borrow money out of other economies. She pointed out that the governments that have gotten into economic trouble did so because they borrowed from other countries over which they had no control of their currencies. It’s not in the article, but if they’d stuck to issuing their own currency instead of borrowing from other countries, they presumedly wouldn’t have gotten into trouble. Could be a good reason for rethinking the EU. None of the member countries issue their own currency.

    • True, but the US is a BIG borrower. You can make up any scenario to fit your hypothesis, but what is reality? I believe that the article is about the US not some third world country. Even third world countries have to buy some materials from other countries and if those countries refuse to accept the currency; TROUBLE.

      • Below is a quote from Bill Mitchell, the world’s most prominent MMT economist, from a blog post on Wednesday of this week:

        From http://bilbo.economicoutlook.net/blog/?p=40722

        “This is another myth that is now being advanced by many British Tweeters who are trying to discredit MMT – that ‘MMT only applies to the US’.

        Even John McDonnell’s advisor claimed that.

        I covered that claim in detail in these blog posts:

        1. MMT is just plain good economics – Part 1 (August 9, 2018).

        2. MMT is just plain good economics – Part 2 (August 13, 2018).

        3. 2. MMT is just plain good economics – Part 3 (August 14, 2018).

        So, lets get it straight – again.

        It is certainly a “self-evident” fact that Australia, like all currency-issuing countries that do not borrow in foreign currencies or peg their currencies by any arrangement is sovereign in that currency.

        To say otherwise is to misunderstand what currency sovereignty means.

        The Australian government:

        1. Issues its own currency exclusively. No-one else creates Australian dollar currency.

        2. Requires all taxes and related obligations to be extinguished in that currency.

        3. Can purchase anything that is for sale in that currency at any time it chooses, without financial constraints. That includes all idle labour.

        4. Its central bank sets the interest rate.

        5. The currency floats.

        6. The Government does not borrow in any currency other than Australian dollars.

        QED.

        Self-evident.

        Conclusion: more mindless tripe circulating on Twitter from attention seekers who have nothing constructive to offer.”

      • To my understanding, all U.S. debt is in the form of Treasury bonds. A good chunk of it is owned by other countries, particularly China, but it’s all U.S. currency.

        • Yes but as any mmter would tell you, that’s totally okay, because from a purely financial point of view, the Chinese government is part of the external sector within the us economy. The fact that they own bonds is null and void. They can only use that currency to purchase things as any other currency user would.

          So yes, China owns US bonds and the US will have to pay them. But just because it’s China doesn’t change anything it’s just another person the fed will spend money into giving.

          Further the manufacturing and selling of bonds is entirely arbitrary and self-constrained. If the fed chose to right now it could create money and bonds and then not sell the bonds and just keep them.

          See Steve Keen on potential uses of the fed (public qe, overnight interest rates, etc.)

          But to sum it up in one sentence. If China owns US bonds, then the US can always spend their dollars into existence to pay China those bonds.

    • And why did they borrow from other countries? Could it possibly be that they needed products from those countries that were not obtainable locally? A few countries can get away with being independent of the rest of the world – but you’d better be prepared to trash your iPhone

    • Federal taxes to the government is like oxygen to you and me. Sure, without oxygen, we can’t pay our bills, but we’d be dead, so…

      Similarly, federal taxes are the lifeblood of society. They don’t “fund” things, but they hold our society together. Without them, there’s be much bigger problems than “cam we fund federal programs?”

      • The trick wording is, as you point out in quotes is the verb, “fund”. In the end, the government cannot spend unless their balance sheet balances with entries indicating matching tax revenues. Call it what you want, but that is taxes enabling the funding of government programs. QED

        • That’s the antithesis of MMT. If the government chose to, it could issue currency to spend on anything. Oh wait — they already do that. It’s what happens when a government shutdown nears and the Congress passes an emergency spending bill.

    • Sorry Leonides, You need the tax to take the money out of circulation so there’s room to create some more.

      Otherwise you get rampant inflation. There are good reasons for collecting tax, as the lady says it’s just that raising revenue for government spending isn’t on the list.

    • Taxes are what actually creates demand for a currency. When a government demands that its citizens pay their taxes in the currency issued by that government, thereby denying payment in any other form, the government creates demand for its issued currency. Citizens and businesses are then forced to obtain that currency in order to pay taxes.
      It is also important to note that taxes are used for other purposes as well, such as removing currency to control inflation, incentivize behavior, or to remove distortions in an economy (huge accumulation of currency by oligarchs, for instance).

        • So we need the government to steal from us so they can produce more and more currency out of thin air? What an excellent system because we all know how efficient governments are and how little corruption there is in government.

          How has that been working so far? The US dollar has lost over 95% of its value in the last 100 years; most of that in the last 50 years. Works great for the Feds who get first use of the new currency and academics who get to take credit for central planning.

          • An odd point of view, considering that ALL currency is produced out of thin air. You’re not going to argue that we should go back to the gold standard, are you?

          • Currency backed by something real, as currency was originally derived, is odd?

            To answer your question, I do not argue for a gold standard. I argue that money should be what a free market determines is best.

      • Only problem with your argument is that the money accepted by the government to settle tax obligations is created by private banks.

    • “we can now eliminate the income tax!” Yes, we could, but some other form of taxation would have to be imposed in order to 1) create demand for the currency; 2) discourage unwanted economic behavior, such as speculation and usury; 3) redistribute wealth; and 4) repress economic concentrations of wealth — i.e. redistribute wealth.

      What Kelton and most other MMT theorists usually fail to discuss is the need to apply government indebtedness for purposes that promote the general welfare. Spending $1 trillion to give everyone tickets to attend the Super Bowl would be highly inflationary and would quickly undermine confidence in the currency, leading directly to the type of reactions some people are mentioning here. By contrast, spending $1 trillion to send men and women to Mars would expand national productive capacity by advancing the frontiers of science and technology. Note that this happens even though the “wealth” immediately created by a Mars program is literally shot out of earth’s orbit. As first Treasury Secretary Alexander Hamilton wrote, “To cherish and stimulate the activities of the human mind” is among the best means “by which the wealth of a nation may be promoted.” (1791, Report on Manufactures, Section VI); and “the intrinsic wealth of a nation is to be measured not by the abundance of the precious metals contained in it, but by the quantity of the productions of its labor and industry.” (1790, Second Report on the Public Credit also referred to as Report on a National Bank).

      • If the goal is really to put money in the economy, just get rid of the income tax. All the IRS does is just “cancel” Fed notes. Granted, Treasury notes will go up, but people can stop wasting their time in compliance with an idiotic tax code and turn that time to productivity. That means more asset creation will occur, which will stabilize the ratio of asset to notes. So even though the “deficit and debt” will go up, so will asset creation. That will generate demand for US notes and thus keep inflation and interest rates tame.

          • I have read the article and many others regarding MMT and I’m still absolutely convinced that taxation / confiscation of financial resources from the public is not necessary except where excessive hoarding or corruption is indicated.
            People should pay for services rendered and that does not happen where sociopaths and psychopaths have a right to confiscate finances from the public at gun point.

  5. Her thesis seems to be built on the magical thinking that deficits will produce surpluses, and then we can forget about the deficits. They are 2 sides of the same coin. If surpluses are produced by deficits, they’re not really surpluses if they advance one-on-one. The thesis seems to hinge on the improbable premise that the two can be kept in some kind of undefined ‘balance’, such that the deficits will not get out of hand, and depreciate the currency, feeding inflation.

    But as I read this line of thought, a name kept echoing in my mind: Elizabeth Holmes.

    • I think you are misinterpreting MMT. The point is that the deficit is a federal (i.e., public) deficit. The surplus is a private-sector surplus. Two different things. And, according to the theory, the federal deficit doesn’t matter, because the government can issue more currency at will. As Tom Hickey points out below — and as Ms. Kelton indicated in her lecture, although it was not included in the article — “the US government can always issue the funding to cover obligations like SS. The question is whether there will be ample real goods to cover demand both to satisfy desires and also prevent inflation owing to goods shortages.” That is the only limitation on the government’s issuance of currency.

      • Yes, the question of real goods is a critical question, particularly in an economy in which a growing portion of our ‘goods’ are services. Further, real goods are consumed or depreciate; debt doesn’t. It’s serviced. And to the degree that our ‘goods and services’ are un-real, their value may evaporate in an instant, as in bit-coin-like thingies and our precious tech unicorns. To suggest that there in a chinese wall that safely divides our public debt from our private wealth is the ultimate test of magical thinking. They are two sides of the same national ledger. And, speaking of the Chinese, to what degree do foreign debt-holders unravel, or at least pose a vulnerability, to Ms. Kelton’s simplistic thesis?

        • In point of fact, neither Ms. Kelton, nor Alan Greenspan, nor Steve Mnuchin is a bit concerned about China’s U.S. debt holding.

  6. Good article on MMT. It’s essentially a short lecture by Stephanie Kelton. She is very articulate.

    CFO
    ‘The Federal Government Does Not Need Revenue’
    David McCann

    My comment there:

    A deficit is a flow that leads to changes in the cumulative debt as a stock. Cumulative fiscal deficits lead to cumulative public debt that constitutes the aggregate net financial saving of non-government that is denominated in the currency. This is an accounting identity, since the corresponding identify is that private debt nets to zero. The aggregate net financial assets of non-government is the non-government surplus after payments to the government, mostly taxes but also fees, fines and tariffs.

    Taxation is unnecessary to generate funds for spending by a government that is sovereign in its currency, which implies that the government has monopoly on the currency in its currency zone.

    Then why tax at all? First, taxation drives demand for the currency. Secondly, taxation controls inflation. Taxes can do other things depending on policy, but driving demand for currency and inflation-control are the chief financial reasons for imposing taxation. How taxes are levied is a policy question that is decided politically in a democratic republic. This is decided based on both economic efficiency and effectiveness of policy and also political factors affecting social and economic policy. The goal of policy is conditions that the majority of the electorate wants. This changes over time

    The constraints on currency generation are essentially two-fold. The first is real, as Alan Greenspan pointed out to Paul Ryan at a Congressional hearing on social security. Greenspan told Ryan that the US government can always issue the funding to cover obligations like SS. The question is whether there will be ample real goods to cover demand both to satisfy desires and also prevent inflation owing to goods shortages. The availability of real goods in the future depends on investment in the present and the economic base created by economic policy — education, health care, infrastructure, R&D, etc.

    Treasury security issuance simply drains excess reserves from the payments system run by the central bank, facilitating the cb hitting its target rate when not paying interest on excess reserves that sets the policy rate directly.

    This all fits together as a system. Previous economists and financially astute individuals, like Keynes and Lerner, explained it but this understanding falls outside conventional economics, which regards money (the financial system) as neutral with respect to an economy. So conventional economists model the economy as a barter system of goods being exchanged for good, with money as a “veil.” The chief contribution of Keynes lay in pointing out that a monetary production economy is joined at the hip with money & banking and finance.

    MMT adds little that was not previously known but has been ignored since Milton Friedman and the Chicago School came into prominence. The contribution of MMT is chiefly tying what was previously known together in an explanation of macroeconomics as it related to monetary and fiscal policy to optimize growth, employment and price stability in the current environment, which changed after Nixon shut the gold window for international settlement.

    The financial constraint in addition to domestic price stability (“inflation rate”) is the foreign exchange rate. While the domestic policy rate is under control of the central bank as the monetary authority that sets the policy rate, the foreign exchange rate floats relative to other currencies unless the country chooses to peg or run a currency board. Many factors affect the exchange rate and the misunderstanding of finance and economics leads many to conclude that fundamentals are different than that actually are. Even scratching the surface of this is beyond the scope of a comment since many factors are involved in floating rates. Under gold, the policy rate was causal but not under floating rates. Now it’s a constellation of conditions.

  7. The more money the government issues the less it is worth. In 1932 a dozen eggs cost 18 cents. The sky didn’t fall, but wealth was destroyed on a massive scale. Buy gold.

    • I don’t think so. First of all, there is massively more wealth in America today than there was in 1932. Second, as I pointed out in reply to another comment — and this is also what Alan Greenspan believes — “The US government can always issue the funding to cover obligations like Social Security. The question is whether there will be ample real goods to cover demand both to satisfy desires and also prevent inflation owing to goods shortages.” Issuing more currency doesn’t erode the value of money. Shortages of goods and inflation do that. You can issue more currency without generating inflation if demand for goods is sufficiently high.

      • Surely if you increase the money supply and demand for goods is sufficiently high, then purchasing of those goods will increase – leading to price increases?

          • Increasing or decreasing the money supply is only one small part of the equation.

            There are many tools available to deal with this potential problem. Increase taxes. Sell bonds. Pass laws. Create regulations. Raise or lower interest rates. Do a public service program to encourage or shame behaviors. Think outside of the box.

    • “The more money the government issues the less it is worth.” …IF you tax none back, IF there are not enough resources to handle that extra money, IF the currency is pegged to gold. And many other possibilities as well.

      Money creation is not the only side of this equation.

    • George,

      buy gold by all means, just don’t try to run a monetary system using it as some sort of underpinning, because in reality it too is only a token. It’s real value is virtually zero..and absolutely zero if it’s all you have available to eat.

  8. You can debate opinions, but not facts. People like to debate facts such as that US Federal taxes do not fund US Govt spending, but that’s like debating whether the Earth is round. There are plenty of debates we can have once people accept the facts. For example, with Single Payer Healthcare, we should be debating whether utilization will increase, and whether that will create a shortage of doctors. And what will doctors salaries will be compared to current compensation? And what effect will this have on corporations if they no longer have to subsidize health premiums for workers. Another example, if infrastructure spending is increased, does the US have enough available workers to do the construction and repairs? If not, the US can offer higher compensation, but then those currently employed would leave the private sector for government work. Private firms would then have to offer higher wages, and that scenario could be inflationary. Those are the key issues, not how big the debt or deficit is.

    • Excellent actual points. This is the crux of how insane this policy is. The fact that in this thread – and article- nobody wants to discuss how everything in mmt is a centralized planning of resources and not market based or at least ignores market controls is insane. It’s simply a fairy tale, with a magical device, a mcguffin. As you’ve stated the rubber does hit the road after the academic exercise of playing semantics. As soon as a scarcity or inflationary argument is made, some mmt defender is quick to explain (of course we can’t just give everyone a free car, super bowl tickets etc. That’s why we’ll only give money to the right things, projects,people.) Which is an insane statement and frankly I can’t believe they have the courage or naivete to use it. For all of the ( historical references) in this article, it sure likes to ignore how large scale centralized planning has gone. How fallible people in positions of authority are, nearly without fail. Once you let the Feds decide who gets what and why, you get a lot of hungry, underserved people. MMT, is so patently absurd only self aggrandizing academics could possibly believe that we could maintain this structure in a form that actual produces a positive outcome. Creating the theory of mmt or supporting it in disdain for their perceived lack of value and influence, as innovators, entrepreneurs, business owners succeed (often failing) wildly. You know who’s going to hate this policy? Literally everyone who is hopping on the train now, when the person they hate more then anything is choosing how the money gets spent-issued-taxed. There are no actual controls, just the Federal Govt. deciding how money gets spent. And for everyone who can’t believe anyone would advocate for a asset based currency, use some imagination. Or try understanding supply and demand outside of a fairy tale environment where some altruistic cult of the wisest economists who have ever lived provide everything for everyone in the most equitable way possible. Until they tax it, to spur productivity, or crush an industry they dislike. Or until they oversupply and that retirement you had planned evaporates. I can’t believe people over the age of 19 can even have a conversation about MMT with a straight face. It’s all academic backslapping of how smart we are to have figured out the obvious solution. While ignoring both the nuance and the obvious. Taking all the slush in between and creating a theory that if it was practiced, would collapse (like soviet union magnitude) due to the ineptitude of the committee/person/council who manages it. If not one of a million other reasons. Then 10 years after that some moron would just say true mmt hasn’t been tried yet, that wasn’t real mmt.

      TLDR: Resources are scarce and all the money in the world doesn’t change that. Centralized committees are ALWAYS garbage at distributing it.

  9. Almost all public debt in the US and around the world is because of to much paid interest since 1970. With to much interest I mean only the part of interest above the inflation and 0.2% per year for compensation of the costs for the banks. The government spend about 40% of GDP. When we create this money out of nothing and stop using taxes there will be more inflation than 10% inflation per year.

  10. This makes no sense to me. It’s too good to be true. Every country would binge on its own currency and there would be consequences for their creditors. Nothing is free in life.

  11. Well if ‘the government can never go bankrupt’, tell that to the millions of furloughed government workers during the last US government shutdown, Stephanie

    • The decision to shut down the government and therefore government agencies that are not currency issuers but users (as was stated in the article) was a political not economic decision.

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