Wednesday, May 11, 2016

David Dayen — Donald Trump Is Right: Deficits Don’t Matter

Trump’s statement sounds a lot like Modern Monetary Theory (MMT), a tenet of economists who believe in de-emphasizing the need for deficit reduction because the U.S. controls its own currency. Balanced budgets, to MMTers, take money out of the hands of ordinary Americans who can put it to more productive use through job creation and consumer spending. The deficit only matters once you reach full employment, when overheated consumer demand can lead to inflation. But we’re nowhere near that point right now, meaning there’s plenty of room for deficits, without any possibility of default.

One MMT advocate, Stephanie Kelton of the University of Missouri-Kansas City, worked for Bernie Sanders in the Senate and now advises his campaign. But even Sanders emphasizes deficit reduction, by promoting higher taxes on the wealthy and Wall Street transactions. Kelton’s worldview, and in this instance Trump’s, goes far beyond even Sanders’s comfort level on the issue.…
If the deficit really doesn’t matter, Democrats would have to live up to their image as the party of the people, and work to provide better opportunities for them. And they would have to spend federal money to do it. Behind the mockery of Trump’s monetary positions is the truth that mainstream Democrats aren’t prepared for the implications of an MMT world. They would rather hold off the left by claiming that their hands are tied because of the deficit.
Such moderation makes the wealthy funders of Democratic campaigns far more comfortable, and it leads many in the media to laud Democrats as the more responsible, serious party. But such cuts don’t lead to more jobs, higher wages, and a better life; spending on infrastructure or health care or education does. Democrats should listen again to Trump’s stray remark for the grain of truth in it: Deficits don’t matter. The sooner the party realizes that, the better off its constituents will be.
Right on, bro! Power to the people!

New Republic
Donald Trump Is Right: Deficits Don’t Matter
David Dayen
ht Kevin Fathi


Matt Franko said...

"Kelton’s worldview, and in this instance Trump’s, goes far beyond even Sanders’s comfort level on the issue.…"

Truer words have never been said.... pretty sad in several ways...

Bob said...

Sanders's comfort level: Hillary