Bruce Wilds — Deficit Spending Main Driver Of American Economy!

Another deficit hawk shocked, shocked, shocked by MMT.

Summary

• Wake up America! It is only massive and unsustainable deficit spending that continues driving our economy forward.
• The budget deficit is set to widen significantly in the next few years and in 2020, is expected to top $1 trillion even with healthy economic growth, according to new projections from the nonpartisan Congressional Budget Office.
• The bottom line is that we are in the midst of a "false economy" and it is only by the grace of this massive deficit spending that we are not languishing at the bottom of a deep economic pit.
• The crux of this post is to point out deficit spending is not a silver bullet without consequences and with each step forward, we get closer to the end of the road.
• While those embracing Modern Monetary Theory may argue otherwise, Econ 101 teaches that such actions as we have seen always lead to a very bad place.

The sky is falling! The sky is falling!

"While those embracing Modern Monetary Theory may argue otherwise, Econ 101 teaches that such actions as we have seen always lead to a very bad place." (No citation.)

And Accounting 101 shows why this is wrong. Basic accounting shows that public debt increases private saving. The funding sources is currency issuance. The funds government net spends in aggregate are exactly equal to the funds that the private sector net saves in aggregate. Deficits are self-funding.

If the author had actually read some basic MMT, he would know this.

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Deficit Spending Main Driver Of American Economy!
Bruce Wilds | Long/short equity, long-term horizon, commodities, currencies