Pete Buttigieg and the Myth of Deficit Responsibility — Luke Darby

Stony Brook University economist Stephanie Kelton is a proponent of something called modern monetary theory (MMT), a new school of economics that argues that as long as a country is in charge of issuing its own sovereign currency, it can't "run out of money." According to MMT, if Greece were still using its own currency, the drachma, instead of the euro, then it could have printed more money to pay off its debts, especially if inflation was low to begin with. Instead, as part of the European Union, it had to turn to the European Central Bank which dictated the terms of Greece's bailout.

Kelton argues in the New York Times that the way we think and talk about deficit is entirely wrong. When governments run up deficits, it's because they're pumping money into their economy or spending it on social welfare programs. Kelton writes, "The problem is that policy makers are looking at this picture with one eye shut. They see the budget deficit, but they’re missing the matching surplus on the other side. And since many Americans are missing it, too, they end up applauding efforts to balance the budget, even though it would mean erasing the surplus in the private sector."...

GQ
Pete Buttigieg and the Myth of Deficit Responsibility

Luke Darby