Thursday, April 1, 2021

Book review: 'The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy' — Megan Wildwood

Another positive review.
It’s a common sentiment that printing large amounts of money is a bad thing because it causes inflation. There has been a lot of hand-wringing lately due to the now three COVID-19 relief packages Congress has passed, which have triggered the printing of trillions of dollars. Forty percent of all U.S. dollars currently in existence have been printed in the last year; conventional economics would portend massive increases in prices or inflation, possibly to the point of hyperinflation.

But, as Kelton explains with Modern Monetary Theory (MMT), the existence of dollars by themselves does not cause inflation. Overspending, either on the government’s or the private sector’s part, does. I had to reread the chapters where Kelton explains how and why this is so, but taking the time to understand MMT is completely worth it. She’s clear: MMT does not give the government a license to print however much money it wants whenever it wants; she’s advocating for spending based on our values rather than our budget.

Since Uncle Sam has the legal authority to create U.S. dollars (indeed, he is the only one with that power), MMT frees us from the false constraints of balancing the federal government’s budget the way individual households and even cities and states must. Acknowledging the differences between how a currency-issuing government relates to money and how a private citizen does allows us to have conversations about what we value rather than argue about cutting budgets of vital programs due to an ultimately imaginary lack of funding.
Real Change
Megan Wildwood


Andrew Anderson said...

The "birth of the people's economy"?!

There's a lie for you since the MMT School would INCREASE privileges for the banks and, by extension, for the rich, the most so-called "credit worthy."

Mike Norman said...

"But the U.S. military actually already approaches its budget through an MMT lens: Fiscal increases are easily approved, without always knowing where the money will come from." -Author.

She's exactly right. That question--"How we gonnna pay for it?"--is never asked when it comes to military spending. The money is always there.

Peter Pan said...

Priorities. People's economy would have people-centered priorities. In that situation, military spending would face the question: "Why should we waste resources on that?"