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The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy
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The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

4.11  ·  Rating details ·  4,758 ratings  ·  840 reviews
A New York Times Bestseller
The leading thinker and most visible public advocate of modern monetary theory -- the freshest and most important idea about economics in decades -- delivers a radically different, bold, new understanding for how to build a just and prosperous society.


Stephanie Kelton's brilliant exploration of modern monetary theory (MMT) dramatically changes o
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Hardcover, 336 pages
Published June 9th 2020 by PublicAffairs
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Popular Answered Questions
Michele No. The writing is straight forward, the language is jargon-free, and MMT is in itself an obvious and easy to understand concept.
Daniel Welch I would argue, yes to a degree. It's all about keeping a countries credibility, when your are a monetary sovereign country this is easier as you don't…moreI would argue, yes to a degree. It's all about keeping a countries credibility, when your are a monetary sovereign country this is easier as you don't have required foreign denominated debt obligations. But as long as the rest of the world views your debt as "reasonable" you can leverage it for investing in your people.(less)

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David Wineberg
Apr 09, 2020 rated it it was amazing
We’ve wasted a century looking at government as if it were a family or a business. It isn’t. As the monopolist controlling American currency, the government doesn’t ever have to worry about running out of money. It can always fund social security and Medicare, and many other programs besides. Instead of fiscal deficits, we should be looking at the deficits in society, because we can do everything to alleviate them with our currency power and expanded deficits. This is the essence of the powerful ...more
Roy Lotz
Deficits can be used for good or evil.

Robert Skidelsky, in his enormous biography of Keynes, remarks that economics today occupies the same position as theology did in the Middle Ages—as a complex a priori logic that can be used to reach any number of contradictory conclusions. The more I read in the subject, the more I agree with him. To be taken seriously in politics means being able to use this logic. And yet, despite the seemingly scientific nature of this language, we seem hardly better
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Milind Hegde
Jun 18, 2020 rated it it was ok
I found this book annoying to read.

The central tenet of modern monetary theory (MMT) is that a monetarily sovereign government, like the United States and maybe a few more, creates currency and so cannot run out of it. In particular, deficits caused by spending in excess of taxation isn't inherently a problem, so long as the spending doesn't cause inflation, which isn't caused by excess currency but by a lack of real, physical resources and production to meet demand. This is definitely an inter
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Peter Tillman
I feel comfortable rating this book "of no possible interest" (to me) based on economist John Cochrane's review at the WSJ, aptly titled "Years of Magical Thinking": https://johnhcochrane.blogspot.com/20... To clarify: I haven't read the book, and don't plan to. But Cochrane's review makes interesting reading. He wasn't impressed. And he is a professional economist, albeit a right-wing one.

Like many of you, I'd vaguely heard of Modern Monetary Theory (aka Magical MT), but payed little attention
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Mehrsa
Jun 18, 2020 rated it it was amazing
I've been following Stephanie Kelton for some time and I think she's one of the smartest people around. The ideas in here are worth reading for anyone sucked into the deficit myth--the idea that we have to "balance the budget" or that the government's budget works like a household. I really appreciate how Kelton covers not just how the US budget works, but also how people on the Hill engage in "pay for" hackery when they know full well that they can just spend but that they need to show the CBO ...more
Sebastian Gebski
Jul 21, 2020 rated it it was ok
(a reminder: I'm NOT rating the MMT, but the book about MMT - there's a huge difference between these two)

I have a few significant problems with "The Deficit Myth":

1. The rhetorics are purely "American style" - which means: "if you repeat something 100 times, readers will treat it as truth, if you don't, they will forget it". Honestly, it felt like the author treats readers like idiots.
2. The initial 2 (or so) chapters were successful in presenting (in a very approachable way) the basics of fisc
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Chaitanyaa From Teatime Reading
As I made my way through The Deficit Myth, I had to stop numerous times, because it felt like my political and ideological underpinnings were being shaken at their cores. The idea that government spending should not be measured and debated in parallel with a family budget made sense to me, but I didn’t understand how. This book explains complex economics and political posturing in digestible terms
It is a book that has the potential to transform public opinion, if it is read. So, I tell you today
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Murtaza
Mar 23, 2021 rated it liked it
This book begins from the seemingly radical premise that as long as a government can issue its own money it need not be concerned with running deficits and can spend as much as it deems fit until inflation starts signalling the need to slow down. Modern Monetarist Theory (MMT) of which Kelton is a proponent argues that demand for national currency is created by the initial act of money issuance and a subsequent requirement imposed on citizens to pay taxes in that currency. Taxes do not fund spen ...more
Gea
Feb 29, 2020 rated it it was amazing
Shelves: netgalley-com
I'm not an economist, or even someone who is savvy about the topic of deficits. One thing I have learned over the years is that conservative politicians rail about the deficit - but only when the other side (Democrats, Liberals, etc.) hold the reins of government. Do a little research and find out for yourself which side usually runs up the deficit. The author is clearly a proponent of MMT, and she knows the subject well, making this book a must read for an introduction to the topic. ...more
Kumail Akbar
I was really looking forward to this book after having followed Professor Kelton on twitter, and after seeing the praise for this book there. However, this turned out to be even more disappointing than I could have imagined. When reading a book written by an economist, it is fair to expect the author to bring to their writing the methods usually employed by the same when publishing in journals. It is fair to expect the author to propose a model and cite its assumptions and limitations, to show h ...more
Debbie Notkin
Jun 29, 2020 rated it it was amazing
Stephanie Kelton is an economist, an economics professor, and a proponent of modern monetary theory (MMT). I've been interested in MMT for a while, and I read a chapbook by Warren Mosler, often described as the originator of MMT. Mosler was persuasive, but also dense and confusing, and I reserved judgment.

What's MMT? Briefly, it is the belief that governments which issue their own currency ("fiat money") should never worry about debts and deficits, as long as the economy has the real material (
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Zoltan Pogatsa
Jun 13, 2020 rated it it was amazing  ·  review of another edition
This book is probably gonna be the Piketty of 2020!
Very easy to read, lots of good examples, simple enough language for any intelligent person to understand.
Kelton, Bernie Sanders' economic advisor, proves how all the austerity of the decades of neoliberalism, including the handling of the eurozone crisis, was unnecessary and harmful.

The state does not run out of money. Money is not the bottleneck. Deficits do not matter. Output capacity matters. What matters is inflation. And inflation can be
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James
Jul 09, 2020 rated it it was ok  ·  review of another edition
If you’re going to read this book, don’t worry if you come away feeling like Gertrude Stein after she visited Oakland.

Although I was disappointed in this book, there were some good points:

First, I listened to the Audible audio book, read by Professor Kelton. She has a pleasant reading voice, even at 1.5X. I especially enjoyed when she imitated teenagers and children talking about monetary theory and macroeconomics.

Second, it was funny. Maybe not intentionally so, but it was funny. My father used
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Wick Welker
We're doing it wrong.

This eye opening work by Kelton, an economist and former democratic economic advisor, is an absolute must read. This book represents a needed paradigm shift from old-school macroeconomic think based on the outdated gold reserve concept and into Modern Monetary Theory (MMT). The fundamental concept of MMT is this: the government should not balance its books like household finances. The main difference between a household budget and the federal government, is that the governme
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Steve
Jan 23, 2021 added it
Before beginning this work on Modern Monetary Theory (MMT), I must admit some preformed thoughts:

‘It works . . . until it doesn’t.’
That Dire Straits song ‘Money for nothing’.
Eddie Murphy in Trading Places, ‘In fact, champagne for everybody, courtesy of Billy Ray Valentine’.
My memories of Argentina’s alluring promises turned to failure – twice.

Professor Kelton does make an interesting case for expanding our thinking around the limits of federal spending and the allocation of our scarce resources
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Heather
Sep 13, 2020 rated it really liked it
This is the sort of book that's capable of changing how you see everything about the way our societies work. A very well explained exploration of the myths that surround economics and the ways in which MMT seeks to refute them. I have no formal economics training whatsoever but having a little understanding of MMT under my belt, I found this to be exactly what I needed to read. We should all be listening to MMT economists instead of letting governments consign so many of us to unnecessary povert ...more
Gary  Beauregard Bottomley
The world changed hugely after this book was published and made this book somewhat superfluous. The pandemic happened and congress passed ‘The Care Act’ for dealing with the pandemic, and they magically created over one trillion dollars out of thin air. There was no talk about ‘bond fairies’, ‘paygo’, nor did anyone take seriously Republicans’ moaning ‘how are we going to pay for it?’. Nobody cared nor should they.

A sovereign state which controls their own currency can create money through fiat
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Frank Theising
Aug 20, 2021 rated it it was ok
Shelves: economics
Well, this book started out promising, explaining to the layman how the Federal budget operates differently than that of a business or a household budget. However, the longer I read the more my opinion of this book fell. The author’s arguments are based on Modern Monetary Theory (which isn’t modern…its been around for at least a 100 years). She takes a simple premise that governments that print their own currency can never run out of money, and then extrapolates from there to explain how deficit ...more
Hank
Jun 10, 2021 rated it it was amazing
I loved this book! I didn't understand it but I loved how Kelton presented information completely foreign to my brain. I will need to read this again (or 10 times) to fully understand what she is getting at but the tldr summary is that deficits are not bad, inflation is, as long as you (Sovereign country) control your own money.

Kelton walks through 5 myths associated with national defecits, all of which I pretty much believed and were a core part of how I viewed monetary policy. My brain hit a w
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Gordon
Sep 09, 2020 rated it it was amazing
How does the US Federal Government raise the money it spends to run its programs, conduct its wars and pay out unemployment benefits? It taxes and borrows, right? No, says this author, that's not how it really works. Since the Federal Government issues its own fiat currency -- "prints" it, as it's usually put -- it can never run out of money, so it really doesn't need to either tax or borrow. It can just spend. For a variety of reasons including the fact that that's the way it's "always been don ...more
Gergo
Jun 16, 2020 rated it liked it
Important topics discussed but the style is really annoying:
-The book seems to argue that everyone is an idiot not understanding how the system works (particularly money creation and public debt).
-MMT is the solution to everything, we were just blind not to see it before.

Actually the ideas offered here are not new, MMT is just a brand created to help selling them (which is fine with me).

I think a better, shorter, more objective write-up on the topic is from Ray Dalio, and it is free to download
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Shriram Venkataraman
Apr 29, 2020 rated it it was amazing
Most of soc dems and leftists already know that we can run massive deficits as the US government controls the dollar and we can't go bankrupt. Give it as a present to your liberal friend who is misinformed. If your friend is a right winger, don't worry about it. They are lost cause. ...more
Robert Campbell
Aug 09, 2020 rated it did not like it
Repetitive shallow political rhetoric. Whatever merits or faults Modern Monetary Theory may have, you won't learn about them in this book. ...more
William Snow
Apr 16, 2021 rated it it was amazing
Shelves: god-tier
What a dangerous book. The Deficit Myth is simultaneously radicalizing and common-sense, in that it transforms the entire way you see the US government and economy by pointing out the facts that have been living right beneath our nose but that we've never appreciated. In short -- and I LOVE that the book came out right before the pandemic so we've already seen it proven right -- money printer really DO go *brrrrrrrrr*.

The book, written ever-so-helpfully by a professor and basically the prophet
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Leah
May 18, 2021 rated it really liked it
Pretty interesting American economic political book.

Kelton definitely made her points, but sometimes it got really boring because it got really repetitive. She also dabbled into more important other "deficits" like education, health, infrastructure etc which I felt wasn't very necessary because the premise of the book is about the financial deficit, but I suppose this bleeds into other facets as well.

Prior to reading this book I didn't even know what Modern Monetary Theory (MMT) was lol so this
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Jose Pedro
Aug 05, 2021 rated it liked it
This book conveys an alternative lens through which to look at the role of government and deficit spending. It was a confusing read: at times interesting and thorough but also repetitive and boring.

The first chapter lays out the most important part of MMT reasoning: the government yields taxes as a way of creating demand for the currency that the government itself issues. This mechanism forces individuals to be socially produtive, in order to find a way of earning money to pay taxes. Since the g
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John Mcjohnnyman
Jul 16, 2020 rated it it was ok
Shelves: politics, economics
My initial impression of MMT prior to this book was that it is purely magical thinking. After reading it, my thinking has changed but not necessarily in a supportive way.

Throughout the book, Kelton tries to stay grounded in reality by sticking to mantras such as "there's no such thing as a free lunch," but by doing so I think that she's just paying lip service to the antiquated thinking she's critical of. Make no mistake, despite raising some qualifiers to avoid having it sound too magical for
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Micyukcha
May 01, 2021 rated it it was amazing
Shelves: kindled
Paradigm-shifting. There will be superior summaries of what this book does from superior reviewers, economists, and writers. So I will write for myself.

For me, grasping the difference between being a currency-issuer vs. currency-user changes the rules and goals of the economy game. The US government is the bank, not a player. Its goal is not to be profitable but rather to provide the incentives and parameters so that the people in the game are productive and well-off (which posits society will t
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Jack Wilson
Oct 30, 2020 rated it really liked it  ·  review of another edition
I’ve always been frustrated by the federal budget and why it was such a big deal when we can print money... and how inflation would be effected as a result. This book satisfied my frustration and showed me the endless possibilities Modern Monetary Theory could have on the macroeconomy.
The unknowns, and potential issues, with MMT are not discussed in great detail and the writing comes across as a bit persuasive at times.
Matthew
A fascinating discourse on Modern Monetary Theory (MMT). Kelton is very persuasive and very clear in her arguments, and I found it easy to get on board with many aspects of this new way of economic thinking. The main sticking point for me is the inflation question, so I wish she'd used some real world examples in her analysis of that issue, but all in all this is a worthy read for econ/public policy nerds no matter where they reside on the political spectrum.

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Stephanie Kelton is an American economist and academic. She is currently a professor at Stony Brook University and was formerly a professor University of Missouri–Kansas City.

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“the government relies on two sources of funding: it can raise your taxes, or it can borrow your savings.” 3 likes
“The debt isn’t the reason we can’t have nice things. Our broken thinking is. To fix our broken thinking, we need to overcome more than just an aversion to big numbers with the word debt attached. We need to beat back every destructive myth that hobbles our thinking.” 2 likes
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