The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy in Daily Show / Colbert Report / Nightly Show / The Opposition

Dec 04, 2022 Andy rated it liked it · review of another edition

The general point about Keynesian economics is important, but this is an annoying book to read. The author repeats her conclusion over and over (the government can't run out of money because it prints it). This repetition doesn't make the case stronger or clearer.
The explanations of what money is NOT are good enough (it's not exchangeable for gold; it's not like a household budget). But to help the reader understand the whole concept, I think there should have been more explanation of what a fi ...more

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Apr 30, 2021 Letitia rated it really liked it

Shelves: 2021-to-read, textbooks, audiobook

Let me start by giving unequivocal kudos to Stephanie Kelton for an incredibly well-written and accessible text on the highly abstract concepts of an economic theory that is only JUST getting widespread attention. While my head was spinning after I finished Pinketty's "Capital," after Kelton's "The Deficit Myth," I find myself pondering concepts that I fully understand, and feel I just need to contemplate further. That is a testament to clear and cogent writing that isn't often found in economic Let me start by giving unequivocal kudos to Stephanie Kelton for an incredibly well-written and accessible text on the highly abstract concepts of an economic theory that is only JUST getting widespread attention. While my head was spinning after I finished Pinketty's "Capital," after Kelton's "The Deficit Myth," I find myself pondering concepts that I fully understand, and feel I just need to contemplate further. That is a testament to clear and cogent writing that isn't often found in economics texts. I might need to study her theory of taxation more, but I think I understand it.

So what do I think of Modern Monetary Theory after all that? I'm not sure. This is the only text I have read to date on the topic, so I leave the book thinking well this sounds great, but is her argument convincing? Am I a full-blown convert to MMT? In one sense, it's an elegant formula, that caters to something economists have known for a long time: the deficit doesn't matter and only serves as a political tool for both parties to leverage in their favor. But does full MMT, the disposal of the idea of a balanced budget, truly work?

Yes, ultimately I think it does. Kelton could not be more correct when she says we are not talking about a household budget here. We are talking about an entity that creates and prints currency. It does not operate by the same rules. This is why accounting is numerical and economics is conceptual. Money is a construct, value is a construct, budgets only apply to entities removed from the inception. In this case, state and local governments would also need to use household accounting tactics, because they cannot in fact create currency the way the Federal government can. But the US Government has no such limitations.

So why do I remain unconvinced that this is the unequivocal way forward? Well, because to my mind MMT functions a bit like nuclear energy. Clearly, nuclear energy is the most efficient, most effective, cleanest, "BEST" solution to the needs of a globe that has massive energy needs and horrible consumption habits. But if you don't handle it flawlessly, perfectly, without a single error, the results are catastrophic.

I think MMT is something like that. Sure, it is the "BEST" economic approach available to us. But if you do not perfectly manage it, down to the percentages of a cent of inflation, then the post-WWII hyperinflation of the Hungarian pengo will be but a fable in the quaint history of global economics as we experience the Dollargeddon brought on by human error or poor prediction in an MMT economy. I COULD BE WRONG ABOUT THIS I'VE ONLY READ ONE BOOK but that is my nearest metaphorical takeaway after this text.

The deficit itself doesn't concern me. As Kelton points out, foreign-held bonds have actually given us a BUFFER against inflation, and none of those debts is actually in any danger of default (because, again, the Federal government literally makes money). But here's a secondary concern to the Dollargeddon mentioned above... the budget does serve as a political tool and doing away with it in the way Kelton proposes comes with some massive benefits...but it also comes with massive losses that force us to reevaluate our entire value system. Not monetary value system: our moral one. For example, I do not want as much Federal spending on the military-industrial complex, or on subsidies for oil. One of the ways that I, and others of my political persuasion argue against that, is through the constraints of budget. If we maintain that a budget is a moral document, that enumerates priorities, then I have the option of pointing to appalling defense spending, compared to the fact that we do not have healthcare, housing security, food security, or in fact fully funded schools in this country. I can make a moral argument for pulling away from one part of the budget, and putting it elsewhere. However, when the budget as such goes away, I don't get that argument anymore. In Kelton's universe, defense spending AND healthcare AND housing AND social security are all fully funded, none withdrawing from the other. That sounds utopian, but it's actually NOT what I want. I would love for there to be less spending on defense, whether or not a corresponding dollar amount goes elsewhere. MMT takes away that political tool as an argument. As much as it seems more authentic and honest to do so, it comes with a cost to political expediency.

That said, there doesn't seem to be any problem funding the military-industrial complex now, even while they claim they have no money for anything else. And it is galling to hear politicians repeatedly claim impotence because there's no money in the budget. They're lying. Surely THEY know they are lying, but do their constituents know it?

I've begun to spin off here, but it's because there's too much to say about this entire concept, and ultimately I think there is incredible value in this book, and MMT deserves further consideration. I'm just not fully signed on as a fan girl yet. ...more

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Dec 31, 2020 Lily marked it as to-read

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Jan 03, 2021 Peter marked it as to-read

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Shelves: current-events, s3, d2, cover-white-70-percent, current-events-economy, cover-white, year-2020, current-events-2020, published-in-06june, 0t-economics

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Aug 29, 2022 Linda marked it as to-read

Shelves: government, business, nonfiction

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