The Deficit Myth

I highly recommend this book to everyone who cares about how governments spend and collect money, which should be everyone. The explanations are clear, important, and interesting.

Right from the beginning the story about about where the first US dollar (or any fiat currency) comes from had me hooked on the book. I listened to the audiobook of this one so I don't have kindle highlights. But the gist of this one is: the government could not possibly have taxed people without first spending some dollars in the economy.

The main takeaways for me were

• We don't have to fear deficits, which are just surpluses for private industry.
• Taxes are unnecessary for government spending but serve only to create incentives and disincentives and to redistribute wealth and resources.
• Balancing the budget would limit the supply of Treasuries and, taking the argument to the extreme, eliminating the market in Treasuries is absurd. Everyone should agree that the market in Treasuries stabilizes the dollar and empowers the US.

I want Stephanie Kelton to be in charge of the OMB.

– originally written 2021-02-02

I give this 4 stars because it was pretty readable and I get the idea. Like other nonfiction books I’ve read recently, it felt like it went on a little long, repeated itself, etc. There’s a tendency for personal anecdotes to show up, I guess to try to make things more interesting, but it often feels more like the author trying to showcase their importance when the story doesn’t really add anything.

My takeaways are (with no sense of the strength of the claims cause I’m not that smart):

1. MMT recognizes that a nation with currency sovereignty doesn’t need to worry about a deficit. There’s always more money.
2. The real concern is inflation. You do not have a blank check. You have limited resources (human and otherwise), that need to be taken into account.
3. Congress should manage fiscal policy with inflation in mind, not the deficit. The budget should be deficit agnostic. It should be whatever it needs to be to balance the economy.
4. Sort of tangentially, the author pushes the idea of a federal job guarantee as an alternative to unemployment benefits. These would be jobs related to public works and care. I have so many questions about that idea that she doesn’t answer.