Terrific column today Robert. There’s an important contradiction in your analysis that needs pointing out.
You call for a return to an aggressive Keynsianism ala FDR & LBJ. In this you are correct.
At the same time you advance the (mistaken) notion that the deficits caused by GOP billionaire tax cuts will have to be paid back sometime in the future. No. No. No.
The idea that the U.S. economy has to have a “balanced budget” or that “deficits are too big” is how neoliberalism sells austerity.
In fact, the U.S. economy, sovereign in its own currency (USD), does not need to balance the budget at all, ever.
The U.S. has a monopoly on the creation of dollars. Dollars are the world’s reserve currency and U.S. Treasury bills are the worlds safest financial assets.
Unlike a household, corporation or local government the US government isn’t going out of business (unless these ItThings wreck it that bad) so deficits never have to be paid back.
To pay off last year’s deficit the Treasury can (and does) issue new Treasury bills. There have been plenty of times in the past 10-15 years when interest on the 30 day & 90 day notes was NEGATIVE! (The world was willing to absorb so much U.S. Treasury debt that the inflation adjusted rate on those Treasuries was less than Zero).
This is the bare bones insight of Modern Monetary Theory (MMT) and it’s really important for you to understand it. Why? Bc S long as arguments for balanced budgets are taken seriously ***There’s No Room for Aggressive Keynesian economic policy.***
Keynesian demand management requires deficits.
1. If & only if the public sector (government) pumps more demand/income into the economy then is drained out thru private savings + imports that recessions are warded off.
2. IFF deficits are basically ignored then FISCAL policies that build the middle class can be enacted. Otherwise it’s austerity.
3. The function of federal taxes is NOT financing government expenditure. The tax system *should* be working toward massive reductions in Income Inequality. (read Spirit Level, Wilkerson & Pickett)
So basically, if you are advocating for a return to the keynsianism of FDR/LBJ you can’t simultaneously argue that deficits are bad or should be avoided or should be kept to a minimum. Those policy concerns are antithetical.
Stephanie Kelton’s The Deficit Myth is a good starting point. And I’ve written a couple of popular pieces on this topic. Happy to share if you are interested.
Thanks Robert for your hard work and excellent insights.
Terrific column today Robert. There’s an important contradiction in your analysis that needs pointing out.
You call for a return to an aggressive Keynsianism ala FDR & LBJ. In this you are correct.
At the same time you advance the (mistaken) notion that the deficits caused by GOP billionaire tax cuts will have to be paid back sometime in the future. No. No. No.
The idea that the U.S. economy has to have a “balanced budget” or that “deficits are too big” is how neoliberalism sells austerity.
In fact, the U.S. economy, sovereign in its own currency (USD), does not need to balance the budget at all, ever.
The U.S. has a monopoly on the creation of dollars. Dollars are the world’s reserve currency and U.S. Treasury bills are the worlds safest financial assets.
Unlike a household, corporation or local government the US government isn’t going out of business (unless these ItThings wreck it that bad) so deficits never have to be paid back.
To pay off last year’s deficit the Treasury can (and does) issue new Treasury bills. There have been plenty of times in the past 10-15 years when interest on the 30 day & 90 day notes was NEGATIVE! (The world was willing to absorb so much U.S. Treasury debt that the inflation adjusted rate on those Treasuries was less than Zero).
This is the bare bones insight of Modern Monetary Theory (MMT) and it’s really important for you to understand it. Why? Bc S long as arguments for balanced budgets are taken seriously ***There’s No Room for Aggressive Keynesian economic policy.***
Keynesian demand management requires deficits.
1. If & only if the public sector (government) pumps more demand/income into the economy then is drained out thru private savings + imports that recessions are warded off.
2. IFF deficits are basically ignored then FISCAL policies that build the middle class can be enacted. Otherwise it’s austerity.
3. The function of federal taxes is NOT financing government expenditure. The tax system *should* be working toward massive reductions in Income Inequality. (read Spirit Level, Wilkerson & Pickett)
So basically, if you are advocating for a return to the keynsianism of FDR/LBJ you can’t simultaneously argue that deficits are bad or should be avoided or should be kept to a minimum. Those policy concerns are antithetical.
Stephanie Kelton’s The Deficit Myth is a good starting point. And I’ve written a couple of popular pieces on this topic. Happy to share if you are interested.
Thanks Robert for your hard work and excellent insights.
Susan