The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy
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- Author：Stephanie Kelton
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Summary
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 our understanding of how we can best deal with crucial issues ranging from poverty and inequality to creating jobs， expanding health care coverage， climate change， and building resilient infrastructure。 Any ambitious proposal， however， inevitably runs into the buzz saw of how to find the money to pay for it， rooted in myths about deficits that are hobbling us as a country。
Kelton busts through the myths that prevent us from taking action: that the federal government should budget like a household， that deficits will harm the next generation， crowd out private investment， and undermine long-term growth， and that entitlements are propelling us toward a grave fiscal crisis。
MMT， as Kelton shows， shifts the terrain from narrow budgetary questions to one of broader economic and social benefits。 With its important new ways of understanding money， taxes， and the critical role of deficit spending， MMT redefines how to responsibly use our resources so that we can maximize our potential as a society。 MMT gives us the power to imagine a new politics and a new economy and move from a narrative of scarcity to one of opportunity。
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 our understanding of how we can best deal with crucial issues ranging from poverty and inequality to creating jobs， expanding health care coverage， climate change， and building resilient infrastructure。 Any ambitious proposal， however， inevitably runs into the buzz saw of how to find the money to pay for it， rooted in myths about deficits that are hobbling us as a country。
Kelton busts through the myths that prevent us from taking action: that the federal government should budget like a household， that deficits will harm the next generation， crowd out private investment， and undermine long-term growth， and that entitlements are propelling us toward a grave fiscal crisis。
MMT， as Kelton shows， shifts the terrain from narrow budgetary questions to one of broader economic and social benefits。 With its important new ways of understanding money， taxes， and the critical role of deficit spending， MMT redefines how to responsibly use our resources so that we can maximize our potential as a society。 MMT gives us the power to imagine a new politics and a new economy and move from a narrative of scarcity to one of opportunity。
Reviews
Cecilia
，
This book fundamentally changed the way I see economics and i know I will look back on it as formative in my thinking。 I loved the first six chapters deeply， and am completely sold on a federal job guarantee and MMT as a way of thinking。 I felt the final two chapters were a bit repetitive/irrelevant to the core economic points （particularly chapter 7 which really covered a host of societal issues that I am well aware of and to me are not the point of this book） and so I give this book a four sta This book fundamentally changed the way I see economics and i know I will look back on it as formative in my thinking。 I loved the first six chapters deeply， and am completely sold on a federal job guarantee and MMT as a way of thinking。 I felt the final two chapters were a bit repetitive/irrelevant to the core economic points （particularly chapter 7 which really covered a host of societal issues that I am well aware of and to me are not the point of this book） and so I give this book a four starts rather than five as I think staying focused on the fundamental change everyone on all sides of the aisle needs to make in how we think about monetary policy and government spending is more important in this book than advocating for liberal causes （even if I agree）。 This causes are not the focus of this book， aren’t the authors area of expertise， and shouldn’t have been given something like 80+ pages。 。。。more
Robert
，
I LOVED IT！What I liked most is how clear and easy to follow it was。 I have seen the term "Modern Monetary Theory" for a few years but had no idea what it was really about; after reading this it all seems pretty simple and obvious。3 things that particularly stood out to me:（1） Federal Taxes don't fund anything！This is so counterintuitive， but it makes total sense。 （2） The Job Guarantee as automatic stabilizer。 I love it。 Has some similarities to Universal Basic Income。（3） Effect of high interest I LOVED IT！What I liked most is how clear and easy to follow it was。 I have seen the term "Modern Monetary Theory" for a few years but had no idea what it was really about; after reading this it all seems pretty simple and obvious。3 things that particularly stood out to me:（1） Federal Taxes don't fund anything！This is so counterintuitive， but it makes total sense。 （2） The Job Guarantee as automatic stabilizer。 I love it。 Has some similarities to Universal Basic Income。（3） Effect of high interest rate， austerity economics on developing countriesIn the early 1980s（i） The US adopted low tax， low spending economic policies under Reagan（ii） The IMF adopted harsh "Structural Adjustment Programs" to force developing countries to become more "market oriented"。 I had never thought about the connection between these 2 things， but they clearly came from the same place。Now I am not sure if the MMT lens is the only correct way to think about macroeconomics， but it clearly offers a perspective that has been missing so far。 There has been way too much fear-mongering about budget deficits and national debt over the last few decades， it's good to have a counterbalance。 。。。more
Nikola Milutinovic
，
A helpful tool for thinking about how federal governments actually spend， borrow， and tax。 The theoretical parts changed my thinking and confirmed some hunches about the （low） long-term importance of deficits during recessions or periods of slow growth。 However， in normal economic times， I’m not sure the books offers anything useful， as the MMT framework would probably yield the same results as our current inflation control framework。 It is a 5-star book when Kelton is describing theory and maki A helpful tool for thinking about how federal governments actually spend， borrow， and tax。 The theoretical parts changed my thinking and confirmed some hunches about the （low） long-term importance of deficits during recessions or periods of slow growth。 However， in normal economic times， I’m not sure the books offers anything useful， as the MMT framework would probably yield the same results as our current inflation control framework。 It is a 5-star book when Kelton is describing theory and making simple models。 It is a much weaker book when she writes on policy。 The job guarantee stuff is just workfare， and she doesn’t address improving employment insurance or just fixing cash transfers。 At Kelton’s worst， she comes off like Naomi Klein。 。。。more
Tommy Crawford
，
Essential
Levente Nagy
，
Another precious gem to be grateful for。 Thanks for Marsha and her refined taste that ultimately brought my attention to it。 Macroeconomy is an utterly interesting topic。 In this book one gets to understand the monetary part of it， the way it truly functions these days。 It was extremely insightful and well worth another listening/read。Stephanie's proposal advocates a federal job guarantee with fair wages that would virtually eliminate unemployment。 The financing would come from issuing more gove Another precious gem to be grateful for。 Thanks for Marsha and her refined taste that ultimately brought my attention to it。 Macroeconomy is an utterly interesting topic。 In this book one gets to understand the monetary part of it， the way it truly functions these days。 It was extremely insightful and well worth another listening/read。Stephanie's proposal advocates a federal job guarantee with fair wages that would virtually eliminate unemployment。 The financing would come from issuing more governmental bonds （going more into debt） My only sense of lack is rooted from the fact that she has not elaborated enough on the shooting inflectional problem that would naturally follow massive indebtedness。 She only proposes to take up more loan until the point where inflation starts to fly。 But where is that point after all？ But I might have missed something as well。In my opinion overheating of the economy cannot be prevented any other way than with a marked progressive tax system aided by a similarly significant wealth tax for the super wealthy。 I feel like if the proposal laid out in this book combined with the taxation program depicted in "The triumph of injustice" will be implemented by President Biden it could save western democracies as we know it。 To save the climate as well we need to take into consideration the insights of Jason Hickel's “Less is More” and “The Divide” about global injustice， exploitation and resource over use。 What is needed is much less material consumption in the north and the complete dropping of the obligatory GDP growth paradigm。 Instead focus on more equal distribution of goods and foster growth only in sectors and countries where it is truly needed。 。。。more
Elissa Manookian
，
This book was very illuminating， and the writing is accessible to those without a background in economics。 It often felt redundant in the second half of the book， but that also helps drill the information into your mind。 If you feel like it’s getting too repetitive for you by like ch。 4 or 5， skip them and then read the last chapter （ch。 8）。
Amin Mo
，
If I'm to summarize the content of this book which proposes a theory regarding effective economic policy-making， is that it regards a budget deficit to be negligible， and a false indicator of how a government must act for the benefit of the people， whereas an efficient way of approaching economic policy making should strive to leverage government spending in order to resolve certain challenges in the society by maximizing the employment capacity of the country， which is to be achieved via employ If I'm to summarize the content of this book which proposes a theory regarding effective economic policy-making， is that it regards a budget deficit to be negligible， and a false indicator of how a government must act for the benefit of the people， whereas an efficient way of approaching economic policy making should strive to leverage government spending in order to resolve certain challenges in the society by maximizing the employment capacity of the country， which is to be achieved via employing the unemployed in positions that bring value to the country。As demonstrated in the book， such theory - called MMT -， faces many adversaries before being adapted as the classic perception of the economy is that a deficit - which is when a government spends more than it receives from taxation， or when imports exceed exports -， is simply a reflection of an economy that is performing negatively。 One challenging element that made me sceptical to the content of the book， is the idea that printing money can simply resolve any issue， where inflation can be a significant factor to be taken under consideration。 The author does state that issuing money will not seamlessly and casually solve every issue of the economy， and claims that the impediment of inflation can be resolved by proper employment， however， I believe there should have been more emphasis on such aspects。As when it comes to the writing style of the book， I found it to be unappealing， to a point of detesting it from the beginning， which made finishing the book more challenging as I prefer reading with a more academic tendency。 Furthermore， I did not fully-grasp and comprehend the topics of the book， which can be attributed to the writing-style， or the manner in which information was included。All-in-all， the main purpose of a book is to contribute in insight， regardless of the writing-style， therefore， as I find the book to provide beneficial and helpful information， I would rate it five stars。 。。。more
wren
，
everything i believed as a child about money and society？ yeah it was all kinda true。 the more technical aspects of the first two chapters flew over my head， but that just further proves how much this book had shifted my perspective as a previously stem-averse reader。 even reading the terminology i found enjoyable as the author wrote in such an accessible way that wasn't pretentious and lecturing。 the last few chapters really hit me the hardest， and gave me more concrete reasons （as if anymore w everything i believed as a child about money and society？ yeah it was all kinda true。 the more technical aspects of the first two chapters flew over my head， but that just further proves how much this book had shifted my perspective as a previously stem-averse reader。 even reading the terminology i found enjoyable as the author wrote in such an accessible way that wasn't pretentious and lecturing。 the last few chapters really hit me the hardest， and gave me more concrete reasons （as if anymore was needed） of the extent of greed， power， and control。 how literally everything is the way it is for a specific reason for a few。 kinda wild。 read this book。 。。。more
Andy
，
Worth a read whatever side of politics you are on。 It is simply arguing to look at economics in a different way where deficit is not the major driver。。 Australian Conservative Federal Government seems to be agreeing that a huge deficit is not that bad if used for a purpose。 You can always print more money or bonds so long as it does not lead to serious inflation。I have always wondered why we seem to be able to spend madly at times improving infrastructure and at other times we are too scared to。 Worth a read whatever side of politics you are on。 It is simply arguing to look at economics in a different way where deficit is not the major driver。。 Australian Conservative Federal Government seems to be agreeing that a huge deficit is not that bad if used for a purpose。 You can always print more money or bonds so long as it does not lead to serious inflation。I have always wondered why we seem to be able to spend madly at times improving infrastructure and at other times we are too scared to。 Our economic model needs a major overhaul and this is not a bad start。 。。。more
Robert Foley
，
Fascinating read。 It explains very clearly the tenets of mmt and is very persuasive。 It definitely explodes a lot of the lazy criticisms out there。 This book presents mmt as a bit of a panacea and smacks a bit of utopian thinking but it's certainly made me want to learn more and has me very interested to see what happens in the US if Biden continues down the route he's going with massive spending。 Fascinating read。 It explains very clearly the tenets of mmt and is very persuasive。 It definitely explodes a lot of the lazy criticisms out there。 This book presents mmt as a bit of a panacea and smacks a bit of utopian thinking but it's certainly made me want to learn more and has me very interested to see what happens in the US if Biden continues down the route he's going with massive spending。 。。。more
Allison
，
I’m still kind of wrapping my head around the idea of MMT， but this book is an excellent foundation， and I have a feeling it’ll be instrumental for better-understanding the expanding role of government for the next several years。
Mike
，
Modern Monetary Theory （MMT） contends that the government can basically print an unlimited amount of money and solve all the country's ills without the ugliness of inflation or hyper-inflation。 Well， I wanted this explained to me。 I did take some economics in university so I can understand the basics。 Unfortunately， this is not the book to read。 The author skims over the hard stuff without really explaining it so she can get to her left-wing polemics of which there is plenty。 Now， maybe I agree Modern Monetary Theory （MMT） contends that the government can basically print an unlimited amount of money and solve all the country's ills without the ugliness of inflation or hyper-inflation。 Well， I wanted this explained to me。 I did take some economics in university so I can understand the basics。 Unfortunately， this is not the book to read。 The author skims over the hard stuff without really explaining it so she can get to her left-wing polemics of which there is plenty。 Now， maybe I agree with her and maybe not but that is not why I picked up her book。 。。。more
Trevor Pye
，
Worth the read！ Will read again。Not as wonky as I would have liked， but is probably written for an audience that does not have a degree in economics。 The treatment of inflation left a lot of question。 If the medium or long term deficit is not the constraint to fiscal policy。 Rather I inflation is the constraint we really need to understand inflation。Looking for more technical treatment of MMT。
James Chapman
，
Key idea: Inflation is the limiting factor not interest rates
Matt
，
The first half is an excellent primer of MMT’s basic description of how government spending and money actually work。 It is oversimplified but perfect for achieving the book’s mission of reaching people who probably don’t normally study economics。The second half of the book becomes fairly repetitive and basically a standard left-wing wishlist。 At times it seemed to have little to do with MMT。 For me， MMT’s main contribution is explaining how government spending and debt works。 It’s policy proposa The first half is an excellent primer of MMT’s basic description of how government spending and money actually work。 It is oversimplified but perfect for achieving the book’s mission of reaching people who probably don’t normally study economics。The second half of the book becomes fairly repetitive and basically a standard left-wing wishlist。 At times it seemed to have little to do with MMT。 For me， MMT’s main contribution is explaining how government spending and debt works。 It’s policy proposals are interesting， but I think a bit utopian。 A job guarantee， the cornerstone of MMT recommendations， makes sense in theory but it’s pretty difficult to imagine it in practice。 Can you get fired from your government guaranteed job if you suck at it or don’t show up？ While MMT is right that government debt doesn’t crowd out private investment， a job guarantee really could crowd out the private sector by sucking up too much of the labor force into cushy decent-paying government jobs with generous benefits。Criticisms aside， I would 100% recommend this book to anyone interested in becoming a more informed voter。 We need to stop fighting the phantom menace of government debt and start focusing on the real questions and issues of distribution and prioritization。 。。。more
Joey Nedland
，
Phenomenal book that forces one to reconsider the lens through which our government deficit and debt is discussed。 Kelton's core point is that Modern Monetary Theory （MMT） supports government spending without respect to the deficit， *so long as inflationary risks are not imminent*。 Government officials traditionally use the debt as a cudgel， linking tax inflows as the only debits that support government spending to improve the lives of its citizenry。 The thesis that she hammers on repeatedly is Phenomenal book that forces one to reconsider the lens through which our government deficit and debt is discussed。 Kelton's core point is that Modern Monetary Theory （MMT） supports government spending without respect to the deficit， *so long as inflationary risks are not imminent*。 Government officials traditionally use the debt as a cudgel， linking tax inflows as the only debits that support government spending to improve the lives of its citizenry。 The thesis that she hammers on repeatedly is that linking taxation and government spending this way gets it all wrong; the true purpose of taxes is to impose work on citizens （thereby ensuring a consistent supply of real resources in the economy）， and to remove currency from circulation to ease inflationary pressures that government spending creates。So much of the criticism that I see of MMT seems to claim that MMT doesn't properly account for inflationary risk。 It does！ Her whole point， well articulated in this book， is that the United States isn't feasibly at a point where inflation poses a tremendous risk。 In a future world， where the government continues spending and invests in things like infrastructure and green tech， inflationary risk will require curbed spending and increased taxes-- not to directly 'pay for' the spending， but to ensures that real dollars in circulation don't bring inflation to fruition。Hard to think of a book on economics that's this compelling。 Highly recommend。 。。。more
Rick Smith
，
Okay。 I have to admit I only read two chapters of this book。 That's all you need to understand the principles of Modern Monetary Theory and be able to explain it and think tactically and strategically how it could be applied。 It's pretty important to understand right now because a lot of Joe Biden's economic staff are proponents of the theory （ as is Bernie and AOC， etc。。。）。 Basically the theory is that if a state is printing its own money--- how do you run out？ There are some inflationary press Okay。 I have to admit I only read two chapters of this book。 That's all you need to understand the principles of Modern Monetary Theory and be able to explain it and think tactically and strategically how it could be applied。 It's pretty important to understand right now because a lot of Joe Biden's economic staff are proponents of the theory （ as is Bernie and AOC， etc。。。）。 Basically the theory is that if a state is printing its own money--- how do you run out？ There are some inflationary pressures， apparently， but we're not even close to that at this point in time。 The rest of the book？ Speculating on a "Peoples Economy"。 I browsed that。 Nothing really new。 It's a quick read on the theory。 The practice， however， is going to take some discussion and struggle。 。。。more
Aaron He
，
just the first few chapters the book kinda repeating itself。
Steve
，
An excellent book that clearly， concisely， and convincingly presents the case for modern monetary theory as the guideline to building a better more equitable economy and society！
Nikolay Rostov
，
There are some good ideas in this book。 The linkage drawn between national debt and private equity is very interesting and the author's perspective on this is interesting。 It is reminiscent of Mark Blyth， Austerity: The History of a dangerous idea。 Blyth basically says that if Germany keeps saving the rest of the Eurozone will wither。 Kelton argues that if the US government saves， and eliminates its deficit， the private sector， and interestingly developing countries will suffer。 Clinton's surplu There are some good ideas in this book。 The linkage drawn between national debt and private equity is very interesting and the author's perspective on this is interesting。 It is reminiscent of Mark Blyth， Austerity: The History of a dangerous idea。 Blyth basically says that if Germany keeps saving the rest of the Eurozone will wither。 Kelton argues that if the US government saves， and eliminates its deficit， the private sector， and interestingly developing countries will suffer。 Clinton's surplus in 1998 is an interesting example。 The major shortage of the book is that it acknowledges the unique situation of the US as the printer of the global reserve currency rather late。 The book's findings would be hard to apply to many countries outside the US。 。。。more
Brett Steingo
，
Simply put， Kelton’s proposal is to reconfigure the entire （Fed/Congress/Treasury） system， removing all legal and logistical constraints currently preventing government from ‘printing money to pay for social projects’ – specifically universal employment for all that want it at $15 per hour。 Her core claim is both enlightening （only because so many people mistakenly imply otherwise） and tautological: If the government can continue printing money without negatively impacting its value （inflation） Simply put， Kelton’s proposal is to reconfigure the entire （Fed/Congress/Treasury） system， removing all legal and logistical constraints currently preventing government from ‘printing money to pay for social projects’ – specifically universal employment for all that want it at $15 per hour。 Her core claim is both enlightening （only because so many people mistakenly imply otherwise） and tautological: If the government can continue printing money without negatively impacting its value （inflation） then it can pay for anything that is for sale in its currency。 Once we get through the very many complex， related issues， this is obvious: If there is a large group of workers willing to sell the output of their labour in exchange for lines of poetry written by me， then I too can pay for anything as long as I keep producing poetry and the value of my poetry never decreases in the eyes of those buying it。 Kelton strangely spends a lot of time re-iterating （and re-iterating and re-iterating…） the belief that what makes currency issuing governments （like the US） unique is their ability to create money。 As pointed out in various critiques; within an endogenous monetary system， anyone can create ‘currency’ （be it IOU notes， shares in a company， Bitcoin or my poetry）。 She downplays MMT’s far more fundamental assertion – based on a very old idea called Chartalism – that the demand for money is based not on its status as a store of value or a widely accepted medium of exchange， but on government expropriation。 That is， the fact that government demands， by threatening the population with violence， that we all pay taxes in currency issued by themselves。 It is for this reason alone， she believes， that there is demand for US （or any other） currency。 With this in mind I would like to revisit some of the stories used by MMT for illustrative purposes:Kelton recounts Mosler’s story about how he got his kids to perform chores by threatening to remove privileges。 If they could not produce a certain number of his business cards each week， they could not watch TV。 To earn cards， they had to do chores。 Kelton goes so far as to state， quite matter-of-factly， that “Tax is what incentives people to work”！ Think about that。 The incentive we all have… the reason we work according to MMT， is to pay taxes！ Of course， this is ludicrous。 Our incentive to work is to eat… and then of course to clothe ourselves and our families， provide shelter and so on as we move up the hierarchy of needs。 Mosler freely admits that when he first told his kids to work for cards， they ignored him。 They only complied when he threatened them。 Taxes only work at all because most of us choose to accept rewards for our labour in the form of money， which we do because of money’s value as a widely accepted medium of exchange。 Since taxes are （mostly） a percentage of income， we could avoid taxes completely simply by reverting to barter arrangements or finding an alternative medium of exchange （counter-economics）。 What Mosler’s example is missing is that it is not by government privilege that we eat， house and clothe ourselves。 It is by our labour。 In this sense government is not like a household （whereby kids do rely on parents for these things）。 His second-favourite example makes the same mistake。 When talking in a lecture theatre he likes to say （and Kelton recounts）， “If I deploy a gunman at the door and the only way to get out of this room is to give him one of my business cards， I can get you all to work for me in order to procure a business card”。 Well actually， it would be much easier for everyone to overpower Mosler and take his business cards。 Of course， he can stretch the thought experiment by assuming he too is armed and cannot be overpowered but then the gunman at the door is a distraction。 He is simply holding a gun to people’s heads and demanding they do what he wants。 He is nothing but a common mugger。 This is the role to which MMT denigrates government， making all of us nothing but victims。 It completely denies the internal attitude – the real reason why we find money useful （desirable） and the reasons we – to some degree – concede to paying away some percentage of our labour in the form of taxes。 MMT， while well-meaning and pretty-sounding （jobs for all， social security， free money！） actually casts us all as victims and scoundrels （we only pay taxes because we are forced to， and the government / the law is nothing but ‘the gunman writ large’）。 For those of us that believe this not to be the case， there is another explanation: It’s the classical explanation that money is valuable because it is useful as a store of value and a medium of exchange。 When people lose faith in this money （even if the issuer is a monetary sovereign such as the governments of Zimbabwe or the Weimar Republic）， then the value of the currency tends to zero。Mosler makes crass statements （not in the book）， like “We owe China nothing but a bank statement”。 He implies， and Kelton expressly states， that the US could pay off the national debt tomorrow， simply by printing money and paying it out （or， as Kelton says， by pressing some numbers on a keyboard） – because the debt is held in dollars。 She does not properly go into why the debt to China， for example， is held in dollars。 She explains why it is held in Treasuries rather than Reserves， but not why it is in USD rather than Chinese Yuan。 If China started exporting goods on the basis that the US pay only in Yuan， then the debt would be in Yuan and immediately the entire MMT argument （at least with respect to debt to China） would become defunct。 Kelton hints at the idea that China is manipulating its currency but makes no attempt to explain why or to tie this manipulation to the policy of exchanging Chinese-manufactured products for US Treasuries。 Imagine the reaction of the hundreds of millions of Chinese workers who have laboured to produce the goods purchased by American consumers over the last 20+ years at the suggestion that America owes them ‘nothing but a bank statement’。 Treasuries are shares in the US economy and by owning them， China owns a stake in America。 I too can ‘run up my deficit’ by， every year， issuing more shares in my company and diluting current shareholders。 I can even pay my suppliers for their goods by simply creating and handing out more shares for as long as they value them。 However， at some point， those shareholders will convert their shares and insist on payment in a different currency – and/or the value of my shares will deflate to nothing。 The only limitation to printing money， Kelton recommends， should be an “automated mechanism” that measures inflationary pressure on the economy and then reduces spending in response。 She does not go into much detail about how this mechanism would work but the implication is that there would be a commissar of MMT economists who would “program” the “automatic mechanism”。 In effect then， rather than using what the government collects in tax as an indication of how much money can be spent into the economy without causing inflation， she suggests a different measurement – she just doesn’t say what it is。 Kelton spends most of the book challenging the idea that government needs to first tax people in order to spend。 This is technically true， and it would probably improve the level of debate if politicians， economists and others stopped insisting in public that the government has to raise taxes before it can spend。 Of course， tax revenue is linked to the credibility of the currency， but this “Tax then Spend” formulation confuses the issue and subjects decisions to criticism once people realise the simple， technical point Kelton is asserting。 What gets completely obscured in Kelton’s lengthy argument is that anyone can spend before they earn （it’s called credit）。 Anyone can create currency （IOUs， poetry）。 MMT’s underlying belief – not articulated in the book - is about the nature of money and the idea that the reason that government currency maintains its value is because they use guns to force people to pay taxes in that currency。To support her policy proposals， the only serious claim MMT is really making – which is not new at all but is traditional Keynesian thinking – is that government can increase productivity by increasing spending due to latent capacity in the real economy。 Kelton makes the case that there are public goods that America needs – better healthcare， better infrastructure， social security。 The data she presents makes this hard to argue with。 She also argues that government spending in the past has not always – as some neo-classical economists might predict – led to inflation。 So for me， this book was well written， well narrated and engaging but， once the smoke cleared， all the talk of TABS and STAB （‘tax and borrow then spend’ vs ‘spend then tax and borrow’） seems to be a red herring。 The only real question – a source of debate between Austrians and Keynesians for many years prior to MMT – is to what degree the economy can absorb government spending without causing inflation and what the other consequences （like crowding out） might be。 These issues are given relatively little consideration in the book in favour of preaching the message that “government can spend as much as it wants without paying the price”。 This seems like a reckless and misleading message to promote – especially considering its obvious popular appeal。The far more straightforward way to present this proposal would be to show that the proposed government spending would grow the economy and produce real value – that the available workforce of unemployed people have the skills and capacity to run， manage and execute crucial projects – and that the private sector is unable to deliver due to transaction （coordination） costs and the traditionally accepted characteristics of public and （potentially） common goods – i。e。 that they are non-excludable。 Unfortunately， that approach would not justify a new book and certainly would not garner the attention demanded by “The Deficit Myth”。 。。。more
Jeffrey
，
The Deficit Myth is a well-written and accessible primer into MMT。 Kelton writes in a way that avoids overly technical jargon to make this a quite accessible read， with real world examples that help to debunk some common myths surrounding the debates over fiscal policy。Kelton's main message is that a country that issues in debt in its own fiat currency is not bound by the concept of a deficit - simply put it is misleading to try and describe the government budget through the lens of a household The Deficit Myth is a well-written and accessible primer into MMT。 Kelton writes in a way that avoids overly technical jargon to make this a quite accessible read， with real world examples that help to debunk some common myths surrounding the debates over fiscal policy。Kelton's main message is that a country that issues in debt in its own fiat currency is not bound by the concept of a deficit - simply put it is misleading to try and describe the government budget through the lens of a household balance sheet。 Doing so is unhelpful in two ways - first （leaving aside for now the external trade balance）， by definition the government deficit is a surplus for the private sector; secondly， if we take household saving as a virtue， it is logically impossible to for everyone to be in an account surplus - if government debt was paid off there would be no bonds for the private sector to invest in。 Thus， politicians are often engaged in pointless squabbling over the budget deficit - which is not just a waste of time， but also producing negative results。 As Kelton urges:“We need to fix our thinking。 Not just to prevent senseless cuts to programs that support tens of millions of Americans but also to have a more enlightened debate about the full range of things we could accomplish if we weren’t so afraid。” （p80）Instead， Kelton argues， by freeing ourselves from the constrained thinking about budget surpluses and deficits， we should instead be targeting inflation， which gives the true measure of the real resource limits of our economy。 Indeed， the empirical evidence supports Kelton - we have long been below the supposed NAIRU without and inflation。 So she is right we can drive better outcomes for most people。 And to assist the economy in reaching full employment， Kelton proposes a federal jobs guarantee - the federal government should stand ready to employ anyone who wants a job。 This would not only help the government help set minimum labour standards for the rest of the economy， but also help reduce the impact of any down turn in the future， by acting as an automatic stabiliser。 Further this would allow the government to direct resources to specific areas - allowing us to properly address the challenges of our time like climate change and assisting disadvantaged communities。For the most part I agree with Kelton - the current economic malaise has left far too many behind。 Also government intervention is also required in order to drive certain outcomes which then create certain advantages for the rest of society down the line - for example the government employment of women in World War Two which helped to normalise women's workplace participation， or as Kelton herself notes， Kennedy's space program which helped to drive technological innovation that we all reap the benefits from。 However， there are two issues with MMT that would prevent its adoption。 The first is pragmatic - the household balance sheet view will be tough to dislodge。 The availability heuristic means that most people will find it easier to think of a government budget in terms of their own。 Also the political expediency of the myth will probably make it hard to kill off - the need to limit the deficit is embraced by both sides - the right to argue for small government and the left for increased taxation on the wealthy。 The second issue is a theoretical one - how would MMT reign in inflation when we are at or past the resource limit of the economy？ The reason that the inflation mandate was given to independent central banks was that governments have been unwilling to reign in spending in the good times。 Of course， Kelton's universal job guarantee being an automatic stabiliser helps - but that would not prevent other spending being passed。 Even if the electorate was to agree there was a problem， historical experience has not shown many examples of democracy overcoming the problem of a small minority of vested interests （for example NIMBY-ism）。 At the end of the day， the responsibility rests on the electorate at large and given the rise of disinformation， what other safeguards are there。 While central bankers may not be democratically elected， they do possess more technocratic experience。One last point of contention， why does MMT have to stop at a universal jobs guarantee， why not just introduce a Universal Basic Income？ This would help get assistance to the vulnerable people in society， especially those without the ability to work。 Given Kelton's propensity think big， it was disappointing that she did not address the possibility， as well as positives and negatives， of a UBI。Overall Kelton's book does a great job debunking a lot of the current myths surrounding the ability and limitations of the government to spend。 In doing so， she shows that we could do a better job supporting the vulnerable as well as tackling larger issues in society such as inequality and climate change。 Ultimately though， as Bernie Sanders pointed out: “Change never comes from the top down。 It always comes from the bottom up。” Hopefully Kelton's book gets the audience it deserves to help spread the message。 。。。more
Adam Williams
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MMT introduces a much better way to think government deficits for currency issuing governments。 However while Kelton goes into great depths about all the things that can be paid for and all the jobs that can be guaranteed when inflation is low。 She does not spend any time discussing the practical and political issues of having to reduce the government deficit when inflation is high。 Because MMT requires the government deficit to be always at a level to match the productive capacity of the econom MMT introduces a much better way to think government deficits for currency issuing governments。 However while Kelton goes into great depths about all the things that can be paid for and all the jobs that can be guaranteed when inflation is low。 She does not spend any time discussing the practical and political issues of having to reduce the government deficit when inflation is high。 Because MMT requires the government deficit to be always at a level to match the productive capacity of the economy， this will always be an problem。 If it isn't then the deficit is too low。Also what level of inflation are we aiming to achieve: 1。5%， 2% or 5%。 Why any of these in particular？To reduce inflation there are two levers to pull: increase taxation or reduce government expenditure。 But no treasury official or central banker will be willing to stomach the personal political fallout with doing either。 There are so many more questions to be answered before mass adoption of MMT。Hopefully these questions can be answered and inflation safe guards put in place before mass adoption。 Otherwise an MMT economy may be thrown in to an inflationary spiral by a policy maker optimising for their short term career objective。 Then the household budgeting luddites will have won forever。 。。。more
HO
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Kelton likens herself to Copernicus。 Don Quixote is more apt。 Her understanding of economic history is shockingly bad， which is why she presents long debunked ideas as new revelations。
Nick
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The core MMT assumption seems to be that the state can mobilize resources directly as the issuer of currency and so doesn’t need to tax for revenue but to change behavior or spend without issuing more money risking inflation。 It looks circular since the reason we use government money is to pay taxes and we have taxes to get us to use the government’s money。 But if you didn’t have taxes then the state would have to employ resources directly which only really happens during war。 The MMT argument i The core MMT assumption seems to be that the state can mobilize resources directly as the issuer of currency and so doesn’t need to tax for revenue but to change behavior or spend without issuing more money risking inflation。 It looks circular since the reason we use government money is to pay taxes and we have taxes to get us to use the government’s money。 But if you didn’t have taxes then the state would have to employ resources directly which only really happens during war。 The MMT argument is tempting even for conservatives and libertarians as a way to fund government without increasing taxation but this could come at the expense of devaluing currency or directly controlling the means of production while taxing is actually a more indirect means of acquiring resources subject to less discretion。 Most cases of hyperinflation however according to a Cato study are due to debts in a foreign currency or political instability so having a sovereign sound currency is important。 MMT advocates such as the author tend to favor a job guarantee to directly control demand and the labor market but the reasoning could be used to justify a guaranteed income using spending rather than direct control and subject to less discretion。 。。。more
Dave Oakley
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i was getting rusty on my mmt talking points， which just wont do when i start attending large group gatherings and want to drunkenly ramble about it to ppl。 this books a perfect primer/refresher on the big picture ideas behind it
Dylan
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MMT is important and pretty paradigm-shifting the first time you learn about it， but I came into this book familiar with the basics of it， and， based on the pace of it， it does not cover much more than that。 It felt like there was a longer article or video's worth of content in here， drawn out to book length by way of lots of repetition。 MMT is important and pretty paradigm-shifting the first time you learn about it， but I came into this book familiar with the basics of it， and， based on the pace of it， it does not cover much more than that。 It felt like there was a longer article or video's worth of content in here， drawn out to book length by way of lots of repetition。 。。。more
Steve Warsaw
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Kelton spells out what it takes to have an economy for the people。 If nothing， the crisis in 2008 and the Coronavirus in 2020 prove there is a role for government policy in helping all Americans。 Well written and well researched tour-de-force。 It turned the dogma I was taught in B school and economics on it head。 I'm impressed and an MMT convert。 Kelton spells out what it takes to have an economy for the people。 If nothing， the crisis in 2008 and the Coronavirus in 2020 prove there is a role for government policy in helping all Americans。 Well written and well researched tour-de-force。 It turned the dogma I was taught in B school and economics on it head。 I'm impressed and an MMT convert。 。。。more
Noël Coenraad
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challenging and insightful read; however， applying and processing her view on economics will take a couple more reads to fully understand the book。 I recommend it if you have any questions related to money printing and government intervention in markets。
Thomas Trenner
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