Back in 2009, in the wake of the global financial crisis, Steve Scully asked President Obama when America would finally run out of money. The president replied, “We’re out of money now. We’re operating in deep deficits.” (click image to play) Last night, Scott Pelley
Additional funds are but a keystroke away but how will (and how quickly can) they be spent into existence? Cui bono? Can they prevent another Nakba or the meltdown of Israel? Exene Cervenka sang, “Both sides are right. But both sides murder. I give up.......why can’t they??” (X - “I must not think bad thoughts” Still performing w/ original lineup btw!)
None of these people suggests they give consideration to the likely real costs of two wars. I suppose munitions expended is probably a plus for the military-industrial establishment, but what about human lives eaten in conflict, human capacity and real resources diverted to war? What about devastation to the global environment?
"What are the inflationary implications?" Are you kidding me?!! What are the moral implications? Let's take a hypothetical. We can either build a tank or one of those gigantic pieces of construction equipment that the Caterpillar Company produces. Let's stipulate that both products consume the same value of labor, raw materials, and energy inputs. And so when each product rolls off the assembly line, they are, economically speaking, basically a wash.
But what happens next? The tank is used in training exercises (hopefully never in real warfare) and thus consumes fuel and the labor of its crew (army recruits who are being paid)--which produces nothing except for war readiness that enhances national security (we hope). And then the tank inevitably breaks down and needs spare parts that require more labor, energy and raw materials. In other words, the tank produces nothing and sucks value out of the economy--and that's nothing compared to the value it will destroy if it's ever actually used in war.
Meanwhile, the Caterpillar equipment is deployed in building roads, bridges, schools, hospitals, apartment complexes, etc.--all the while adding value to our economy.
The point is not that we shouldn't build tanks. It's just that we need to understand that military procurement is always a shitty economic investment and that we should agree to invest all that is necessary for national defense and not a penny more!
MMT is a profoundly moral way of looking at our economy. It's disappointing to see that it's being used to justify the affordability of 2 wars. I think I understand where Stephanie is coming from (my impression is that she's a wonderful person), but her argument is in dire need of a few caveats.
DEAR DR. KELTON-A PLEA FROM THE AZ WILDERNESS ---THE GENERAL PUBLIC NEEDS EDUCATED/ EXPOSED TO THE BROAD CONCEPTS OF MMT-- MORE SO NOW PERHAPS THAN EVER BEFORE ,WITH THE MAGA REPUBS WILLING TO SHUT DOWN GOV'T BECAUSE OF THE "TRILLIONS OF DEBT BEING PASSED ON TO FUTURE GENS"--MMT'S CORE GROUP, ESPECIALLY DR KELTON ,NEEDS TO BE ON NATIONAL CABLE NEWS OFTEN/REGULARLY ,INCLUDING FOX,IF AT ALL POSSIBLE, WHERE "THE DEFICT MYTH" CAN BE HEARD BY THE MULTITUDES RATHER THAN
BE READ BY A SELECT FEW-PLEASE USE EVERY AVENUE POSSIBLE TO ENTER THE AVERAGE CITIZEN WORLD -YOU AND YOUR COLLEAGUES ARE EXCEPTIONAL PRESENTERS AND WITH AN INTRODUCTION OF MMT TO THE AVERAGE FOLK, LIKE SENIOR ME, CAN MAKE BETTER VOTING DECISIONS AND BE LESS INFLUENCED BY SELF SERVING POLITICAL /ELITE TYPES
My dream is that they see the ultimate war as climate change and they create a clean energy reverse mortgage wherein people can borrow at a one time low fixed finance fee for EVs and solar , a reverse mortgage that they pay off when they sell their homes , where the government eats part of the finance fees just like they eat military spending making it a no brainer for the transition to EVs and solar and a safer environment free from the war on our climate.
Wars only bring death and destruction so we can’t morally afford two wars. But yes, our fiat currency allows us to make numerous bad policy decisions to include going to war over and over again. I remain optimistic that MMT will help us realize a “just and lasting peace” for our country and world.
Nice to get a post, considering that is what we've all subscribed for.
It is with much hope that party apparatchik never enters into the MMT framework. I say this both with respect and as a long time follower from Arliss Bunny and JD Alt epoch.
Hubris, world domination, client states and propaganda arms, as all belligerents feverishly creating and justifying their own narrative. Pause to remember that the first casualty of war is always truth.
Yes it is possible to fund two wars with the worlds strongest fiat currency and the world's biggest economy. All recent administrations have de facto recognized this. MMT morally neutral about how federal dollars are spent. Of course the economy fares far better when those fiat trillions are spent on Biden's IRA and BIL rather than Trump's 2017 give-away to the rich. With respect to military expenditures these are the least labor-intensive uses for federal $. As other commenters point out they are also the most climate-damaging expenditures as well. Do we really need to spend as much on the military as the next 9 nations to maintain our deterrence? And does Israel really need our armaments to enforce its will on Gaza? Yes we can afford it but can the world?
Can US afford another war? Answer - Yes, we can. All we need is Congress authority.
Can US afford Green New Deal, Free College & Universal healthcare? Answer - US has a long term debt problem.
I say we cannot afford any war. It is not the money but the hardware. The Ukrainian proxy war is showing that U.S. weaponry is not very good against the Russian army.
Money can fix most things excepting time. To design, produce, and field better weapons will take time. We are decades away from self sufficiency in modern robust defense armaments.
You are completely delusional and dangerous. Encouraging your Party of War that “we” can fight and pay for two wars with the flick of fiat currency. You actually have the audacity to suggest we think about the inflationary effects later. Nice. Too bad the British didn’t understand what they had before fighting two world wars, losing an Empire and essentially defaulting in the 70’s with inflation over 20% and having to borrow from the IMF. Crazed. It happened.
You actually quote Joe who doesn’t understand what a billion or a trillion means. The dude is a poster board for Elder Abuse. Sad. Joe: “No. We’re the United States of America, for God’s sake. We’re the most powerful nation in the history—not in the world—in the history of the world. The history of the world.” Aren’t we too-the great power that just surrendered in Afghanistan? Maybe Joe forgot. Remember the innocent dropping like flies off of our retreating planes? Crazed. I also like how you laugh off Paul Jones who warns our debt to GDP is over 120%. This time is different, we got fiat. Got it. Did he also mention mortgage rates are approaching 8%. I imaging that doesn’t matter in Groovy where MMT shows that government spending is about political will and “collective goals”. Thank you.
Hey Janet darling, Xi on the line and wants us to finance the trifecta! You got it. Three wars baby. I’m thinking we do the three, proxy the whole thing, universal health, and expended something or another this year. What’s to worry baby, we got fiat currency. What’s that Janet? The bond market is wobbly? The 30 year is down 30%. Not to worry, I’ll call Xi and trade Taiwan for a little love in the next auction. ;) Tell him these wars are all an investment. Throw in some collective BS. He loves that. If that doesn’t work ask him if Justice and the rule of law matters to him. The nutty MMT people use that one too. And hurry. They won’t let Air-force One take off, no price for fuel. They want us to pay In yuan, at Andrews. Crazed.
All fun and games aside, for you to suggest that we can basically finance anything, even two wars, if we have the will and conviction because we got Fiat currency is dangerous. Maybe you should talk about that too in your next missive. You may have forgotten your Hemingway but he characterized bankruptcy as a process that occurs two ways: “ Gradually and then suddenly “. It could happen to us if we continue to take on and finance tomfoolery along with two wars that we potentially cannot finance nor afford because we thought it was all investment and the flick of a keyboard.
We cannot afford two wars.
My understanding is a constraint on the application of MMT is adequate resources. The U.S. lacks the resources for a modern combined arms conflict against a peer adversary.
It is necessary to be able to produce your own weapons. We can't make sufficient artillery rounds for Ukraine, much less adding Israel and the U.S armed forces to the list.
Our air defense technology is decades behind both China and Russia. Stand off shock and awe with subsonic Tomahawk cruise missiles is not going to faze either. My bet is that Iran is immune to a salvo of Tomahawks as well.
Our weapons system in general are overpriced and less than robust in battlefield conditions. (For an example look at the setup required for a salvo of HIMARs missiles versus a Russian Grad system.) These systems depend upon the existence of a surveillance network of satellites and AWACs planes. In an all out war these entities are subject to being eliminated.
Battlefield dominance has shifted to missiles and drones. We are outclassed on both fronts.
So to sum up: despite unbelievable expenditures the U.S. lacks a military that can sustain a high intensity combined arms conflict against a peer military for more than a month. We lack robust weapons in sufficient numbers and the troops trained to use them. Does this country want to lose the potential productive capacity of a generation to a draft and horrific casualties? I hope this question puts a constraint on such a foolish idea.
I hope Dr. Kelton is saying we could, rather than we should.
The more experiences we have the more obvious the reality; MMT is the way it works; not a 'theory'.
Military spending, in a democracy, does result in output for civilian consumption as much as any of the background important tasks that quietly support in the background the people and the civilian, people's economy.
Which is not at all to comment on particular choices, "the forever wars," contracting out production to the mega defence corporations at inflationary rates, or whatever the pet peeve of the old left before it was--starting in the seventies, with taking the wrong side on the one pivotal issue that really did matter, but now come to maturity--taken entirely over by an enless series of cultural fads finally now just designed but to trigger the right and divide the nation.
Please please address the relentless misinformed disinformation produced on this podcast: The Problem With a $2 Trillion Deficit - The New York Times