But should we tell the masses?
Stephanie Kelton asks, "[D]o we need deficit myths and old-time budgetary religion to protect us in a world of uncertainty?"
Who are "we" and "us" in that question? No doubt you're using them rhetorically, but I fear that could boomerang on you (and, in non-rhetorical sense, us). The Washington Democrats (ranging from Schumer to Pelosi to Manchin) still need those myths to one degree or another. The Washington Republicans need them when they're not in power. As Tonto said to the Lone Ranger, ....
I think the people already in on the secret. As Dick Cheney said, deficits don't matter (i.e., not a political issue). The issue is what people want bigger government to do--start wars and cut taxes, or fight climate change, provide healthcare, etc.? The dangerous piece of the secret might be admitting that we really didn't need taxes to pay for any of it. So, the agonizing tax-filing chore is simply to mop up and destroy some of your excess $.
We (all of us who aren’t bent on social and political domination) have nothing to fear from the masses; rather, what about the right that would prefer to do any number of large projects aimed at heightened social surveillance, Space Force silliness or massive engineering projects designed to blunt the more extreme effects of climate change while charging full steam ahead on fossil fuel use. it’s the right I’d worry about.
After Wallace, New Deal liberals' subsidization of white-flight suburban sprawl, auto bases, red-lined destruction of "minority" business districts, tearing out electric traction (streetcars, interurbans and cargo short lines) ubiquity of segregated schools and Dixiecrats' gatekeeping tag-team kleptocracy: federal, state and municipal (enforced by the courts). We're reminded how Keynesian largess, simply lined pockets of dopplegangster criminals; subjugated Blacks, LatinX, certainly MOST female citizens... as developers undoubtedly accelerated climate change, poisoned air, water, food (especially amongst poor, indentured, media-denigrated or ignored citizens) to maintain a petit-bourgoise managerial, credentialed white voters, while gentrifying Creative Class™ kids into decaying cities; by flipping minority housing.
The vehemence and stubbornness towards MMT seems analogous to the same reluctance to move off the gold standard. Fundamentally, this requires a generational transition in the same manner of the Niels Bohr's remark that physics advances one funeral at a time.
I'd appreciate someone with knowledge of MMT explaining how resource limits will be measured and modeled so that forward planning can occur in pursuit of Govt agendas. How will tradeoffs be measured and modeled so that we can understand the relative benefits of different budgetary allocations?
"If MMT (and Keynes and Tooze) are correct that anything we can actually do, we can afford, then how do we operate in a world where that truth is revealed to the broader public? Are MMT economists too cavalier about the risks of inviting everyone in on the secret? Is honesty really the best policy, or do we need deficit myths and old-time budgetary religion to protect us in a world of uncertainty? Can we trust the MMT framework to guard against excesses?"
I like this framing. It cuts through the noise. Ultimately, if we simplify these questions further, we are asking the following: What kind of a society do we want to live in?
For my part, if we want to live in a just and democratic society, then we have to reveal the truth. To do otherwise is to seek advantage. To do so is to stand in opposition to the egalitarian ethos democracy requires.
I would request that the subject of US dollar as reserve currency be addressed.
While I am in agreement in general with the concept that a sovereign government has no short term limit on its ability to generate revenue in the absence of large foreign currency denominated debts, the existence of trillions of US dollars in the hands of foreigners - both sovereign and private - is real.
Just how many trillions? And just how strong or delicate is the motivation which underlies why these foreigners hold US dollars?
The one scenario I have not seen talked about is some level of loss of faith in the US dollar by these holders and what impact the repatriation of these dollars has on the US economy.
After all, if these holders are non-voting victims of dollar printing - which is to say, inflation export - then a significant reduction of foreign held dollars would constitute a re-import of said inflation.
It is also safe to say that the existence of these foreign-held dollars underwrites some significant degree of US sovereign spending without consequence. Again, if a foreign dollar holder is the non-voting, non-beneficiary recipient of exported inflation/USD devaluation, the trillions of USD held be said foreigners enables far greater US sovereign spending than would otherwise be possible without inflation consequences. And in turn, the management of said foreigners' perceptions of the US dollar and its stability does matter.
"Are MMT economists too cavalier about the risks of inviting everyone in on the secret?" No. The Rs figured it out with the Bush and McConnell-Trump tax cut for the rich.
Thank you for this interesting article. It should be a discussion for every educated student across the globe
McConnell threatens to trigger a default on obligations of the U.S. Treasury by withholding Republican Senator's support for a further postponement of the applicable debt limit. Can't the FED forgive repayment of enough of the Treasury bills it holds to reduce that debt to below the existing limit, and/or purchase enough of such bills, and then forgive their repayment to stay within the limit? If the FED would announce its intention to pursue that policy indefinitely, there would be no need for Congressional action on the debt limit -- ever. If not, why not?
The difficulty becomes how do you explain taxes. If tax revenue supposedly pays for government expenses, that's one thing. (Dubious in practice.) But if the purpose of taxes is to try to bend inequality thru redistribution, then you've got to have a principled theory how that is supposed to work.
We should tell the masses. They won't believe it though, at least not until government admits it.
MMT is factually true, and factual truth should never be withheld or perverted by mismanaged government policy. Even so, It's rejected by the masses on the long and tired tradition of their lies.
Such lying is the primary motivator for corrupting influences staked within the policies of democratically elected representatives, which continually drag the people of this country down into an ocean of societal muck.
If the country ever changes for the better, the people must come to know the factual reality of truth, rather than the Representative corrupt claims of their distorted reality of facts.
Stephanie Kelton offers factual reality, relative to the countries monetary policies, and the mismanagement, and corrections, of same.
The people of the country must come to understand and accept the basis of Its reality. Once accomplished, they can effectively remove the corruption by which they were fooled.
Some years ago I read something where the writer explained why she always preferred Star Trek over Star Wars. The gist of the argument was Star Wars, despite its inconsistent silliness, merely perpetuates an immature belief in an unelected elite who know better and will take care of society (the Jedi). And Star Trek, for all its hokey idealism, at least argues for humans freely creating their future society. It is at least republican, if not democratic.
I liked her argument.
Samuelson thought he and other economists, together with presumably sober-minded politicians, should be our stern parents, our Jedi. What is the point of a republic if the public in our res publica cannot even discuss things freely?