#178 Building An Economy For The People - Unpacking The Deficit Myth Part 7
The MMT Podcast with Patricia Pino & Christian Reilly
Criticism of Modern Monetary Theory's view on deficits
This chapter discusses the main criticism of Modern Monetary Theory (MMT) which stems from MMT's assertion that there are no financial constraints on government spending. Critics argue that deficits only matter as a way to balance government budgets, so if MMT denies the role of deficits, then deficits don't matter. However, MMT actually argues that deficits do matter, but not in the traditional sense of balancing budgets.
Patricia & Christian conclude their conversation about Stephanie Kelton’s best-seller The Deficit Myth.
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LIVE EVENTS!
- “Rethinking Capitalism” weekend event with Dr Steven Hail (Canberra, 26th-27th August): https://modernmoneylab.org.au/events/
- Sign up to the Gower Initiative For Modern Money Studies’ mailing list for updates about their event with Warren Mosler in London on 1st September (details TBC): https://gimms.org.uk/mailing-list/
- Website of the 3rd International European MMT Conference (Berlin, September 9th-10th: https://www.mmtconference.eu/
Relevant to this episode:
- Our “Unpacking The Deficit Myth” series: https://www.patreon.com/posts/47191289
- For more on MMT and the NHS/Medicare4All, listen to: Episode 42 - John T Harvey: The NHS And Healthcare Economics: https://www.patreon.com/posts/33460238 and Episode 96 - Deborah Harrington: The Fight For The NHS: https://www.patreon.com/posts/49819223
- For more on MMT and ecological economics, listen to: Episode 39c - Steven Hail - Green Economics, A Just Transition and The 2020 Sustainable Prosperity Conference https://www.patreon.com/posts/32431123, Episode 108 - Steven Hail & Gabrielle Bond: Achieving Sustainable Prosperity: https://www.patreon.com/posts/54178535, Episode 172 - Steven Hail: Bond Vigilantes! Inflation! The National Debt! The Excuseonomics Killing The Planet: https://www.patreon.com/posts/84572294?pr=true, Episode 138 - Stephen Williams: Economics vs The Planet: https://www.patreon.com/posts/69831268?pr=true, Episode 140 - Michael Hoexter: Hard Money Ideology Won’t Save The Planet: https://www.patreon.com/posts/70471081?pr=true and Episode 141 - Phil Lawn: On Ecological Economics: https://www.patreon.com/posts/70826821?pr=true
- For more on Overt Monetary Financing, read “Overt Monetary Financing – again”, by Bill Mitchell: https://billmitchell.org/blog/?p=32361
- For more on the endogenous money view (the non-fringe, very mainstream view that bank loans create deposits, not the other way around - listen to episode 13 - Steven Hail: Everything You Always Wanted To Know About Banking, But Were Afraid To Ask: https://www.patreon.com/posts/41790887, 126 - Dirk Ehnts: How Banks Create Money: https://www.patreon.com/posts/62603318 and episode 43 - Sam Levey: Understanding Endogenous Money: https://www.patreon.com/posts/35073683
- For more on the MMT Job Guarantee, see “Our Job Guarantee episodes” (below).
- For more on MMT and inflation, see “Episodes on inflation” (below)
For an intro to MMT:
- Our first three episodes: https://www.patreon.com/posts/41742417
- Episode 126 - Dirk Ehnts: How Banks Create Money: https://www.patreon.com/posts/62603318
Quick MMT reads:
- Warren’s Mosler’s MMT white paper: http://moslereconomics.com/mmt-white-paper/
- Steven Hail’s quick MMT explainer: https://theconversation.com/explainer-what-is-modern-monetary-theory-72095
- Quick explanation of government debt and deficit: “Some Numbers Are Big. Let Me Help You Get Over It”: https://christreilly.com/2020/02/17/some-numbers-are-big-let-me-help-you-get-over-it/
For a short, non-technical, free ebook explaining MMT, download Warren Mosler’s “7 Deadly Innocent Frauds Of Economic Policy” here: http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
Order “The Deficit Myth” by Stephanie Kelton: https://www.amazon.co.uk/gp/product/B081JVRT57/ref=dbs_a_def_rwt_hsch_vapi_tkin_p1_i0
Order the Gower Initiative’s “Modern Monetary Theory - Key Insights, Leading Thinkers” (2023): https://www.e-elgar.com/shop/gbp/modern-monetary-theory-9781802208085.html
Order L Randall Wray’s latest book, “Making Money Work for Us” (2022): https://www.amazon.co.uk/gp/product/B0BDCS46BG/ref=dbs_a_def_rwt_hsch_vapi_tkin_p1_i0
Episodes on monetary operations:
- Episode 20 - Warren Mosler: The MMT Money Story (part 1): https://www.patreon.com/posts/28004824
- Episode 126 - Dirk Ehnts: How Banks Create Money: https://www.patreon.com/posts/62603318
- Episode 13 - Steven Hail: Everything You Always Wanted To Know About Banking, But Were Afraid To Ask: https://www.patreon.com/posts/41790887
- Episode 43 - Sam Levey: Understanding Endogenous Money: https://www.patreon.com/posts/35073683
- Episode 84 - Andrew Berkeley, Richard Tye & Neil Wilson: An Accounting Model Of The UK Exchequer (Part 1): https://www.patreon.com/posts/46352183
- Episode 86 - Andrew Berkeley, Richard Tye & Neil Wilson: An Accounting Model Of The UK Exchequer (Part 2): https://www.patreon.com/posts/46865929
Episodes on inflation:
- Episode 7: Steven Hail: Inflation, Price Shocks and Other Misunderstandings: https://www.patreon.com/posts/41780508
- Episode 65 - Phil Armstrong: Understanding Inflation: https://www.patreon.com/posts/40672678
- Episode 104 - John T Harvey: Inflation, Stagflation & Healing The Nation: https://www.patreon.com/posts/52207835
- Episode 123 - Warren Mosler: Understanding The Price Level And Inflation: https://www.patreon.com/posts/59856379
- Episode 128 - L. Randall Wray & Yeva Nersisyan: What’s Causing Accelerating Inflation? Pandemic Or Policy Response?: https://www.patreon.com/posts/63776558
Our Job Guarantee episodes:
- Episode 4 - Fadhel Kaboub: What is the Job Guarantee?: https://www.patreon.com/posts/41742701
- Episode 47 - Pavlina Tcherneva: Building Resilience - The Case For A Job Guarantee: https://www.patreon.com/posts/36034543
- Episode 148 - Pavlina Tcherneva: Why The Job Guarantee Is Core To Modern Monetary Theory: https://www.patreon.com/posts/episode-148-why-73211346
- Quick read: Pavlina Tcherneva’s Job Guarantee FAQ page: https://pavlina-tcherneva.net/job-guarantee-faq/
More on government bonds (and “vigilantes”):
- Episode 30 - Steven Hail: Understanding Government Bonds (Part 1):https://www.patreon.com/posts/29621245
- Episode 31 - Steven Hail: Understanding Government Bonds (Part 2): https://www.patreon.com/posts/29829500
- Episode 143 - Paul Sheard: What Is Quantitative Easing?: https://www.patreon.com/posts/71589989?pr=true
- Episode 147 - Dirk Ehnts: Do Markets Control Our Politics?: https://www.patreon.com/posts/episode-147-dirk-72906421
- Episode 144 - Warren Mosler: The Natural Rate Of Interest Is Zero: https://www.patreon.com/posts/71966513
- Episode 145 - John T Harvey: What Determines Currency Prices?: https://www.patreon.com/posts/72283811?pr=true
More on Silicon Valley Bank and bank runs:
- Episode 162 - Warren Mosler: Anatomy Of A Bank Run: https://www.patreon.com/posts/80157783?pr=true
- Episode 163 - L. Randall Wray: Breaking Banks - The Fed’s Magical Monetarist Thinking Strikes Again: https://www.patreon.com/posts/80479169?pr=true
- Episode 165 - Robert Hockett: Sparking An Industrial Renewal By Building Banks Better: https://www.patreon.com/posts/81084983?pr=true
- MMT founder Warren Mosler’s Proposals for the Treasury, the Federal Reserve, the FDIC, and the Banking System: https://neweconomicperspectives.org/2010/02/warren-moslers-proposals-for-treasury.html
MMT Events And Courses In 2023:
- More information about Professor Bill Mitchell’s MMTed project (free public online courses in MMT) here: http://www.mmted.org/
- Details of Modern Money Lab’s online graduate and postgraduate courses in MMT are here: https://modernmoneylab.org.au/
- Website of the 3rd International European MMT Conference (Berlin, September 9th-10th: https://www.mmtconference.eu/
MMT Academic Resources compiled by The Gower Initiative for Modern Money Studies: https://www.zotero.org/groups/2251544/mmt_academic_resources_-_compiled_by_the_gower_initiative_for_modern_money_studies
MMT scholarship compiled by New Economic Perspectives: http://neweconomicperspectives.org/mmt-scholarship
A list of MMT-informed campaigns and organisations worldwide: https://www.patreon.com/posts/47900757
We are working towards full transcripts, but in the meantime, closed captions for all episodes are available on our YouTube channel: https://www.youtube.com/channel/UCEp_nGVTuMfBun2wiG-c0Ew/videos
Show notes: https://www.patreon.com/posts/86849221?pr=true
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