TED Talks Daily The big myth of government deficits | Stephanie Kelton
Sep 9, 2021
Economist Stephanie Kelton, an advocate for Modern Monetary Theory, challenges the stigma surrounding government deficits. She argues that spending shouldn't be viewed as a burden but as essential investment in health care, education, and infrastructure. Kelton emphasizes the need to rethink how we perceive deficits, particularly in light of the pandemic, suggesting they can drive economic growth and societal benefits. She pushes for innovative approaches to public investment in a post-crisis economy, urging listeners to believe in the possibility of change.
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Government vs. Household Budgets
- Governments don't handle money like households.
- Unlike individuals, the federal government can create its own currency and doesn't need to 'find' money to spend.
The Federal Government's Unique Position
- The federal government, as the currency issuer, can never run out of money.
- They can buy anything for sale in their own currency without needing to check their bank account.
Reframing Deficits
- Deficits are typically seen negatively.
- A government deficit represents a financial surplus for another part of the economy.