I’m all in with MMTers (and Keynes) on deficit spending to get to full employment. But there’s a bunch of other stuff I don’t get. Here’s my good faith effort to better understand where their arguments are coming from. http://jaredbernsteinblog.com/questions-for-the-mmters/ …
2018 urt. 7
Thanks for the questions, they are good ones. I’ll provide some replies below to each…
4 Structural deficits. The government budget deficit adds financial assets to the non-government sector, as a matter of accounting (in the form of currency, reserves, Treasuries, and other gov liabilities). If people aren’t willing to accumulate those assets, then they will
spend them, buying goods and pushing up employment/output until we hit an inflation limit or even beyond. On the other hand, if there’s a strong desire to accumulate those assets, then people will endeavor to spend less than their income, pushing down employment/output. So, the
gov deficit is providing the financial assets that the non-government sector wants to net accumulate, and there’s no reason to think that the desire to accumulate net financial assets drops to zero at full employment. In other words, a gov budget deficit might be non-inflationary
at full employment, if it’s matched by private savings desires. And particularly when we have legislated incentives for people to save (like tax-advantaged savings accounts and others), that probably makes the necessary full-employment budget deficit larger.
In even plainer English: balance the economy, not the budget. The budget should not be a target. It should be whatever it needs to be for full employment and price stability, even if that happens to be deficits forever. Full employment and price stability should be the targets.
Lol how could a deficit be sustainable long term?
You’ve got to think like a currency-issuer, not a currency-user. Here’s a little analogy: the Metro Authority consistently runs a subway pass-deficit: it gives out more passes (by selling them) than it takes back (by redeeming them). This is because there is always somebody who
would like to accumulate a few passes, or somebody who buys a pass then leaves town without using it. Is this “long-term unsustainable”? Of course not. The Metro Authority isn’t going to “run out” of subway passes. If you or I tried to run subway-pass-deficits however,
(by selling more passes than we buy), eventually we’d run out, or have to borrow some. You and I are users, not the issuer. The rules don’t work the same way.
Here’s a helpful response by @
billy_blogAn MMT response to Jared Bernstein – Part 1
An MMT response to Jared Bernstein – Part 2
(Next: Part 3)
Not to forget the price level is a function of prices paid by gov. And feel free to contact me any time to discuss MMT.
Gehigarria, in An MMT response to Jared Bernstein – Part 2:
One Response to An MMT response to Jared Bernstein – Part 2
Charles Hayden says:
Long time reader, first time commentator.
I’m hoping Jared reads your series in response.
You may not know but a few years back he was on MSNBC on Chris Hayes’ show with Stephanie also as a guest and after she spoke about the need for infrastructure spending, he went on to praise her saying something like “Kelton for President.” So he is a friendly.
I think once we get him thinking about the correct definition of the US dollar supply all else will fall in order. It’s absolutely crazy that people don’t count US treasury securities and US treasury guaranteed agency debt as part of the dollar supply.
Also, I talked with Warren Mosler on facebook and he said he’s offered to meet with Jared in the past and I reiterated that offer as a comment on Jared’s post. This all could be resolved in less than 20 minutes of a face to face discussion.
Thank you for all that you do!