Invited Presentation by L. Randall Wray at the UBS European Conference, London, Tuesday 13 November 2018
Q: These questions about deficits are usually cast as problems to be solved. You come from a different way of framing the issue, often referred to as MMT, which—at the risk of oversimplifying—says that we worry far too much about debt issuance. Can you help us understand where fears may be misplaced?
Wray: First let me say that I think the twin deficits argument is based on flawed logic.
It runs something like this: the government decides to spend too much, causing a budget deficit that competes with private borrowers, driving interest rates up. That appreciates the currency and causes a trade deficit.