Category Archives: Stephanie Kelton

Krugman, Helicopters, and Consolidation

By Scott Fullwiler and Stephanie Kelton

Paul Krugman has a new post that explains why the debate over money- vs. bond-financing of government deficits is really much ado about nothing.  In it, he essentially echoes longstanding MMT-core principles, as we will show below.  Indeed, MMT blogs have written as much many times previously (for example, see here, here, here, and here).

Krugman’s post looks at two alternative scenarios:

Case 1: The government runs a deficit, selling bonds to offset the shortfall, while the Federal Reserve does QE

Case 2: The government runs a deficit but does not sell bonds, instead financing all of its spending by “printing money” (i.e. with newly created base money)

Continue reading

Mosler Endorses ZIRP. Forever.

By Stephanie Kelton

Warren Mosler, writing for US News & World Reports, makes the case that the Fed should not “normalize” rates or go back to trying to fine tune the economy by raising and lowering the overnight interest rate but, instead, just leave rates where they are.  Let’s see if Warren’s argument will top the list of reader favorites. Read the full article here.

MMT for Toddlers

By Stephanie Kelton

This year’s must-have stocking stuffer. My new MMT Coloring book.

 

Randy Wray and Stephanie Kelton Present at Fields Institute

Randy Wray and Stephanie Kelton presented at Fields Institute at University of Toronto in conjunction with INET. The conference was Mathematics for New Economic Thinking. The presentation links below will take you to Field’s site where slides appear side by side with the video. Below the links to the videos are links to view and download PDF versions of the slides as well.

Randy Wray’s presentation, “The Nature of Money: A Series of Debits and Credits” can be viewed here.

Stephanie’s presentation, “Fiscal Space and Financial Stability: A Differential Analysis” can be viewed here.

Randy’s slides are available here.

Stephanie’s slides are available here.

 

Rotten Title, Great Summary of My Talks on MMT

By Stephanie Kelton

As much as I dislike the title of this article from Advisor Perspectives, the essay itself is a good overview of the talks I’ve been giving at national, regional and chapter meetings of the Financial Planning Association (FPA) over the past year-and-a-half. I wasn’t aware that Veras was working on a piece and didn’t see it until it was published (or I would have implored him to change the title!). I wanted to share the piece but only after this word of caution: I would not and did not say, “deficits don’t matter,” as you’ll discover if you read the entire piece. This is a touchy subject for MMTers, who’ve been (wrongly!) accused of taking the position that “deficits don’t matter.” Randy Wray made the MMT position crystal clear years ago, and I told Dan Jamieson the same thing when he interviewed me for a similar piece in Investment News:

InvestmentNews: Are MMT theorists saying deficits don’t matter?

Ms. Kelton: Deficits do matter, but not in the way people think.

So with that flashing neon disclaimer in place, here’s Veras’ article from Advisor Perspectives.

Former Dept. Secretary of the U.S. Treasury Says Critics of MMT are “Reaching”

By Stephanie Kelton

A few weeks ago, I had a lengthy e-mail exchange with Frank N. Newman, former Deputy Secretary of the U.S. Treasury. Frank’s books (here and here) are so closely aligned with MMT thinking about deficits, debt, monetary operations, etc. that I wanted to get his thoughts on one of the most common criticisms of MMT. MMT recognizes that the currency itself is a simple public monopoly and that the issuer of the currency must spend (or lend) it into existence, before it can be used to pay taxes or buy bonds. The implication? Governments that issue sovereign money are not revenue constrained. Critics have argued that MMT has this all wrong because the system requires the government to have numbers on its balance sheet before it can spend — i.e. the government is not allowed to run an overdraft and is, therefore, constrained by cash on hand. Here’s what Frank Newman thinks of that critique:

Continue reading

How to Talk About Debt and Deficits: Don’t Think of an Elephant*

By Stephanie Kelton

Many economists (perhaps even those who agree with us) refuse to talk about the national debt and government deficits the way we do on this blog. Instead of boldly challenging the assertion that the U.S. faces a long-run debt (or deficit) problem, headline progressives typically do what Jared Bernstein did in his column today — i.e. they pay “obligatory” tribute to the Balanced Budget Gods, thereby reinforcing the case for austerity at some point in the not-so-distant future when we will be forced to to deal with this very bad thing called the government deficit. Followers of my work here and on Twitter know that I refuse to pay homage to the Balanced Budget Gods. Instead, I prefer to shift the burden of proof onto those who contend that the U.S. faces a long-term debt or deficit problem. The first step is to establish that solvency can never be an issue for a government that spends, taxes and borrows in its own (non-convertible) currency. The following quote from the St. Louis Federal Reserve usually does the trick, but this great confession from Alan Greenspan also helps.

Continue reading

Stephanie Kelton’s Appearance on All In with Chris Hayes

NEP’s Stephanie Kelton appeared on Chris Hayes’ All In on Monday evening, (10/8/13). The topic of discussion was “Why the debt ceiling isn’t your family budget” examining the fallacy of comparing the debt ceiling to a family budget.

See the full show here.

Hooray of the Day

Today’s jobs report was lousy. Employers added just 169,000 jobs to non-farm payrolls in August, and downward revisions to June and July payroll numbers erased 74,000 jobs from the record. Lots of people are saying that the this weakness means that the Fed cannot, must not, dare not Septaper. Others have said what a bad time it would be to let a debt ceiling fight force a government shutdown. I’ve only seen one person zero in on the fundamental problem with our economy — the government’s deficit has gotten too small.  Kudos to Ezra Klein for connecting the dots and to Carolyn McClanahan for immediately recognizing this as a key MMT insight

The Good Society: Lessons Not (Yet) Learned

By Stephanie Kelton

John Kenneth Galbriath’s book, The Good Society: The Humane Agenda, creates a blueprint for a more just, prosperous and stable world. I’m re-reading it for the nth time because I continue to believe we might just get there one day. Indeed, I’m convinced we must.

Continue reading