Ezio Subissati

According to Stepfanie Kelton, author of The Deficit Myth and economic advisor to the Democratic Party and Bernie Sanders in particular, deficits don't matter because the government is the "issuer of money" not like consumers and business which are the "users of money". This means that government can create money to finance their deficits where consumers and businesses cannot so governments need not be held to balance budgets like everyone else. In the US, this government power came about post Bretton Woods in the early 70s severing the link between the US dollar and gold holdings by government. Whereas government deficits were limited by gold holdings prior to Bretton Woods, now government deficits have no limit in terms of money available to spend except public opinion. MMT economists seize on this money printing press to argue that now (post 1971) governments can print money endlessly with the only constraint being the "productive capacity of the economy". So if there is excess capacity in the economy ( unemployed persons and no inflation) then deficits don't matter i.e. spend away until unemployment is eliminated and inflation is not rearing it's ugly head. Kelton does a great job in presenting MMT as a credible economic theory and making it readable and convincing to the masses. According to MMT the "money" deficit problem is a myth. The real real deficit problem is the deficit in employment, health care, education, infrastructure, affordable housing etc. So why not use government "money" deficits to hire all unemployed people, provide universal health care and affordable housing for everyone? What can possibly be wrong with that? Nothing really if you don't mind the power over the economy that it gives to government and history has shown that governments will abuse this power thereby reducing the productive capacity of the economy. If the productive capacity of the economy is reduced, this will result in fewer available goods and services (shortages) and higher prices for the available goods and services (inflation). soci