The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy, by Stephanie Kelton, is a comprehensive and thought-provoking book that challenges the conventional wisdom about government deficits and debt. Kelton, a leading economist and public policy expert, presents a provocative and well-argued case that will make you rethink everything you thought you knew about government spending and debt.
The central premise of The Deficit Myth is that our current obsession with deficit reduction is misguided and counterproductive. Kelton argues that government deficits can actually be a good thing, and that they are not always the fiscal bogeyman they are made out to be. To support her argument, Kelton draws on modern monetary theory (MMT), a relatively new approach to economics that has gained a following in recent years. MMT holds that governments, unlike households and businesses, do not face the same financial constraints because they have the power to create money. This means that the government can always afford to buy whatever is for sale in its own currency, provided it is willing to accept the inflationary consequences of doing so.
Kelton does an excellent job of explaining the key concepts of MMT in a way that is accessible and easy to understand. She uses a combination of economic theory, historical data, and real-world examples to demonstrate how MMT can be used to solve a wide range of economic problems, from unemployment and inequality to climate change and infrastructure. She also debunks the myth that deficits lead to hyperinflation, and shows that they can be managed in a responsible and sustainable way.
But Kelton's book is not just about economics. It is also a call to action for a new kind of economy, one that puts people and the planet first. Kelton argues that our current system is failing us, and that it is time for a radical rethink of how we organize and allocate resources. She advocates for a "people's economy," in which the government plays a more active role in providing for the common good and ensuring that everyone has the opportunity to thrive.
Throughout the book, Kelton uses a combination of rigorous analysis, engaging storytelling, and real-world examples to make her case. She draws on a wide range of sources, including economic theory, historical data, and contemporary policy debates, to build a compelling and multifaceted argument. The Deficit Myth is a must-read for anyone interested in economics, public policy, and the future of our economy. It offers a fresh and nuanced perspective on a topic that is often oversimplified and misunderstood, and provides a new framework for thinking about government spending and debt. Whether you agree with Kelton's arguments or not, this book is sure to stimulate your thinking and spark meaningful debates. Overall, I highly recommend The Deficit Myth to anyone interested in economics and public policy.