Suppose the government buys a tank from a defense company. Unlike a household, the federal government just issues the currency it spends the head of household must earn the money to balance his/her budget. The myth is that since a household must balance its budget, governments must do so also. One is the comparison of household budgets to government budgets. There are several themes that Kelton returns to as she exposes popular myths. It will not require an economics degree to understand the book.

Kelton has a unique ability to reduce abstract and complicated issues to simple and understandable terms. It contains only a few charts and no equations, and it is written in plain English. It made the New York Times’ best seller list. On those grounds we endorse her book as helpful and interesting. That is about all we wish to say about MMT itself, for our purpose is not to make a judgment on the merits of MMT but to review some of the myths that exist around budget deficits and public spending. In the book, she advocates for MMT on the grounds that it can dispel myths about how our money system works and thus can free up policymakers to move us toward a more productive and people-focused economy. MMT is by no means standard or mainstream economic theory and is derided by some academics as totally unrealistic and dangerous. Right now, Kelton is the face of a school of economic thought called Modern Monetary Theory (“MMT”). The deficit discussion is certainly pertinent at this time. Furthermore, the Biden administration is proposing additional large spending programs that will have deficit effects. Exploring these issues is especially timely since very large deficits have been produced in the last year through pandemic relief and aid. You may not always agree with her on monetary and fiscal policy, but if you read this book, you may have a better understanding of how our system of money functions.

Government ever run out of money? Are deficits always and everywhere inflationary? If these are concerns of yours or if you seek perspective on these and other issues related to budget deficits, we recommend reading The Deficit Myth by Stephanie Kelton. Have you ever worried about too much government debt? Will the government ever have a balanced budget again, much less pay down its debt? Will the U.S.

The deficit myth book