Stephanie Kelton in Defense of MMT
About The Episode
Stephanie Kelton’s much-awaited book, The Deficit Myth, which is already a New York Times Bestseller is now available. In it, she makes the case for modern monetary theory – or MMT – as the paradigm to guide our fiscal policies. This book is exceptionally relevant, as we have seen several trillion dollars added to the federal deficit and a broad expansion of the Fed’s balance sheet in response to the coronavirus pandemic. That has fostered widespread speculation about the wisdom of those policies and whether they will lead to slower economic growth, inflation or something worse. MMT provides a clear answer to those questions.
About Our Guest
Stephanie is my guest on this podcast. She is a professor of economics and public policy at the State University of New York at Stony Brook. She was chief economist on the U.S. Senate Budget Committee (serving the Democrats) and an advisor to the Bernie Sanders 2016 and 2020 presidential campaigns. Stephanie is interviewed by Michael Edesess, who is reviewing her book. Michael’s review will appear in Advisor Perspectives in the next two weeks.
Here is a link to buy Stephanie’s book, The Deficit Myth, on Amazon.
Here’s the John Kenneth Galbraith paragraph Michael was referring to, from “The Great Crash 1929”:
“To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in — or more precisely not in — the country’s businesses and banks. This inventory — it should perhaps be called the bezzle — amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.”