Do Bond Sales & Borrowing Finance US Deficit Spending?
Professor L. Randall Wray responds to this question and debunks the misunderstandings and fallacies surrounding it.
Professor L. Randall Wray responds to this question and debunks the misunderstandings and fallacies surrounding it.
A country might choose to use a foreign currency for domestic policy purposes. Here, however, we are examining a nation that does not issue a currency at all.
A government deficit will result if the nongovernment sector has a surplus—a perfectly sustainable balance.
It is difficult to believe that our economy can continue to grow robustly as the government sucks disposable income and wealth from the private sector by running surpluses.
“By what process, I wondered, have we convinced ourselves that we do not have enough U.S. Dollars to pay ourselves to create the goods and services we need to prosper as a society?”
Its influence is felt even in liberal or progressive organizations, and among progressive commentators and writers, who all share ideas like fiscal policy discipline and tax reform.
The great power of MMT is its lesson that the federal government can create new dollars by running deficits to do things that should be done.
The “fiscally responsible” solution is probably not what you think it is.