Usual problem of compressed discussion of economics and history tonight on @Channel4News with @mattfrei and @StephanieKelton. US fiscal consolidation did happen after 1945, though I was wrong to suggest it went on into the 1960s. 1/5
Federal government ran surplus in 7 out of 14 years from 1947 to 1960. Then modest deficits (on average <1% of GDP) until 1975. 2/5 
But it was mostly growth and inflation, in roughly equal measure, that brought down the debt/GDP rate to its low point of 31% in 1981. 3/5
The key question for @StephanieKelton, which we didn't get to, is what happens if you do sustained fiscal and monetary expansion and don't get growth? The answer is you either end up as a version of Japan, with debt at >200% of GDP, zero inflation and low growth ... 4/5
... or you return to the inflationary problems of the 1970s, or you have nasty fiscal arithmetic that forces austerity or default. 5/5 Ends.
PS What I should have said was that the US ran *primary* surpluses from the late 1940s until the mid 1970s (and again in the mid 80s and 90s). Thanks to @JohnHCochrane for this chart, prompted by his excellent @HooverInst talk yesterday.
PPS And of course the Fed ended its wartime debt management role under the Fed-Treasury Accord of 1951: federalreservehistory.org/essays/treasur… Proponents of MMT essentially want to undo that. So post-war history doesn't support their case at all.
