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Stephanie Kelton Profile picture
@StephanieKelton
Sep 25, 2020 • 4 tweets • 1 min read • Read on X
What a load of utter garbage. These people are truly dangerous.
One of the worst ideas imaginable.
What a joke. The current crisis demonstrates exactly the opposite—i.e. that nothing you’ve carped on about has mattered one bit, nor did decades of rising debt and deficits prevent Congress from combating the COVID recession.
You’re peddling nonsense.

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More from @StephanieKelton

Stephanie Kelton Profile picture
Jul 15
Abolish fiscal rules and the agencies that enforce them? Galbraith makes the case. (This is for you too, 🇬🇧)
"The budget process cultivates and perpetuates the idea that smaller deficits are better than large ones..." 1/
"..it sets a standard that tax cuts should be offset, at least in part, by spending reductions. That standard now leads to the grotesque bill just enacted." 2/
"According to the budget process, however, extending current tax law is scored as another tax cut – requiring yet another offset through spending cuts...The beast of deficit reduction is never sated." 3/
Read 12 tweets
Stephanie Kelton Profile picture
Jan 22
"A government-spending-led expansion would allow the private sector to expand without creating fragile balance sheets--indeed, government deficits would boost profits and add safe Treasury debt to private portfolios. 1/
However, a robust private sector-led expansion would tend to cause tax revenues to grow faster than private sector income (with a progressive tax system and with transfer spending falling in a boom) so that the government budget would 'improve' (move toward surplus) while the private sector balance would deteriorate (move toward deficit). 2/
For that reason, Minsky argued that private sector-led expansions tend to be more unsustainable than government-led expansions because private deficits and debt are more dangerous than government deficits and debt. 3/
Read 5 tweets
Stephanie Kelton Profile picture
Oct 24, 2024
Why does the government almost always spend in excess of taxes --i.e. run a budget deficit ? A 🧵
1/ Image
The short answer is that the rest of us, on average, typically want to accumulate more US$ than what is required to pay taxes. That is, we want to net save US$. 2/
Government spending in excess of taxes--deficit spending--manufactures the $US that enable the rest of us to net save. 3/
Read 19 tweets
Stephanie Kelton Profile picture
Jun 11, 2024
"Each time the Federal Reserve acts as a lender of last resort, it prevents some financial institution or some financial market from collapsing. 1/
When it does this, it introduces additional Federal Reserve liabilities into the economy and extends a Federal Reserve guarantee over some set of financial practices. 2/
Thus in 1966 it protected banks that used certificates of deposits, in 1969-70 it protected the commercial paper market, and in 1974-75 it extended the Federal Reserve guarantee to those who owned the liabilities of offshore branches of American banks. 3/
Read 13 tweets
Stephanie Kelton Profile picture
Apr 20, 2024
🧵
20 yrs ago, Scott Fullwiler wrote this paper, comparing the (then extant) practice of hitting interest rate targets via day-to-day open-market operations and managing TT&L accounts with the yet-to-be-adopted practice of paying interest on reserves. 1/ papers.ssrn.com/sol3/papers.cf…
Scott concluded that instead of replacing non-interest bearing reserves with interest-bearing Treasuries, it would be far "more direct and more efficient" to turn the non-interest bearing reserves into interest-bearing reserve balances (IBRBs). Treasury could then stop issuing securities altogether. 2/Image
But don't financial markets need Treasuries for a whole variety of reasons? Could we really just stop issuing them? Scott explains why the answer is yes. 3/Image
Read 7 tweets
Stephanie Kelton Profile picture
Apr 7, 2024
"If we could wave a magic wand and wipe out Treasury interest payments, we would have a lot of desperate people who had lost the income from savings bonds, Treasury bills, notes, and bonds and the pension funds that were holding them... 1/2
This in turn would mean less spending on goods and services, less production, and less employment for a lot of other people." 2/2
~Robert Eisner (1994)
"It is sometimes argued that this involves a regressive redistribution of income, on the assumption that the rich receive interest income...
Read 5 tweets

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