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21 Nov, 4 tweets, 2 min read
MMT: The Clock that Keeps on Ticking

bloomberg.com/opinion/articl…

I’ll put the MMT record up against the stopped clock mainstream Keynesian record any day. Exhibit A brookings.edu/wp-content/upl…
If you’ve followed the headline Keynesians over the years, you know that they have twisted themselves into knots, trying to justify their ever-shifting views on fiscal sustainability.
They counseled Congress (and Obama) to steer clear of a bigger relief package, paving the way for an abysmal “recovery.” They leaned into Simpson Bowles and went on to warn that “A debt crisis is coming.” washingtonpost.com/opinions/a-deb…
They’ll hobble the incoming administration too, if they have the chance. They got the big stuff wrong when it mattered. And there’s no evidence they’ve figured out why they had it so wrong for so long. All they’ve got is “some hand-waiving about a “global savings glut”.

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More from @StephanieKelton

Stephanie Kelton Profile picture
27 Oct
I promise to stop when the battle is won. Until then, here’s another attempt to improve understanding and shift our broken thinking about government “deficits.”

THREAD
First, the word deficit. 🤦🏼‍♀️
It’s a terrible word because it suggests a shortfall.
A deficiency.
A problem.

It’s none of those things.
But that’s how we usually think of the word. Like when the announcer says, “If the Rays are going to come back and win this game, they’re going to need to overcome a three-run deficit against the Dodgers.”

The team with the deficit loses the game.
Read 14 tweets
Stephanie Kelton Profile picture
14 Oct
I recently heard someone refer to MMT as “dangerous.” It is upsetting to those who prefer to stay nestled in the conventional discourse, where it is acceptable to change one’s answers to age-old questions but not to challenge the questions themselves. 1/4
Thus, “How much does the government *need* to tax vs borrow to pay for its spending?” can be answered differently by “reasonable” people. 2/4
Dangerous people change the questions: “What is the purpose of taxing and borrowing, and when/why should a currency-issuing government *choose* to do more of either?” 3/4
Read 4 tweets
Stephanie Kelton Profile picture
25 Sep
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.
Read 4 tweets
Stephanie Kelton Profile picture
20 Sep
A thread (1/21)

Let's talk about the "deficit" that isn't. The conventional way to talk about the government's fiscal position is to look at the difference between how much money the Government spends (G) and how much it collects via Taxation (T).
G > T means the government is spending more than it collects in tax payments. Convention has us refer to this as a fiscal "deficit."

G < T means the government is spending less than it collects in tax payments. Convention has us call this a fiscal "surplus."
Standard definitions of a "deficit" include: Image
Read 22 tweets
Stephanie Kelton Profile picture
14 Sep
They had me right up to the end. The last paragraph should have been omitted. The fiscal trajectory is not unsustainable. Planting those seeds just undermines the broader argument. washingtonpost.com/opinions/2020/…
Worth noting that Lew got this very wrong. 2017 tax cuts in no way constrained fiscal capacity in the face of COVID-19. Similarly, today's deficits don't pose any inherent risk looking ahead. If you're worried about inflation, say so. Otherwise, last para above just a throwaway. Image
Full interview cnbc.com/video/2018/03/…
Read 4 tweets
Stephanie Kelton Profile picture
14 Aug
If MMTers were just doing standard Keynesian macro, then we would not have arrived at completely different conclusions (from mainstream Keynesians) re: the Bush tax cuts, the Clinton surpluses, the Euro, debt sustainability, interest rates (eg Japan vs Italy), the Trump tax cuts.
Our framework is grounded in Minsky, Godley, Lerner, (to name a few) and complemented/strengthened by interdisciplinary work, especially legal scholarship. If MMT was just Lerner's Functional Finance, we never would have gotten all the big stuff right.
No MMT economist urged lawmakers to return to PAYGO in 2007, complaining that the deficit was "driving down national saving." A mainstream Keynesians did.
Read 12 tweets

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