(a Repost from Tuesday)
What does “Balance the Economy, not the Budget” mean?
It means the primary goal of economic policy is to achieve full employment with low inflation. A deficit or a surplus is a product of policies supporting the two critical goals of the economy.
This doesn’t mean deficits are irrelevant. It does mean (1) If there is a deficit, it should be created by stimulus (spending and working/middle class tax cuts) , not tax cuts for the wealthy; and (2) If deficits are high and inflation looms, anti-inflationary measures should be taken, including Fed, trade or tax measures. (A “demand-pull” inflation like this is very rare.)
Also note — the deficit may go down after spending (ACA and stimulus) and tax cuts (FICA cuts in stimulus)— See 2009-2017
These are some fundamentals of MMT (Modern Monetary Theory), a growing movement having its second annual conference in NYC this weekend at the New School in NY’s Greenwich Village.*
Here is an MMT Primer (illustrated!), recommended by Warren Mosler, the “Godfather” of MMT, who will be at the conference.
Registration for the conference is here: Modern Monetary Theory Conference, and it’s a bargain: a $40 contribution, or less or more, depending on your situation.
Kossack Arliss Bunny introduced me to MMT about five years ago via Kagro’s show. Her great podcast with another Kossack, Will McLeod, is called Hopping Mad: Politics, Economics and Carrots and she does explanations of MMT every week. In March, we jointly responded to comments in this diary:
Democratic Deficit Obsession: A Surrender to the GOP's Asymmetrical Debt Warfare
Arliss will be presenting at the Conference!
Among the other speakers at the conference will be Pavlina Tcherneva of Bard’ s Levy Economic Institute. You should listen to her interview on Hopping Mad and also read her article: Unemployment: The Silent Epidemic. It is an incredible combination of empathy, logic and economics, and serves as an introduction to the Job Guarantee, a practical implementation of MMT ideas, now endorsed (in various forms) by Senators Gillibrand, Booker and Sanders.
Stephanie Kelton is a fantastic MMT spokesperson, and will also be at the Conference. Watch her video of “The Angry Birds Approach to Understanding Deficits in the Modern Economy.”
See you at the New School!
*MMT experts here — please let me know if I need to correct my summary. Thanks