Discussion #40: The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy, by Stephanie Kelton

<p>Welcome to Citizen Scholar! Since launching last year we’re reaching people all over the world, so we thank you for your support. If you enjoy our writing on civic virtue and individual excellence, we humbly ask you to share Citizen Scholar with your family members and friends who may enjoy it. The contents of the audio and text formats are identical and meant to accommodate your preferences. Please let us know if you have any feedback - we’re always looking for ways to improve!</p><p><strong>Introduction</strong></p><p>This week we’ll conclude our mini-series on studies in American capitalism. We chose to investigate Modern Monetary Theory (MMT), an alternative to the traditional strains of monetary theory presented by neoclassical economics. MMT entered the policy mainstream in the second half of the last decade, and economist Stephanie Kelton is one of the highest profile contributors to that success. Her book <em>The Deficit Myth </em>is a fascinating introduction to and defense of MMT.</p><p>Kelton herself admits MMT’s framework and resulting policy recommendations are so radical that they’re alien to almost every member of the U.S. Congress. To give the esteemed reader an idea, she calls President Obama a fiscal conservative. Economists talk about radical ideas all the time as an intellectual exercise. MMT is different because of the traction it appeared to gain in the halls of power in the late 2010’s and early 2020’s.</p><p>In 2019, murmurs could be heard about its policy recommendations being considered in the Federal Reserve, in Congress and even among some on Wall Street. Passionate debates were had about the morality and efficacy of “helicopter” payments – direct cash payments to ordinary citizens – and the Federal Reserve’s ability to print money to make them feasible for the government. These tools, which would’ve been unthinkable ten years before, were quickly used in the 2020 COVID relief packages and 2021 Infrastructure Law. Of course, the pandemic made so much of the previously unthinkable p