Review of Stephanie Kelton's "Deficit Myth."

This is my copy of Stephanie Melton's "The Deficit Myth." Kelton is a neo-keynesian economist who has worked for the US Government. In this work she provides an easily accessible summary of "Modern Monetary Theory." There's alot to go into here, but her main argument is that most Federal Government's can finance major spending projects with debt. She argues that hyperinflation can be offset by not trying to solve bottlenecks and supply issues by throwing money at them (because that simply inflates prices of scarce commodities), and by paying off the bond market in a shorter timeframe than originally expected.

Personally, my current thinking is more in favour of a classical Social Democratic Keynesianism (at least so far as minimal demands are concerned). Funding social welfare programs by taxing the rich and nationalised capital efficient industry (I'm thinking vaccines and pharmaceuticals) bypasses the inflation problem, and aligns more with my socialist politics. What's more, because the current economic crisis is caused by bottlenecks in supply, MMT is not the solution to the present crisis. Again, nationalised industry saves the day by allowing us to restart our manufacturing sector. The ALP is starting to realise this by adopting the proposal for government owned timber plantations.

 

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