I finished reading The Deficit Myth by @StephanieKelton last night.

I considered writing a really laudatory tweet hunting for an RT, but decided to go with nuance.

My thoughts are below:

The Deficit Myth was my first real introduction to MMT and how fiat currency works in the 21st century.

@StephanieKelton does a terrific job simplifying monetary policy to make it accessible to all. I learned a a lot from reading this book.

I especially loved her “Three Buckets” visualization of money flows between the federal government, US citizens and the foreign private sector.

I’m sold on the central idea of the book. Money spent by the federal government is cash in our pockets.

Critics of MMT, from what I’ve seen, believe that MMT will lead to money printing and inflation. The Deficit Myth does address these concerns.

In fact, this is the most important factor in regulating how much money the government can spend.

Fiat currency issuers are limited by the productive capacity of their resources, including their people.

Once demand is higher than what the country can physically produce, then inflation kicks in. Money printing doesn’t lead to inflation if the money can be absorbed.

I’m buying the idea that as a currency issuer, US federal gov’t spending is not limited by how much it taxes and borrows.

It just makes sense to me. And I think policy makers understand this as well. The stimulus packages in 2008 and 2020 show as much.

They just won’t admit it.

My only criticism of the book is that it spends more than half of its pages describing what the country should do with this new knowledge.

@StephanieKelton writes eloquently about economics, but it would be hard to write 250 pages just saying “gov’t deficit is private surplus”.

I encourage people to read The Deficit Myth. It’s a great intro to Modern Monetary Theory.

Once the country can wrap their heads around how fiat currency works, then we can have real debates over what federal funding priorities should be in the US.