The Deficit Myth

Stephanie Kelton

The Deficit Myth



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In The Deficit Myth: Modern Monetary Theory and How to Build a Better Economy,   Stephanie Kelton - a leading advocate of Modern Monetary Theory (MMT) - debunks six key myths that have shaped the conception of the state budget deficit as negative, arguing instead that the deficit can actually strengthen the economy. This is true for countries with monetary sovereignty, for which the state budget is very different from an ordinary household budget, since the state has the power to issue its own currency. With its revolutionary vision, MMT redefines the way to use public resources in order to maximise a society’s potential and imagines a politics and an economy based on opportunity rather than scarcity.

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Analysis and key concepts


Modern Monetary Theory is the revolution of the financial relationship between governments and contributors


Why we cannot compare the budget of a sovereign state to that of a family or a private company


Excessive government spending cannot be seen in the deficit, but in the rate of inflation


Clearing the debt will not make future generations richer


Instead of excluding private investment, government deficits increase collective wealth and savings


The deficit does not make America independent from other foreign countries: what matters is the management of labour policies


There will always be money for social security programs: the important thing is that they are managed intelligently


Modern Monetary Theory at the service of good politics: the deficit that really counts




Take-home message

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Many useful tips to:

  • Counteract the principle of scarcity and enter into a mindset of financial abundance.
  • Understand why the budget deficit can help strengthen the economy.
  • Imagine economic and political systems which prioritise people’s needs and public interest.

Stephanie Kelton is a leading exponent of Modern Monetary Theory (MMT). She teaches Economics and Public Policy at the State University of New York at Stony Brook, founded the famous blog New Economic Perspectives and is a member of TopWonks, a network of top American thinkers. She was chief economist of the US Senate Budget Committee for the Democratic Party, and an advisor to Bernie Sanders' presidential campaign in 2016. In the same year, Politico included her among the fifty people who most influenced the US political debate, while Bloomberg named her one of the 50 people who defined 2019. Her articles have appeared in the New York Times, Washington Post, Los Angeles Times and Bloomberg.

Publishing house:

Public Affairs