Stephanie Kelton > Quotes

“the government relies on two sources of funding: it can raise your taxes, or it can borrow your savings.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“The debt isn’t the reason we can’t have nice things. Our broken thinking is. To fix our broken thinking, we need to overcome more than just an aversion to big numbers with the word debt attached. We need to beat back every destructive myth that hobbles our thinking.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“it (government) can't run out of dollars any more than a carpenter can run out of inches.”
― Stephanie Kelton

“The government doesn’t want dollars,” Mosler explained. “It wants something else.” “What does it want?” I asked. “It wants to provision itself,” he replied. “The tax isn’t there to raise money. It’s there to get people working and producing things for the government.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“The government can create money. So, what’s the point of taxes? Why does the government need to take my money in taxes?18 I told the folks at Planet Money that MMT recognizes at least four important reasons for taxation.19 We’ve already touched on the first. Taxes enable governments to provision themselves without the use of explicit force. If the British government stopped requiring its people to settle their tax obligations using British pounds, it would rather quickly undermine its provisioning powers. Fewer people would need to earn pounds, and the government would have a harder time finding teachers, nurses, and so on who were willing to work and produce things in exchange for its currency.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“It comes out as “bring back manufacturing jobs” or “make America great again.” But it’s really about replacing the lost sense of job security and what a middle-income job was once able to provide.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“The point is, not every deficit serves the broader public good. Deficits can be used for good or evil. They can enrich a small segment of the population, lifting the yachts of the rich and powerful to new heights, while leaving millions behind. They can fund unjust wars that destabilize the world and cost millions their lives. Or they can be used to sustain life and build a more just economy that works for the many and not just the few. What they can’t do is eat up our collective savings.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“MYTH #3: One way or another, we’re all on the hook. REALITY: The national debt poses no financial burden whatsoever.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“If central banks can convince people that inflation will move higher, people will begin spending more money today (why wait to buy something if prices are heading up?), and the added demand will actually move prices higher. Still others see inequality and wage stagnation as key drivers of slow growth and de minimis pressure on wages and prices. Some say wage growth and a more equitable distribution of income would help bolster demand among lower- and middle-income households, thereby helping to create some inflationary pressure.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“Government financial balance + Nongovernment financial balance = Zero”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“From 1942 until 1947, the Federal Reserve—at the behest of the Treasury Department—actively managed the government’s borrowing costs. Even as spending to fight World War II drove the federal deficit to more than 25 percent of GDP in 1943, interest rates trended lower. That’s because the Fed pegged the T-bill rate at 0.375 percent and held the rate on twenty-five-year bonds at 2.5 percent. As MMT economist L. Randall Wray put it, “the government can ‘borrow’ (issue bonds to the public) at any interest rate the central bank chooses to enforce. It is relatively easy for the central bank to peg the interest rate on short-term government debt instruments by standing ready to purchase it at a fixed price in unlimited quantities. This is precisely what the Fed did in the United States until 1951—providing banks with an interest-earning alternative to excess reserves, but at a very low rate of interest.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“MYTH #4: Government deficits crowd out private investment, making us poorer. REALITY: Fiscal deficits increase our wealth and collective savings.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“It’s the economy, stupid”),”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“The only solution was to tie the hands of macroeconomic policy makers.7 Instead of giving the Federal Reserve discretion to trade lower unemployment for higher inflation, the central bank should be forced to accept the fact that a certain amount of unemployment was necessary to keep inflation stable. As we will see, MMT contests this framework.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“The historical record is clear. Each and every time the government substantially reduced the national debt, the economy fell into depression. Could it have been a remarkable coincidence? Thayer didn’t think so. He blamed the “economic myths” that drove politicians to wrestle their budgets into surplus on the flawed belief that paying down debt was both morally and fiscally responsible.45 As we see from the insights of MMT, government surpluses shift deficits onto the nongovernment sector.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“it’s easy for businesses to increase supply in response to more spending. But as an economy moves closer to its full employment limit, real resources become increasingly scarce. Rising demand can begin to put pressure on prices, and bottlenecks can develop in industries that are experiencing the greatest strain on capacity. Inflation can heat up. Once the economy hits this full employment wall, any additional spending (not just government spending) will be inflationary. That’s overspending, and it can even happen if the government’s budget is balanced or in surplus.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“That bidding process pushes prices higher, giving rise to inflationary pressures. To mitigate that risk, the tax needs to offset enough current spending to free up the real resources the government is trying to hire. The problem is that because this particular tax is levied on a tiny cadre of uber-rich people, it won’t open up much (if any) fiscal space.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“It’s also important that they don’t promise to convert their currency into something they could run out of (e.g., gold or some other country’s currency). And they need to refrain from borrowing (i.e., taking on debt) in a currency that isn’t their own.3 When a country issues its own nonconvertible (fiat) currency and only borrows in its own currency, that country has attained monetary sovereignty.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“separate two of the most important issues regarding entitlements: the government’s financial ability to pay and our economy’s productive capacity to deliver promised real benefits.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“The difference gave China a $420 billion trade surplus (the US carried the opposite, a $420 billion trade deficit with China). Americans paid for those goods with US dollars, and those payments were credited to China’s bank account at the Federal Reserve. Like any other holder of US dollars, China has the option to sit on those dollars or use them to buy something else. Uncle Sam doesn’t pay interest on the dollars China keeps in its checking account at the Fed, so China usually prefers to move them into what is effectively a savings account at the Fed. It does this by purchasing US Treasuries. “Borrowing from China” involves nothing more than an accounting adjustment, whereby the Federal Reserve subtracts numbers from China’s reserve account (checking) and adds numbers to its securities account (savings). It’s still just sitting on its US dollars, but now China is holding yellow dollars instead of green dollars. To pay back China, the Fed simply reverses the accounting entries, marking down the number in its securities account and marking up the number in its reserve account. It’s all accomplished using nothing more than a keyboard at the New York Federal Reserve Bank.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“Taxes are critically important, but there’s no reason to assume the government must raise taxes whenever it wants to invest in our economy. In practice, the federal government almost never collects enough taxes to offset all of its spending. Deficit spending is the norm, and everyone in Washington, DC, knows it. And so do voters. That’s why so many politicians complain that Congress needs to get its fiscal house in order before it’s too late.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“Government deficit = Nongovernment surplus”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“hit the 1.5 degree target, the world will need to cut its fossil fuel use in half by 2030 and eliminate all fossil fuel consumption by 2050.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“Fiscal surpluses suck money out of the economy. Fiscal deficits do the opposite. As long as they’re not excessive, deficits can help to maintain a good economy by supporting incomes, sales, and profits.42 They’re not imperative, but if they disappear for too long, eventually the economy hits a wall.43 As Frederick Thayer, the prolific writer and professor of public and international affairs at the University of Pittsburgh, wrote in 1996, “the US has experienced six significant economic depressions,” and “each was preceded by a sustained period of budget balancing.”44 Table 1 details his findings.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“Taxpayers weren’t funding the government; the government was funding the taxpayers.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“The tax is there to create a demand for the government’s currency. Before anyone can pay the tax, someone has to do the work to earn the currency.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“He put them in a situation where they needed to earn his “currency” to stay out of trouble. Each time the kids did some work, they got a receipt (some business cards) for the task they had performed. At the end of the month, the kids returned the cards to their father. As Mosler explained, he didn’t actually need to collect his own cards back from the kids. “What would I want with my own tokens?” he asked. He had already gotten what he really wanted out of the deal—a tidy house! So why did he bother taxing the cards away from the kids? Why didn’t he let them hold on to them as souvenirs? The reason was simple: Mosler collected the cards so the kids would need to earn them again next month. He had invented a virtuous provisioning system! Virtuous in this case means that it keeps repeating.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“Think about it. Jeff Bezos, the richest man in America, has an estimated net worth of $110 billion. How many fewer cars, swimming pools, tennis courts, or luxury vacations will Bezos purchase after 2 percent of his wealth is taxed away? The answer is not many. A small, annual tax on a fraction of his net worth isn’t going to crowd out much of his spending. When it comes down to it, he’s more of a saver than a spender. Billionaires save their wealth in the form of financial assets, real estate, fine art, and rare coins. A wealth tax might make the infrastructure bill appear fiscally responsible, but it makes a lousy offset if the government wants to increase spending in an economy that doesn’t have much available slack.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“The government can create money. So, what’s the point of taxes? Why does the government need to take my money in taxes?18 I told the folks at Planet Money that MMT recognizes at least four important reasons for taxation.19 We’ve already touched on the first. Taxes enable governments to provision themselves without the use of explicit force.”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

“unemployment”
― Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy