The Deficit Myth

by Stephanie Kelton

Posted Feb 2, 2021

I highly recommend this book to everyone who cares about how governments spend and collect money, which should be everyone. The explanations are clear, important, and interesting.

Right from the beginning the story about about where the first US dollar (or any fiat currency) comes from had me hooked on the book. I listened to the audiobook of this one so I don't have kindle highlights. But the gist of this one is: the government could not possibly have taxed people without first spending some dollars in the economy.

The main takeaways for me were

  • We don't have to fear deficits, which are just surpluses for private industry.
  • Taxes are unnecessary for government spending but serve only to create incentives and disincentives and to redistribute wealth and resources.
  • Balancing the budget would limit the supply of Treasuries and, taking the argument to the extreme, eliminating the market in Treasuries is absurd. Everyone should agree that the market in Treasuries stabilizes the dollar and empowers the US.

I want Stephanie Kelton to be in charge of the OMB.