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Summary

The leading thinker and most visible public advocate of modern monetary theory - the freshest and most important idea about economics in decades - delivers a radically different, bold new understanding for how to build a just and prosperous society.

Any ambitious proposal - ranging from fixing crumbling infrastructure to Medicare for all or preventing the coming climate apocalypse - inevitably sparks questions: how can we afford it? How can we pay for it? Stephanie Kelton points out how misguided those questions really are by using the bold ideas of modern monetary theory (MMT), a fundamentally different approach to using our resources to maximise our potential as a society.

We've been thinking about government spending in the wrong ways, Kelton argues, on both sides of the political aisle. Everything that both liberal/progressives and conservatives believe about deficits and the role of money and government spending in the economy is wrong, especially the fear that deficits will endanger long-term prosperity.

Through illuminating insights about government debt, deficits, inflation, taxes, the financial system and financial constraints on the federal budget, Kelton dramatically changes our understanding of how to best deal with important issues ranging from poverty and inequality to creating jobs and building infrastructure. Rather than asking the self-defeating question of how to pay for the crucial improvements our society needs, Kelton guides us to ask: which deficits actually matter? What is the best way to balance the risk of inflation against the benefits of a society that is more broadly prosperous, safer, cleaner and secure?

With its important new ways of understanding money, taxes and the critical role of deficit spending, MMT busts myths that prevent us from taking action because we can't get beyond the question of how to pay for it.

PLEASE NOTE: When you purchase this title, the accompanying reference material will be available in your Library section along with the audio on our desktop site.

©2020 Stephanie Kelton (P)2020 Hodder & Stoughton Limited

Critic reviews

"The best book on rethinking economics that anyone will find right now." (Richard Murphy, political economist and author of The Joy of Tax)

What listeners say about The Deficit Myth

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A sophomoric fantasy.

In essence you can print as much money as you like as long as you don't cause inflation. This is true if we can agree what inflation is and how we can measure it but we can't and the warped CPI measure used now will only become more fraudulent when it has to remain low or frustrate the cherished dreams of a thousand politicians.
Like telling the alcoholic that they can drink as much as they like as long as they don't damage their liver or telling the serial adulterer they will be fine just as long as they don't get caught. Kelton tells us we can do the economic equivalent of playing in traffic on the freeway as long as we don't get run down.
Hayek's Maxim springs to mind: The curious task of economics is to prove to men (and women) how little they know about what they think they can plan.

18 people found this helpful

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Compelling and exceptionally clear

This is a compelling and exceptionally clear explanation of the disastrous effects of the financial myths which distort the management of the economies of the US and other countries. Governments which issue their own currency can’t run out of money. They can always pay for anything they decide to, in that currency. As long as they don’t stoke inflation. Due to the myth that currency issuing governments must budget - and fear bankruptcy- like households, nearly all major economies are run chronically well under their capacity. So, for countries with abundant real resources, and their own currency, the inflation risk is unlikely to be a major constraint. By attempting, inappropriately, to balance budgets, or run surpluses, governments are destroying value in their economies, and failing their societies. JFK, John Maynard Keynes, Alan Greenspan, Ben Bernanke and others have all understood this, and said it. Now we should all do the same.

8 people found this helpful

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Happening whether you like it or not

A great explanation of money printing and its possibilities. The public job creation proposals are nebulous, but there's no doubt that mmt can be used to rebuild a Sovereign issuing economy. but what about non Sovereign economies? And doesn't this just reinforce the Dollar milkshake effect?

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A very conventional revolutionary

I’m a big fan of MMT and wanted to love this book. It does a fine job as a primer for MMT and is engaging.

The main disappointment is its truly woeful treatment of trade. Kelton relates the tale of a motorcycle factory that got shut down despite millions being simultaneously lavished on dividends and stock buybacks. She announces that the response to this should be the federal jobs guarantee (JG)— in other words, the workers should leave their colleagues and be assigned minimum wage ($15) work in an entirely different sector (she suggests ‘care’) with a transient bunch of other laid-off workers. All the while, both the workers’ skills and the capital stock tied up in the factory atrophy.

This is senseless from an MMT perspective: the aim according to which is to make the full use of the skills, infrastructure and resources of the society.

Instead, the currency-issuing government should intervene to purchase the factory building and capital stock, set it up an employee-owned business run by the existing workforce, and pay them all the JG rate for a given period while they work out how to use their skills and equipment to produce something again. Thus their skills and resources are retained, their dignity enhanced.

As mentioned, Kelton sees the JG as mainly providing jobs in the social & environmental care sector. She doesn’t seem to envisage that the JG could be used for import substitution. Yet the less a country needs to import, the less it needs to worry about exchange rates, and thus to an extent the less it needs to worry about the big constraint on central government money issuance, inflation.

This leads to the other deeply conventional aspect of Kelton’s book. If inflation is the constraint, what should its rate be? She doesn’t answer. Plainly we want predictable prices that don’t change so swiftly that we are in a perpetual panic, but what predictable, manageable rate should we aim at?

The question immediately pitches us into what Kelton studiously avoids: class politics. If you are a debtor, high inflation inflates your debt away; if you are a creditor high inflation inflates your assets away. There is an inalienable class tension here. Kelton emotes at tedious length about the problems of indebtedness, but unless I fell asleep through something interesting, her response is deeply conventional: less unemployment! Better-paying jobs! Etc. Which has little bearing on MMT per se. What does is using currency issuance and inflation targets to reduce indebtedness.

This lack of class analysis is all the more grating given her insouciance about trade deficits. If you import more than you export then the difference is made up through sales of assets to foreign investors. Assets such as real estate, which pushes up the price of housing and thus the indebtedness of homeowners.

Well, enough. The book gives an insight into a revolutionary way of looking at the economy, but the writer is at home in convention.

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Engaging and topical

There are naturally many questions unanswered by this book, but that just makes me want to learn more about the theory. We should all hope it is correct, because we really need it to be! Well read by the author.

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A very important book

This book may redefine public discourse on economics in the years to come. God knows it's long overdue! Kelton's narrative is compelling and written in lucid, easily accessible language that will leave many reassessing the grotesque austerity of the past decade. A rare book in that having read it I suspect many will conclude: "this changes everything".

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Great economics but weak of prescription

Good detail at the front end of the book but narrative becomes repetitive and some of the anecdotes a little mundane . I totally support the thesis; austerity is an economic curse but the author struggles to progress from description to prescriptive solutions that do not read like a political manifesto.

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Interesting perspective on a complex subject

Interesting perspective on MMT however about 3/4 into the book it becomes a bit lost in other deficits (housing, education, environment etc). It also felt like a wish list without real though on how to make it happen.

Perhaps too a complex subject to try and solve in a book but still worth listening to, just to get a different view of monetary issues.

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Brilliant

This was a wonderful explanation of the truth of deficits both false and real.
MMT is more than a lens, it a Hubble telescope to open up the economic universe

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A must read for everyone.

If you've ever had a problem with government spending this is a must read. MMT gives us a lens with which to view economics, and through it, we clearly see that we need to change the way we feel about an economic deficit.

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  • O. R. Jones
  • 30-08-20

Changes the way you think about public money

An excellent summary of MMT and really makes you question how we could run government fiscal policy.

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  • Anonymous User
  • 12-07-20

Great take on MMT

The book is well written and presented in a way that generalists can easily follow. It is entertaining and easy to read. The content is well researched.

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  • Allan
  • 07-07-20

MMT - what is it? Find out here - worth a listen

A well written book on a topic I did not know much about. Good thought provoking concepts presented in a very easy to listen way. Felt it went away from the basic MMT theory for some of the later chapters and became more of a wish list. It is - by design- mostly focused on the position of MMT for large nations / reserve currency issues etc. Would have been interested in how effective MMT could be for small nations that have to pay in another currency for needed items they can not produce - but understand this may be beyond the scope of this book. Overall a very useful listen - I don’t necessarily agree with everything- but very glad I listened to it. Enjoy

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  • Anonymous User
  • 20-04-21

Phenomenal!!

In my opinion, this book, and the teachings behind it, should be studied in every economics class beginning in high school. An educated populace is a healthy populace, and this is transformative information for our global society.