The Deficit Myth Book Cover

The Deficit Myth

Modern Monetary Theory and the Birth of the People’s Economy
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There are several misconceptions when it comes to understanding the economy of a country. These misconceptions are further propelled by politicians and a lack of proper awareness about financial parameters that affect the economic sphere of our lives. In this insight, we shall briefly discuss the Modern Monetary Theory (MMT) that provides a dynamic outlook to view the problems of our times and how the old and archaic mode of thought is detrimental to our conception of how the economy functions. In the lessons, we shall focus on the myths related to our economy and how MMT provides a different lens or perspective to understanding the economy of a nation. However, it is key to note that the observations are based on developed nations like the US, UK and Japan and may not be suitable for application in developing countries.

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Lesson 1- Modern Monetary Theory

The common question that is consistent throughout all governmental deliberations over policy issues on health care, infrastructure, education, or climate change is how the money will be distributed to meet the necessary standards. Politicians always claim deficit when it comes to the allocation of resources to meet certain infrastructural and developmental projects. When it comes to increasing public well-being, there are far more options than we realize but we need to see through the myths and misconceptions that often restrain us. 

Modern Monetary Theory (MMT) is a theory that seeks to explain how money works. It changes how we view our politics and economics. According to the conventional view, the taxpayer is at the centre of the monetary universe because of the belief that the government has no money of its own. The only money available to fund the government must come from people. MMT radically changes our understanding by recognizing that it is the currency issuer and that the government itself that finances all government expenditures. MMT clarifies what is economically possible and shifts the focus of policy debates that get stuck over questions of financial feasibility. MMT focuses on the broader economic and social impacts of a proposed policy change rather than its narrow budgetary impact. MMT distinguishes the real limits from the self-imposed constraints.

Every economy has its internal speed limit, regulated by the availability of productive resources such as levels of technological development, availability of land, workers, factories, machines, and other materials. If the government tries to spend too much on an economy that’s already running at full speed, inflation will accelerate. If a government wants to accomplish something, the money can always be made available. If lawmakers wanted to, they could advance legislation aimed at raising the living standards of the people or setting aside money for education, technology, and infrastructure that are critical for long-term prosperity. Spending or not spending is a political decision but the economic ramifications of any bill should be thoroughly considered.

Lesson 2- How should a Government Budget Be?

There is often an idea that the federal government should think of its budget like a household. But nothing is farther away from the truth. The government has the power which no household or private firm has, that is the power to issue money. When governments try to manage their budgets like households, they miss out on the opportunity to harness the power of their sovereign currencies to substantially improve life for their people.

The MMT as a theory deeply affirms that the government is not dependent on revenue from taxes or borrowing to finance its

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Chapter List
  • Lesson 1- Modern Monetary Theory
  • Lesson 2- How should a Government Budget Be?
  • Lesson 3- The Politics of Inflation
  • Lesson 4- The Crisis of The National Debt
  • Lesson 5- Private Investments and Deficits
  • Lesson 6- Trade War is a Failed Idea
  • Lesson 7- Entitlement Programmes and Redistribution of Money
  • Lesson 8- The Real Problems of Deficit
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FAQs

In the summary of The Deficit Myth book, there are 8 key lessons. These lessons include:

  1. Lesson 1- Modern Monetary Theory
  2. Lesson 2- How should a Government Budget Be?
  3. Lesson 3- The Politics of Inflation
  4. Lesson 4- The Crisis of The National Debt
  5. Lesson 5- Private Investments and Deficits
  6. Lesson 6- Trade War is a Failed Idea
  7. Lesson 7- Entitlement Programmes and Redistribution of Money
  8. Lesson 8- The Real Problems of Deficit

The Deficit Myth by was published in .

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