{"id":439,"date":"2010-07-21T09:31:38","date_gmt":"2010-07-21T13:31:38","guid":{"rendered":"http:\/\/www.multiplier-effect.org\/?p=439"},"modified":"2010-07-21T09:31:38","modified_gmt":"2010-07-21T13:31:38","slug":"deficits-do-matter-but-not-the-way-you-think","status":"publish","type":"post","link":"https:\/\/blogs.bard.edu\/multiplier-effect\/deficits-do-matter-but-not-the-way-you-think\/","title":{"rendered":"“Deficits Do Matter, But Not the Way You Think”"},"content":{"rendered":"

That’s the headline for a defense of Modern Money Theory <\/a>by Levy senior scholar L. Randall Wray, who complains that “even deficit doves like Paul Krugman, who favor more stimulus now, are fretting about \u201cstructural deficits\u201d in the future.” Wray goes on to say:<\/p>\n

There is an alternative view propounded by economists following what has been called \u201cModern Money Theory\u201d, which emphasizes the difference between a currency-issuing sovereign government and currency users (households, firms, and nonsovereign governments) (See\u00a0here<\/a> and\u00a0here<\/a>). They insist that the notion of \u201cfiscal sustainability\u201d or \u201csolvency\u201d is not applicable to a sovereign government \u2014 which cannot be forced into involuntary default on debts denominated in its own currency. Such a government spends by crediting bank accounts or issuing paper currency. It can never run out of the \u201ckeystrokes\u201d it uses to credit bank accounts, and so long as it can find paper and ink, it can issue paper currency. These, we believe, are simple statements that should be completely noncontroversial. And this is not a policy proposal \u2014 it is an accurate description of the spending process used by all currency-issuing sovereign governments.<\/p><\/blockquote>\n

Regular readers of this blog will recall the earlier debate on these issues<\/a> between Krugman and Levy senior scholar James K. Galbraith.<\/p>\n","protected":false},"excerpt":{"rendered":"

That’s the headline for a defense of Modern Money Theory by Levy senior scholar L. Randall Wray, who complains that “even deficit doves like Paul Krugman, who favor more stimulus now, are fretting about \u201cstructural deficits\u201d in the future.” Wray goes on to say: There is an alternative view propounded by economists following what has […]<\/p>\n","protected":false},"author":212,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[32],"class_list":["post-439","post","type-post","status-publish","format-standard","hentry","category-economic-policy","tag-deficits"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/users\/212"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/comments?post=439"}],"version-history":[{"count":1,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/439\/revisions"}],"predecessor-version":[{"id":440,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/439\/revisions\/440"}],"wp:attachment":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/media?parent=439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/categories?post=439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/tags?post=439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}