Stephanie Kelton: The big myth of government deficits | TED

Government deficits have gotten a bad rap, says economist Stephanie Kelton. In this groundbreaking talk, she makes the case to stop looking at government spending as a path towards frightening piles of debt, but rather as a financial contribution to the things that matter -- like health care, education, infrastructure and beyond. "We have the resources we need to begin repairing our broken systems," Kelton says. "But we have to believe it's possible."

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[garrenwork]

Can we get an update Ted talk with her explaining inflation?

[charlesmunson]

Sure is tough to buy a house or even pay rent nowadays. Driving up asset prices through inflation is a terribly regressive system, i guess we wont call it a tax though.

[stevewarden]

apparently money does grow on trees! or on computers.

[ronobrien]

Not long after she spoke about government's need to control inflation, we had the highest rate of inflation in 40 years.

[robertgillespie]

when you can't lose and only win, somewhere lies a fallacy😳

[daviddempsay]

When someone dismisses a question by saying, "It's the wrong question" (2:55) what that person is really saying is, "You are asking a question that I don't want to answer, therefore you are wrong for asking it." One of the first thing students will be told in an introductory economics class is that "There is no such thing as a free lunch." The notion of something for nothing is a fallacy, and deficits will ultimately have to be paid back in some way; therefore, questions as to how repayments will be made are legitimate and should be fully addressed.

[wertywerrtyson]

She says inflation is the real limit. I guess that limit got hit pretty fast…having this talk right before the biggest inflation period since the 70s 😂

[ronobrien]

If the issuer of currency can never run out of money, why do we have taxes? Some of the largest growth the country has seen was before there was an income tax.

[IdahoHobo]

The scary part is.she kept a straight face throughout. her presentation.

[aduffield]

No one ever asks "How will we pay for this new war"
We've got infinite money for war and tax breaks but never when it actually helps the people

[harleyb.birdwhisperer]

By extension of the logic, there is no need to ever issue government debt, or impose any taxes to obtain revenue. You just print it. Seems like flying blind, using ‘inflation’ (whatever that is) as a sort of financial altimeter while adjusting speed based on the fuel gauge. Could be dangerous in the mountains.

[roonsbane]

She completely glosses over the fact that our government deficit, or debt is borrowed money. People invest in government bonds, because they expect a return on their investment. If there is no return, there is no investment. You also can’t just print, or virtually create money out of nowhere, because it devalues the currency.

[alfreddunn]

Fiat money has always baffled me, banks create it out of thin air, and I (and the rest of us) spend practically the rest of our life, working away paying back with interest, a mortgage ...its basically an I.O.U system the whole world of money runs on.

[miknak]

I wish I could ask Dr. Kelton one big question about the interest payment on the government issued bonds and treasure notes. The bigger the national debt, the bigger the interest payment. Am I wrong to think that the federal government should reduce the amount of national debt so that the government would not allocate a large percent of its budget to this interest payment.

[Rachelebanham]

There's some interesting ideas here (and in MMT) and I agree that inflation rather than deficit should be a better measure of an economy. However, the MMT idealogues are in my opinion missing two things that always happen in practice: 1. squirting fiat into the economy pretty much always ends up with _residual_ inflation even after government re-balancing measures (through taxation, interest rate hikes, etc.). 2. Governments spend a significant proportion of what she is defining deficit surplus not on the local population but quite often on foreign investments, foreign contracts that don't benefit the tax payers. So you have an open economy. So medium to long term money just leaks out the closed economy to make MMT work. I think it's important to not to be too ideological about MMT. Aspects of it do work but at the end of the day, if you squirt in excessive amounts of money into the system far and beyond what the country can produce then you're going to get inflation. At the end of the day, money (or wealth) is only a measure of the country's output and that's fundamental. And that is what Thatcher was really saying when she made her quote about there is no government money.

[jobegerlach]

inflation is an invisible tax on people who dont have enough money to invest. if you really "care" about inequality and minorities then stop printing money, stop bailing out banks, and start helping people understand what fiscal responsibility entails. its easy to claim MMT will work, but if people cant invest then your saving accnt interest will never keep up with inflation and thus the CPI will slowly outstrip their ability to live comfortably... this is why millennials like myself have a more difficult time affording housing than our parents. also its really easy to say printing money will fix things when you have a tenured position that safe and hermitically sealed off from the markets at large.. shaking my head sadly right now...

[jacobhicks]

If you follow her logic why do we even pay taxes?

[sparkyfromel]

MMT is to fiat currency what sub prime loans were to mortgages

[TeslaLegend]

Little knowledge is a dangerous thing.

[regorsgarageboatbasin]

How does MMT handle debt service? As the Federal Reserve raises interest rates to fight inflation, the US budget must accommodate higher spending for debt service in the yearly Federal budget. The debt service is currently 7% of the budget. Chairman Powell states the current spending is not supportable long term.