Stephanie Kelton argues that the conventional wisdom surrounding deficits and debt is flawed and needs to be questioned.
There is a disconnect between what makes sense on an individual level in personal finance and what is good for the economy as a whole.
Saving and paying down debt may be good for individuals, but if everyone in the economy does it at the same time, it can harm the economy.
💰 The paradox of thrift and deleveraging show that when people spend less and save more, it can lead to a downward spiral in the economy.
💼 Sales drive job creation and economic growth. Businesses hire and invest when they have customers and demand for their products.
📈 To grow the economy, spending must increase. GDP is a measure of all the spending on newly produced goods and services in the economy.
📉 Recessions are inevitable, but they are always followed by recoveries.
💰 To prolong a recovery, there needs to be enough spending in the economy from the private sector, government, or the rest of the world.
🏛️ The US government, as the monopoly issuer of the dollar, can never become insolvent and has the sole authority to create the currency.
📚 The current Social Security system is not going broke and can afford future benefit payments.
💼 The focus should be on ensuring future productivity to maintain the purchasing power of benefit payments.
💰 Understanding the modern monetary system is crucial to debunking myths about the economy and government spending.
📊 Deficit owls prioritize balancing the economy over balancing the government budget.
📉 Government deficits help to produce private sector surpluses, so reducing deficits may harm the economy.
💰 Government spending is not constrained by tax revenues and can be used to stimulate the economy.
📈 The economy has the potential for growth, but there is a significant amount of lost output and income due to various issues such as dilapidated infrastructure, student debt, and income inequality.
💰 There are several options to address these issues, such as investing in infrastructure repair, enhancing retirement schemes, dealing with climate change, and implementing job guarantee programs.
🌐 However, the challenge lies in finding ways to fund these initiatives without relying on unsustainable methods like bubbles, excessive debt, or reversing trade deficits.
Kansas cutting taxes led to a decrease in revenue and economic problems.
Increasing the minimum wage leads to increased income and spending.
A federally funded jobs program can achieve true full employment.
The TPP is more about protecting US corporations than promoting trade.
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