Stephanie Kelton On The Economics of Bernie's Platform

Economics isn't easy for many voters to understand. Stephanie Kelton is one of the top economists in the world-- as well as Bernie's chief economic advisor-- and teaches economics at Stony Brook. She's been helping Blue America congressional candidates understand some of the trickier bits of economics behind policy solutions like Medicare-For-All, the Green New Deal, free public college, raising the minimum wage to a living wage, cancelling student loan debt...

In the video above she was interviewed by Bloomberg News yesterday. You may get something out of it; I hope so, because it isn't anything Trump or Status Quo Joe is ever going to comprehend, nor will any of it be reflected in the extremely conservative-- or neo-liberal, to be more precise-- policy agendas. Let me add a few bits and pieces-- four-- from things Kelton has said and written recently:

• "The federal government is nothing like a household. In order for households or private businesses to be able to spend, they've got to come up with the money, right? And the federal government doesn't have to behave like a household. In fact, it becomes really destructive for the economy if the government tries to behave like a household. You and I are using the U.S. dollar. States and municipalities-- the state of Kansas or Detroit-- they're also using the U.S. dollar. Private businesses are using the dollar. The federal government of the United States is issuing our currency, and so we have a very different relationship to the currency. That means that in order to spend, the government doesn't have to do what a household or a private business has to do: find the money. The government can simply spend the money into the economy and when it does, the rest of us end up receiving that spending as part of our income."

• "The conventional thinking about budget deficits, I think, tends to be that people look at a deficit and they think that it's evidence of overspending. They think it's evidence the government is mismanaging its books. That it's done something wrong. [But] evidence of overspending is inflation. So what is the budget deficit? I like to do this by using an example. I think it helps people. If you think of the government deficit as the difference between what the government spends into the economy and what it taxes back out, then imagine a government that spends $100 into the U.S. economy but it only taxes $90 back out. We label that a government deficit and we record that on the government's books. But what we forget to do, is pay attention to the fact that there's now $10 somewhere in the economy that wouldn't have been there otherwise, that is put there by the government's deficit. In other words, their deficits become our surpluses. So when we talk about the government having all this red ink, we have to remind ourselves that their red ink becomes our black ink, and their deficits are our surpluses."




• "People tend to hear deficit and think it's something that we should strive to eliminate, that we shouldn't be running budget deficits. That there's evidence of fiscal irresponsibility. And the truth is the deficit can be too big. Evidence of a deficit that's too big would be inflation. But the deficit can also be too small. It can be too small to support demand in the economy and evidence of a deficit that is too small is unemployment. So, deficits can be too big, but they can also be too small. And the right level of the deficit is the one that gets you a balanced overall economy. The one that allows you to achieve high levels of employment and low inflation."

• "We could add $1.5 trillion to the deficit over 10 years, as we just did with tax cuts that go disproportionately to people in the top-income distribution, and we could have done, for instance, student debt cancellation at virtually the same price tag. We could have done massive infrastructure investment, or R&D investment. You can have the same budgetary outcome, but very different economic outcomes, in terms of the potential to boost long-term growth and productivity, impacts on the distribution of income, and so forth. Every economy has its own internal speed limit. You can only absorb so much additional spending at any point in time, given the slack that the economy has at that moment. So can the deficit be too big? Of course! But can it be too small? Yes. And that’s something you rarely hear people say. Or complain about it."

This is a really excellent long-form Bernie interview with Joe Rogan from yesterday. I'm swooning; it's so enlightening and so powerful. Early this morning, 1.7 million people had watched it on YouTube and now over 2.8 million have watched. Take a look; it's really excellent: