Wait till the lefts AOC supporters realizes what she has cost them.
Obama trying to steer the party down a winning path, and they are shytting on him on Twitter.
#wattba
Why can the right wing always use MMT and not the left for popular proposals?
Bernie Sanders' 2016 economic advisor Stephanie Kelton on Modern Monetary Theory and the 2020 race
Kelton: MMT starts with a really simple observation and that is that the U.S. dollar is a simple public monopoly. In other words, the United States currency comes from the United States government. It can't come from anywhere else. And therefore, it can never run out of money. It cannot face a solvency problem, bills coming due that it can't afford to pay. It never has to worry about finding the money in order to be able to spend. It doesn't need to go and raise taxes or borrow money before it is able to spend.
So what that means is that 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.
Malter: How much is too much? The CBO estimates that if things remain unchanged, the debt will be 152 percent of GDP in 2048. That will be the highest in the nation's history. Is that too much?
Kelton: Let's remember what the national debt is. The national debt is nothing more than a historical record of all of the dollars that the government spent into the economy and didn't tax back that are currently being held in the form of safe U.S. Treasurys. That's what the national debt is. So the question about whether the debt is too big or too small (or whether it might get too big at some point in the future) is really a question about whether that's too many safe assets for people to hold 10, 20, 50 years from now.
If you think about what happened after World War II, when the U.S. national debt went in excess of 100 percent, close to 125 percent of GDP. If we were talking about it the way we talk about it today as burdening future generations as posing a grave national security risk, we would have to scratch our heads and say, wait a minute. Do we think that our grandparents burdened the next generation with all of those bonds that were sold during World War II to win the war, build the strongest middle class, produce the longest period of peacetime prosperity, the golden age of capitalism, all of that followed in the wake of fighting World War II, increasing deficits, massively increasing the size of the national debt. And of course the next generation inherits those bonds. They don't become burdens to the next generation. They become their assets.
So it's impossible really to put a number, nobody can. How much debt is too much debt? If you look at Japan today you see a country where the debt-to-GDP ratio is something like 240 percent. Well above, orders of magnitude above, where the U.S. is today or even where the U.S. is forecast to be in the future. And so, the question is how is Japan able to sustain a debt of that size? Wouldn't it have an inflation problem? Wouldn't it lead to rising interest rates? Wouldn't this be destructive in some way? And the answer to all of those questions, as Japan has demonstrated now for years is simply: No. Japan's debt is close to 240 percent of GDP — almost a quadrillion, that's a very big number, yen. Long-term interest rates are very close to zero, there's no inflation problem. And so despite the size of the debt there are no negative consequences as a result and I think Japan teaches us a really important lesson.
Really, the only potential risk with the national debt increasing over time is inflation and to the extent that you don't believe the U.S. has a long-term inflation problem you shouldn't believe that the U.S. is facing a long-term debt problem.
Malter: Isn't it a valid concern that printing more money to pay for spending, especially when we're not in a recession, will result in inflation and destroy the spending power of regular people.
Kelton: If Congress got together and wrote a budget and decided they were going to put trillions of additional dollars into something like infrastructure investment, noting that our national infrastructure is approaching kind of Third World standards, and they said let's put several trillion dollars in and not offset any of that new spending. They just said, "Let's spend $3 trillion more into the U.S. economy." Would that be problematic? The answer is almost certainly yes, because we have an economy that has approached full employment (I don't believe we're there).
But the question is always: How much capacity does the economy have to absorb any new spending without prices beginning to rise?
So look, the Republicans passed the tax cuts and we now know that that added about $1.9 trillion to deficits over the next 10 years. There were people at the time who said, "The U.S. economy cannot take $1.9 trillion in fiscal stimulus. We're at full employment, if we do this it's going to create all kinds of problems. Interest rates will spike, inflation will accelerate, growth will slow." None of those things happened and the answer to the question why is because the economy had the capacity to absorb it.
