Just sharing again in case anyone is wondering where all the stimulus money being spent around the world due to Coronavirus comes from, if the government didn't call for more taxes or issue bonds.
Quote:
|
Originally Posted by Kuhb
Bizarre lol
I'm just saying that Krugman has made a number of incorrect calls due to his basis in Keynesianism (an economics from gold standard era). He actually admitted around 2014 that he was wrong about Japan, but isn't sure why. He gets close every so often.
The the two key insights which MMT offers, which are plainly correct is that
1) The government does not need tax revenue in order to spend. Spending occurs first, which creates the money, then taxes occur second, to restrict the money supply and legitimate the currency.
2) Government spending in and of itself is not necessarily inflationary. What matters is whether there is fiscal space (slack) in the economy for the government to step into.
But if you're stuck equating a fiscal budget with a household budget (you've gotta pay it back!), you'll not be able to see this.
|