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#14978037
I'm not an economist, however, that doesn't mean my opinion is worthless.
Professional MMT economics professors will tell you that the modern fiat currencies mean that Neo-liberal economics is just wrong. However, even MMTers see endless growth as an excellent thing and possible on a finite planet.

So, my list of errors is --- assuming you have a fiat currency.
1] The US Gov. (for example) can crate all the dollars it wants to.
. . a] This means it can't go broke. It can always pay its bills as they come due.
. . b] The national debt is also the amount of dollars that the Private Sector of the economy have saved. This is a good thing and not at all a bad thing. The Private Sector needs those dollars.
. . c] The only risk with deficit spending is some inflation. Runaway inflation would be almost impossible in a nation like the US.
. . d] Please note that I'm not saying that any huge amount of deficit spending is not a problem. Surely there is some point at which it is a problem.

2] International trade *is* a zero sum game. This means for every transaction/sale there is an exactly equal amount of change in the trade balance of the 2 nations involved. One is positive and one is negative, the net is zero. It must be.
. . . Now, many nations want to have a positive trade balance. They see this as a good thing for them. No economics theory I know of points out that this is not stable. It is not in equilibrium. This is because some other nation must as a result have a negative trade balance. If even one nation keeps having a positive trade balance it follows that all the other nations must in total have a negative trade balance. Someday this is going to cause a problem.
. . . [In a sense this is like the private lender=borrower situation, below. The nation with the trade surplus is accumulating foreign money. It can't keep buying assets in foreign nations forever. In the limit as time goes to infinity, someday it will own every asset on earth. Before this situation is reached the other nations will seize those assets that they can just take. The surplus-nation is making endless 'sort of loans' and should understand that they will never all be paid off.]
. . . The US should not allow itself to have an endless negative trade balance. In this one case Trump can see what no one else sees. The world should not let Germany and Japan have endless trade surpluses. Someday there will have to be a reckoning.
. . . Nations can't be allowed to have endless trade surpluses, or there needs to be a way to feed free money to those nations doing the buying. It is as simple as that.

3] While Gov. debt is a good thing, private debt is a dangerous thing. Unlike Gov. debt that can be rolled-over endlessly*, private debt must be paid off or written off by the lender. When banks make loans they create money out of thin air, adding to the money supply and the GDP. Paying the loans off destroys that money and writing it off can make the lending bank insolvent. Either way it is bad for GDP growth. The GFC/2008 was caused by too much private lending/borrowing. BTW, it it isn't proper to just blame a truthful and honest borrower if there is a problem, because the lender is just as much at fault; and for every borrower there is a lender.

4] Endless economic growth is also impossible on a finite planet. Someday it must end. What happens then? Why not find a way to stop the endless growth now? Growth is just kicking the can down the road and hoping that the sh*t doesn't hit the fan in your lifetime or you kid's (?). This seems irresponsible to me. Besides it adds to AGW and could as a result kill *every* human on the planet. Actually it *will* kill every human unless it is stopped someday.


.* . The US has effectively proven this over the last 35+ years by borrowing $20T and not paying it off much at all (only a small surplus for 3 years in the late 90s). If Gov. borrowing was a problem one of the 3 recessions in those years would have exposed that problem. The fact that no problem was exposed proves (by experiment) that Gov. borrowing doesn't cause problems. Even inflation is well in hand now.
#14978087
I'd state it slightly differently. It's not deficit spending that poses the finite risk of inflation - it's simply spending itself. Having a deficit allows greater spending, which can under certain circumstances* present an increased risk of inflation. We've lived under a demand-constrained economic environment for decades, and it would take a fairly long period of robust demand to counteract it (the anemic growth since the "08 crash certainly doesn't qualify).

* The following conditions must be present to substantially increase the risk of inflation:
1) Economy at or near maximum capacity utilization. Low inventories, suppliers maxed out. New orders coming in faster than they can be filled.
2) Unemployment low enough that employers must offer higher wages to attract workers.
3) Exogenous shock like resource bottleneck (oil shortages, for example).

Capacity utilization has been trending downward for decades:
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