- 03 May 2018 11:20
#14910991
Dr. Stephanie Kelton is an economics professor. She is in the MMT school of economics.
She says that the Sector Balance sheet theory of economics is (by definition) true. And, it says that all the economists who want the Fed. Gov. to eliminate the deficit and run a surplus are (by definition) wanting the US GDP to grow less or even stop growing.
Remember, the US always has a negative balance of payments [this means it has a positive current account balance of the same amount].
She explains the above statement by showing that all Gov. spending must become income for someone and almost all of it will therefore add to the GDP. This is either directly when the Gov. buys some thing from a company, or indirectly, when the person who is paid the money (a retired person maybe) spends it on any thing or any service.
So, she claims that (by definition) calling for "reducing the deficit" is also calling for "reducing the growth of the GDP". [She doesn't say directly that this would not be true if the US had a large positive balance of payments surplus, but this is true. If I understand the theory correctly. And also it may explain why in the 19th Cent. the US may have had GDP growth while having a Gov. surplus. Also, if there was lot of gold being mined in the 19th Cent. This also would allow GDP growth along with a surplus.]
Links: [I hope they work]
https://cas2.umkc.edu/economics/.../Ful ... %20MMT.pdf
She says that the Sector Balance sheet theory of economics is (by definition) true. And, it says that all the economists who want the Fed. Gov. to eliminate the deficit and run a surplus are (by definition) wanting the US GDP to grow less or even stop growing.
Remember, the US always has a negative balance of payments [this means it has a positive current account balance of the same amount].
She explains the above statement by showing that all Gov. spending must become income for someone and almost all of it will therefore add to the GDP. This is either directly when the Gov. buys some thing from a company, or indirectly, when the person who is paid the money (a retired person maybe) spends it on any thing or any service.
So, she claims that (by definition) calling for "reducing the deficit" is also calling for "reducing the growth of the GDP". [She doesn't say directly that this would not be true if the US had a large positive balance of payments surplus, but this is true. If I understand the theory correctly. And also it may explain why in the 19th Cent. the US may have had GDP growth while having a Gov. surplus. Also, if there was lot of gold being mined in the 19th Cent. This also would allow GDP growth along with a surplus.]
Links: [I hope they work]
https://cas2.umkc.edu/economics/.../Ful ... %20MMT.pdf