Democrats are back. So is economist Stephanie Kelton’s big idea
In the early days of the Biden administration, after the COVID-19 pandemic and overlapping recession , advocates of government spending to aid the recovery faced concerns that such programs would add to the seemingly ever-growing national debt. In addition to arguments about unemployment and the overall health of the economy, backers of spending bills like what became the Infrastructure…
Democrats are making a strong comeback, and economist Stephanie Kelton's groundbreaking theory is gaining traction once more. After the COVID-19 pandemic and recession, advocates for government spending to aid recovery faced doubts about the potential impact on the national debt. However, Modern Monetary Theory (MMT) emerged as a powerful economic idea, particularly popularized by Stephanie Kelton, an economics professor and senior advisor to Bernie Sanders's presidential campaigns.
MMT argues that deficit spending by governments with the power to issue their own currency is not inherently bad and can be used to promote a more prosperous and just economy. Kelton's influential 2020 book, The Deficit Myth, explains why the federal government's budget doesn't function like a household budget, emphasizing the spending capacity available for priorities like healthcare, education, infrastructure, and climate change.
With Democrats set to take office in the House, Senate, and state governments after campaigning on affordability, MMT may once again influence government direction. Professor Kelton, now at Stony Brook University, notes that the book's ideas have reached many of the new candidates preparing to serve. The academic foundations of MMT, initially met with resistance, gained traction through Kelton's blog, New Economic Perspectives, and online debates with prominent economists.
The shift in Democrats' mindset towards MMT reflects a broader recognition that deficits are no longer the primary constraint on policy, contributing to a more progressive vision of government spending.
Written by urgent.news from Fast Company's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
