Weekend Guide: 10.16.2020
If I had to do it all over again I would try my hand at studying Economics. In an alternate universe I attended Princeton and studied at the famed Department of Economics. Went straight to Wall Street. Did my time - maybe ten years. Made some serious scratch. Then a quick 180 into the public sector, dedicating my life to educating youth on finance and fiscal responsibility all while atoning for my sins and those of my wall street brethren.
Let it be known that this path was never in the cards. My SAT scores, along with the rest of the academic package presented to institutions of higher learning left a lot to be desired. This is why I am so fascinated with truly smart people, especially those who trade in finance, a subject near and dear to my heart - also one that is purposefully abstract.
I’ve read countless books on finance and economics - histories, theories, practical applications - but none have been as clear and easy to understand as The Deficit Myth by Stephanie Kelton. In short, Kelton clearly outlines why the “How will we pay for that?” political rebut falls flat in a country with extreme monetary sovereignty like the USA (our government prints our own currency). It’s a must-read if you are at all interested in macroeconomics or modern monetary theory.
“America is a currency creator so there’s no reason for people to live like this. Government and the banks have made a deal to keep the people in debt. They always say if you print money it will cause inflation. They just printed 3 trillion. Little or no inflation.”
Without getting too in the weeds, here is the wikipedia entry for Modern Monetary Theory. Essentially, MMT posits that our government can pay for whatever it wants. Healthcare, education, social programs - but they don’t. Also, taxes are just there to create demand for the currency that they print. When you pay them, they just credit your account - a simple keystroke. Good to know, right? Coming up with the money is easy, the real challenge involves managing inflation as that money gets pumped into the economy. But with an unlimited supply of money, we should be able to figure this one out.
This is all to say that, simply, we can do better. Hopefully reading Kelton’s book will urge some folks to think a bit more critically about political discourse regarding deficit. It should allow us to make real world decisions based on real world resources. But, sadly those who are reading (anything at all) are all probably on the right side of history. So, in all likelihood we chalk it up to another shout into the echo chamber. Either way, a great read!
Last but not least, here is a link to a playlist for the weekend. As always, if you know anyone who would appreciate this content - pass it on!
Peace and love!
Dan