《The Deficit Myth: Modern Monetary Theory and the Birth of the Peoples Economy》
Introduction Bumper Sticker Shock
It ain’t what you know that gets you into trouble. It’s what you know for sure that just ain’t so.
—MARK TWAIN
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Modern Monetary Theory (MMT)
Do I believe the solution to all our problems is to simply spend more money? No, of course not. Just because there are no financial constraints on the federal budget doesn’t mean there aren’t real limits to what the government can (and should) do. Every economy has its own internal speed limit, regulated by the availability of our real productive resources—the state of technology and the quantity and quality of its land, workers, factories, machines, and other materials. If the government tries to spend too much into an economy that’s already running at full speed, inflation will accelerate. There are limits. However, the limits are not in our government’s ability to spend money, or in the deficit, but in inflationary pressures and resources within the real economy. MMT distinguishes the real limits from delusional and unnecessary self-imposed constraints.
Chapter 1 Don’t Think of a Household
MYTH #1: The federal government should budget like a household.
REALITY: Unlike a household, the federal government issues the currency it spends.
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household model (TAB)S: taxing and borrowing precede spending
currency-issuer model S(TAB): spending before taxing and borrowing
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How the Currency Issuer Spends: S(TAB)
Mosler had a beautiful beachfront property with a swimming pool and all the luxuries of life anyone could hope to enjoy. He also had a family that included two young kids. To illustrate his point, he told me a story about the time he sat his kids down and told them he wanted them to do their part to help keep the place clean and habitable. He wanted the yard mowed, beds made, dishes done, cars washed, and so on. To compensate them for their time, he offered to pay them for their labor. Three of his business cards if they made their beds. Five for doing the dishes. Ten for washing a car and twenty-five for tending to the yard work. Days turned into weeks, and the house became increasingly uninhabitable. The grass grew knee high. Dishes piled up in the sink, and the cars were covered in sand and salt from the ocean breeze. “Why aren’t you doing any work?” Mosler asked the kids. “I told you I would pay you some of my business cards to pitch in around here.” “D-a-a-a-a-ad,” the kids intoned. “Why would we work for your business cards? They’re not worth anything!”
That’s when Mosler had his epiphany. The kids hadn’t done any chores because they didn’t need his cards. So, he told the kids he wasn’t requiring them to do any work at all. All he wanted was a payment of thirty of his business cards, each month. Failure to pay would result in a loss of privileges. No more TV, use of the swimming pool, or trips to the mall. It was a stroke of genius. Mosler had imposed a “tax” that could only be paid using his own monogrammed paper. Now the cards were worth something.
Within hours, the kids were scurrying around, tidying up their bedrooms, the kitchen, and the yard. What was once considered a worthless rectangular calling card was suddenly perceived as a valuable token. But why? How did Mosler get the kids to do all that work without forcing them to do any chores? Simple. He put them in a situation where they needed to earn his “currency” to stay out of trouble. Each time the kids did some work, they got a receipt (some business cards) for the task they had performed. At the end of the month, the kids returned the cards to their father. As Mosler explained, he didn’t actually need to collect his own cards back from the kids. “What would I want with my own tokens?” he asked. He had already gotten what he really wanted out of the deal—a tidy house! So why did he bother taxing the cards away from the kids? Why didn’t he let them hold on to them as souvenirs? The reason was simple: Mosler collected the cards so the kids would need to earn them again next month. He had invented a virtuous provisioning system! Virtuous in this case means that it keeps repeating.
Mosler used this story to illustrate some basic principles about the way sovereign currency issuers actually fund themselves. Taxes are there to create a demand for government currency. The government can define the currency in terms of its own unique unit of account—a dollar, a yen, a pound, a peso—and then give value to its own otherwise worthless paper by requiring it in payment of taxes or other obligations. As Mosler jokes, “Taxes turn litter into currency.” At the end of the day, a currency-issuing government wants something real, not something monetary. It’s not our tax money the government wants. It’s our time. To get us to produce things for the state, the government invents taxes or other kinds of payment obligations. This isn’t the explanation you’ll find in most economics textbooks, where a superficial story about money being invented to overcome the inefficiencies associated with bartering—trading goods without the use of money—is preferred. In that story, money is just a convenient device that sprang up organically as a way to make trade more efficient. Although students are taught that barter was once omnipresent, a sort of natural state of being, scholars of the ancient world have found little evidence that societies were ever organized around barter exchange.
The Role of Borrowing in MMT
Then why does the government need to borrow? The answer is, it doesn’t. It chooses to offer people a different kind of government money, one that pays a bit of interest. In other words, US Treasuries are just interest-bearing dollars. To buy some of those interest-bearing dollars from the government, you first need the government’s currency. We might call the former “yellow dollars” and the latter “green dollars.” When the government spends more than it taxes away from us, we say that the government has run a fiscal deficit. That deficit increases the supply of green dollars. For more than a hundred years, the government has chosen to sell US Treasuries in an amount equal to its deficit spending. So, if the government spends $5 trillion but only taxes $4 trillion away, it will sell $1 trillion worth of US Treasuries. What we call government borrowing is nothing more than Uncle Sam allowing people to transform green dollars into interest-bearing yellow dollars.
Chapter 2 Think of Inflation
MYTH #2: Deficits are evidence of overspending.
REALITY: For evidence of overspending, look to inflation.
Faith Contested
The truth is, we have placed far too much responsibility on central banks, not just in the US but around the world. They cannot alter taxes or spend money directly into the economy, so the best they can do to promote employment is to try to establish financial conditions that will give rise to more borrowing and spending. Lower interest rates might work to induce enough new borrowing to substantially lower unemployment. But they might not. As Keynes famously observed, “You can’t push on a string.” What he meant was that the Fed can make it cheaper to borrow, but it cannot force anyone to take out a loan. Borrowing money puts companies and individuals on the hook for the debts they incur. Loans must be repaid out of future income, and there are good reasons why the private sector might be reluctant to increase its indebtedness at various stages of the business cycle. Remember, households and businesses are currency users, not currency issuers, so they do need to worry about how they’re going to make their payments.
Chapter 3 The National Debt (That Isn’t)
A Life Without Debt?
TABLE 1. US History of Budget Surpluses and Debt Reduction
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What this means is that times have changed. The dollar is no longer tied to gold. The US issues a freely floating fiat currency so it doesn’t need to tax or borrow before it can spend. Indeed, as we learned in Chapter 1, the S(TAB) model reflects the way the economy actually works. Taxes aren’t important because they help the government pay the bills. They’re important because they help to prevent government spending from creating an inflation problem. Similarly, bond sales aren’t important because they allow the government to finance fiscal deficits. They’re important because they drain off excess reserves, which enables the Fed to hit a positive interest rate target. But today the Fed pays interest on reserve balances, so it no longer relies on Treasuries to hit its rate target.
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If we’re not going to eliminate Treasuries, then we must find a way to make peace with the national debt. Perhaps we should start by giving it another name. The national debt is nothing like household debt, so using the word debt just leads to confusion and unnecessary angst. We could just refer to it as part of our net money supply. I doubt yellow dollars will catch on, but hey, it’s worth a shot! In Shakespeare’s Romeo and Juliet, Juliet famously inquires, “What’s in a name?” She wasn’t troubled when she learned that Romeo was a Montague. For her, “A rose by any other name would smell as sweet.” Love, as they say, is blind. On the political stage, words matter. It’s time to come up with a new name for these interest-bearing dollars.
Chapter 4 Their Red Ink Is Our Black Ink
MYTH #4: Government deficits crowd out private investment, making us poorer.
REALITY: Fiscal deficits increase our wealth and collective savings.
Chapter 5 “Winning” at Trade
MYTH #5: The trade deficit means America is losing.
REALITY: America’s trade deficit is its “stuff” surplus.
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A gold standard is only credible if the government can make good on its promise to convert the currency into gold at a fixed price. Having enough gold was critical. And running a trade surplus was the surest way to build up a country’s gold reserves. Conversely, trade deficits led to an outflow of gold, since countries used gold to pay for their imports. To try to prevent the loss of gold reserves, interest rates were frequently raised to draw the flow of gold bullion back into the country. The idea is that higher interest rates would slow down domestic demand sufficiently (meaning fewer imports and therefore less gold flowing out of the country) while the higher returns promised by increased rates would encourage more gold inflows. But raising interest rates to reverse an outflow of gold often meant that governments weren’t free to keep interest rates low to support their domestic economies. Even when high interest rates succeeded in protecting gold reserves, the policy often had devastating consequences. That’s because rising interest rates frequently triggered an economic slowdown, which meant that many of the citizens of the affected country had to endure domestic recessions and entrenched unemployment. So the gold standard created a recessionary bias in economies operating with trade deficits. The inflexibility of the system prevented governments from focusing on full employment.
Chapter 6 You’re Entitled!
MYTH #6: “Entitlement” programs like Social Security and Medicare are financially unsustainable. We can’t afford them anymore.
REALITY: As long as the federal government commits to making the payments, it can always afford to support these programs. What matters is our economy’s long-run capacity to produce the real goods and services people will need.
Chapter 7 The Deficits That Matter
As long as there is plenty, poverty is evil. Government belongs wherever evil needs an adversary and there are people in distress.
—JOHN F. KENNEDY
Chapter 8 Building an Economy for the People
The Descriptive Side of MMT
An MMT view of the monetary system changes the way we think about what it means for currency-issuing nations to “live within their means.” It asks us to think in terms of real resource constraints—inflation—rather than perceived financial constraints. It teaches us to ask not “How will you pay for it?” but “How will you resource it?” It shows us that if we have the technological know-how and the available resources—the people, the factories, the equipment, and the raw materials—to put a man on the moon or embark on a Green New Deal to tackle climate change, then funding to carry out those missions can always be made available. Coming up with the money is the easy part. Managing the inflation risk is the critical challenge. More than any other economic approach, MMT places inflation at the center of the debate over spending limits. It also offers a more sophisticated array of techniques for managing inflationary pressures than what we have today.
[[备注]] How will you resource it? 这个思维重要
What MMT describes is the reality of our post–Bretton Woods monetary system. We are no longer on a gold standard, and yet much of our political discourse is still rooted in that outmoded way of thinking. We see it every time a reporter asks a politician, Where will you find the money to do that? It’s long past time we came to grips with what it means to be the issuer of a sovereign fiat currency. For the currency issuer, money is no object. Literally or figuratively. It doesn’t exist in some scarce physical form—like gold—that the government needs to “find” in order to spend. It is conjured into existence from a computer keyboard each time the Federal Reserve carries out an authorized payment on behalf of the Treasury.
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Austerity is a failure of imagination—a failure to imagine how we can simultaneously improve living standards, invest in our nation’s future, maintain a healthy economy, and manage inflation. Trade wars are a failure of imagination—a failure to imagine how we can simultaneously maintain domestic full employment, help poorer nations sustainably develop, lower our global carbon impact, and continue to enjoy the benefits from trade. Ecological exploitation is a failure of imagination—a failure to imagine how we can simultaneously improve living standards, maintain a prosperous economy, and transition human activity so that we are protecting people and the planet. MMT provides a profound tool kit for all countries to begin to reimagine how they can care for their local populations, preserve treasured cultural identities, rejuvenate unique ecosystems, redevelop sustainable and local agriculture, increase productive capacity, and encourage innovation.
Let’s look at one example of how MMT can help us find alternative approaches to improving real outcomes. One of the main challenges facing policy makers in the US and around the world is the transition to sustainable and zero carbon energy production. The transition of our nation’s electric infrastructure has begun, but there is a long way to go to scale up renewable energy, energy storage, and other technologies to replace fossil fuels as the primary means of electricity production. Under the old paradigm, the policy debate is often based on either government mandates or market incentives. A government mandate requiring power companies to generate cleaner forms of electricity could leave ratepayers (households and businesses) saddled with the extra costs. Though market incentives, such as giving tax credits to companies who develop more sustainable energy generation, can potentially stimulate a build-out of alternative energy sources, they can also slow adoption as developers wait for optimal economic conditions. As a result, utilities might wait longer before retiring existing coal plants.