#99 Rohan Grey: On The Deficit Myth – Don’t Think Of A Household
Lawyer and Modern Money Network President Rohan Grey answers questions posed by readers of Stephanie Kelton’s The Deficit Myth at a book club event hosted by Ramona Massachi of Real Progressives.
Show Notes
Related episodes:
- For an intro to MMT Listen to these episodes.
- Listen to Episode 48 with Rohan on the #MintTheCoin initiative.
- Listen to Episode 90, with Stephanie Kelton.
- Our Unpacking The Deficit Myth Series.
Our episodes explaining government bond issuance:
More resources from Rohan Grey:
- Rohan Grey’s website.
- Administering Money: Coinage, Debt Crises, And The Future Of Fiscal Policy by Rohan Grey.
- Monetary Resilience by Rohan Grey.
- The Modern Money Network.
Other sources of Information:
- Most MMT resources can be found at We Can Have Nice Things.
- A list of upcoming MMT events and courses: https://www.patreon.com/posts/47531455
- A list of MMT-informed campaigns and organisations worldwide: https://www.patreon.com/posts/47900757
- Support Real Progressives.
- Listen to Macro N Cheese podcast.
We are working towards full transcripts, but in the meantime, closed captions for all episodes are available on our YouTube channel: https://www.youtube.com/channel/UCEp_nGVTuMfBun2wiG-c0Ew/videos
Transcript of Opening Monologue
At the beginning there, you heard Modern Money Network President Rohan Grey, and in a moment, we’re going to be hearing Rohan answer questions posed by readers of The Deficit Myth, Stephanie Kelton’s ground-breaking best-seller, at a book club event hosted by Ramona Massachi of Real Progressives.
In the show notes, I’ve linked to where you can see video of this event and to where you can follow and financially support the work of Real Progressives. They’re a team of volunteers doing incredible work, so please help out if you can.
If you’re new to MMT, you might want to listen to our first three episodes where we talk through the basics, or listen to our Unpacking The Deficit Myth series. We also have an episode with Stephanie Kelton, that’s our episode 90, but if you’ve already read, or you’re in the process of reading The Deficit Myth, the following Q&A is a great way to consolidate on the ideas introduced in the book.
The chapter under discussion, entitled “Don’t Think Of A Household” introduces the reader to the idea that the government isn’t like any other entity in the economy when it comes to the money we use. In fact the government is in the opposite position to the rest of us – they issue the currency, and we use it, and what follows from that is that when the government spends in deficit, ie it spends more than it collects in taxes, the non-government, that would include you and me, the non-government sector gets the surplus that that deficit creates.
Every deficit has to have a corresponding surplus, and so the government’s deficit is the private sector’s surplus – and so arguing to reduce the government’s deficit is the same as arguing to reduce the wealth of the private sector. One could argue that a certain fraction of the private sector could do with having their wealth reduced for social equity purposes, but anybody living in the real world knows that’s never where spending cuts or tax increases are targeted and so my personal feeling is that I can’t recall an example of where arguing for deficit reduction wasn’t just another way of arguing for austerity.
Professor Kelton has said elsewhere that she would prefer that people understood that headlines about trillion-dollar deficits were actually headlines about trillion-dollar surpluses as far as the readers of those headlines, all currency users, were concerned. And so the book is aimed at correcting these obvious and tired media distortions about what the term “government deficit” actually means.
In the following Q&A, a question comes up about government bond issuance and we have a two-part interview with Dr Steven Hail on that topic, and that’s our episodes 30 and 31 where we go into more detail about how it works, and why it shouldn’t really be called borrowing, and how the secondary bond market is something central banks use to achieve target interest rates, rather than to raise revenue to fund the government.
A lot of other things came up in the conversation, including the #MintTheCoin initiative, which Rohan worked on with congresswoman Rashida Tlaib, and the conversation touches on other MMT writing and resources, so I’ve linked to all of those in the show notes where, as ever, I’ve linked to where you can support this podcast financially via Patreon dot com slash MMT podcast. Support starts at a dollar a month which is 72 British pence at the time of recording, and no matter what level of support you give, you get early access to all our episodes, and patron-only episodes where you can ask me and Patricia MMT questions.
We are 100% listener funded, your financial support really helps keep the show going, and your support in other ways, whether it’s by recommending us to other people, or just by listening and spreading the word about this stuff really helps, too.
Thanks as ever for the time you put into understanding MMT, and thanks again to Ramona, Virginia, Steve, and the rest of the hard-working team at Real Progressives – let’s dive in!