The Deficit Myth review: Flipping the script on how we think of public finances
Stephanie Kelton believes modern monetary theory can build a better economy
Stephanie Kelton: Smashing shibboleths of conventional economic wisdom, she is unafraid to point out the emperor has no clothes. Photograph: Tom Williams/CQ Roll Call
Milton Friedman once noted that when a crisis occurs, “the actions that are taken depend on the ideas that are lying around”. Indeed, it was many of his own ideas that became bedrocks of neoliberalism and using monetary policy to manage the business cycle following the stagflation of the 1970s.
As the initial shock and awe of Covid-19 ebbs to reveal economic wreckage that could ultimately dwarf that of the global financial crisis of a decade ago, finance ministers and fiscal pundits are flagging a future retreat to the orthodoxy of fiscal hawkishness. Austerity by any other name would smell so foul.