I encourage everyone to look at this with an open mind.
Explaining Why Federal Deficits Are Needed - New Economic PerspectivesNew Economic Perspectives
I'd like to add on this doesn't include the recent clinton surplus.Most MMT advocates probably took months to get comfortable with it. But like a personal computer, one need not understand its innards to use its power. The great power of MMT is its lesson that the federal government can create new dollars by running deficits to do things that should be done.
Most Americans believe the federal government is like a family or business that must live within its income. On the surface, that makes sense and the reasons why it is wrong are complex. Here are five nuggets, or simple ways to explain why it is wrong to voters who will never be economists. They show why federal deficits are necessary. They can be adapted and used as appropriate.
Federal deficits are necessary and the government normally runs them. It ran them during 129 of the past 200 years or nearly two thirds of the time. During the other third, it ran surpluses to reduce its debt during five periods of six or more years. Each period led to a major depression.
1823-1836: Federal debt reduced 99% depression began 1837.
1852-1857: 59% 1857.
1867-1873: 27% 1873.
1880-1893: 57% 1893.
1920-1930: 36% 1929.
The government had to run deficits to recover from each depression.
How Bill Clinton's Balanced Budget Destroyed The Economy - Business Insider
The private sector cannot survive in negative territory. It cannot go on, year after year, spending more than its income. It is not like the US government. It cannot support rising indebtedness in perpetuity. It is not a currency issuer. Eventually, something will give. And when it does, the private sector will retrench, the economy will contract, and the government's budget will move back into deficit."I look forward to some interesting discussion.When the government collects taxes it takes dollars out of the economy. It also appears to take dollars from the economy when it sells bonds. But unlike taxpayers who lose their purchasing power, bond buyers get bonds and keep their purchasing power. The deficit spending adds new dollars to the economy as if they had been printed. Note these key points:
Unlike reluctant taxpayers, bond buyers want the bonds to use as savings accounts to safeguard their dollars and earn interest.
The government redeems the bonds when they come due, but it can roll over or sell replacements indefinitely.
The total of all dollars the federal government has created this way since 1790 is called the federal debt which never has to be repaid while the nation exists. Attempts to reduce the debt significantly never worked because they took dollars from the economy that it needs to operate and grow.
Because the government can create dollars, it can never run out of them and cannot be forced into bankruptcy.
The federal government is not like families or companies because only it creates new dollars that stay in the economy unless it removes them by running surpluses.
This explanation is generally correct, but the details of how the government creates new dollars are more complicated.