In a Tweet criticizing a comment from Deutsche Bank for saying that there was a limit to debt that could be created. She said
Deutsche Bank initially said,"the more government debt you have, the less money you have available for government spending on health care, education, and social issues," which sounds pretty reasonable to me. Dr. Kelton said that only applies if you're on that primitive gold standard (in fine print just above the date/time tag at the bottom). She's arguing that money is infinite.
Nope, that's not how it works. That is only true if you treat money as finite and budget as fixed pie.It's interesting how she defends this. She specifically picks things that aren't real. By extension, I think her argument is that interest on the country's debt isn't real. We just make up money to pay it. If you owned US debt - Treasury Bonds, or other instrument - would you be happy to think they're just making up your repayment out of thin air?
- The carpenter can run out of inches of wood, nails or anything that is used to create real things
- The stadium can run out of seats, food, and playing surface. It can't give out points the team didn't score and retain any credibility.
- The airline can run out of Frequent Flier miles they can redeem: they can run out of seats to put passengers in.
- The USA can run out of dollars if we want them to be worth something.
This has Venezuela written all over it - where the money isn't worth bending over to pick up out of the gutter. Venezuela, Zimbabwe, Wiemar Republic...
Good thing America can't run out of zeroes to add to our currency. Get your wheelbarrows oiled and ready.
Stephanie Kelton in her day job as Professor of Economics at Stony Brook University. As the author of the original article quipped, I bet she gives out perfect recommendations for every student who asked - can't run out of those, can she? Which makes those recommendations worthless, too.