The above title was suggested in a comment on YouTube to the video below.
The actual title on the New Economics Perspectives web site is Dr. Kelton’s Graduate Macro Students’ Video Project. The Dr. Kelton of the title is Stephanie Kelton, Professor, Economics, and Chair of the Department of Economics, University of Missouri-Kansas City.
I think the video is something that everyone should see, but you know me. I always question everything. So I left a comment on the web site and on YouTube.
At 9:34 into the presentation – Sector Financial Balances as a % of GDP, 1952q1 to 2013q2
There was a little sleight of hand in part of the discussion around the government always needing to be in the red so that others can be in surplus. The truth of the matter is that the government may need to run in the red if the money supply needs to be increased. In a growing economy, the money supply almost always needs to increase, so it seems like the argument I am making is only a quibble.
However, when you skip over the truth to make your message less complicated, it always comes back to bite you. When your opponent points out the fallacy of your argument, you don’t want to have to backtrack, admit you weren’t being accurate, and only then make the correction I am suggesting.
Is the four added words in the proviso, “in a growing economy”, too much to expect in order to keep the argument completely above board?
If the Fed is now ineffectively shoving massive amounts of liquidity into the economy to try to stimulate it, might there come a time when the economy recovers that this excess liquidity must be slurped back out? I know the Fed says that they have a plan, so maybe it won’t require a few years of government surpluses to accomplish the task.
Adding this to the discussion might prove to the doubters that you aren’t completely blind to other possible events that could happen.
December 13, 30123
One of the New Economic Perspectives comments on this article suggested a Dilbert comic strip.
Scott Adams probably didn’t mean this as the start of a deep economic question, but this Dilbert cartoon: http://dilbert.com/2013-12-03/ (at least the first 2 frames) can provide a humorous segueway to answer the question of the origin of money — “The first money came (and continues to come) from the issuer!” Most people agree with frame one, but haven’t even thought to ask frame two and who that issuer might be.