Monday, December 21, 2020

Vicious Attack on Rand Paul By Stephanie Kelton

Well, this is really something.

Stephanie Kelton, who really thinks there are no negative consequences to government deficit spending, just viciously attacked Senator Rand Paul for his very sound warning about out of control deficit spending.

Get a load of this:

As I detail in Problems With Modern Monetary Theory: A Comment on Stephanie Kelton’s "The Deficit Myth", Kelton has no understanding of fundamental economics and her book is filled with non sequiturs.




  1. Unfortunately he played into her hands by talking about "running out of money." Literally speaking, she's correct, the government cannot run out of (fiat) money. The debate with MMTers needs to be around the adverse consequences of printing money.

  2. I bet if you ask her she is about sharp as a river stone when it comes to inflation.

  3. "Economically illiterate drivel". Projection at its best!

  4. If "money" doesn't represent prior productivity, then it's not real money. Obviously, Rand Paul is talking about real money, and not the endless fiat money that is Kelton's definition.

  5. And BTW, Rand Paul has probably forgotten more sound economics than Kelton ever learned in her lifetime.

  6. Just read Chapter 4 in Kelton's book where she deals with government deficits and the "crowding-out" theory. She argues, in short, that "the crowding-out story doesn't work in countries (like the U.S.) that borrow in their own sovereign currencies." In short, no crowding out and the "proof" is that interest rates have gone down, not up. You will have to go to that chapter for the full analysis on why she thinks that this is so BUT the idea is not necessarily absurd on its face. Further, she does not assert that there are "no negative consequences" from deficits. According to her, deficits can be too large (or taxes too low) and the resulting spending splurge can certainly lead to inflation. So, Robert, I would be interested in your discussion of those two points. (You may have discussed them in your book which, alas, I have not yet read.)