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It’s time for the federal government to spend – Editor

The following is the introduction to a blog by Prof Bill Mitchell on Monday 23 March 2020, with the title Modern Monetary Theory time! No, it always has been! [1]:

“The world is changing, that is for sure. Governments around the world are promising to spend billions to address the coronavirus crisis and no-one (other than a few so-called progressives) are talking about how governments will pay for the interventions. Everybody knows how. They have always known. The shams about governments not having enough money to provide adequate housing, schooling, employment, health care, other services, and a sustainable response to climate change are now exposed for all to see. The game is well and truly up. Everybody can see that governments only have to announce an intervention entailing billions of dollars in spending and it will happen. Forget all the ‘complexity’ about accounting arrangements. Forget also the stuff that we will drown under massive tax burdens if the government dares to help some disadvantaged person get a leg up in life. Forget all the stuff about bond markets punishing profligate governments with insolvency. Everybody can now see that the bond markets are the beggars and that the government rules. Even in the Euro-zone, it is obvious that the ECB is able to fund fiscal deficits of any size – ‘there is no limit’. Only the Modern Monetary Theory economists have consistently outlined the rationale for what is going on at present. And that point is increasingly being recognised although not always in ways I think does their work justice.“

Source: Billy Blog, 23 March 2020


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