The Deficit Myth

Henry George School of Social Science

Spring 2022

Week 3 (May 02 2022) Discussion Questions

Chapter 2: Think of Inflation

• Explain the following terminology used by Kelton in Chapter 2:

  • Fiat currency
  • Cost-push and demand-pull drivers of inflation
  • Federal Reserve dual mandate
  • Functional finance
  • Automatic stabilizer

• In Chapter 2, Kelton discusses certain concepts from orthodox economics but is highly critical of them. In your own words, describe these concepts and Kelton's criticism of them.

  • Monetarism
  • Natural rate of unemployment
• From the MMT perspective, the political slogan, "Tax the rich to pay for the Green New Deal," is problematic. Why?

• In Chapter 2 Kelton introduces the concept of the the Federal Job Guarantee (JG).

  • What is the connection between the a federal Job Guarantee and the U.S.'s monetary sovereignty?
  • Why would the JG have to be financed by the federal government?
  • How would the JG stabilize inflation?
  • What would be the difference between the JG wage and current federal/state/local minimum wage laws?
• Kelton writes, "The threat to our common well-being isn't the budget deficit. It's excessive inflation." (69) "[U]nder current budgeting procedures, Congress doesn't have to consider inflation risk when it wants to spend more." (70)
• How would consideration of inflation risk be integrated into the federal budgetary decision-making process?