Another Comment in the Washington Post

Another article in the Washington Post, discussing my senator #MoscowMitch's plan to let all the states go bankrupt, compelled me to preach the MMT gospel! Hallelujah, time for a Jubilee!

Note, I have an electronic subscription to the Washington Post, the article may be behind a paywall.

Congress needs to provide relief to states, companies, and individuals in whatever amount necessary. #MoscowMitch's line about "borrowing money from future generations" is either disingenuous or ignorant, with Mitch it's hard to tell which. The US government never borrows money. Following the orders of Congress, the Fed creates money by crediting private bank reserve accounts, operations that occur completely in computers. Taxes destroy money to keep the money supply under control. The Treasury sells bonds to hit interest rate targets and thereby guide the economy, not to "borrow money". The Treasury never has to sell bonds.

#MMT FTW! Now is the time. If it's appropriate, and interest rates are greater than zero, we can worry about the excess Dollars generated when we are out of this mess.

Note, to compute a blue sky upper bound on the amount of relief that could be provided: GDP is currently ~$21T, the national debt is ~$24T. Japan has had a national debt of 2x GDP for 2 decades without serious consequences. If we go to 2x, we have $18T to play with.