'How Are You Gonna Pay For It?'
This is the third and last in a series of posts based on youtubes from a speech in Milford CT by Warren Mosler. Warren is running for the Senate in CT in the Independent Party primary. Unlike both the Democratic and Republican candidates Warren really understands economics and his forté is explaining it to people. Here's a youtube following on the last one I blogged about. My earlier post covered Warren's policy proposals. This one considers the question “How are you gonna pay for it?””
I've written some about this question recently here, here, and here. And a lot of what I've written has been based on Warren's words and the words of other economists who use the MMT approach including Bill Mitchell, Randy Wray, Stephanie Kelton, Pavlina Tcherneva, Marshall Auerback, and Jamie Galbraith. In writing about the question, I've tied to write simply and bring my answers down to earth. But I don't think anybody is better at this than Warren. So here's what he has to say in the Milford speech:
Warren explains in plain language that our taxing and borrowing through the selling debt instruments do not produce money that is then used for spending. Instead, we never use the borrowed or taxed money, and instead just make money every time the Government spends. The Government is not like us. We have to use earned or borrowed funds to spend. But the Government has unlimited authority to spend subject only to what Congress says it can spend. That's part of what I mean by saying that the US Government is sovereign in its own currency, and also the basic reason why someone who asks you “How are you gonna pay for the it?” is just exhibiting their ignorance and failure to understand the monetary system, or even worse, if they do understand it, is just, plain lying.