Cambridge Business Association
The Deficit Myth
A review of

The Deficit Myth

Modern Monetary Theory and the Birth of the People's Economy

Stephanie Kelton • Public Affairs • 2020

Pay No Attention to the Debt Behind the Curtain

by Ariel Courage

“But how will you pay for it?” is a common refrain in American politics, but what if cost really is no object? In The Deficit Myth, economist Stephanie Kelton explains why America can have its debt without fret. 

Stephanie Kelton, a professor at Stony Brook University and former economist on the US Senate Budget Committee, has gained notoriety with her claim that deficits don’t matter. In The Deficit Myth, she argues that federal governments need not balance their budgets; if they spend beyond their means, central banks can simply print more money. It’s an appealing theory, and Kelton makes a compelling case for it. 

Foreign Affairs said the book was “clear and vigorously written,” and The Guardian wrote of Kelton, “She has succeeded in instigating a round of heretical questioning, essential for a post-COVID-19 world, where the pantheon of economic gods will have to be reconfigured.” Economic adviser Mohamed A. El-Erian called The Deficit Myth “a ‘must-read’ that is sure to influence many aspects of policy making going forward.” But the text also has drawn plenty of detractors, including The Wall Street Journal, which termed it “magical thinking,” and the Cato Institute, which wrote that “it’s an attractive vision, but it doesn’t work.”

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