The Deficit Myth

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.”