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"The government is definitely capable of doing that, but think about the consequences. If the government were to spend without any limits at all, it would push

"The government is definitely capable of doing that, but think about the consequences. If the government were to spend without any limits at all, it would push aggregate demand to the point where the economy cannot grow quickly enough to satisfy the demand. The result will be inflation." In other words, deficits [can] matter. Where do you think we are right now?

nhaehnle 15y ago
Where do you think we are right now? You mean with respect to the size of the deficit? I think additional spending targeted at direct job creation would be a good thing. Even more so if the jobs created go towards improving the future economic capacity of the country, e.g. by improving schools, making the country more self-sufficient in terms of energy, think solar plants in southern states combined with updates to the electrical grids and storage capabilities, things like that. Actually, many MMT economists also argue in favor of a Job Guarantee, i.e. a government program that ensures full employment simply by providing such WPA-like jobs at a minimum wage. The theory is that such a program can never be inflationary. At least the kind of inflation that is caused by bidding for higher prices cannot happen since the wages in a Job Guarantee are fixed by legislation.