Link of the day: Congress can give every American a pony
This piece from the LA Times gives an entertaining introduction to some of the ideas behind Modern Monetary Theory, without ever mentioning the word. The idea presented in the article is this: The amount a government is decided independently from the taxes it collects. Spending is therefore a question of ‘do we want to spend’ not ‘can we collect money to spend’. The article does not address the question when and why states default. But it presents an important idea. At some point in the future I plan to write more about Modern Monetary Theory. Until then, have a look at the Wikipedia article or at this Planet Money Podcast about the topic.