Powerful ideas from top nonfiction
Try Blinkist to get the key ideas from 7,500+ bestselling nonfiction titles and podcasts. Listen or read in just 15 minutes.
Start your free trial
Blink 3 of 8 - The 5 AM Club
by Robin Sharma
Listen to the Intro
The Deficit Myth summary
Stephanie Kelton
Modern Monetary Theory and the Birth of the People's Economy
25 mins
Brief summary
"The Deficit Myth" by Stephanie Kelton challenges the notion that government deficits are inherently bad and argues the importance of rethinking the role of money in our economy.
Topics
Table of Contents
The Deficit Myth
Summary of 8 key ideas
Audio & text in the Blinkist app
Key idea 1 of 8
The federal government shouldn’t budget like a household.
Imagine a typical political ad starring everyday, patriotic Americans. There’s a waitress, a businessman, and maybe an affable construction crew. The ad shows each of these stand-up citizens hard at work. Then, it shows them back at their kitchen tables planning the family finances.
Over these wholesome scenes, a voice poses a question: “You and your neighbors are responsible with your spending – shouldn’t the government be as well?” It seems like common sense. If a family can create and stick to a budget, so can the government.
However, Modern Monetary Theory, or MMT, argues that this analogy is a little too simple. While your everyday household uses money, the government actually makes it. It’s a subtle distinction that makes a huge difference.
The key message here is: The federal government shouldn’t budget like a household.
Traditional economics treats the government like a big, complicated family household. So if a family wants to buy something, like a new couch, it has to either make money from work or borrow money from the bank. Similarly, if the government wants to buy something, like a public health system, it needs to make money by taxing citizens or borrow money by issuing bonds. This is called the taxing and borrowing precede spending, or TABS, model.
But consider this: Where does money come from? In many countries, including the US, Japan, and Canada, money is made by the government. In the US, the Federal Reserve either prints it as bills or issues digital dollars directly into bank spreadsheets. Since only the government has this issuing power, it has monetary sovereignty – a monopoly – over its supply.
Being a currency issuer is important because, unlike a family, a government doesn’t need to earn money. It can simply make more of it. In fact, MMT says that money only exists in the first place because governments began spending it into existence.
Therefore, the TABS model is backwards. If the government wants to buy something, it must issue and spend the money first. After all, collecting taxes and borrowing only become possible after the money is already circulating. This is called spending before taxing and borrowing, or the STAB model.
So does MMT mean governments can just print as much money as they want? Not necessarily. However, it does mean they have fewer fiscal constraints than the average family. They don’t need to worry about deficit spending or going broke. But they do need to consider inflation. We’ll look at this issue in the next blink.
Want to see all full key ideas from The Deficit Myth?
Key ideas in The Deficit Myth
More knowledge in less time
Read or listen
Get the key ideas from nonfiction bestsellers in minutes, not hours.
Find your next read
Get book lists curated by experts and personalized recommendations.
Shortcasts New
We’ve teamed up with podcast creators to bring you key insights from podcasts.
What is The Deficit Myth about?
The Deficit Myth (2020) lays out the basic tenets of Modern Monetary Theory. This unconventional approach to economics asks us to reexamine how we think about budgets, scarcity, and even money itself.
The Deficit Myth Review
The Deficit Myth (2020) by Stephanie Kelton is an eye-opening exploration of government deficits and the myths surrounding them. Here's why this book is worth reading:
- By challenging conventional wisdom, Kelton provides a fresh perspective on the economy and government spending, allowing readers to question long-held beliefs.
- The book's clear and accessible explanations make complex economic concepts understandable for everyone, regardless of their background in economics.
- It offers a compelling argument for rethinking the role of government deficits, making it both thought-provoking and relevant in today's economic landscape.
Best quote from The Deficit Myth
Once you internalize the difference between the currency issuer and a currency user, you can begin to see, through a new lens, why so much of our political discourse is broken.
—Stephanie Kelton
Who should read The Deficit Myth?
- Political junkies seeking a hot new take
- Amateur economists looking to learn more
- Anyone who has ever asked, “But how are we going to pay for it?”
Categories with The Deficit Myth
Book summaries like The Deficit Myth
People ❤️ Blinkist
Sven O.
It's highly addictive to get core insights on personally relevant topics without repetition or triviality. Added to that the apps ability to suggest kindred interests opens up a foundation of knowledge.
Thi Viet Quynh N.
Great app. Good selection of book summaries you can read or listen to while commuting. Instead of scrolling through your social media news feed, this is a much better way to spend your spare time in my opinion.
Jonathan A.
Life changing. The concept of being able to grasp a book's main point in such a short time truly opens multiple opportunities to grow every area of your life at a faster rate.
Renee D.
Great app. Addicting. Perfect for wait times, morning coffee, evening before bed. Extremely well written, thorough, easy to use.
People also liked these summaries
4.7 Stars
Average ratings on iOS and Google Play
33 Million
Downloads on all platforms
10+ years
Experience igniting personal growth
The Deficit Myth FAQs
What is the main message of The Deficit Myth?
The main message of The Deficit Myth is that government deficits are not always bad and can be used to strengthen the economy.
How long does it take to read The Deficit Myth?
The reading time for The Deficit Myth varies depending on the reader's speed. However, the Blinkist summary can be read in just 15 minutes.
Is The Deficit Myth a good book? Is it worth reading?
The Deficit Myth is a thought-provoking read that challenges traditional beliefs about government spending. It offers valuable insights into economic policy and its impact on society.
Who is the author of The Deficit Myth?
The author of The Deficit Myth is Stephanie Kelton.
What to read after The Deficit Myth?
If you're wondering what to read next after The Deficit Myth, here are some recommendations we suggest:
- The Signal and the Noise by Nate Silver
- Crashed by Adam Tooze
- Makers and Takers by Rana Foroohar
- The Myth of the Strong Leader by Archie Brown
- Help Me, I Have No Discipline and Zero Self-Control by Vaughn Carter
- Capitalism, Socialism and Democracy by Joseph Schumpeter
- The Power of Instinct by Leslie Zane
- Superintelligence by Nick Bostrom
- Either/Or by Soren Kierkegaard
- The Algebra of Wealth by Scott Galloway