U.S. Can Run Deficits Much Bigger Than $1 Trillion: Economist Kelton

The video discusses the implications of trillion dollar deficits and the debt-to-GDP ratio, questioning traditional economic models. It highlights the need to contextualize government deficits as financial contributions to the economy. The discussion includes the concept of fiscal space, the impact of tax cuts, and the role of Modern Monetary Theory (MMT) in understanding fiscal policy. MMT suggests focusing on real productive capacity and inflation constraints rather than deficits. The video emphasizes the importance of using updated economic lenses for better policy debates.

What did the Congressional Budget Office project for the future regarding deficits?

• Trillion-dollar deficits

• A decrease in deficits

• Balanced budgets

• Surplus budgets

How does the speaker suggest we view government deficits?

• As financial contributions to the non-government sector

• As a financial burden

• As a temporary issue

• As a sign of economic failure

What is the estimated fiscal space available in the US economy according to the speaker?

• 100 to 200 billion

• 500 to 600 billion

• 700 to 800 billion

• 200 to 300 billion

According to Modern Monetary Theory, what should be the primary concern when considering government spending limits?

• Inflation constraints

• Public opinion

• Tax revenue

• Deficit size

What does MMT suggest about the traditional view of federal budgeting?

• It should focus on deficit size

• It should prioritize tax cuts

• It should focus on real productive capacity

• It should ignore inflation

How does MMT propose we change our perspective on economic policy?

• By focusing solely on tax cuts

• By using a fixed exchange rate

• By adopting a gold standard

• By using a modern set of lenses

What is the main goal of MMT according to the speaker?

• To increase government spending

• To reduce taxes

• To improve policy discourse and decision making

• To guide a specific policy agenda