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by L. Randall Wray
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Every few years, a politician stands before a camera and announces that the government must tighten its belt. The national debt has grown too large, they say. We have been living beyond our means. We must cut spending, raise taxes, or both, because we cannot keep borrowing from our grandchildren. The audience nods solemnly. The comparison to a household that has maxed out its credit cards feels intuitive. It feels responsible.
**Author:** L. Randall Wray
**Estimated Reading Time:** 45 minutes
**What You'll Learn:**
* Why a government that issues its own currency can never run out of money * How taxes actually create demand for currency rather than fund government spending * Why government deficits create private sector wealth * What the Job Guarantee is and how it could deliver full employment with price stability * Why the Eurozone was designed in a way that made crises inevitable * How to think clearly about inflation, hyperinflation, and quantitative easing
**Who This Book Is For:**
This book is for anyone who has ever wondered why governments that control their own currency behave as if they are perpetually on the verge of bankruptcy. It is for readers frustrated by the constant warnings about national debt burdens, for students of economics who sense that something is missing from the standard textbook story, and for citizens who want to understand what is actually possible when it comes to public policy. If you have ever asked whether we can afford to fix our infrastructure, hire more teachers, or address climate change, this book will change how you think about those questions.
Every few years, a politician stands before a camera and announces that the government must tighten its belt. The national debt has grown too large, they say. We have been living beyond our means. We must cut spending, raise taxes, or both, because we cannot keep borrowing from our grandchildren. The audience nods solemnly. The comparison to a household that has maxed out its credit cards feels intuitive. It feels responsible. There is just one problem. The comparison is wrong. A household that uses dollars must obtain dollars before it can spend them. It earns dollars through work, borrows them from a bank, or receives them as gifts. If a household spends more than it earns for too long, it will eventually run out of dollars and face bankruptcy. This is true for households, for businesses, for state and local governments, and for entire nations that do not issue their own currency. But it is not true for a government that issues its own currency. The United States government does not need to obtain dollars before it can spend them. It creates dollars when it spends. The Japanese government does not need to find yen under the sofa cushions. It creates yen by crediting bank accounts. The British government creates pounds. The Australian government creates Australian dollars. These governments are not like households. They are the source of the currency, not users of it. This distinction, between currency issuers and currency users, is the foundation of Modern Money Theory. It sounds simple, almost too simple.…
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Get the complete summary in the appA government that issues its own currency can always afford to buy anything for sale in that currency.
Taxes do not fund spending. They create demand for the currency and manage aggregate demand.
Government deficits create net financial wealth for the private sector.
The national debt is the private sector's financial asset, not a burden.
Bond sales manage interest rates, not government borrowing.
A floating exchange rate grants policy independence. A fixed exchange rate creates vulnerability.
"Modern Money Theory" is a strong fit if you want practical ideas around economics, finance, money, especially themes like a government that issues its own currency can always afford to buy anything for sale in that currency; taxes do not fund spending. they create demand for the currency and manage aggregate demand. The MinuteRead summary distills these concepts into a focused read, whether you're deciding whether to buy the book or applying its lessons at work.
Motivated to help readers with government that issues its own currency can always afford to hire unemployed labor, L. Randall Wray wrote “Modern Money Theory” to package those ideas for a fast, focused read. In “Modern Money Theory”, L. Randall Wray focuses on government that issues its own currency can always afford to hire unemployed labor. Through “Modern Money Theory”, L. Randall Wray distills the core ideas on economics into lessons readers can absorb in a single short sitting. Readers turn…
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