Bard’s L. Randall Wray Testifies Before House Budget Committee on the Economic Costs of Debt

As America’s fiscal deficit nears $1 trillion for the first time since the financial crisis, the House Budget Committee held a hearing on November 20 seeking answers to a crucial question: Does it pose a clear and present danger to the economy? Professor Wray’s response: “Federal deficits and debt are not so scary. Neither is on an unsustainable path. Rather, persistent deficits and rising debt are normal.” Wray is one of the leading advocates of Modern Monetary Theory, an emerging school of thought that says countries like the United States, which borrow in their own currency, can pursue growth through deficit spending so long as prices are under control. His paper for the committee argued that MMT has never said deficits or debt don’t matter but that they are best viewed as outcomes of policies aimed at lifting the economy, not goals in themselves. When economists and lawmakers push for debt reduction, said Wray, “MMT cautions that what we might be reducing is economic growth.”

Post Date: 11-26-2019