While some modern monetary theory supporters (‘MMTers’) can be pretty relentless in their advocacy, the Coalition of the Sane owes them a huge debt of gratitude because without their efforts we wouldn’t have ever witnessed a Washington Post pundit writing something like this (boldface mine):
The U.S. Treasury never has to default on any of its debts. That’s because we control our own currency. If we owe debts and don’t have the tax revenue to pay them, we can always just print the money and hand it over. That may not be the best approach, and in the very worst-case scenario this leads to hyperinflation so bad that defaulting is the less-bad option. But we’re so far from that situation today that worrying about it doesn’t seem worthwhile.
I’m sure many liberal-leaning economists from the neoclassical mold will think that they already knew this. That may be, but most people (heh–think about it…) did not know this. The idea that we can not run out of money–and its correlate that we can never be limited solely by the lack of currency–is a very important one, and one that was pushed not by Neo-Keynesians but the heterodox economists.
If you’re a scientist (for example), this means that, while we might not to fund certain things for various reasons, if someone tells you that ‘we can’t afford it’, he or she is full of it. Money should never be the rate-limiting step.
Unfortunately, our punditariat is incredibly stupid and is, on the whole, refractory to this idea, but that’s par for the course.
An aside: I’m very sympathetic to MMT, but I think some of its supporters seem oblivious to the effects that different kinds of deficit reduction and spending can have (not all cuts or increases are equal in their macroeconomic effects). The balance of accounts has great utility but can’t explain everything.