This second entry in the Money & Public Purpose series features Stephanie Kelton and Warren Mosler debunking widely held misperceptions on the relationship of governments to the economy (for instance, that running surpluses is a good idea). In order to have government play the role they suggest, that of accommodating the actions of the other major sectors (households, businesses, export/import), the best approach is heavy reliance on automatic stabilizers such as their job guarantee. For instance, the English language media was hectoring Germany immediately after the financial crisis for not implementing much in the way of stimulus programs, as China and the US did. Germans were at first puzzled, then annoyed, since their employment related programs would lead to higher spending as the economy soured. And indeed, Germany’s performance shortly after the implosion was better than the critics forecast for this very reason.
They’ve aslo made a short slide deck available that includes the visuals used in the talk.