The Deficit Myth - Stephanie Kelton [Economics Series]

Join us for a discussion of The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy by Stephanie Kelton.
The synopsis and some tentative discussion questions are below. If as you read, you encounter some thought-provoking lines and/or find yourself wrestling with some burning questions, please note them down and bring them to the discussion!
Whether you’ve read the whole book or just want to explore some of its central ideas, you’re welcome to join; and if you need help accessing the text, please feel free to reach out to me directly.

Synopsis:
In The Deficit Myth, Kelton challenges the conventional view that government budgets function like household budgets and that deficits represent fiscal irresponsibility. Drawing on Modern Monetary Theory (MMT), she argues that sovereign governments that issue their own currencies are not financially constrained in the same way as households or businesses; their real constraint is inflation, not solvency. The book reframes deficits as tools that can support full employment, public investment, and social welfare, while warning that the true limits to spending lie in resource capacity and price stability. Kelton contends that misunderstandings about public debt have narrowed political imagination and prevented governments from pursuing policies that could expand economic security and shared prosperity.

Discussion Questions (subject to revision):

1. Kelton argues that governments that issue their own currency cannot “run out of money” in the way households can. How convincing do you find this distinction?
2. If inflation—not solvency—is the real constraint on public spending, how confident should we be in policymakers’ ability to manage that constraint?
3. Does reframing deficits as potentially beneficial change how you think about public debt debates in the U.S. or other advanced economies?
4. Kelton emphasizes real resource limits (labor, materials, productive capacity) over financial limits. Does this shift clarify economic trade-offs, or obscure fiscal discipline?
5. Critics argue that MMT underestimates political and institutional risks. What vulnerabilities or blind spots do you see in Kelton’s framework?
6. How does The Deficit Myth compare to more conventional macroeconomic theories about deficits, crowding out, and interest rates?
7. To what extent are Kelton’s claims dependent on the U.S. dollar’s global reserve status? Would her framework apply equally to smaller or emerging economies?
8. After engaging with the book, do you feel that deficit fears are overstated, appropriately cautious, or insufficiently attentive to inflationary risk?