Book Review: "The Deficit Myth" by Stephanie Kelton
The Deficit Myth book

Book Review: “The Deficit Myth” by Stephanie Kelton

A couple of months ago, I reviewed Scott Santens’ Let There Be Money. In that book, he mentioned The Deficit Myth from author Stephanie Kelton. Having enjoyed Santens’ work overall, I decided to continue my education on Modern Monetary Theory (MMT) by downloading Kelton’s audiobook.

The Deficit Myth by Stephanie Kelton book cover

Subtitled Modern Monetary Theory and the Birth of the People’s Economy, Kelton’s book serves as a deep dive into the concept of MMT and how it differs from our widely accepted notions of the economy. For those unfamiliar, the basic idea is that, as a sovereign nation that has the ability to issue its own currency, there’s no reason to worry about national debt. In fact, she argues that the U.S. could erase the debt immediately if it wanted… but explains why that also might not be a good idea. Thus, although it’s common for us to think about the government’s budget as we do our own, that thinking (according to Kelton and other MMT economists) is dead wrong.

If that description still has you scratching your head a bit, luckily Kelton offers a number of illustrative examples and metaphors. This includes the bathtub concept (which Santens highlighted in his book) in which taxes act as a drain and government spending is the flowing water. There’s also a comparison to the game of Monopoly, with Kelton pointing out that players start with money in hand and the bank — per the rules — cannot run out of funds. Overall, I think these comparisons do an effective job of helping even the least economically inclined readers understand MMT and the arguments Kelton is making.

While it’s true that Kelon has worked as Chief Economist for Democrats, The Deficit Myth takes aim at both sides of the aisle, with the author pointing out that Barack Obama and even Bernie Sanders have often made statements that go against MMT’s ideals. Moreover, rather than taking potshots at specific politicians (although there are a few criticisms along the way), Kelton highlights some foundational issues that have made implementation of MMT more difficult. This isn’t to say that the book is perfectly even-handed when it comes to politics, but I wouldn’t say that it tries to offend either.

On that note, one of my favorite parts of the book was where Kelton coins a new term. You may be familiar with the titles “deficit hawk” or “deficit dove.” However, Kelton describes herself as a “Deficit Owl.” Not only does this fit the bird theme but, as she explains, the owl’s ability to see 360 degrees also makes it a perfect comparison for MMT economists.

Another interesting chapter in the book finds Kelton shifting focus to other types of deficits that are a problem — and how switching to an MMT model could allow us to address them. These include fixing joblessness, tackling climate change issues, and more. Here is also where Kelton admits that not all of the ideas she presents may actually be good ones, but that the possibilities are worth exploring. I found this honesty refreshing and realistic, which only raised my opinion of her overall.

Notably, while there are several mentions of the 2008 financial crisis throughout the book, one topic you won’t hear reference to is COVID. That’s because the book was initially published in June 2020 and was likely done months beforehand. Personally, although I’m sure Kelton has done interviews where I could hear how her MMT ideas could have helped with that situation, I’m hoping for a second edition where those topics can be explored.

On the whole, I’d say that Kelton’s arguments persuaded me on the potential that modern monetary theory presents. Yet, I can’t quite say the same for her guaranteed employment pitch. Like Santens, this is where I personally think a universal basic income would be more useful/effective. But, luckily, there’s no rule that says you need to agree with everything a book says.

After reading (or listening to) The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy, I can see why it’s already become such an influential work. Like other books I’ve enjoyed, this one got me thinking and made me question some of my preconceived beliefs. I also found the book to be uplifting, in a way, as it presents a certain amount of optimism about what’s possible — even if it’s an uphill march, to be sure. Ultimately, whether you come away from the book as an MMT true believer or thinking that it’s pure bollocks, I still think The Deficit Myth is worth a read.

The Deficit Myth
The Deficit Myth book cover
The Deficit Myth: A Thought-Provoking Exploration of What Our Economy is Capable Of
5
Formats
Paperback, hardcover, Kindle, audiobook
Page count/Runtime
352 pages (paperback)/10 hours 52 minutes
Stephanie Kelton’s “The Deficit Myth” is a fascinating deep dive into the concepts of Modern Monetary Theory (MMT). Despite the potentially dry or heady topics at hand, Kelton does an excellent job of illustrating MMT principles in intriguing ways and making them easy to understand. What’s more, she also does an effective job at laying out what types of economic possibilities an embrace of MMT could bring. All of this makes for a great read – even if you don’t end up agreeing with everything she lays out.
Pros
  • Presents its concepts clearly and understandably
  • Looks at both sides of the aisle politically
  • Offers ideas beyond the main conceit of MMY
Cons
  • Could use an update to incorporate lessons from COVID

Author

Kyle Burbank

Head Writer ~ Fioney
Kyle is the head writer for Fioney. He is a personal finance nerd, constantly looking for new apps and services to test and incorporate into his own financial game plan. In addition to his role at Fioney, he's written for other publications including Born2Invest, Lifehack, and Laughing Place, as well as his own site Money@30. He also creates personal finance and travel-related videos for Fioney's YouTube channel, which has garnered more than 2 million views. Currently, Kyle resides in Springfield, Missouri with his wife of 10 years. Together, they enjoy traveling (including visiting Disney Parks around the world), dining, and playing with their dog Rigby.

Other Articles by Kyle Burbank

American Express to Acquire Tock from Squarespace

American Express is expanding its dining platform with not one but two acquisitions. About the acquisitions: Today, Amex announced that it will be acquiring the restaurant reservation service Tock from Squarespace (who purchased the company in 2021). The purchase is expected to be for $400 million in cash but is subject to closing conditions, customary adjustments, and regulatory approval. Amex also notes that, as part of the deal with Squarespace,...
Gynger financing options

Technology Financing Company Gynger Raises $20 Million

A FinTech that helps tech-buying businesses finance their purchases has closed a new round of funding. About the round: This week, Gynger announced that it had raised $20 million. The Series A was led by PayPal Ventures, while Gradient Ventures, Velvet Sea Ventures, BAG Ventures, and Deciens Capital also participated. In addition to the equity round, the company secured a debt facility of $100 million from Community Investment Management. Previously,...
carry on travel bag and a Starbucks coffee

Starbucks and Marriott Bonvoy Announce Rewards Partnership

Two popular loyalty programs are joining forces to reward travelers (and keep them caffeinated). About the partnership: Starting this week, Starbucks Rewards and Marriott Bonvoy members will be able to link their accounts and earn bonus rewards. First, those with linked accounts will earn Double Stars during stays at participating Marriott Bonvoy properties. If a regular Starbucks Double Stars Day falls during one of these stays, members can earn Triple...
The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get the Latest News Delivered to Your Inbox

A Guide to Building Credit and Increasing Your Credit Scores

When it comes to credit, there’s some good news. The average credit score in the United States has been steadily rising in recent years, coming in at 715 in 2023. That may be because, today, consumers not only have more ways to access their credit reports and scores than ever before but also because there are an increasing number of options that Americans have for building credit in the first...

2024 SoFi Checking and Savings Review

Ever since I started taking an interest in the FinTech sector, one company whose name I’ve seen pop up over and over again is SoFi. Lately it seems as though that theme has been sent into overdrive as the company has not only become a household name thanks to its stadium naming rights deal but also because of the company’s continued product expansions. The most interesting development in my mind...
Brim logo

Brim Financial Raises $85 Million as It Eyes Global Expansion

Toronto-based FinTech infrastructure startup Brim Financial has announced a new funding round. About the round: Brim has revealed an $85 million round. The Series C was led by EDC Investments while new investor Vistara Growth and returning investors White Owl Group, Epic Ventures, and Zions Bank also participated. To date, the company has now raised $110 million including a Series B in 2021. According to Brim, the latest funding will...
Chase Freedom Flex card

Chase Reveals Q2 2024 Freedom 5%(+) Bonus Categories

Chase has announced its bonus category picks for the second quarter of 2024 — including some interesting twists. About the categories: As April approaches, Chase has revealed what categories Freedom and Freedom Flex cardholders can earn bonuses on. From April 1st through June 30th, customers can earn 5% (or more) in three categories: Amazon.com, Hotels, and Restaurants. Similar to how Chase embraced a "New Year, New Me" theme last quarter,...
Rent Day

Bilt Announces Home Collection Deal for May 2024 Rent Day

For May's Rent Day, Bilt is offering a deal that will allow members to decrease their rent bill while also adding to their home decor. About the Home Collection offer: Bilt has crafted a unique Rent Day offer for May 2024. Through the 1st, when Bilt members redeem their points toward rent payments, they'll receive the same number of points to be used toward Bilt Home Collection items. To take...