ода на икономически растеж може да бъде приемлив, но по-високите нива могат да доведат до инфлация и други икономически проблеми. Той настоява за нов подход към фискалната политика, който включва по-голямо участие на държавата в икономиката чрез публични инвестиции и социални програми. Този нов подход, според Мозлър, може да доведе до по-устойчиво и справедливо икономическо развитие за всички граждани.
Warren Mosler and his criticism of US spending habits
Warren Mosler, often referred to as the “godfather” of Modern Monetary Theory (MMT), criticizes the spending habits of the United States administration, comparing them to a “drunken sailor.” Mosler, a prominent figure in MMT and a successful American entrepreneur, targets the dangerous mix of high debt levels and massive deficits, alongside the traditional tactics used by the Federal Reserve to combat inflation through high interest rates.
Mosler, whose work has significantly influenced the MMT movement, believes that a 7% deficit as a percentage of GDP in a period of economic growth may be acceptable, but higher levels can lead to inflation and other economic problems. He advocates for a new approach to fiscal policy, which includes greater government involvement in the economy through public investments and social programs. According to Mosler, this new approach could lead to more sustainable and equitable economic development for all citizens.
The Impact of Interest Rates on Inflation
Discussing the effects of interest rates on inflation, economist Mozler argues that a lack of recession is similar to “government spending like a drunken sailor.” This viewpoint challenges the traditional belief that higher interest rates can inadvertently fuel inflation through what is known as an interest income channel.
Rethinking Monetary Policy
Mozler’s unconventional perspective on monetary policy suggests that economists have underestimated the incentives coming from regular coupon payments to holders of US government bonds. He claims that interest rate hikes by the Federal Reserve indirectly boost government spending.
The Impact of Government Spending on the Economy
Government spending is a factor that traditional economists often overlook. Despite criticisms, experts see little risk of a recession due to the huge amount of money entering the system. Some even joke that if a 7% deficit led to a total economic collapse, “no one will ever hear about it.”
These warnings are valid. The Congressional Budget Office in the US has warned about the growing federal deficit and the expected interest expenses, which will exceed defense spending for the first time. This trend is concerning and needs to be addressed.
The Challenges of Economic Growth
The government is expected to maintain the budget deficit at or above 5.5% of GDP by the end of 2034. Meanwhile, the state’s economy reported a modest growth in real GDP of 1.4% in the first quarter of 2024, attributed to reduced individual consumption, exports, and government spending. In comparison, a growth of 3.4% was reported in the last three months of 2023.
Inflation Concerns
Prior to Mozler, property tycoon Grant Cardon also blamed “out of control” government spending for inflation. In a post on social platform X on June 21, Cardon presented statistical information, according to which
The Growing Debt Crisis in the US
The administration of President Joe Biden is currently collecting $4.4 trillion in revenue annually, but spending over $6 trillion, creating a massive imbalance. The public debt of the United States is now over $34.8 trillion, and the latest report from the Congressional Budget Office predicts it will exceed $50 trillion by the end of 2034.
Billionaire Calls for Urgent Action
Back in December 2023, billionaire Stanley Drakenmiller called for urgent action to offset the costs. He explained that the federal government had spent 20% of the country’s GDP before the outbreak of the pandemic.
The Impact of COVID-19 on the Economy
The pandemic has had a devastating effect on economies worldwide, with the GDP dropping by 25% in some countries. This crisis has led to unprecedented deficits, with government expenses surpassing revenues by trillions of dollars.
Words of Wisdom
As the famous saying goes, “When you find yourself in a hole, stop digging.” This advice is especially relevant during times of economic turmoil, as it reminds us to be mindful of our spending habits and make wise financial decisions.
