Stephanie Kelton, an economics professor at the University of Missouri Kansas City and one of the earliest defenders of the coin, explained via email:
- "Until the idea of minting a $1 trillion coin became a reality, most people probably never gave much thought to the government’s financial operations. We understood that the government spent money, and we knew the money had to come from “somewhere”, but we assumed there were limits to how much the government could afford to spend.
- Like a household, we were told that the government could spend more than it takes in, but only as long as private lenders remained willing to extend credit. Borrow too much, and your credit rating will suffer. From there, it’s a hop, skip and a jump to “shared sacrifice” and “tough choices” to avoid becoming the next Greece.
- Enter the coin. An idea so simple the mind recoils. The Treasury has the power to end-run the process by cutting out the middlemen – taxpayers and bond markets –simply directing the Federal Reserve to add some numbers to its balance sheet. Saints preserve us! People are freaking out because the coin appears to remove the constraints on government finance by allowing the government to just “print” money. The truth is, the government is already the issuer of the currency. It is already not revenue constrained. The coin doesn’t change anything fundamental, but most people don’t realize this because they don’t know anything about the mechanics of the way the government currently gets numbers into its account at the Fed."
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