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In this vein, I think it would be a very different world if the lines in the budget were listed as percentages, and then the overall total was determined based on a factor of tax revenue. So a simplified version would look like:
War: 25%
Social Security: 25%
Bureaucracy: 25%
Debt: 25%
Total budget: 1.25x tax revenue for 2023.
And then the actual amount of money would get calculated based on these figures. Right now the numbers are so disconnected from anything the average person can comprehend.
Edit: I don't really mean for the average person to see percentages. Of course one could calculate percentages after the fact.
I mean for the politicians to only see a percentage on each line item. I mean for politicians to argue that X program should get .01% of the budget, while that program only receives .005%. Percentages are a way of declaring priorities. And you can't exceed 100%.
And then, after the percentages are selected, the total budget compared to the tax revenue for the previous year is argued about and chosen.
Apparently it's not just for the average person.
To be fair, it's easy to mock people who ought to know what they're talking about but the US funding market is legitimately impossible to describe.
I think his interview was taken out of context. Atleast I hope it was. The reason we borrow money instead of just printing all we need is it basically soaks up money that would end up elsewhere and cause inflation instead of being saved. And inflation reduction device.
He should be smart enough to know that so I have to assume he was just tired or wasn’t sure where they were going and didn’t feel like providing a better answer.
He might be an MMTer. That's gotten popular among the in crowd recently for obvious "we can print as much money as we want without worrying about inflation" reasons.
This is rather MMTers poking some fun at other supposed macro experts who don't actually have a correct clear grasp on how money or government funding works. He kept tripping over his words because his intuition was leading him astray, so "government prints money and then lends it" kept coming out. The correct, clear, simple answer is that government prints money in the form of bonds every day, and swaps them with central bank reserves where appropriate (like swapping between $100 bills, $1 bills, and quarters where appropriate, perhaps when trying to ride the bus or go to the arcade). The only clash is that people have pre-existing non-sensical stricter definitions of the word "money", so MMT generally prefers to sidestep a language intuition issue and just refer more broadly to what matters, financial assets.
It's already been nearly a decade since mainstream economists stopped trying to say MMT is wrong, and switched to "we knew that already", so I guarantee you MMTers aren't saying something as obviously wrong as "we can print as much money as we want without worrying about inflation". And it's MMT who has pushed better & better verbal explanations to laypeople of all those interlocking balance sheets in IGI's linked NYFed diagram.
This might also be because talking with MMT'ers is often a constant exercise of dealing with motte-and-baileying with risible radical claims and commonsense stuff described in somewhat different words from usual.
Bingo.
I looked deep into MMT many years ago to find out what descriptive claims they made that were different from mainstream economics. I found three:
(1) Confidence in fiscal policymakers to e.g. time fiscal policy to control demand.
(2) An approximately flat SRAS curve, though many of its advocates don't realise this and haven't read about SRAS curves, because they have never read an intro macro textbook. In plain English, it's like an on/off model of how increased demand affects prices: until full employment, stimulus is more or less non-inflationary. Mainstream Keynesians used to believed this.
(3) Various Old Keynesian claims about the monetary policy or interest rate changes, though this is not universal among MMT advocates.
That's it. Everything else is motte-and-bailey, rhetoric, distractions which have performed the useful function of hiding MMT from most rigorous scrutiny, or uninteresting errors that some advocates of MMT make when they mix up normative with descriptive claims about how e.g. the Treasury works.
I'm not an economist and I don't understand much about it, so I wish you and @LateMechanic would have a discussion to illuminate this a bit. He seems to be pro-MMT and you seem to be against. You two have any thoughts on the other's view?
Such a discussion would be hard. MMT advocates tend to see themselves as primarily stating a profound critique of standard theories of public finance that is true as a simple matter of institutional facts + accounting, whereas I see them as warming up a few ideas that almost all Keynesians abandoned long ago. So the very terms of the debate would likely be messed up. This has been my experience debating MMTists in the past, e.g. they say, "Do you admit X?", I show that X has been standard econ for 100+ years, and they say "Oh, so you admit X!", I say "Of course", and then they say, "Well, this politician says otherwise, and he did PPE at Oxford, so economists must teach otherwise!"
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