Cory Doctorow Explains Modern Monetary Theory

SF&F author, Cory Doctorow, has a pretty solid grasp of economics and how it affects our society. In a long blog post, he has provided a good explainer on modern monetary theory. It's an important topic, especially right now, as governments are spending huge amounts of money to ameliorate the effects of the COVID-19 pandemic (or in the case of the United States, as an excuse the make their rich friends even richer at the expense of the working poor).  

If the government runs a "balanced budget" that means it's taxing as much money of out existence as it is spending into existence, leaving behind no money for the rest of us to save or spend. Balanced budgets starve the private sector of the money it needs to operate.

When that happens, banks create private money (lending money that they don't have on deposit, something that they are allowed to do as part of their deal with the national government), and then they get to charge interest for those loans.

So the finance sector hates public money – which benefits everyone – and loves private money – which benefits them. But of course, banks inevitably overspend and since they aren't national governments, they risk defaulting, so they need public money to bail them out.