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MMT, Deficits and Savings: The Babysitting Model
John Carney | Senior Editor
Good post, good questions, moves the debate forward.
The answer to why government "should" accomodate non-government saving desire using the sectoral balance approach, stock-flow consistent modeling, and functional finance is to achieve full employment along with price stability (mopping up residual unemployment with the MMT JG).
The economic justification of this normative "should" is efficiency and effectiveness. Policy that idles productive resources unnecessarily is economically inefficient. MMT macro theory shows that this inefficiency in the name of controlling inflation is mistaken and that achieving full employment and price stability is a feasible objective using policy options derived from MMT macro theory.
Moreover, an economy is the material life-support system of a nation. Effectiveness wrt public purpose requires full employment in a situation in which income is a sine qua non of survival in modern society. Persistent unemployment results in economic adversity and political dissatisfaction, which all politicians know is poisonous to their careers.