Are you sure you want to delete this post?
My MMT RESPONSE to the President's STATE of the UNION speech:
If people saved as much as Obama wants them to save, we would need much larger government deficits than we do already. Unspent income is known as a demand leakage, and if the private sector doesn't want to spend all or more of its income, it's up to the federal government to spend more than its income, or the amount by which people are attempting to net-save doesn't get sold as output, and incomes fall by that amount, leading to less overall savings. This is known as the "paradox of thrift."
And the failure to understand this (known as a "fallacy of composition"
) drives the erroneous idea that "savings fund investment spending", when its the other way around.
The federal government has already built-in massive tax incentives to save (especially for rich people) and the Obama "myRA" plan would build on that for lower income groups. But if everybody saves, who spends to keep the system from grinding to a halt? Some agent has got to spend more than their income, but the private sector cannot do that forever. Only the government can, because it has the only legal printing press, and it doesn't tax to collect its own money. It taxes to regulate our spending and compel us to acquire the government currency. U.S. dollars are tax credits, and the currency is a simple public monopoly for public purpose. Involuntary unemployment and excess capacity is the evidence that the economy wants to hold more tax credits than supplied by the issuer.
And all of this saving means we can have lower taxes per size of government + financial conditions.
If people want to save larger proportions of their income, that's not a problem, but that means we need larger government deficits than otherwise. government deficit=non-government surplus.
Cut taxes for the 99%.
Stop handouts to rich people.
Offer a federally funded job to anyone who is able and willing to work serving their country at a living wage, while they look or wait for a job paying higher wages.