Book Review: Liberty From National Debt

The volume "Freedom from National Debt" past times Frank N. Newman, was published inwards 2013, together with is an introduction to financial policy. Frank N. Newman worked equally a banking concern executive together with was the number ii official at the US Treasury. In the book, he explains why worries almost US regime debt are largely unfounded. The cloth is familiar dry soil for those who follow Modern Monetary Theory (MMT) only the volume is presented without equally good much theoretical baggage. 

Book Content 

The volume is fairly short, at 107 pages (I read the Kindle version, hence I honor that length is harder to judge). The volume consists of 10 chapters, addition an introduction together with an appendix.

The chapters are:

• Chapter 1: What is "Money"?
• Chapter 2: How Money (bank deposits) together with Treasuries are continually exchanged
• Chapter 3: Why taxes are never needed to "pay off" "national debt"
• Chapter 4: Why US Treasuries cannot aspect upwardly the same problems equally securities issued past times eurozone nations
• Chapter 5: Why nosotros exercise non require to worry almost involvement rates on Treasuries (The myth of the "bond vigilantes")
• Chapter 6: Why involvement on Treasuries is non a work for the US 
• Chapter 7: Why unusual ownership of Treasuries is non a problem
• Chapter 8: The quote debt limit" debate inwards Congress
• Chapter 9: Economic Saving together with Treasuries
• Chapter 10: Conclusions

The chapter titles offering a real adept overview of what his conclusions are. The volume uses closed to of the analysis from the author's before volume "Six Myths That Hold Back America – And What America Can Learn from the Growth of China's Economy" (which I accept non read). The volume is somewhat informal, together with does non dump of majority of statistics on the reader. Unfortunately, it does non accept figures showing the trends inwards economical data. I honor that presenting information inwards graphical course of written report would assistance readers lay the electrical current province of affairs inwards context.

The target audience of the volume would endure citizens who accept an involvement inwards these questions, together with non specialists. By means of comparison, the writing on this weblog is targeted at somewhat to a greater extent than specialized audience. The operational framework he discusses is for the United States, although he refers to the differences from the Euro area.

Relationship with MMT

There is an obvious overlap with the analysis of regime debt inwards MMT. I accept covered many of these topics myself here. The payoff of the volume format is that it provides a continuous business of argument.

Although he refers to MMT authors (plus others who accept a like persuasion of the role of regime debt), of the volume is mainly presented equally matter-of-fact statements almost the operational realities of the Treasury marketplace together with banking system, without introducing theoretical baggage. Since Mr. Newman was Deputy Secretary of the U.S. Treasury, he is inwards a seat to fighting from potency almost regime debt operations.

The payoff of non delving into theory is that the volume should endure easier to follow. The disadvantage is that it is to a greater extent than hard to know where 1 could read farther on these topics, together with a reader may honor it harder to empathise discussions elsewhere. For example, inwards chapter ix he discusses "heat together with air-conditioning" inwards the context of non having financial policy causing the economic scheme to hitting capacity constraints, which presumably would Pb to inflation. If he had mentioned Functional Finance, it would endure easier for a reader to rails downwardly to a greater extent than tidings of the topic, together with empathise the debates almost the issue.

Can Theory Be Ignored?

I volition Federal Reserve notation that I am inwards the procedure of writing a volume on financial policy, together with I am interested inwards how closed to other writer decided to approach the topic. By non dragging inwards arcane debates almost Ricardian equivalence, only instead explaining operational realities inwards a affair of fact tone, the volume in all probability could accomplish a wider audience. I accept a narrower target audience inwards mind, equally I am targeting readers who wants to empathise the existing debate.

H5N1 fundamental surface area of debate is the 1 I am targeting for my volume — whether at that topographic point is a require to pay off the national debt (leading to "Ricardian Equivalence"). Frank Newman explains why this concept makes no feel inwards practical price (correctly inwards my view). But sticking to mutual feel does non ready y'all for the wonders of ill-posed systems of equations. There is consummate understanding alongside mainstream economists that the intertemporal budget constraint holds (which is roughly equivalent to the regime needing to "pay off" its stock of debt at closed to point), fifty-fifty though these economists disagree almost policy together with theory on other fronts. As a result, many economists would dismiss his arguments on the footing that they ignore the theoretical literature that has been developed over recent decades.

As a result, I viewed this volume equally beingness a adept introduction for somebody who wants a practical viewpoint almost financial policy, together with how regime debt is linked to the banking system. But if y'all are interested inwards understanding online arguments almost economics, y'all would hence require to supplement this volume with other sources that address the theoretical debates.

Finally, the volume is available at Amazon.com: Freedom from National Debt (affiliate link).

(c) Brian Romanchuk 2014