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"Reserve currency status does afford increased deficit-spending capacity."

Reserve currency is essentially a myth. It's just an artefact of double entry bookkeeping in banks.

There are lots of reserve currencies. Every floating rate currency held outside its native borders is "reserve". It's just somebody holding the money - aka savings.

Many countries do that for mercantile reasons to avoid a dutch disease at home. Norway is one, China is the main other.

"Piloting federal fiscal policy on MMT is akin to steering the plane to FL 100 and keeping an eye out for a stall"

It's just excess savings, which are automatically offset by a Job Guarantee. Basic accounting really.

Deficits are just an accounting residual causes by people choosing to save. For there to be a deficit at all somebody has to choose to hold the money. Or there won't be one.

> Every floating rate currency held outside its native borders is "reserve"

This is empirically false. Offshore currency holdings make offshore financing in your currency easier. That makes financing deficits less likely to produce domestic inflation.

Quantity and diversity of the offshore holders of one's currency matter. There is a qualitative difference between the U.S. dollar and Argentinian peso.

"This is empirically false"

It isn't. It is accounting fact. Every currency held outside its borders is a foreigner saving that currency. That's all a reserve is.

Lots of people like to hold US dollars. Fewer Argentine pesos even within the country.

Actually having fewer people hold you currency makes it easier to run. You just make your budget in that currency balanced by increasing taxes. If you have lots of people saving your currency then let them - and accommodate the savings.

Hasn’t the last ~15 years had been an experiment in printing money on the order of trillions (3-7 for wars in the ME, how many more T. for bailouts/QE)?

> the last ~15 years had been an experiment in printing money

Through monetary policy. When the Fed creates a dollar it destroys a dollar of assets, e.g. by buying a bond.

Fiscal policy is different. When Congress appropriates it creates new money. That impacts the real economy differently. (This is why every crisis involves central bankers calling for fiscal stimulus. It is more powerful.)

Fiscal [0] stimulus isn't any more powerful in terms of degree of impact, what it is is more targetable where it is needed. The scope of monetary policy typically delegated to central banks is enormously powerful, but it has all the targeting selectivity of a thermonuclear bomb.

[0] since we are discussing MMT, we should note that the term “fiscal” is a reference to metaphor that is not at all appropriate to modern fiat currency systems, and that so-called fiscal policy isn’t constrained by a fisc and is just as monetary as what is traditionally called “monetary” policy. But it's easier to use the classic terms than “taxation and spending” in place of fiscal and “central bank credit” in place of “monetary”.

MMT doesn't depend on “reserve currency status”, it depends on having use of fiat currency.

> Reserve currency status does afford increased deficit-spending capacity.

The key point of MMT isn't that fiscal balance (deficit v surplus) doesn't inherently matter as much because there are conditions (whether “reserve currency status” that you've focussed on it something else) that Trump it for the countries of concern, it's that fiscal balance is ultimately an illusion based on a metaphor (the fisc, a finite purse filled by revenue and depleted by spending) that simply fails to reflect reality for a country whose budget operates in its own fiat currency, and that the financial constraints on such a country have to do with monetary effects of decisions, not fiscal balance.

> If a country runs up large deficits in the name of its reserve currency it affects others’ inclinations to hold the currency in reserve.

Sure, the sum effect of the governments decision making on demand for the currency, and those value of the currency, (the kind of reserve considerations you discuss here are an aspect of this, not categorically special) is exactly the kind of monetary consideration that MMT holds is a real constraint. But fiscal balance itself isn't a useful yardstick for that.

> Piloting federal fiscal policy on MMT is akin to steering the plane to FL 100 and keeping an eye out for a stall.

No, it's more like guiding nap-of-the-earth flight with a radar altimeter rather than a barometric altimeter calibrated to the long-term average global pressure at sea level. Monetary effects are the actual hard constraints, fiscal balance is a distant, murky proxy with an uncertain and time-and-conditions-variable relation to the actual constraint that obfuscates rather than clarifies.

Presumably for the USD to lose reserve currency status some other currency would have to become more attractive as a long term bet? Are there any obvious candidates at the moment?

Red China and her policies of debt-trap diplomacy are making increased use of her currency more attractive.

> for the USD to lose reserve currency status some other currency would have to become more attractive as a long term bet?

Not necessarily. Reserve currencies facilitate international trade and finance, things which may not exist in their present form without the United States. There is no rule saying the world must have one.

Everyone could wind up owning their trading partners’ currencies. We could revert to a commodity standard. Or free trading zones could emerge with synthetic currencies.

The Chinese Yuan is on its way to supplanting the US Dollar as a reserve currency in some regions, particularly Africa.

https://qz.com/africa/1291372/chinas-yuan-gets-support-from-...

Does the US, or any nation really, care what Reserve Zimbabwe uses? Not trying to be flippant, I'm just not sure that these nations matter at all on the world stage

"Five hundred dollars? Fully subsidized? With a plan? I said that is the most expensive phone in the world. And it doesn't appeal to business customers because it doesn't have a keyboard. Which makes it not a very good email machine." - Ballmer on the iPhone

In the early days its easy to be unimpressed and rightfully so, but its certainly a signal of potential change in the order of things.

> Unfortunately, like a lot of beautiful macroeconomics, it isn’t a policy prescription.

Nobody who decides the policy will have read the theory anyway, so that doesn't really matter.

It requires a suspension of disbelief to accept that economic policy is decided based on theory. It is the same fig-leaf as copyright supporting artists, then the law clearly being written by groups like Disney based on their own convenience.

> suspension of disbelief to accept that economic policy is decided based on theory

Not decided on. But influenced by. Or at least, who gets to be influential is influenced by it.

MMT’s political bullet point of “deficits don’t matter so spend like crazy” empowers a unique set of policies. So those actors push it so voters will accept the cost of their goodies.

> the same fig-leaf as copyright supporting artists, then the law clearly being written by groups like Disney

Disney helped draft the Constitution?

"MMT’s political bullet point of “deficits don’t matter so spend like crazy” empowers a unique set of policies."

Good job that isn't what MMT says then isn't it.

Quite why people insist on putting up that straw man I don't know. It just makes them look ridiculous.

MMT says when you run out of things to buy at a price worth paying the spending automatically stops, and that means you can only really buy the unemployed.

If you want anything else you have to tax first to make what you want to buy unemployed. Then you can buy it.

It's no longer a matter of running out of money, as that is impossible, it's a matter of running out of unemployed to deploy.