Bollocks. The amount of productivity of each worker and the primary productivity of the land is finite.
That is The Pot.
Anything that drains that pot results in a poorer country.
It's the new form of trickle-down economics... "Let's print $5T and hand it to defense contractors... eventually we'll all be better off!"
There are definitely forms of mal-investment by government. With $5T we could have built high speed rail and fixed our bridges and airports and still have money left over for a moonshot, like, I don't know, sending humans to mars. Instead we bought nothing and thousands of people are dead.
> The real limit on government spending was not some artificial debt ceiling, or the risk of “running out of money”, but the productive capacity of the economy and the risk of sparking either inflation, or a ruinous multiplication of bottlenecks and dysfunctional backlogs of unmet orders. As Keynes said, we can afford anything we can actually do.
But the discourse about the war (as in your comment) focuses entirely on all the things we could've done with that money, as though building bridges vs bombing people was a binary decision.
It's not. We didn't spend $5T on war and leave our infrastructure crumbling because the war crowded out our capacity to build; we simply have decided, through our politics, not to bother with the latter.
The irony is that MMT has been perceived as a progressive theory to encourage spending on social programs. But progressives are arguing against war using the same austerity economics that conservatives use to justify not spending on said programs. Meanwhile, nothing about MMT is actually left or right; in practice the military-industrial complex in our government is evidence that MMT works.
And as any economist will tell you -- you can print money right up until you can't. And when you realize you can't print anymore money -- it's already too late to course correct without inflicting tremendous misery on real people.
So yes,it very literally reduces our capacity to construct infrastructure at home. Before you you get to the non imaginary budgetary issues.
The "fallacy" this article is trying to combat is econ 101
> That is The Pot.
It's not a pot, its a stream; using the available flow isn't draining it (some uses, in fact, increase the future flow.) There are tradeoffs at the limit between present realized value and future flow rate, but most of the time the actual value is inside rather than at the boundary of the possibilities curve, so you its possible to improve one value without a trade-off in the other (unfortunately, the effects on either axis of an action aren't unambiguously predictable, either, so there is often room for reasonable disagreement about the merits of particular courses of action.)
> It's not a pot, its a stream; using the available flow isn't draining it
WRT PAYGO style government spending this is perfectly accurate.
WRT debt-financed spending it's closer to correct than "The Pot" but still off (spending now doesn't drain the stream, but does reduce future flow for a fixed period of time).
WRT a massive war it distracts from the enormous second and third order effects.
They buy US Treasury bonds. Or oil.
[1] https://www.thebalance.com/u-s-military-budget-components-ch...
The lowest peak year of total defense (not just war) spending during a war appears to be 1.5% of GDP in 1899 during the Spanish-American War [0]. 3.5% of GDP is nowhere near the lowest total defense spending has ever been.
Secondly, military spending is more than 3.5% GDP. It is only 3.5% if you exclude pension and health benefits due to retired military, interest on past military spending (past as in, last year's) and so on. The real military budget is always underreported to a large extent.