No Problem with Japan's Huge Debts: MMT Advocate Kelton

Economy

Tokyo, July 16 (Jiji Press)--State University of New York Prof. Stephanie Kelton, a leading advocate of so-called modern monetary theory, or MMT, said Tuesday that there is no need to worry about Japan's huge public-sector debts, pointing to the country's low inflation.

MMT basically argues that a government that issues debt in its own currency can borrow money as much as it wants as long as inflation is low and that it can therefore increase spending without raising taxes, whereas many experts and financial authorities believe that swelling fiscal deficits will help raise prices and interest rates, leading to economic stagnation.

Inflation would "manifest itself" if there are problems with the huge public debts, but there are no signs of inflation in Japan, Kelton said at a press conference after a speech in Tokyo.

She also pointed to stubbornly low interest rates in Japan despite its huge fiscal deficits.

"Japan has shown to the world many important lessons that are consistent with what MMT has argued for decades," Kelton said, calling on the nation to further increase fiscal spending for the growth of its economy.

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