this is basic math Doug. if spending adds 20 dollars to reserves and taxation subtracts 10 dollars then deficit spending injected 10 dollars of reserves into the banking system (20-10=10). Marx explicitly says that this happens every year, not just a "short term cyclical stuff". In fact, he explicitly says that it's not part of the business cycle. In any case, the basic mathematical principle is easy to project. If you disagree, please come up with a counterargument why the principle doesn't extend out over many years.
"This is MMT la-la land, where you can just print money without bad consequences"
This is a strawman of your own construction. Not one person in that world has ever said that. What has been said is that the constraints on spending is the existence of a significant amount of unused capacity. Additionally, people in that world have said over and over that "pump-priming" can generate employment but isn't a good full employment policy because it is often designed with big projects in mind that are capital intensive and use mostly skilled workers. That's why they suggest extending out the logic of a jobs program to hire on the "low end" or "off the bottom" but extend it as an offer to anyone at the fixed wage.
"The Fed could print the money if it wanted to, but at some point it'd end up like a Latin American country in the 1970s with a 1,000% inflation rate. We're nowhere near that now, of course, but you can't do that shit forever. When half your deficit is financed from abroad, you actually do have to worry about what your creditors think. "
This is a misleading presentation of Federal Reserve policy. the federal reserve sets an interest rate target and then conducts open market operations to achieve it. as a result, the yield on government bonds tends to circulate around that target interest rate (of course, extended out by the yield curve). The federal reserve doesn't need to implement some special policy for the treasury to sell government bonds. They do what they always do to offset treasury reserve effects, they buy government bonds when the treasury receives tax income or sells a government bond and they sell a government bond when the treasury spends redeems a government bond. This is basic stuff Doug. So basic, even Marx understood it in his day. It doesn't make a discretionary decision to "finance" government deficits.
On your second point, you seem to hold an extremely crude quantity theory of money. Inflation isn't determined by the amount of reserves that are injected into the banking system. banks aren't allowed to spend reserves or lend them out to people without reserve accounts at the Fed. What determines inflation is either a significant run up in costs or a rising markup relative to costs. Government deficit spending could certainly cause that, but so could spending from any other sector. In our current economic conditions with mass unemployment, very low capacity utilization and extremely high private debts relative to GDP, I'm very skeptical of the idea that large deficits will be causing inflation anytime soon. Further, your reference to foreign creditors is contradictory. Trade deficits are contractionary because by definition it means we purchase more goods from abroad then we export. They are part of the reason are deficits need to be so high. If our deficit was below 3.2 per cent (last years current account deficit numbers) then the private sector would have to run a deficit.
Now If you're thinking of another mechanism for federal budget deficits to generate inflation, I'd be happy to hear it. but you haven't provided one so far. -- -Nathan Tankus -----------------------------------------------------------------------------------------------------------------------------------------------