Thank you for sharing this Steve. Frankly, I find it disturbing how something as simple as MMT, something based not as much on theory but on our daily monetary practices across the world, remains so misunderstood and so hotly debated. Also, I do hope your modeling work with Minsky gains far greater recognition and appreciation. It is exemplary.
because it destroys the neoliberal neoclassical and Austrian understanding of money (could include marxian but don't know much enough but sounds neoclassical), which completely destroy the whole school. 90% of all Economists are proponents of these schools, they won't give up after teaching this for 40 years of their live.
@@sharann3482 Yeah. It's face saving egotism on a massive pathological and genocidal scale. The neoclassical and neoliberals cannot stomach learning their whole policy influence over decades has crippled economies and killed people on a holocaust level scale. Objectively. Paradigm shifts happen one funeral at a time. A fair few people like Robson will need to die off (metaphorically, or literally lose power) before MMT is "acceptable."
@@sharann3482 from my understanding, it doesn't destroy those theories. Both sets of theories are correct. It seems to me that the debate is centered around what the role/level of government intervention should be. Correct me if I'm wrong but, i think a good analogy is a car and it's suspension. MMT is effectively being used as the suspension system of the car. Using it, the passengers feel less shocks and bumps from the road and can make for a more stable riding experience. However, you'll notice, that professional drivers require still suspension systems, that is because they need to feel the feedback from the road to drive effectively. That's the austrian system, it's foundational, it's the actual signals, it's the actual road. MMT doesn't remove the road, or the underlying fundamentals of economic activity, it attempts to control its effects. And so, that's the danger. If you make the suspension system too soft, you lose all feedback from the road. Same with MMT, if you distort the economy too much, it only had an artificial bearing on reality. And on both cases can lead to major crashes if your MMT or suspension system is not tuned properly. And so, the question is, how to do ensure that government to have a properly tuned system? And should the system be tuned for performance, aka more closely matching underlying fundamentals, but a bumpier ride, or for comfort, more government intervention with all of the good and bad associated with that.
Explain MMT to anyone that has no university background in economics and they will most likely get it really quickly. But if you go to any forum that has people with degrees in economics in it, you‘ll be laughed at, strawmanned and even insulted. This is how big the indoctrination is in our universities. MMT really needs to get the students before they are brainwashed. It‘s like Max Planck said it: „A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die and a new generation grows up that is familiar with it. . . . An important scientific innovation rarely makes its way by gradually winning over and converting its opponents: it rarely happens that Saul becomes Paul. What does happen is that its opponents gradually die out, and that the growing generation is familiarized with the ideas from the beginning: another instance of the fact that the future lies with the youth“. Or in short: Science advances one funeral at a time.
This is great news , so all Venezuela needs to do is turn on the printer. We'll become Venezuela if this goes on long enough. Money will lose its value
Excellent discussion! I have been in the MMT camp since I started reading Michael Hudson and Steve Keen about twelve years ago. I even delved into Minsky', although he is a bit difficult to navigate. It amazes me, when I was listening to the parliamentary debate in the UK today over the budget...and even after all the covid spending...that only a handful of MPs (in any party!) seemed familiar with MMT. It was all about WHEN we should start raising taxes...not IF!
I just read Hicks “The Market theory of Money” where he argues that everyone is obsessed with inflation but nobody seems to care about deflation. He finds it strange since the concern should be stability. “To impose a condition of non-inflation, upon an economy which has become adjusted to rising prices, would surely, from this point of view, be quite as much of an upset.” (Hicks, 1989) Also from trying to find decent debates between heterodox and orthodox economics I find it increasingly weird how arguments are just being ignored or (purposely) misunderstood, resulting in polite but boring discussions. I guess what I am really missing is intellectual curiosity, especially since economics failed the public so miserably. I am studying economics, because I thought there is this huge moment for change in the profession after 2009. I can tell that in my university the great shift was from fresh- to salt water economics.
A dissent-free debate. The debate we need is on MMT's implicit hypothesis about what creates economic growth. MMTers apparently believes it should go like this: 1. Government hires (and encourages the private sector to hire) the least promising workers (the unemployed) to do...what? Something that was a net loss before they were laid off. Dig ditches, cash paychecks and buy consumer products to boost the Aggregate Demand figures the economic models like. 2. Through one financial means or another, government commandeers a quarter (?) of workers' output for its important infrastructure projects, preempting projects private investors would otherwise have funded. Whereas private investors can evaluate projects based on cost/benefit analysis, MMT teaches the ministers that their costs are always zero, which would seem to make their job harder. But despite that, despite having no skin in the outcome, and despite the peculiar incentives of poilitical optics, they'll somehow make shrewder decisions than the private sector.
Good in Thailand... if you are a citizen. Not so much if you are a migrant worker, they still get treated like sh*t. You can trace that also back to Thailand politicians not understanding they issue the baht, and can fully employ everyone willing to work. (they likely will be among the last to see through the MTM lens, because of their massive corruption and Palace/Parliament grift problems.) Steve Keen should have sojourned in New Zealand. People (working class and some in the public service media) would actually listen to him here.
The sole person who were critical of MMT had arguments that could have been spouted on Fox News. Utterly uninformed about the most fundamental facts. Pretty funny that he name-dropped Krugman. Keen probably chuckled inside.
Inflation isn't the only constraint, labour and resources should be considered too. Where do capital markets fit in with MMT? What does international trade look like If money isn't a constraint? In addition how are those resources allocated? Inflation also does not affect every sector and class evenly. What is the proper way to measure inflation? Is not "money" neutral in the long run, yet the MMT goal is 0% inflation. Or did I misunderstand and that inflation should still occur?
A unit of account can never run out... it’s about RESOURCES! Resources we could run out. The federal government spending is on resources... not profit.... unlike corporations
Government and corporations are not on different teams. They are on the same team. Government spends on bailouts or weapons contracts or bureaucrats to protect corporate patents or CIA ops to overthrow foreign governments who aren't friendly to US corporate interests. Government is one big corporate money laundering operation.
Professor Keen, I'm a graduate student looking to do some work on the role of private debt in the economy. Where can I find the latest data? I can of course find your excellent chart going back to the 1830s but I don't feel comfortable citing a website, is there a more "formal" source it can be found, or how can I find the data to construct a similar graph myself? Thank you for all the work you do in helping to debunk economics! The mainstream will keep resisting, but you and others, and hopefully the next wave of us, will have to just keep correcting their bull.
Thanks Brian. The recent data is maintained by the BIS: see www.bis.org/statistics/full_data_sets.htm. The pre-1946 data for the USA can be gleaned from Census publications "The bicentennial edition of Historical Statistics of the United States is the third in the series of volumes inaugurated in 1949. In both form and content, the bicentennial edition has drawn heavily from, and built upon, the two prior editions. Both the first volume, Historical Statistics of the United States, 1789 to 1945, issued in 1949, and the second volume, Historical Statistics of the United States, Colonial Times to issued in 1960, were prepared by the Bureau of the Census with the cooperation of the Social Science Research Council". There are time series on debt and bank loans from 1834 till 1945 and 1916 till 1970, with vastly different levels but very similar rates of change. So I assembled the long term 1834 till now data series by splicing them at current levels.
@@ProfSteveKeenIt seems you read comments and but only answer people who agree with you but can't answer people who disagree or challenge your theory's basic assumptions. For instance - Why does MMt you say taxes put value into money and get it accepted when taxes put No value at all into the money of countries where inflation sent the sovereign money into a situation of being utterly worthless. So worthless their own governments dropped it. Why does MMT say the government is the source of all money when historically money is all sorts of forms and exchange of goods and services by barter existed despite and before the government. Why do you persist saying that the government deficit is a surplus for the private sector when the government deficit can only exist by them borrowing money either from the reserve bank or the private sector where in both instances the loans mature and have to be paid back by the private sector via taxes.
@@Rob-fx2dw , "Why does MMT say the government is the source of all money when historically money is all sorts of forms and exchange of goods and services by barter existed despite and before the government." ANSWER: change the world "money" with the world "currency". As the matter of fact, MMT is inapplicable in any economic regime in which a currency is not present and this is a statement shared by all the MMT economists. It's "currency", and not "money" in a more general (and broader) sense. "Why do you persist saying that the government deficit is a surplus for the private sector when the government deficit can only exist by them borrowing money either from the reserve bank or the private sector where in both instances the loans mature and have to be paid back by the private sector via taxes." ANSWER: because currency itself is a public monopoly. You can easily recognize it by studing the process through which an economy, where a currency is not present, is then introduced. Because you are Italian, I pass you two sources in Italian language on it, i.e. a video and a book on this topic. Video: ruclips.net/video/fh2zDgswt50/видео.html Book: bottegapartigiana.org/wp-content/uploads/2021/03/Le-origini-della-moneta-di-conto-luglio-2017-a-cura-di-Jacopo-Foggi.pdf
@@RainbowTRW What is your understanding of the word "Currency" and what is it in respect to "Money" in the economy presently. The specific meaning of currency is the nominated legal tender of a nation that is in any form what so ever be it digital or coinage or paper. E.G. Dollars, Pounds, Renmimby. The term money is anything accepted as payement in trading or exchange to settle a debt or create a loan.
very interesting. I ran through your balance sheet example and I have a few questions Professor Keen. First: when the CB repurchases bonds from banks, and the latter incurs a profit, does that create money? I suppose yes, as the profit would be recorded as retained earnings, hence increasing the money supply. Second: does your example imply that bond sales and repos don't create money, but rather provide and drain liquidity when needed? Lastly: when the treasury needs to pay for the interest it borrowed from the Fed, how does it do that? does it just roll over its loans by borrowing continuously from the fed? this would also answer how the TGA manages to be always positive (as if that was not the case, the TGA could be maintained positive only by bond sales and tax revenues, indicating those as actual sources of spending). So i guess the last question is summarised as: how does the circle end? Thank you :)
another question: when the treasury engages in the first spending, the treasury account is set at 0 but is decreased. Does that imply that the treasury account is first debited by the Fed (increasing also loans)?
@@user-tb2gs2xn2v Don't expect a rational answer from Keen. I asked him why his graph showing deficits causing an increased supply of money for private sector did not take into account the fact that the private sector also incurs the obligation to pay back the money when the treasury securities created and sold to get that money matured. His answer effectively was his Minsky model shows it doesn't. He could provide no independent information as to why he was right. Why? - because the assumptions made in his own model are false.
Kelton @17.50. If you trace back the chains of debt and sources of funds you come to the point where the resources of the Earth, plus solar energy, are exchanged for currency by harvesting the free ‘natural increase’ of biomass ( domesticated plants and animals, plus unsustainably harvested wild stocks) and using free solar energy, plus diminishing stocks of fossil fuels. Ultimately the Earth pays the debt.
Keen @51.00 At the lowest tier of the economy, the primary producer, =farmers, fishers, foresters, miners , their principal asset is a natural resource.
Great discussion. Maybe someone can help: Kelton's example at 1:22 of a federal job guarantee program during economic slumps offering a way to create anti-inflationary pressure made me ask myself if in fact economic downturns and high unemployment tend to cause inflation, and it seems that the opposite is true. So is there a problem with her suggestion?
I'm getting sent here when I click on "Reply" to Rob's comment starting "It seems you read comments and but only answer people who agree with you but can't answer people who disagree or challenge your theory's basic assumptions...". So I'll reply here. In brief, I'm writing a book that answers misconceptions such as yours, and I sporadically check comments here and reply equally sporadically. If I were to pull apart all your misconceptions, I'd be wasting my time here and not writing that book.
Steve Keen - What ? MMT has been around for over 20 years and you have been commenting on and promoting it for over 10 years. Yet you cannot answer simple questions like why you support the MMT idea that taxes put the value into the money but the historical evidence of all those countries (some 30 or more of them) where due to inflation the money failed in the last 70 years to have any value despite taxes being collected. Even their own governments dumped their currencies to substitute another country's currency. You have not even done the straight mathematics to work out the MMT idea that taxes are destroyed is wrong because the evidence is that taxes are re spent. The evidence of the spending by the US Federal government from 2011 to 2020 which was over 35 trillion dollars yet the national debt only rose by about 10 trillion to 21 trillion from the 11 trillion it had been in 2011. So the mathematics of the original 11 trillion plus 35 trillion spent equals 46 triilion. Not the 21 trillion it was in 2020. A missing amount is over 25 to 26 trillion to be conservative. The correct explanation is that taxes paid for Most of the Federal government spending in that period as they have always done.
The key statement was that MMT works because the private sector has the confidence in the Treasury bills. The petrodollar has and will continue to allow this for some time. You can go anywhere in the world, hop into a cab, and show the driver USD and they will take you where you want to go. That is not the same for most currencies. However, as has happened with EVERY fiat currency in the past at some point, the private sector ( and eventually also those cabbies) won't accept the currency because it is debased. Maybe it won't happen for the next 10, 20 or 30 years, but it will certainly happen. The confidence in the currency is based on the total debit level. The faster you grow the debt, the sooner it will come. MMT works until it doesn't.
No. MMT "works" because it describes existing monetary operations. The governemtn is the score keeper, their currency is a tax credit. Treasury bonds have no necessary role,[^] they're a regressive hold-over from fixed exchange rate and gold standard eras = welfare for people who already have money. With the existing (already MMT) systems, you can adopt ZIRP, and use fiscal to steer the economy (full employment, price stability) bonds are not a necessary instrument when you have a fiat currency and floating exchange rate. [^] If risk free assets are desired for parking savings, the governments can just 100% insure bank deposits. Ergo, no need for governemtn pension savings, no need for bonds.
Just a thought, what if over time there was shift in people's understanding that a currency's strength is not linked to it's debt ratio, and instead a currencies strength was measured by the economy it supported, as MMT advocates. Surely there would be no reason for people to stop borrowing in that currency.
I think MMT works because it is describing what happens in any soveign economy. The dollar status of fiat currency is related to energy production. As the US oil production started to decline it has been challenged as the fiat currency. I think this is why Trump and Wall street and Fed agreed to save shale oil industries which have been loosing money since day one. When maori tribes where dealing shells it was not for trade nor taxes but to avoid war, it was not a currency. Most economists are quite wrong about these things. David Graeber has done an excellent job clarifying that matter in "Debt: the first 5000 years".
@@laurentfournier561 When I say petrodollar, I mean the fact that the Saudi Royal Family will not accept any other currency for oil, and so global oil markets are only traded in USD. Therefore USD is the worlds reserve currency. So even though it is fiat, the Fed can print as much as they want because it is ubiquitous and accepted.
You are right on that. Failing businesses and failing personal finances can operate on the same effect as failing governments by borrowing and outside their ability top pay back the debt that created until it inevitably comes home to roost. These people have learned nothing from history and of course are about to repeat the failures again.
What came first? The tax or the spending?!!!!! If I could create a unit of account ($) I would.... but that is counterfeit.... MMT is the “Lens “ of understanding federal spending. I believe in MMT. Thank you for this interview. I own two books by Dr Stephanie Kelton.....
You are wrong. When I get my information I get it from the reliable sources like the people who actually perform the task and not some third hand source with a political or other agenda who puts across a fanciful story that does not add up. The loans come first along with the newly created money which is mostly from private banks and some from the Central banks. That is because money today is fiat credit money that private banks create most of. The government gets it's money from the Federal reserve in the US as does the government in Canada who get their money from the Central bank of Canada. See the central bank of Canada's explanation which is at :- lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201551E#:~:text=Money%20is%20created%20in%20the,new%20loans%2C%20such%20as%20mortgages. The loans from the Central bank that provide the new money all have to be paid back when the maturity date of the treasury bonds that were bought from the treasury to secure the actual money (funds for their deficit spending) also mature. All of the loans in the US that have been made over 30 years ago have been paid out and no longer exist because they matured so they are not any part of the national debt. . The loans that private banks make also have to be pad out by the borrowers with money the borrowers have earned.
@@Rob-fx2dw there are no “loans”…. Taxes never pay for anything… you can’t even answer the question…. What came first? The taxes or the spending? Taxes drive the currency Taxes create unemployment Taxes are a brake or gas pedal to control wealth gaps and inflation Taxes do not fund spending. #Learnmmt
@@Rob-fx2dw yes banks “loan “…. To the borrower that can pay back WITH interest… the federal government has treasury bonds that we can “buy” with our own money and they then pay a small interest after a period of time….
Governments don't have price sensitivity and thus they always end up driving up prices on everything (esp healthcare, education, and housing). Hell sometimes they work to remove their negotiating power (as we've seen in pharma pricing).
No. Scarcity of supply, therefore lack of vendor competition does not come from unlimited capacity to spend. Supply side economics, Austrian school, drives the boom bust cycles.
healthcare, education, and housing costs are lower when implemented by governments. it’s because they can negotiate prices. that’s why countries with public healthcare spend way less than countries like the US on healthcare. the insurance companies, pharma companies, private hospitals all add to the costs. this is why as an american i pay way more for healthcare. when i lived in germany, and south korea i paid way less because they have some form of universal healthcare. i lived it dude. also my housing and school were way way cheaper in germany. i got stipends for my education, housing, and travel on public transit. but don’t trust me you can look up the numbers for what households worldwide spend on stuff like healthcare, education, and housing.
@1:00:00 Rochon speaking as a mainstreamer? The orthodoxy certainly do not understand inflation, because they do not know where prices come from (except for relative prices). But MMT does understand the source of the price level and inflation: the source of the price level is the monopolist, and since inflation is basically the change in the price of the currency (purchasing power) and the monopolist controls the price level, so the government controls inflation, whether they know it or not (they do not know it). It's Econ-101: the monopolist is price-setter not price-taker,....but can certainly foolishly act as if they don't know it.
Stephanie at ~ 1:20:00 said central bankers have no good predictive models for inflation yet Steve Keen's 'Minsky' macroeconomic computer model is able to predict inflationary impacts from many possible sources. Central bankers have no excuses for their ignorance or incompetence or games of deception.
Inflation must be evaluated in the context of history and technology. The share of the labor force involved in agriculture has been steadily declining in the modern world. This may create some fragility, for example, if there is some kind of agricultural supply shock. But goods are cheap cheap cheap, and housing has just been climbing. We can way overproduce, many times more than our needs, in terms of basic commodities. This has been true since 1920's or so, the industrial revolution.
And inflation can be seen as a political choice by powerful actors to drive up prices in a commodity by throttling supply; e.g. the OPEC oil shock of the 1970s. Because oil based energy was so central to creating global GDP, the inflationary effects reverberated around the world for years afterwards.
I'm not sure of either. The wealthy have interest in maintaining high unemployement rates, bullshit jobs and low inflation. Inflation, low unemployment is good for small businesses and borrowers. Back in the 60 and 70 a worker could buy a small house in 15 or 20 years, you could start your own business with a light burden of loans... MMT unfortunately is a little bit naive regarding class interest. The wealthy doesn't care about a balanced economy. As Buffet put it, there is a class warfare, but his class won! At least it as won the control of the economy but I'm not sure they are going to win against climate change that is a challenger of another status ;-)
Why do most opponents of MMT not bother to learn the basics of the thing they feel so strongly about? How can you feel so strongly about something which you clearly know so little about? Sometimes it seems intentional, like with Krugman's constant strawmanning, because it is easier to argue against their simplified misrepresentions.
Steve Keen replies. "I'm getting sent here when I click on "Reply" to Rob's comment starting "It seems you read comments and but only answer people who agree with you but can't answer people who disagree or challenge your theory's basic assumptions...". So I'll reply here. In brief, I'm writing a book that answers misconceptions such as yours, and I sporadically check comments here and reply equally sporadically. If I were to pull apart all your misconceptions, I'd be wasting my time here and not writing that book.". Thank you Steve Keen but I guess I will be waiting for that book for a long long time because it wl have to reveal a conceptual understanding of economics greater than that of Charles Darwin's revelations in the theory of evolution.
What happens after Energy supplies are allocated to a plan - is a choreography, no matter how it sounds complex. This is the Soviet Union mark II. "Energy, like time, flows from past to future". Wailing.
WTF? No one is advocating centrally planned economics. There's always a role for a private sector doing what they please within legal and market demand constraints.
Have you forgotten entropy ? Just like time, once "consumed" energy changes from usable to useless and heat. There is no going back. can you take me back in the year 1973 ?
Steve Keen needs to live up to his promise and explain how his sectoral balance theory of government deficits being a surplus for the private sector stands up in face of the reality that the idea ignores the fact that Federal deficits create a debt which is passed on to the taxpayer to fund when it matures. He made that promise to do so several years ago but has not been able to provide any reply. Why - One has to ask ? Because that sectoral balance be in a surplus idea is clearly WRONG.
The “government “ is for the people by the people WE the people.... the people are the government.... representatives are those who represent the people... but they don’t
My parents bought “bonds”.....for their grandchildren.... the interest rate is a joke... but we still get the money.... mind you my parents BOUGHT the bonds with their money....
Interest rate on bonds is not great right now. But bonds are a good deal for savers. They may not pay much interest, but they pay more than cash, and they are safe as long as the US gov't does not collapse/"default" on its debt.
@@tiberiusalexander6339 You need to do your homework. Government bonds are a disaster as a savings instrument because you are bound to lose when you buy them. That is also the opinion of Warren Buffet who has been one of the best reputed investors over the last 60 years.
Thanks for the talk. Very useful for thinking through the monetary system. I ended up thinking if we really want to have a selflimited government when there are clearly stuff to do that markets wont do without government iniciative. Does it make sense that governments borrow from secondary markets instead from the central bank at 0%? They do have really a constrain that has to come from markets better than from voting processes in order to have incentives to use their spending wisely? And lastly... can sometimes government spending result not into economic growth or employment but rather take care of nature or other forms of value sistematically invisible to market forces? Can we degrow by government intervention? And would it be neccesary global scale coordination.
Because you shouldn't be saving currency, you should be saving ownership of useful assets that grow with inflation. Units of currency represent a claim on a portion of the total economy in relation to prices. If prices increase, that says that by being decisive with the currency that you own, you are better directing the economy: either to make something for you to consume, or someone else to consume. By saying that there should be deflation, you are saying that society should owe more to you in the future for doing nothing, for taking no risks, for just letting everyone else in the economy doing the work of figuring out what to make. If you want to protect currency from inflation: buy stocks and bonds.
Usually the 'economists' who use 'macroeconomic models' 'believe' that the solution to the current macroeconomic problem is the implementation of the 'correct' type of demand side policies. That is, how to increase income/output {'growth'}. Increase M0, M2 or M3, cut r, or make it negative. Increase G and finance it by 'borrowing' from the central bank or by borrowing from the private sector. Or ensure that private credit is extended only for GDP transactions. All that is lacking is a 'sufficient' increase in effective demand! The neoclassical/Austrian economists, who believe that income/output is 'supply determined', will argue that all that is required to generate a large increase the growth of the underlying productive potential of an economy is for taxes to be cut and more 'competition', etc be introduced! Aside from the externalities of 'growth', what they ignore is the 'supply side'? 'We' have ten years? “ . . . our best estimate is that the net energy 33:33 per barrel available for the global 33:36 economy was about eight percent 33:38 and that in over the next few years it 33:42 will go down to zero percent 33:44 uh best estimate at the moment is that 33:46 actually the 33:47 per average barrel of sweet crude 33:51 uh we had the zero percent around 2022 33:56 but there are ways and means of 33:58 extending that so to be on the safe side 34:00 here on our diagram 34:02 we say that zero percent is definitely 34:05 around 2030 . . . we 34:43 need net energy from oil and [if] it goes 34:46 down to zero 34:48 uh well we have collapsed not just 34:50 collapse of the oil industry 34:52 we have collapsed globally of the global 34:54 industrial civilization this is what we 34:56 are looking at at the moment . . . “ ruclips.net/video/BxinAu8ORxM/видео.html&feature=emb_logo
What you are doing is seperating 2 systems; 1 system is to account for money from the view of a private citizen, the other system is to account for money from the view of the Federal Reserve or the Gov't. If you rearrange the language to use 1 system, with it's positive and negative side, it will be much clearer. The Normal system is the reverse of MMT and MMT is the reverse of the Normal - Previous system.
Your comment is valid since using two sets of langauge and applying one set to the government sector (and Federal Reserve) then applying another language set to the Non Federal government sector. No wonder they are confused and conflating concepts and making statements that are contradicory.
Not even a contest. Entrenchmemt alone is keeping mainstream enshrined in academia. MMT needs to gird up and go Game Of Thrones style until a few heads roll out of the way.
Kelton tells more lies about the US having never defaulted on it's debt despite having claimed to having "looked at this for a lot of years" . She also claims that it doesn't happen then says it happened 'voluntarily' in Japan - So it is still Default but she tries to put qualification on it. Who cares if a default by someone you lent money to was involuntary or 'voluntary ' . - You still lose the money because it is indeed DEFAULT. The truth is the US government in 1933 defaulted on the debt it owed to it's own citizens. The situation is described in detail in a recent book by Sebastian Edwards named " American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold,". It explains that FDR entered the White House on March 4, 1933, and in less than two months (April 19, 1933), he announced that he was taking the U.S. off the gold standard. FDR asserted that he was doing this to end the Great Depression and to raise farm prices. As FDR put it: “the whole problem before us is to raise commodity prices.” FDR gave Congress license, and Congress used it to abrogate the Gold Clause via a joint resolution in June of 1933. Before that, a gold clause was included in most private and public bond covenants. These covenants insured that bond holders would receive interest and principle payments in dollars that contained as much gold as the dollar had contained when the bonds were issued. The U.S. government manipulated the price of gold upward until President Roosevelt redefined the dollar in gold terms under the Gold Reserve Act of January 1934. Overnight, the dollar became 41% lighter. This left gold‐clause bond holders out to dry. Despite all of Kelton's claims about default happening only in situations where there was foreign debt the facts is all foreign borrowings no matter how tiny become unpayable when local hyperinflation makes payment of any debt impossible because the exchange rate becomes impossibly negative. Even their own sovereign governments abandon their own currencies that become worthless despite taxation which Kelton falsely claims makes value for the currency.
More misinformation from Kelton who says raegan trippled the national debt. Yes, trippled it from 800 billion to 2.1 trillion. But that was from 34% to 50% of GDP over nearly 10 years. Not from 107% to 123% of GDP in three years.
Keene - "To check that I put it into my own Minsky software ". What ? Might also have been stated as:- " So I retreated into my introverted navel gazing instead of checking a well tested proven independent working principles and concepts " .
When the people receive stimulus checks prices go up.... because of corporate profits are going to go up.... regulations = consumer protection...de regulations = capitalism protection
I feel like we’ve more or less been using MMT since the gold window was closed in early 70s, and maybe somewhat in the 30s after Roosevelt decided to expand monetary supply, confiscate gold, and then revalue it. This policy has NEVER been successful long term.
Id argue that Argentinans do not what stability, they want inflation to go down and there doing well there. Why would anyone be upset for inflation to fall or deflation to occur and all of a sudden your cost of living starts to improve?
How about we reduce employment and drop prices on goods so low via deflation that you don't have to run deficits to create wage slaves. There are many people in the economy being paid in excess of their overall productive contributions, thanks mainly to government intervention. The government generally are terrible at allocation precisely because of how easily they are captured by special interests. MMT is a theory and misses the nuance and political realities.
Exactly. It's intellectual crack. It's presented as unleashing heaven on earth, and then real-world politicians show up and say, so this means there's no limit to how much we can dump on our cronies? Sounds great!
I listened to 3-4hrs of mmt theory videos and then switched to debates. In every case it reminds me of the old religious/creationist debates from a decade ago. The against position is always strawmaning and asserting unevidenced things as fact.
Kelton uses her very narrow definition of 'defaulting' by restricting the meaning to default in number of dollars rather than defaulting invalue as well. Most countries default in value not in actual currency units be they dollars or pounds or pesos by creating inflation in their own economies and that means any foreign debt they have which was formerly payable becomes unable to be paid because the inflation causes the exchange rate to be come abnormally adverse. The evidence is that they were lent money in the first place because they were not an extra high risk but have subsequently become one. Not the reverse where their overseas debt causes their currency to go into hyperinflation.
1. A default means "inability to pay". You want a "euphemism" for default that expands -- haha inflates -- the meaning of the word so it means something different. 2. A capitalist system that needs profits and income to increase, requires steady low-level inflation. The real risk is deflation. Deflation is when banks, businesses, and households fall into bankruptcy, houses go to foreclosure, banks get shut down or need bailouts to stay operating as assets they own go bad. 3. Serious unwanted inflation, cases we know about, are all about some serious Supply shocks. Every. Single. Time. When Supply --- and capacity -- goes into contraction for some reason, prices can rise. Like right now, due to COVID, there's shortages of steel and semiconductors for automobiles and other core necessities. Or debts arising in *foreign* currency that can't be paid without increasing export income to get foreign currency. 4. You seem to prefer that they economy should always have a private sector shortage of wealth and shortage of income, rather than having "too much" wealth. So, the Govt should be in charge of making sure that poverty and struggles are kept at a higher level than necessary and that infrastructure should remain in disrepair and without updates. 5. You would never invest in a company that didn't hire smart people, that didn't improve their workforce, that didn't replace their infrastructure, that didn't upgrade their technology for 6 or 7 decades. That's NOT what China is doing, but that plan of neglect and collapse should give America a successful and competitive future. 6. It's hard to tell if Critical Race Theory and hiring a million administrators of "safe spaces" and paying for mandatory "White Privilege" seminars would be the most harmful aspect of backwardsness, or if starving the economy of money is the bigger threat.
@@gg_rider You have not provided an anywhere accurate definition of deflation. our argument is essentially that effects are a cause. You argue that ability to pay is just that. - You would be no doubt happy to receive some Zimbabwe dollars for the US dollars or Euros you paid into your retirement fund because that would Not be in your opinion a default! Is that your argument? It appears you would be happy with that - but would you? You say " Serious unwanted inflation, cases we know about, are all about some serious Supply shocks. Every. Single. Time.". Oh what? What was the 'serious supply shock' that caused the Brazilian hyper inflation (300% per month) of the late 1980's? As for the inflation in countries that had supposedly supply shocks that you say caused it their governments could have according to Steve Keen and his MMT used taxes to control it . Why would that not work if inflation was deceased by taxes?
Kelton misleads people with her false information about the users of the currency omitting who the biggest single user is. . The Federal government is the biggest single currency user in the economy when it buys goods and services from the private sector. It s not the currency issuer. The Federal Reserve bank is the creator of new currency for government to borrow and government has to pay that back when the Federal treasury securities which were initially sold to the Federal reserve to get that new money but later reach their maturity date. Just like they sold treasury securities to the public to get new money. The rest of the money in the economy which amounts to over 90% is created by private banks who create it when loans are approved to their customers which like treasury securities eventually mater and the money is paid back.
I had to cut my viewing in half because this discussion was making my head hurt. Toward the end one of the panelists made a vain attempt to define "money." Sadly he spouted the standard three part definition. Money, however, acts as a medium of INDIRECT exchange. That's it. For that reason the quantity of money need not (indeed should not) vary. Any artificial change in the money supply distorts efficiency of the goods for goods exchanges facilitated by the use of money.
So inflation target should be 0%? Because what you say, in theory should work. But historically currencies have been deflationary (cutrency appreciation) or inflationary. The only thing remotely close to what you have describe was the international currency that Keynes envioned it would counterbalanced against balance of payments for each country for this exact reason.
Prof Rochon has no idea of what deficits do to the non government sector. He ignores the facts that firstly deficits result in more money flowing to the private sector because the arguments put forward by MMT economists ignore the debt that is created through borrowing which the private sector is forced to pay back through taxes when the bonds mature and have to be paid out. a secondly he ignores the fact that savings in the private sector to not come from increased money flow but only come from having lower payments (costs) than income. If increased money flow to the caused increased savings then they would also increase costs.
Bottomline MMT is good only for countries like USA which prints $, borrow in $ , pay back in $ and spend in $ For other countries like India which borrow in other currency like $, it may not work very well unfortunately.. 😞
Not good for any country- Why - ask yourself who they borrow from ? The federal Reserve bank ! Who pays it back ? Taxes on the private sector (people) .
@@Rob-fx2dw I agree overall too much of borrowing is BAD even MMT says the same. I was just stating, it is "relatively" easier for USA since $ is world's reserve currency.
@@amolghanekar7629 I agree the US is presently the world reserve currency . But that advantage is not what it used to be since much trade in oil and other commodities is now being done in currencies that is via bilateral agreements are not dependant on the US dollar. that weakness was illustrated many years ago when the US went entirely off the gold standard in 1971 and you only have to ok at what happend then to see that the inflation in the US dollar soared so high that the US was forced to make an agrrement with Saudi Arabia and the OPEC nations to sell oil only in US dollars. It was done for fear of the collapase of the US dollar which was then the world reserve currency. This highlights the fact that ties of currencies to real goods is the critical factor in maintaining value of a currency. Not taxes which have failed to do so in all of the countries where inflation sent the value of money to zero despite the taxes that MMT claims.
@@Rob-fx2dw taxes do not pay it back. taxes are used to give the currency relevancy and to curb inflation by removing money from the private sector. this is what MMT says. they say this explicitly in this video.
@@Rob-fx2dw the US government prints the money. they don’t borrow it from the private sector. your comments makes me think you haven’t listened to one thing kelton or keen have said, or any of the others proponents of MMT. no offense
Hasn't the money spent on COVID (4.5 Trillion hard dollars) 16 Trillion in estimated total spent when you put in loss of productivity and special loans put this argument to bed? We do have a little inflation issue going on now but due to the money supply it's due to shutting the economy down for a couple months and we have very little supply of certain goods. I'm thinking semiconductor chips as one of the biggest drivers of inflation.
That printed money did cause inflation at a much steeper rate than in previous years and my bet is that next year it will also be up higher than it normally is even if no more money is printed. If covid happened again, the amount of money that would need to be printed would be even higher due to this inflation from previously printed money and the cycle continues. MMT is really just not a great theory to get behind.
@@simonjaz1279 MMT or Keynsian economics as it has been known for sometime does at least have evidence behind it. Every bout of inflation is marked with the supply of goods being outstripped by demand. For example in the 70's our most recent battle with high inflation was caused by low gasoline supply being way outstripped by demand. Current inflation started in the auto industry with the low supply of cars being far outstripped by demand for new cars. Your arguement "The printed money caused it." What are facts of this arguement? Is this just how you feel?
@@anthonypape6862 right and I agree with MMT on the idea on how the government operates in terms of money and taxation. But the idea of printing more money=more money is wrong. Now on to the 70s inflation crisis... This idea you bring up is also not wrong as it is directly related to inflation. However, this was not the root cause. Look up what the monetary policies were back then and you will find your answer. Nixon had keynesian economic policies which disrupted the economy. Nixon imposed wage and price controls as well which in the short term worked well, but ended up just helping the inflation raise considerably. Only after more strict policy on this money and government was made did this inflation problem die down. (Basically it was poor policy at then end of the day not the goods that caused it). As for why knflation is happening right now, its because of the printed money for covid relief. This added money into the economy and the lock down ending has caused a spending spree. With more dollars in the economy, it is no surprise that prices have risen because of it. This is the very basic way to look at it. Not my feelings...just facts.
@@simonjaz1279 I know of no business ever that raises prices due to government monetary policy. People were paying $10k over sticker for cars that sold for cost less $5000 in incentives months earlier. Coca Cola prices remain unchanged. It is the duty of every business to charge what it feels it can get away with. At Home Depot paint prices didn’t change. A 2x4 tripled in price. (Tariffs on Canadian lumber). So my question is how does money supply gain consciousness and tell different businesses it’s ok to raise prices??
@@simonjaz1279 I almost forgot Nixon’s big thing was he took us off of the gold standard. And it should be noted did any of the so called sound monetary policies pull us out of inflation? He put us back on Gold right? Absolutely not. And No none of the policies worked and it continued through Ford and Carter.
Steve Keen YES, YOU HAVE MADE a MISTAKE. . - A big mistake !! I asked him to address an issue pertaining to his claims and he intially says he will be dealing with it. But his failure to do so is evident when he says " to prove it but his mathematics is Not in question. His poor grasp of the initial concept is his failure. :
Someone should tell the MMTers that we do not need large federal deficits, high levels of government debt, or to print a lot of money. All we need is state ownership of large national and multinational corporations and a government job guarantee. All those billions in profits could be utilized by the state to fund the budget. There is also the sovereign wealth fund option.
A version of this worked in New Zealand for thirty years, whereby there were state owned industries and assets and a private sector, the private sector was split by local production for local markets which was protected by tariffs and the export market. During that thirty year period we had full employment and a flourishing society. It was destroyed by joining IMF, World Bank, going into debt for damns and fertiliser (like India) and eliminating the protection of local trade, as NZ economy collapsed NZ had its form of Thatcherism, known as Rogernomics which sold off local asset at rock bottom prices and ushered in neoliberalism at break neck speed, second only to Chile. My concern is the means of production, even if there was the political will to restore a more wholistic economic system - everywhere trade deals by rich countries are only agreed if small countries further liberalise, allowing rich and group 'funds' to come in by up property, land, business, forests, etc stripping the means of production further away from the local population driving up asset prices, then commodity prices and driving down wages.
@@soraya_ If the 30 year period you are talking about encompasses the is 1970's and early 1980's New Zealands economic worries were realtively bad compared with most other developed nations. Not so flourishing a society and not full employement since in the early 1980's it was 5% and the GDP per capita had fallen by 10% from the mid 1970's until early 1980's. From early 1990 until 2006 it had gone up by nearly 40%.
According to the promoters of MMT put across the belief it is an accurate descripion of the operation of the money system and the economy but just some of it's major failings relegate it to the standard of rubbish economics . Just consider these contradictions within the theory which are only some of the failures of MMT thinking:- If it is such an accurate description why does it say " the purpose of taxes is for government to provision itself (Mosler) and then they say taxes are destroyed and not used by government to spend again as well as saying taxes are not necessary. How are those statements reconciled? How would government provision itself if taxes were not spent ? How would it be a true claim by MMT that government is an"'issuer" of money and not also "spender" if it uses taxes to provision itself. They can't be reconciled and no MMT economist can explain those contradictions. Why ? - because it is a rubbish idea pretending to be genuine theory.
I have never been to a sporting event where the scorer is participating in the game like the government does in the economy. Yet Kelton's explanation of how money in the economy works uses an analogy of s scorer in a game. Maybe she has never been to game or made so bad observations that she thought the scorer made up the scores despite what happened on the field. The analogy is totally unlike what government does when it participates in the economy. No. - Scorers don't participate in a game like government does in the economy. Anyone seen the scorer make a home run or touchdown or even a tackle?
Kelton lards her explanation with so much extraneous verbiage as to contribute to the general confusion of the question of government finance. There are only three ways to finance the operation of the federal government. 1), Conventional taxation, 2) Borrowing from individuals or foreign governments, and 3) Monetary inflation (raising the ratio of money in circulation to the amount of goods and services available in the marketplace.) Technically, monetary inflation is simply a tax levied against the nation's savings, collected by reducing the value (purchasing power) of all previously-issued money, and it comes with the inevitability of price inflation, the timing of which depends on what economists call the "velocity of money".
Exactly - Yes. Those three ways, in the end all result in government taking resources from the private sector. There are no "government" resources from Outside of the economy which government can use to "Prop up the economy" as MMT promoters often claim. There are only politicians and MMTers pretending there are and taxing the private sector to do so by these 3 means. Even the borrowing by government ends up being actual conventional taxes to pay off the borrowed money when the bonds created to borrow have to be paid out on maturity.
The idea that the natural rate of interest is zero is total rubbish. Lending money always involves level of risk of not getting it all back. Who would lend at an interest rate of Zero instead of keeping their money in their savings account or in cash which are better alternatives than risking a loss for no gain? Only someone who is really financially incompetent including maybe Stephanie Kelton if she really believes what she says. The natural rate of interest is not zero since there would be very little lending at that rate.
You misunderstand. By "natural rate of interest", she is referring to what the short-term inter-bank interest rate would be if the central bank/Treasury did not artificially intervene in Open Market Operations (OMOs). In this scenario, government deficit spending would directly result in a flood of excess reserves held by banks at the central bank. In fact, in the long run, these excess reserves would numerically equal what the "national debt" is. If the commercial banking system has far in excess of reserves to meet their payment clearing and withdrawal requirements, there would literally be zero need for banks to borrow ANY reserves from other banks or the central bank. This means the "inter-bank interest rate" would indeed tend to zero because, in effect, there wouldn't be an inter-bank lending market. So in a way, you're correct. The banks *wouldn't* lend in an excess reserve scenario. Not because the interest rate is so low, but rather because no other bank would want/need to borrow from you!
@@JGS2295 Your idea about reserves is slightly faulted because in some countries there are No reserves at all. What has muddied the present interest rates is the government's monopoly intervention into the market in which with the help of the reserve bank there is an exclusive arrangement involving borrowing and a mandatory interest rate policy where bonds are sold on the market with a competitive interest rate and to overseas entities to raise money for government to spend as part of their budget. Some countries even have a mandatory percentage of government bonds to be owned in their contributory retirement pension funds.
MMT is short sighted, once the debt to GDP ratio exceeds 90%, faith in currency and insolvency become issues. US Treasury now must keep interest rates low to afford debt service...Just like Japan...inflate the debt down over a long time, i.e. stagflation...
At 22:30 Kleton says the "government spends the currency into existence". This a false grossly misleading statement that contradicts the explanations of the actual institutions who create the money in the economy. The facts are most money in the economy (over 90%%) is created by private banks when they make loans to their customers. The rest is created by the Federal reserve bank which lends money to the government in exchange for treasury securities. It is all fiat credit based money created from lending and it all has to be paid back when or before the instrument (loan or treasury security) reaches it's maturity date. Yet despite these facts Kelton displays he explanation showing government as an issuer of money and not the first user and biggest single user of money in the economy who spends the money they get from the Federal reserve bank acquiring goods and services in exchange. Even the founder of MMT, Warren Mosler, says Quote " the purpose of taxes is for government to provision itself". Provisioning itself means buying goods and services from the economy of the private sector.
Taxation is to create universal demand for the token that is issued as money duh. So that money has any value at all it needs to be demanded by everyone
Totally wrong. Taxes did nothing to put value into the money of al of the countries where inflation made them worthless such as Zimbabwe, Brazil, Hungary.
@@Rob-fx2dw not understanding. The reason why a population uses one thing rather than another as money is because of the threat that is implied with tax. Its because of tax that everyone wants, trades and uses money. That is indisputable fact. At least for groups of people large enough for anonymity. Inflation happens when a country mis manages its money supply. When a country doesn't match the money supply to goods and services created in the economy. But here what I'm saying is that for a token to have any value at all there must be a form of taxation. Take gold for example. The reason everyone accepted gold coins as currency was because Kings extorted (taxed) gold coins from the people.
@@subjectiveinsights2447 You say "The reason everyone accepted gold coins as currency was because Kings extorted (taxed) gold coins from the people.". You ignore the fact that any money can have value without taxes. Bitcoin and other digital currencies have value but there are no taxes on it . That alone proves your MMT influenced idea is wrong. Secondly I will reply with what I have said to others about the country's money and taxes failing to put value into it. It may see someone like the government taking taxes would make it valuable but it is an unsupported belief that is proven wrong by the evidentiary facts. MMT says taxes put value into and get acceptance of money. How did that idea work in all of the countries where inflation ruined their money ? Taxes did not do anything like putting value into or getting acceptance of the money or make the money worth anything. So how do you validate your claim in view of that real evidence. A rational response that explains it OR admit that taxes don't put any value into money. Why?" - I will explain:- I will give you an example - someone goes out side with a belief they can fly. They get onto a high building and jump off and they fall without being able to fly - They are badly injured and hospitalized. Do you think that their belief of flying is rational despite their injuries OR are they incapable of rational thought given the evidence that they fall . MMT has said taxes put value into the money like the person jumping off the building after believing they can fly but it is an irrational belief because the evidence proves they can't. The rational belief about what was proven an original now failed belief is that evidence proves it wrong and that evidence must be accepted in view of the original belief being wrong. A failed belief in economics is taxes put value into money because the evidence of 30 countries in the past 80 years where the inflation made the money worthless and rejected is taxes failed to put any value into their money because it was rejected by their people and eventually by their own governments Saying taxes put value into money is like someone jumping off a building, not being able to fly and going back trying it again 30 times and still not believing that it is a failed idea and continuing to do so. .
@@Rob-fx2dw mmt doesn't say taxation puts value into money at all. Thats a nice strawman. Bitcoin... by itself... with no state backing... Will.never be money. If states start demanding it to pay taxes then it could become money. Anyway mmt doesn't claim taxation puts value into money but it does claim that taxation forces everyone to demand currency. Theres a difference. You cant just print willy nilly. Again mmt doesn't say that either. What am I doing? Your blatantly a troll who hasn't even tried to understand mmt. All of this has been said clearly and more lucidly than I can say on the very video we're commenting on. Your either a troll or you don't have the capacity to understand.. if the latter I apologise
@@subjectiveinsights2447 You don't know what money is in todays economies. You also are ignorant of MMT because they do say it makes the value for the currency. Kelton's own words; " As long as the government has the power to enforce it's tax laws, people will need the government's money. The currency will have value and the peole will sell things to the government in order to get it's currency " See at the 35:30 minute point of this video :- ruclips.net/video/6IBEoWSiTHc/видео.html You are the ignorant abuser in this conversation showing a lack of emotional intelligence. Have you nothing else to offer in the way of rational argument?
![Moneybagg Yo - WHISKEY WHISKEY [feat. Morgan Wallen] (Official Audio)](http://i.ytimg.com/vi/kJamyq0WplE/mqdefault.jpg)
Kelton knocking it out of the park again.
Thank you for sharing this Steve.
Frankly, I find it disturbing how something as simple as MMT, something based not as much on theory but on our daily monetary practices across the world, remains so misunderstood and so hotly debated.
Also, I do hope your modeling work with Minsky gains far greater recognition and appreciation. It is exemplary.
because it destroys the neoliberal neoclassical and Austrian understanding of money (could include marxian but don't know much enough but sounds neoclassical), which completely destroy the whole school. 90% of all Economists are proponents of these schools, they won't give up after teaching this for 40 years of their live.
@@sharann3482 Yeah. It's face saving egotism on a massive pathological and genocidal scale. The neoclassical and neoliberals cannot stomach learning their whole policy influence over decades has crippled economies and killed people on a holocaust level scale. Objectively. Paradigm shifts happen one funeral at a time. A fair few people like Robson will need to die off (metaphorically, or literally lose power) before MMT is "acceptable."
@@sharann3482 from my understanding, it doesn't destroy those theories. Both sets of theories are correct. It seems to me that the debate is centered around what the role/level of government intervention should be. Correct me if I'm wrong but, i think a good analogy is a car and it's suspension. MMT is effectively being used as the suspension system of the car. Using it, the passengers feel less shocks and bumps from the road and can make for a more stable riding experience. However, you'll notice, that professional drivers require still suspension systems, that is because they need to feel the feedback from the road to drive effectively. That's the austrian system, it's foundational, it's the actual signals, it's the actual road. MMT doesn't remove the road, or the underlying fundamentals of economic activity, it attempts to control its effects. And so, that's the danger. If you make the suspension system too soft, you lose all feedback from the road. Same with MMT, if you distort the economy too much, it only had an artificial bearing on reality. And on both cases can lead to major crashes if your MMT or suspension system is not tuned properly. And so, the question is, how to do ensure that government to have a properly tuned system? And should the system be tuned for performance, aka more closely matching underlying fundamentals, but a bumpier ride, or for comfort, more government intervention with all of the good and bad associated with that.
Explain MMT to anyone that has no university background in economics and they will most likely get it really quickly. But if you go to any forum that has people with degrees in economics in it, you‘ll be laughed at, strawmanned and even insulted. This is how big the indoctrination is in our universities. MMT really needs to get the students before they are brainwashed. It‘s like Max Planck said it: „A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die and a new generation grows up that is familiar with it. . . . An important scientific innovation rarely makes its way by gradually winning over and converting its opponents: it rarely happens that Saul becomes Paul. What does happen is that its opponents gradually die out, and that the growing generation is familiarized with the ideas from the beginning: another instance of the fact that the future lies with the youth“. Or in short: Science advances one funeral at a time.
This is great news , so all Venezuela needs to do is turn on the printer. We'll become Venezuela if this goes on long enough. Money will lose its value
Well done per usual, Prof Kelton.
Excellent discussion! I have been in the MMT camp since I started reading Michael Hudson and Steve Keen about twelve years ago. I even delved into Minsky', although he is a bit difficult to navigate. It amazes me, when I was listening to the parliamentary debate in the UK today over the budget...and even after all the covid spending...that only a handful of MPs (in any party!) seemed familiar with MMT. It was all about WHEN we should start raising taxes...not IF!
Kelton and Keen really put on a clinic.
6:44~ kelton
48:09~ keen
1:23:40~ keen
1:26:19~ kelton
I just read Hicks “The Market theory of Money” where he argues that everyone is obsessed with inflation but nobody seems to care about deflation. He finds it strange since the concern should be stability. “To impose a condition of non-inflation, upon an economy which has become adjusted to rising prices, would surely, from this point of view, be quite as much of an upset.” (Hicks, 1989)
Also from trying to find decent debates between heterodox and orthodox economics I find it increasingly weird how arguments are just being ignored or (purposely) misunderstood, resulting in polite but boring discussions. I guess what I am really missing is intellectual curiosity, especially since economics failed the public so miserably. I am studying economics, because I thought there is this huge moment for change in the profession after 2009. I can tell that in my university the great shift was from fresh- to salt water economics.
A dissent-free debate. The debate we need is on MMT's implicit hypothesis about what creates economic growth. MMTers apparently believes it should go like this:
1. Government hires (and encourages the private sector to hire) the least promising workers (the unemployed) to do...what? Something that was a net loss before they were laid off. Dig ditches, cash paychecks and buy consumer products to boost the Aggregate Demand figures the economic models like.
2. Through one financial means or another, government commandeers a quarter (?) of workers' output for its important infrastructure projects, preempting projects private investors would otherwise have funded. Whereas private investors can evaluate projects based on cost/benefit analysis, MMT teaches the ministers that their costs are always zero, which would seem to make their job harder. But despite that, despite having no skin in the outcome, and despite the peculiar incentives of poilitical optics, they'll somehow make shrewder decisions than the private sector.
Amen
Dr. Keen dropping cold hard truth BOMD's on the academic paradigm!
The only deficit we need to be worried about is “Private debt “!!!!
Love me some MMT love me some Deficit Myth!!! Love me some Stephanie Kelton!!!! ❤️❤️❤️
on ya prof...hope things are good in Thailand...
Good in Thailand... if you are a citizen. Not so much if you are a migrant worker, they still get treated like sh*t. You can trace that also back to Thailand politicians not understanding they issue the baht, and can fully employ everyone willing to work. (they likely will be among the last to see through the MTM lens, because of their massive corruption and Palace/Parliament grift problems.)
Steve Keen should have sojourned in New Zealand. People (working class and some in the public service media) would actually listen to him here.
Workers are a natural resource!!!! Spend federally to keep people in work!!! That benefits all of us
The sole person who were critical of MMT had arguments that could have been spouted on Fox News. Utterly uninformed about the most fundamental facts. Pretty funny that he name-dropped Krugman. Keen probably chuckled inside.
Out loud, since you can mute yourself on Zoom!
Inflation isn't the only constraint, labour and resources should be considered too. Where do capital markets fit in with MMT? What does international trade look like If money isn't a constraint? In addition how are those resources allocated?
Inflation also does not affect every sector and class evenly. What is the proper way to measure inflation? Is not "money" neutral in the long run, yet the MMT goal is 0% inflation. Or did I misunderstand and that inflation should still occur?
A unit of account can never run out... it’s about RESOURCES! Resources we could run out. The federal government spending is on resources... not profit.... unlike corporations
Government and corporations are not on different teams. They are on the same team. Government spends on bailouts or weapons contracts or bureaucrats to protect corporate patents or CIA ops to overthrow foreign governments who aren't friendly to US corporate interests. Government is one big corporate money laundering operation.
Professor Keen, I'm a graduate student looking to do some work on the role of private debt in the economy. Where can I find the latest data? I can of course find your excellent chart going back to the 1830s but I don't feel comfortable citing a website, is there a more "formal" source it can be found, or how can I find the data to construct a similar graph myself? Thank you for all the work you do in helping to debunk economics! The mainstream will keep resisting, but you and others, and hopefully the next wave of us, will have to just keep correcting their bull.
Thanks Brian. The recent data is maintained by the BIS: see www.bis.org/statistics/full_data_sets.htm. The pre-1946 data for the USA can be gleaned from Census publications "The bicentennial edition of Historical Statistics of the United States is the third in the series of volumes inaugurated in 1949. In both form and content, the bicentennial edition has drawn heavily from, and built upon, the two prior editions. Both the first volume, Historical Statistics of the United States, 1789 to 1945, issued in 1949, and the second volume, Historical
Statistics of the United States, Colonial Times to issued in 1960, were prepared by the Bureau of the Census with the cooperation of the Social Science Research Council". There are time series on debt and bank loans from 1834 till 1945 and 1916 till 1970, with vastly different levels but very similar rates of change. So I assembled the long term 1834 till now data series by splicing them at current levels.
@@ProfSteveKeen Thank you.
@@ProfSteveKeenIt seems you read comments and but only answer people who agree with you but can't answer people who disagree or challenge your theory's basic assumptions.
For instance - Why does MMt you say taxes put value into money and get it accepted when taxes put No value at all into the money of countries where inflation sent the sovereign money into a situation of being utterly worthless.
So worthless their own governments dropped it.
Why does MMT say the government is the source of all money when historically money is all sorts of forms and exchange of goods and services by barter existed despite and before the government.
Why do you persist saying that the government deficit is a surplus for the private sector when the government deficit can only exist by them borrowing money either from the reserve bank or the private sector where in both instances the loans mature and have to be paid back by the private sector via taxes.
@@Rob-fx2dw , "Why does MMT say the government is the source of all money when historically money is all sorts of forms and exchange of goods and services by barter existed despite and before the government." ANSWER: change the world "money" with the world "currency". As the matter of fact, MMT is inapplicable in any economic regime in which a currency is not present and this is a statement shared by all the MMT economists. It's "currency", and not "money" in a more general (and broader) sense.
"Why do you persist saying that the government deficit is a surplus for the private sector when the government deficit can only exist by them borrowing money either from the reserve bank or the private sector where in both instances the loans mature and have to be paid back by the private sector via taxes." ANSWER: because currency itself is a public monopoly. You can easily recognize it by studing the process through which an economy, where a currency is not present, is then introduced. Because you are Italian, I pass you two sources in Italian language on it, i.e. a video and a book on this topic.
Video:
ruclips.net/video/fh2zDgswt50/видео.html
Book:
bottegapartigiana.org/wp-content/uploads/2021/03/Le-origini-della-moneta-di-conto-luglio-2017-a-cura-di-Jacopo-Foggi.pdf
@@RainbowTRW What is your understanding of the word "Currency" and what is it in respect to "Money" in the economy presently.
The specific meaning of currency is the nominated legal tender of a nation that is in any form what so ever be it digital or coinage or paper. E.G. Dollars, Pounds, Renmimby.
The term money is anything accepted as payement in trading or exchange to settle a debt or create a loan.
very interesting. I ran through your balance sheet example and I have a few questions Professor Keen.
First: when the CB repurchases bonds from banks, and the latter incurs a profit, does that create money? I suppose yes, as the profit would be recorded as retained earnings, hence increasing the money supply.
Second: does your example imply that bond sales and repos don't create money, but rather provide and drain liquidity when needed?
Lastly: when the treasury needs to pay for the interest it borrowed from the Fed, how does it do that? does it just roll over its loans by borrowing continuously from the fed? this would also answer how the TGA manages to be always positive (as if that was not the case, the TGA could be maintained positive only by bond sales and tax revenues, indicating those as actual sources of spending). So i guess the last question is summarised as: how does the circle end?
Thank you :)
another question: when the treasury engages in the first spending, the treasury account is set at 0 but is decreased. Does that imply that the treasury account is first debited by the Fed (increasing also loans)?
@@user-tb2gs2xn2v Don't expect a rational answer from Keen. I asked him why his graph showing deficits causing an increased supply of money for private sector did not take into account the fact that the private sector also incurs the obligation to pay back the money when the treasury securities created and sold to get that money matured.
His answer effectively was his Minsky model shows it doesn't. He could provide no independent information as to why he was right. Why? - because the assumptions made in his own model are false.
Kelton @17.50. If you trace back the chains of debt and sources of funds you come to the point where the resources of the Earth, plus solar energy, are exchanged for currency by harvesting the free ‘natural increase’ of biomass ( domesticated plants and animals, plus unsustainably harvested wild stocks) and using free solar energy, plus diminishing stocks of fossil fuels. Ultimately the Earth pays the debt.
Keen @51.00 At the lowest tier of the economy, the primary producer, =farmers, fishers, foresters, miners , their principal asset is a natural resource.
Great discussion. Maybe someone can help: Kelton's example at 1:22 of a federal job guarantee program during economic slumps offering a way to create anti-inflationary pressure made me ask myself if in fact economic downturns and high unemployment tend to cause inflation, and it seems that the opposite is true. So is there a problem with her suggestion?
This is much more informative than the Brady Bunch
It's really about who has power.
I'm getting sent here when I click on "Reply" to Rob's comment starting "It seems you read comments and but only answer people who agree with you but can't answer people who disagree or challenge your theory's basic assumptions...". So I'll reply here. In brief, I'm writing a book that answers misconceptions such as yours, and I sporadically check comments here and reply equally sporadically. If I were to pull apart all your misconceptions, I'd be wasting my time here and not writing that book.
Steve Keen - What ? MMT has been around for over 20 years and you have been commenting on and promoting it for over 10 years. Yet you cannot answer simple questions like why you support the MMT idea that taxes put the value into the money but the historical evidence of all those countries (some 30 or more of them) where due to inflation the money failed in the last 70 years to have any value despite taxes being collected. Even their own governments dumped their currencies to substitute another country's currency.
You have not even done the straight mathematics to work out the MMT idea that taxes are destroyed is wrong because the evidence is that taxes are re spent. The evidence of the spending by the US Federal government from 2011 to 2020 which was over 35 trillion dollars yet the national debt only rose by about 10 trillion to 21 trillion from the 11 trillion it had been in 2011.
So the mathematics of the original 11 trillion plus 35 trillion spent equals 46 triilion. Not the 21 trillion it was in 2020. A missing amount is over 25 to 26 trillion to be conservative.
The correct explanation is that taxes paid for Most of the Federal government spending in that period as they have always done.
Great presentation, Dr. Kelton!
The Constitution does NOT say the Gov't must issue the money, it says the Gov't must set the measurements of the money (how tp measure it).
The key statement was that MMT works because the private sector has the confidence in the Treasury bills. The petrodollar has and will continue to allow this for some time. You can go anywhere in the world, hop into a cab, and show the driver USD and they will take you where you want to go. That is not the same for most currencies. However, as has happened with EVERY fiat currency in the past at some point, the private sector ( and eventually also those cabbies) won't accept the currency because it is debased. Maybe it won't happen for the next 10, 20 or 30 years, but it will certainly happen. The confidence in the currency is based on the total debit level. The faster you grow the debt, the sooner it will come. MMT works until it doesn't.
No. MMT "works" because it describes existing monetary operations. The governemtn is the score keeper, their currency is a tax credit. Treasury bonds have no necessary role,[^] they're a regressive hold-over from fixed exchange rate and gold standard eras = welfare for people who already have money. With the existing (already MMT) systems, you can adopt ZIRP, and use fiscal to steer the economy (full employment, price stability) bonds are not a necessary instrument when you have a fiat currency and floating exchange rate.
[^] If risk free assets are desired for parking savings, the governments can just 100% insure bank deposits. Ergo, no need for governemtn pension savings, no need for bonds.
Just a thought, what if over time there was shift in people's understanding that a currency's strength is not linked to it's debt ratio, and instead a currencies strength was measured by the economy it supported, as MMT advocates. Surely there would be no reason for people to stop borrowing in that currency.
I think MMT works because it is describing what happens in any soveign economy.
The dollar status of fiat currency is related to energy production. As the US oil production started to decline it has been challenged as the fiat currency. I think this is why Trump and Wall street and Fed agreed to save shale oil industries which have been loosing money since day one.
When maori tribes where dealing shells it was not for trade nor taxes but to avoid war, it was not a currency. Most economists are quite wrong about these things. David Graeber has done an excellent job clarifying that matter in "Debt: the first 5000 years".
@@laurentfournier561 When I say petrodollar, I mean the fact that the Saudi Royal Family will not accept any other currency for oil, and so global oil markets are only traded in USD. Therefore USD is the worlds reserve currency. So even though it is fiat, the Fed can print as much as they want because it is ubiquitous and accepted.
You are right on that. Failing businesses and failing personal finances can operate on the same effect as failing governments by borrowing and outside their ability top pay back the debt that created until it inevitably comes home to roost. These people have learned nothing from history and of course are about to repeat the failures again.
My God, Robson has no ears
What came first? The tax or the spending?!!!!! If I could create a unit of account ($) I would.... but that is counterfeit.... MMT is the “Lens “ of understanding federal spending. I believe in MMT. Thank you for this interview. I own two books by Dr Stephanie Kelton.....
You are wrong. When I get my information I get it from the reliable sources like the people who actually perform the task and not some third hand source with a political or other agenda who puts across a fanciful story that does not add up.
The loans come first along with the newly created money which is mostly from private banks and some from the Central banks.
That is because money today is fiat credit money that private banks create most of.
The government gets it's money from the Federal reserve in the US as does the government in Canada who get their money from the Central bank of Canada. See the central bank of Canada's explanation which is at :- lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201551E#:~:text=Money%20is%20created%20in%20the,new%20loans%2C%20such%20as%20mortgages.
The loans from the Central bank that provide the new money all have to be paid back when the maturity date of the treasury bonds that were bought from the treasury to secure the actual money (funds for their deficit spending) also mature. All of the loans in the US that have been made over 30 years ago have been paid out and no longer exist because they matured so they are not any part of the national debt. .
The loans that private banks make also have to be pad out by the borrowers with money the borrowers have earned.
@@Rob-fx2dw there are no “loans”…. Taxes never pay for anything… you can’t even answer the question…. What came first? The taxes or the spending?
Taxes drive the currency
Taxes create unemployment
Taxes are a brake or gas pedal to control wealth gaps and inflation
Taxes do not fund spending.
#Learnmmt
@@Rob-fx2dw yes banks “loan “…. To the borrower that can pay back WITH interest… the federal government has treasury bonds that we can “buy” with our own money and they then pay a small interest after a period of time….
All caught up a bit since then..
Thank you all again.
Governments don't have price sensitivity and thus they always end up driving up prices on everything (esp healthcare, education, and housing). Hell sometimes they work to remove their negotiating power (as we've seen in pharma pricing).
No. Scarcity of supply, therefore lack of vendor competition does not come from unlimited capacity to spend. Supply side economics, Austrian school, drives the boom bust cycles.
@@r4ybc what would you call what happened in 2008 and the persistent compounding inflation for decades?
healthcare, education, and housing costs are lower when implemented by governments. it’s because they can negotiate prices. that’s why countries with public healthcare spend way less than countries like the US on healthcare. the insurance companies, pharma companies, private hospitals all add to the costs. this is why as an american i pay way more for healthcare. when i lived in germany, and south korea i paid way less because they have some form of universal healthcare. i lived it dude. also my housing and school were way way cheaper in germany. i got stipends for my education, housing, and travel on public transit. but don’t trust me you can look up the numbers for what households worldwide spend on stuff like healthcare, education, and housing.
@1:00:00 Rochon speaking as a mainstreamer? The orthodoxy certainly do not understand inflation, because they do not know where prices come from (except for relative prices). But MMT does understand the source of the price level and inflation: the source of the price level is the monopolist, and since inflation is basically the change in the price of the currency (purchasing power) and the monopolist controls the price level, so the government controls inflation, whether they know it or not (they do not know it). It's Econ-101: the monopolist is price-setter not price-taker,....but can certainly foolishly act as if they don't know it.
Stephanie at ~ 1:20:00 said central bankers have no good predictive models for inflation yet Steve Keen's 'Minsky' macroeconomic computer model is able to predict inflationary impacts from many possible sources. Central bankers have no excuses for their ignorance or incompetence or games of deception.
Inflation must be evaluated in the context of history and technology. The share of the labor force involved in agriculture has been steadily declining in the modern world. This may create some fragility, for example, if there is some kind of agricultural supply shock. But goods are cheap cheap cheap, and housing has just been climbing. We can way overproduce, many times more than our needs, in terms of basic commodities. This has been true since 1920's or so, the industrial revolution.
And inflation can be seen as a political choice by powerful actors to drive up prices in a commodity by throttling supply; e.g. the OPEC oil shock of the 1970s. Because oil based energy was so central to creating global GDP, the inflationary effects reverberated around the world for years afterwards.
MMT or how the rich take money out of your pocket without you noticing.
Ambassador Robson spouting the usual anti MMT nonsense tropes. He either didn't listen to a word Kelton said or is wilfully ignorant. Shocking!
I'm not sure of either. The wealthy have interest in maintaining high unemployement rates, bullshit jobs and low inflation. Inflation, low unemployment is good for small businesses and borrowers. Back in the 60 and 70 a worker could buy a small house in 15 or 20 years, you could start your own business with a light burden of loans... MMT unfortunately is a little bit naive regarding class interest. The wealthy doesn't care about a balanced economy. As Buffet put it, there is a class warfare, but his class won! At least it as won the control of the economy but I'm not sure they are going to win against climate change that is a challenger of another status ;-)
The only way to “ accept the currency “ is to pay the tax... which doesn’t create federal spending
Mr. Robson sub national governments have created thier own currency but were stopped by national governments
Why do most opponents of MMT not bother to learn the basics of the thing they feel so strongly about? How can you feel so strongly about something which you clearly know so little about? Sometimes it seems intentional, like with Krugman's constant strawmanning, because it is easier to argue against their simplified misrepresentions.
Deflation isnt a bad thing. Things are waay overpriced at the moment. If you need to pay for things then just collect taxes
He was “stimulated “.... was he pleasuring himself?!!!!😂😂😂😂
21:00
1:03:13 fight inflation offensively
Question is who knows whats best for you? If u think flawed humans running Gov then MMT is 4 u. If u think yourself then sound money is 4 u.
The “debt” is OUR savings or OUR investment into the “public purpose “!!!
Steve Keen replies. "I'm getting sent here when I click on "Reply" to Rob's comment starting "It seems you read comments and but only answer people who agree with you but can't answer people who disagree or challenge your theory's basic assumptions...". So I'll reply here. In brief, I'm writing a book that answers misconceptions such as yours, and I sporadically check comments here and reply equally sporadically. If I were to pull apart all your misconceptions, I'd be wasting my time here and not writing that book.".
Thank you Steve Keen but I guess I will be waiting for that book for a long long time because it wl have to reveal a conceptual understanding of economics greater than that of Charles Darwin's revelations in the theory of evolution.
MMT is so true it’s scary.... #eachoneteachone
First question shows his stupidity. If he doesn't know something as basic as the function of taxes, he has no credibility.
What happens after Energy supplies are allocated to a plan - is a choreography, no matter how it sounds complex.
This is the Soviet Union mark II.
"Energy, like time, flows from past to future".
Wailing.
WTF? No one is advocating centrally planned economics. There's always a role for a private sector doing what they please within legal and market demand constraints.
@@Achrononmaster Circular.
Have you forgotten entropy ? Just like time, once "consumed" energy changes from usable to useless and heat. There is no going back. can you take me back in the year 1973 ?
Steve Keen needs to live up to his promise and explain how his sectoral balance theory of government deficits being a surplus for the private sector stands up in face of the reality that the idea ignores the fact that Federal deficits create a debt which is passed on to the taxpayer to fund when it matures. He made that promise to do so several years ago but has not been able to provide any reply. Why - One has to ask ? Because that sectoral balance be in a surplus idea is clearly WRONG.
The “government “ is for the people by the people WE the people.... the people are the government.... representatives are those who represent the people... but they don’t
My parents bought “bonds”.....for their grandchildren.... the interest rate is a joke... but we still get the money.... mind you my parents BOUGHT the bonds with their money....
Interest rate on bonds is not great right now. But bonds are a good deal for savers. They may not pay much interest, but they pay more than cash, and they are safe as long as the US gov't does not collapse/"default" on its debt.
@@tiberiusalexander6339 You need to do your homework. Government bonds are a disaster as a savings instrument because you are bound to lose when you buy them. That is also the opinion of Warren Buffet who has been one of the best reputed investors over the last 60 years.
Thanks for the talk. Very useful for thinking through the monetary system. I ended up thinking if we really want to have a selflimited government when there are clearly stuff to do that markets wont do without government iniciative. Does it make sense that governments borrow from secondary markets instead from the central bank at 0%? They do have really a constrain that has to come from markets better than from voting processes in order to have incentives to use their spending wisely? And lastly... can sometimes government spending result not into economic growth or employment but rather take care of nature or other forms of value sistematically invisible to market forces? Can we degrow by government intervention? And would it be neccesary global scale coordination.
Kelton @1.51: Why would we the people want any inflation anyway, since it represents the long term erosion of our savings?
Because you shouldn't be saving currency, you should be saving ownership of useful assets that grow with inflation. Units of currency represent a claim on a portion of the total economy in relation to prices. If prices increase, that says that by being decisive with the currency that you own, you are better directing the economy: either to make something for you to consume, or someone else to consume. By saying that there should be deflation, you are saying that society should owe more to you in the future for doing nothing, for taking no risks, for just letting everyone else in the economy doing the work of figuring out what to make.
If you want to protect currency from inflation: buy stocks and bonds.
I live in the U S and I want to use Australian ($)!s!!!! Lol maybe I should just “create” my own unit of account!😂😂😂😂
Ive never seen one leading politician or central banker champion this 'theory' so if there is no one to implement it, what is the point?
Usually the 'economists' who use 'macroeconomic models' 'believe' that the solution to the current macroeconomic problem is the implementation of the 'correct' type of demand side policies. That is, how to increase income/output {'growth'}.
Increase M0, M2 or M3, cut r, or make it negative. Increase G and finance it by 'borrowing' from the central bank or by borrowing from the private sector. Or ensure that private credit is extended only for GDP transactions.
All that is lacking is a 'sufficient' increase in effective demand!
The neoclassical/Austrian economists, who believe that income/output is 'supply determined', will argue that all that is required to generate a large increase the growth of the underlying productive potential of an economy is for taxes to be cut and more 'competition', etc be introduced!
Aside from the externalities of 'growth', what they ignore is the 'supply side'?
'We' have ten years?
“ . . . our best estimate is that the net energy
33:33 per barrel available for the global
33:36 economy was about eight percent
33:38 and that in over the next few years it
33:42 will go down to zero percent
33:44 uh best estimate at the moment is that
33:46 actually the
33:47 per average barrel of sweet crude
33:51 uh we had the zero percent around 2022
33:56 but there are ways and means of
33:58 extending that so to be on the safe side
34:00 here on our diagram
34:02 we say that zero percent is definitely
34:05 around 2030 . . .
we
34:43 need net energy from oil and [if] it goes
34:46 down to zero
34:48 uh well we have collapsed not just
34:50 collapse of the oil industry
34:52 we have collapsed globally of the global
34:54 industrial civilization this is what we
34:56 are looking at at the moment . . . “
ruclips.net/video/BxinAu8ORxM/видео.html&feature=emb_logo
What you are doing is seperating 2 systems; 1 system is to account for money from the view of a private citizen, the other system is to account for money from the view of the Federal Reserve or the Gov't. If you rearrange the language to use 1 system, with it's positive and negative side, it will be much clearer. The Normal system is the reverse of MMT and MMT is the reverse of the Normal - Previous system.
Your comment is valid since using two sets of langauge and applying one set to the government sector (and Federal Reserve) then applying another language set to the Non Federal government sector. No wonder they are confused and conflating concepts and making statements that are contradicory.
Not even a contest. Entrenchmemt alone is keeping mainstream enshrined in academia. MMT needs to gird up and go Game Of Thrones style until a few heads roll out of the way.
Kelton tells more lies about the US having never defaulted on it's debt despite having claimed to having "looked at this for a lot of years" .
She also claims that it doesn't happen then says it happened 'voluntarily' in Japan - So it is still Default but she tries to put qualification on it.
Who cares if a default by someone you lent money to was involuntary or 'voluntary ' . - You still lose the money because it is indeed DEFAULT.
The truth is the US government in 1933 defaulted on the debt it owed to it's own citizens. The situation is described in detail in a recent book by Sebastian Edwards named " American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold,". It explains that FDR entered the White House on March 4, 1933, and in less than two months (April 19, 1933), he announced that he was taking the U.S. off the gold standard. FDR asserted that he was doing this to end the Great Depression and to raise farm prices. As FDR put it: “the whole problem before us is to raise commodity prices.”
FDR gave Congress license, and Congress used it to abrogate the Gold Clause via a joint resolution in June of 1933. Before that, a gold clause was included in most private and public bond covenants. These covenants insured that bond holders would receive interest and principle payments in dollars that contained as much gold as the dollar had contained when the bonds were issued.
The U.S. government manipulated the price of gold upward until President Roosevelt redefined the dollar in gold terms under the Gold Reserve Act of January 1934. Overnight, the dollar became 41% lighter. This left gold‐clause bond holders out to dry.
Despite all of Kelton's claims about default happening only in situations where there was foreign debt the facts is all foreign borrowings no matter how tiny become unpayable when local hyperinflation makes payment of any debt impossible because the exchange rate becomes impossibly negative. Even their own sovereign governments abandon their own currencies that become worthless despite taxation which Kelton falsely claims makes value for the currency.
"so called' sovereign currency....:) ..no change their then .
Den of thieves!
More misinformation from Kelton who says raegan trippled the national debt. Yes, trippled it from 800 billion to 2.1 trillion. But that was from 34% to 50% of GDP over nearly 10 years. Not from 107% to 123% of GDP in three years.
Keene - "To check that I put it into my own Minsky software ". What ? Might also have been stated as:- " So I retreated into my introverted navel gazing instead of checking a well tested proven independent working principles and concepts " .
I usually get a refund after filing taxes.... but I’m poor.... lol
When the people receive stimulus checks prices go up.... because of corporate profits are going to go up.... regulations = consumer protection...de regulations = capitalism protection
By the way.... I’m the same age as Stephanie Kelton
I have a tax to give.... it’s 4 boys, 1 dog and 2 cats....plus a house.... theirs you’re TAX
57:05 Cringe
I feel like we’ve more or less been using MMT since the gold window was closed in early 70s, and maybe somewhat in the 30s after Roosevelt decided to expand monetary supply, confiscate gold, and then revalue it. This policy has NEVER been successful long term.
@@dylanbutts1628 No. Just saying that any type of continued currency manipulation like MMT has never proven to be sustainable long term.
It depends HOW you use it obviously
This is a harder sell than abolishing slavery to the American public. First re instate the fairness doctrine so there can be a public discussion.
Greece is part of the EU .... they used to have their own currency.....
woman is high on her own supply
Id argue that Argentinans do not what stability, they want inflation to go down and there doing well there. Why would anyone be upset for inflation to fall or deflation to occur and all of a sudden your cost of living starts to improve?
How about we reduce employment and drop prices on goods so low via deflation that you don't have to run deficits to create wage slaves. There are many people in the economy being paid in excess of their overall productive contributions, thanks mainly to government intervention. The government generally are terrible at allocation precisely because of how easily they are captured by special interests. MMT is a theory and misses the nuance and political realities.
Exactly. It's intellectual crack. It's presented as unleashing heaven on earth, and then real-world politicians show up and say, so this means there's no limit to how much we can dump on our cronies? Sounds great!
Then you dont have to do anything that is thr system you've had since the late 70's.
I listened to 3-4hrs of mmt theory videos and then switched to debates. In every case it reminds me of the old religious/creationist debates from a decade ago. The against position is always strawmaning and asserting unevidenced things as fact.
Notice that these MMTers never define "money" or explain its role in a price system. If they did, the whole elaborate exposition would fall apart.
Kelton uses her very narrow definition of 'defaulting' by restricting the meaning to default in number of dollars rather than defaulting invalue as well. Most countries default in value not in actual currency units be they dollars or pounds or pesos by creating inflation in their own economies and that means any foreign debt they have which was formerly payable becomes unable to be paid because the inflation causes the exchange rate to be come abnormally adverse. The evidence is that they were lent money in the first place because they were not an extra high risk but have subsequently become one. Not the reverse where their overseas debt causes their currency to go into hyperinflation.
1. A default means "inability to pay". You want a "euphemism" for default that expands -- haha inflates -- the meaning of the word so it means something different.
2. A capitalist system that needs profits and income to increase, requires steady low-level inflation. The real risk is deflation. Deflation is when banks, businesses, and households fall into bankruptcy, houses go to foreclosure, banks get shut down or need bailouts to stay operating as assets they own go bad.
3. Serious unwanted inflation, cases we know about, are all about some serious Supply shocks. Every. Single. Time. When Supply --- and capacity -- goes into contraction for some reason, prices can rise. Like right now, due to COVID, there's shortages of steel and semiconductors for automobiles and other core necessities.
Or debts arising in *foreign* currency that can't be paid without increasing export income to get foreign currency.
4. You seem to prefer that they economy should always have a private sector shortage of wealth and shortage of income, rather than having "too much" wealth. So, the Govt should be in charge of making sure that poverty and struggles are kept at a higher level than necessary and that infrastructure should remain in disrepair and without updates.
5. You would never invest in a company that didn't hire smart people, that didn't improve their workforce, that didn't replace their infrastructure, that didn't upgrade their technology for 6 or 7 decades. That's NOT what China is doing, but that plan of neglect and collapse should give America a successful and competitive future.
6. It's hard to tell if Critical Race Theory and hiring a million administrators of "safe spaces" and paying for mandatory "White Privilege" seminars would be the most harmful aspect of backwardsness, or if starving the economy of money is the bigger threat.
@@gg_rider You have not provided an anywhere accurate definition of deflation. our argument is essentially that effects are a cause.
You argue that ability to pay is just that. - You would be no doubt happy to receive some Zimbabwe dollars for the US dollars or Euros you paid into your retirement fund because that would Not be in your opinion a default!
Is that your argument? It appears you would be happy with that - but would you?
You say " Serious unwanted inflation, cases we know about, are all about some serious Supply shocks. Every. Single. Time.". Oh what?
What was the 'serious supply shock' that caused the Brazilian hyper inflation (300% per month) of the late 1980's?
As for the inflation in countries that had supposedly supply shocks that you say caused it their governments could have according to Steve Keen and his MMT used taxes to control it .
Why would that not work if inflation was deceased by taxes?
Haaaaaaaaaaaaaahaaaaaaa to this other person!!!!😂😂😂😂
Kelton misleads people with her false information about the users of the currency omitting who the biggest single user is.
.
The Federal government is the biggest single currency user in the economy when it buys goods and services from the private sector.
It s not the currency issuer.
The Federal Reserve bank is the creator of new currency for government to borrow and government has to pay that back when the Federal treasury securities which were initially sold to the Federal reserve to get that new money but later reach their maturity date. Just like they sold treasury securities to the public to get new money.
The rest of the money in the economy which amounts to over 90% is created by private banks who create it when loans are approved to their customers which like treasury securities eventually mater and the money is paid back.
I had to cut my viewing in half because this discussion was making my head hurt. Toward the end one of the panelists made a vain attempt to define "money." Sadly he spouted the standard three part definition. Money, however, acts as a medium of INDIRECT exchange. That's it. For that reason the quantity of money need not (indeed should not) vary. Any artificial change in the money supply distorts efficiency of the goods for goods exchanges facilitated by the use of money.
So inflation target should be 0%? Because what you say, in theory should work. But historically currencies have been deflationary (cutrency appreciation) or inflationary. The only thing remotely close to what you have describe was the international currency that Keynes envioned it would counterbalanced against balance of payments for each country for this exact reason.
Prof Rochon has no idea of what deficits do to the non government sector. He ignores the facts that firstly deficits result in more money flowing to the private sector because the arguments put forward by MMT economists ignore the debt that is created through borrowing which the private sector is forced to pay back through taxes when the bonds mature and have to be paid out.
a secondly he ignores the fact that savings in the private sector to not come from increased money flow but only come from having lower payments (costs) than income.
If increased money flow to the caused increased savings then they would also increase costs.
Bottomline MMT is good only for countries like USA which prints $, borrow in $ , pay back in $ and spend in $
For other countries like India which borrow in other currency like $, it may not work very well unfortunately.. 😞
Not good for any country- Why - ask yourself who they borrow from ? The federal Reserve bank ! Who pays it back ? Taxes on the private sector (people) .
@@Rob-fx2dw I agree overall too much of borrowing is BAD even MMT says the same. I was just stating, it is "relatively" easier for USA since $ is world's reserve currency.
@@amolghanekar7629 I agree the US is presently the world reserve currency . But that advantage is not what it used to be since much trade in oil and other commodities is now being done in currencies that is via bilateral agreements are not dependant on the US dollar. that weakness was illustrated many years ago when the US went entirely off the gold standard in 1971 and you only have to ok at what happend then to see that the inflation in the US dollar soared so high that the US was forced to make an agrrement with Saudi Arabia and the OPEC nations to sell oil only in US dollars. It was done for fear of the collapase of the US dollar which was then the world reserve currency. This highlights the fact that ties of currencies to real goods is the critical factor in maintaining value of a currency. Not taxes which have failed to do so in all of the countries where inflation sent the value of money to zero despite the taxes that MMT claims.
@@Rob-fx2dw taxes do not pay it back. taxes are used to give the currency relevancy and to curb inflation by removing money from the private sector. this is what MMT says. they say this explicitly in this video.
@@Rob-fx2dw the US government prints the money. they don’t borrow it from the private sector. your comments makes me think you haven’t listened to one thing kelton or keen have said, or any of the others proponents of MMT. no offense
MMT does not say you can have free lunch. Just don't take away your own lunch -- "Stupid".
Hasn't the money spent on COVID (4.5 Trillion hard dollars) 16 Trillion in estimated total spent when you put in loss of productivity and special loans put this argument to bed? We do have a little inflation issue going on now but due to the money supply it's due to shutting the economy down for a couple months and we have very little supply of certain goods. I'm thinking semiconductor chips as one of the biggest drivers of inflation.
That printed money did cause inflation at a much steeper rate than in previous years and my bet is that next year it will also be up higher than it normally is even if no more money is printed. If covid happened again, the amount of money that would need to be printed would be even higher due to this inflation from previously printed money and the cycle continues. MMT is really just not a great theory to get behind.
@@simonjaz1279 MMT or Keynsian economics as it has been known for sometime does at least have evidence behind it. Every bout of inflation is marked with the supply of goods being outstripped by demand. For example in the 70's our most recent battle with high inflation was caused by low gasoline supply being way outstripped by demand. Current inflation started in the auto industry with the low supply of cars being far outstripped by demand for new cars. Your arguement "The printed money caused it." What are facts of this arguement? Is this just how you feel?
@@anthonypape6862 right and I agree with MMT on the idea on how the government operates in terms of money and taxation. But the idea of printing more money=more money is wrong.
Now on to the 70s inflation crisis...
This idea you bring up is also not wrong as it is directly related to inflation. However, this was not the root cause. Look up what the monetary policies were back then and you will find your answer. Nixon had keynesian economic policies which disrupted the economy. Nixon imposed wage and price controls as well which in the short term worked well, but ended up just helping the inflation raise considerably. Only after more strict policy on this money and government was made did this inflation problem die down. (Basically it was poor policy at then end of the day not the goods that caused it).
As for why knflation is happening right now, its because of the printed money for covid relief. This added money into the economy and the lock down ending has caused a spending spree. With more dollars in the economy, it is no surprise that prices have risen because of it. This is the very basic way to look at it. Not my feelings...just facts.
@@simonjaz1279 I know of no business ever that raises prices due to government monetary policy. People were paying $10k over sticker for cars that sold for cost less $5000 in incentives months earlier. Coca Cola prices remain unchanged. It is the duty of every business to charge what it feels it can get away with. At Home Depot paint prices didn’t change. A 2x4 tripled in price. (Tariffs on Canadian lumber). So my question is how does money supply gain consciousness and tell different businesses it’s ok to raise prices??
@@simonjaz1279 I almost forgot Nixon’s big thing was he took us off of the gold standard. And it should be noted did any of the so called sound monetary policies pull us out of inflation? He put us back on Gold right? Absolutely not. And No none of the policies worked and it continued through Ford and Carter.
Steve Keen YES, YOU HAVE MADE a MISTAKE. . - A big mistake !!
I asked him to address an issue pertaining to his claims and he intially says he will be dealing with it.
But his failure to do so is evident when he says "
to prove it but his mathematics is Not in question. His poor grasp of the initial concept is his failure.
:
Silly fool Stephanie Kelton just explained it!!!!!🤣🤣🤣🤣
Someone should tell the MMTers that we do not need large federal deficits, high levels of government debt, or to print a lot of money. All we need is state ownership of large national and multinational corporations and a government job guarantee. All those billions in profits could be utilized by the state to fund the budget. There is also the sovereign wealth fund option.
You have learned Nothing from history. It has been tried before and failed every time.
A version of this worked in New Zealand for thirty years, whereby there were state owned industries and assets and a private sector, the private sector was split by local production for local markets which was protected by tariffs and the export market. During that thirty year period we had full employment and a flourishing society.
It was destroyed by joining IMF, World Bank, going into debt for damns and fertiliser (like India) and eliminating the protection of local trade, as NZ economy collapsed NZ had its form of Thatcherism, known as Rogernomics which sold off local asset at rock bottom prices and ushered in neoliberalism at break neck speed, second only to Chile.
My concern is the means of production, even if there was the political will to restore a more wholistic economic system - everywhere trade deals by rich countries are only agreed if small countries further liberalise, allowing rich and group 'funds' to come in by up property, land, business, forests, etc stripping the means of production further away from the local population driving up asset prices, then commodity prices and driving down wages.
@@soraya_ What 30 year period are you talking about whre the was full employment and flourishing society ?
@@soraya_ If the 30 year period you are talking about encompasses the is 1970's and early 1980's New Zealands economic worries were realtively bad compared with most other developed nations. Not so flourishing a society and not full employement since in the early 1980's it was 5% and the GDP per capita had fallen by 10% from the mid 1970's until early 1980's. From early 1990 until 2006 it had gone up by nearly 40%.
@@Rob-fx2dw 1937-1967
According to the promoters of MMT put across the belief it is an accurate descripion of the operation of the money system and the economy but just some of it's major failings relegate it to the standard of rubbish economics .
Just consider these contradictions within the theory which are only some of the failures of MMT thinking:-
If it is such an accurate description why does it say " the purpose of taxes is for government to provision itself (Mosler) and then they say taxes are destroyed and not used by government to spend again as well as saying taxes are not necessary.
How are those statements reconciled?
How would government provision itself if taxes were not spent ?
How would it be a true claim by MMT that government is an"'issuer" of money and not also "spender" if it uses taxes to provision itself.
They can't be reconciled and no MMT economist can explain those contradictions. Why ? - because it is a rubbish idea pretending to be genuine theory.
@1:23:00 urrrrr,... maybe don't refer to JG workers as a "liquid pool of workers," ;-)
I hope more than 2 like my comments!!!!!!!😂😂😂
I have never been to a sporting event where the scorer is participating in the game like the government does in the economy. Yet Kelton's explanation of how money in the economy works uses an analogy of s scorer in a game.
Maybe she has never been to game or made so bad observations that she thought the scorer made up the scores despite what happened on the field. The analogy is totally unlike what government does when it participates in the economy.
No. - Scorers don't participate in a game like government does in the economy.
Anyone seen the scorer make a home run or touchdown or even a tackle?
and after the secret of the universe is discovered hee hee hee hee
Kelton lards her explanation with so much extraneous verbiage as to contribute to the general confusion of the question of government finance. There are only three ways to finance the operation of the federal government. 1), Conventional taxation, 2) Borrowing from individuals or foreign governments, and 3) Monetary inflation (raising the ratio of money in circulation to the amount of goods and services available in the marketplace.)
Technically, monetary inflation is simply a tax levied against the nation's savings, collected by reducing the value (purchasing power) of all previously-issued money, and it comes with the inevitability of price inflation, the timing of which depends on what economists call the "velocity of money".
Exactly - Yes. Those three ways, in the end all result in government taking resources from the private sector. There are no "government" resources from Outside of the economy which government can use to "Prop up the economy" as MMT promoters often claim. There are only politicians and MMTers pretending there are and taxing the private sector to do so by these 3 means. Even the borrowing by government ends up being actual conventional taxes to pay off the borrowed money when the bonds created to borrow have to be paid out on maturity.
Did not even listen to the basic explanation of MMT, obviously.
He had ear plugs in!!! God gave us 2 ears and 1 mouth for a reason... obviously he doesn’t know how to use them.....😂😂😂😂
presentation is no debate
This doesn't age well for their Bitcoin opinion!
The idea that the natural rate of interest is zero is total rubbish. Lending money always involves level of risk of not getting it all back.
Who would lend at an interest rate of Zero instead of keeping their money in their savings account or in cash which are better alternatives than risking a loss for no gain?
Only someone who is really financially incompetent including maybe Stephanie Kelton if she really believes what she says.
The natural rate of interest is not zero since there would be very little lending at that rate.
You misunderstand. By "natural rate of interest", she is referring to what the short-term inter-bank interest rate would be if the central bank/Treasury did not artificially intervene in Open Market Operations (OMOs). In this scenario, government deficit spending would directly result in a flood of excess reserves held by banks at the central bank. In fact, in the long run, these excess reserves would numerically equal what the "national debt" is.
If the commercial banking system has far in excess of reserves to meet their payment clearing and withdrawal requirements, there would literally be zero need for banks to borrow ANY reserves from other banks or the central bank. This means the "inter-bank interest rate" would indeed tend to zero because, in effect, there wouldn't be an inter-bank lending market.
So in a way, you're correct. The banks *wouldn't* lend in an excess reserve scenario. Not because the interest rate is so low, but rather because no other bank would want/need to borrow from you!
@@JGS2295 Your idea about reserves is slightly faulted because in some countries there are No reserves at all.
What has muddied the present interest rates is the government's monopoly intervention into the market in which with the help of the reserve bank there is an exclusive arrangement involving borrowing and a mandatory interest rate policy where bonds are sold on the market with a competitive interest rate and to overseas entities to raise money for government to spend as part of their budget. Some countries even have a mandatory percentage of government bonds to be owned in their contributory retirement pension funds.
Money is a way to pay for things in the market..... purchasing ability... savings.... investment.... blah. Blah blah
MMT is short sighted, once the debt to GDP ratio exceeds 90%, faith in currency and insolvency become issues. US Treasury now must keep interest rates low to afford debt service...Just like Japan...inflate the debt down over a long time, i.e. stagflation...
At 22:30 Kleton says the "government spends the currency into existence". This a false grossly misleading statement that contradicts the explanations of the actual institutions who create the money in the economy. The facts are most money in the economy (over 90%%) is created by private banks when they make loans to their customers.
The rest is created by the Federal reserve bank which lends money to the government in exchange for treasury securities.
It is all fiat credit based money created from lending and it all has to be paid back when or before the instrument (loan or treasury security) reaches it's maturity date.
Yet despite these facts Kelton displays he explanation showing government as an issuer of money and not the first user and biggest single user of money in the economy who spends the money they get from the Federal reserve bank acquiring goods and services in exchange.
Even the founder of MMT, Warren Mosler, says Quote " the purpose of taxes is for government to provision itself". Provisioning itself means buying goods and services from the economy of the private sector.
Maybr she mrans is back up by the govertment considering tmhow fractional banking works.
Taxation is to create universal demand for the token that is issued as money duh.
So that money has any value at all it needs to be demanded by everyone
Totally wrong. Taxes did nothing to put value into the money of al of the countries where inflation made them worthless such as Zimbabwe, Brazil, Hungary.
@@Rob-fx2dw not understanding.
The reason why a population uses one thing rather than another as money is because of the threat that is implied with tax.
Its because of tax that everyone wants, trades and uses money.
That is indisputable fact.
At least for groups of people large enough for anonymity.
Inflation happens when a country mis manages its money supply.
When a country doesn't match the money supply to goods and services created in the economy.
But here what I'm saying is that for a token to have any value at all there must be a form of taxation.
Take gold for example.
The reason everyone accepted gold coins as currency was because Kings extorted (taxed) gold coins from the people.
@@subjectiveinsights2447 You say "The reason everyone accepted gold coins as currency was because Kings extorted (taxed) gold coins from the people.". You ignore the fact that any money can have value without taxes. Bitcoin and other digital currencies have value but there are no taxes on it . That alone proves your MMT influenced idea is wrong.
Secondly I will reply with what I have said to others about the country's money and taxes failing to put value into it.
It may see someone like the government taking taxes would make it valuable but it is an unsupported belief that is proven wrong by the evidentiary facts.
MMT says taxes put value into and get acceptance of money.
How did that idea work in all of the countries where inflation ruined their money ? Taxes did not do anything like putting value into or getting acceptance of the money or make the money worth anything. So how do you validate your claim in view of that real evidence.
A rational response that explains it OR admit that taxes don't put any value into money. Why?" - I will explain:-
I will give you an example - someone goes out side with a belief they can fly. They get onto a high building and jump off and they fall without being able to fly - They are badly injured and hospitalized.
Do you think that their belief of flying is rational despite their injuries OR are they incapable of rational thought given the evidence that they fall .
MMT has said taxes put value into the money like the person jumping off the building after believing they can fly but it is an irrational belief because the evidence proves they can't.
The rational belief about what was proven an original now failed belief is that evidence proves it wrong and that evidence must be accepted in view of the original belief being wrong. A failed belief in economics is taxes put value into money because the evidence of 30 countries in the past 80 years where the inflation made the money worthless and rejected is taxes failed to put any value into their money because it was rejected by their people and eventually by their own governments
Saying taxes put value into money is like someone jumping off a building, not being able to fly and going back trying it again 30 times and still not believing that it is a failed idea and continuing to do so.
.
@@Rob-fx2dw mmt doesn't say taxation puts value into money at all.
Thats a nice strawman.
Bitcoin... by itself... with no state backing... Will.never be money.
If states start demanding it to pay taxes then it could become money.
Anyway mmt doesn't claim taxation puts value into money but it does claim that taxation forces everyone to demand currency.
Theres a difference.
You cant just print willy nilly.
Again mmt doesn't say that either.
What am I doing?
Your blatantly a troll who hasn't even tried to understand mmt.
All of this has been said clearly and more lucidly than I can say on the very video we're commenting on.
Your either a troll or you don't have the capacity to understand.. if the latter I apologise
@@subjectiveinsights2447 You don't know what money is in todays economies.
You also are ignorant of MMT because they do say it makes the value for the currency.
Kelton's own words; " As long as the government has the power to enforce it's tax laws, people will need the government's money. The currency will have value and the peole will sell things to the government in order to get it's currency "
See at the 35:30 minute point of this video :- ruclips.net/video/6IBEoWSiTHc/видео.html
You are the ignorant abuser in this conversation showing a lack of emotional intelligence.
Have you nothing else to offer in the way of rational argument?