Everything You Want to Know About Modern Monetary Theory
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- Опубликовано: 26 сен 2024
- Jul.26 -- Bard College Economics Professor L. Randall Wray explains the controversial idea that’s gaining acceptance with Bloomberg's Cristina Lindblad and Peter Coy.
good luck telling Politician to stop SPending when they hit the resource limits
It just happened. Build back better was cancelled due to inflation
The two journalists are like “ why don’t you explain that concept further.,, I’m asking for a friend “ 😂
1
I wish the minimum wage was valued at what my father made when he worked for minimum wage in the 60's...$1.25 an hour. Today his lifestyle / expense ledger would require that number to be $35 an hour! 😶
Full employment is NOT resource availability. - Only a simpleton would think that since it ignores all the needs of an industrialized economy which includes long term skills, natural resources, development times that industries need to increase production, relocation and logistical requirements of natural resources and relocation costs of labor as well as a thousand of other needs like relative marginal costs of increased production.
Watching this interview of Professor Wray I'm reminded of the quote by Hayek: "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account." Hopefully Professor Wray humbles himself to that possibility in time. But with how confidently he asserts that only he and a select group of other people actually understand how money works, I imagine that humility for him will remain elusive.
How fitting the part he left out was violent coersion by the government for tax collection as a necessary first step.
I have a few questions.
If a company printed its own currency (aka stocks) and adopted this strategy. And also adopted a policy that it never fires anyone and also it hires every employee´s childrenn no matter the skill. Also it will buy/rent new equipment and places so they can give everyone jobs as promised. Wouldn´t it make the most productive employees to leave this company or the company to be outperformed by the competition?
What would be happening with the value of this company´s stocks relative to some other company´s stocks which hires, buys and keeps only employees and equipment it needs?
If the answer is as I expect that the value will go down. Than that means that the cost of everything the first company buys from other companies wil skyrocket deosn´t it?
Well, they are saying that this printing is limited by the resources available
@@omarallababidi Honestly I don't see how it is limited. It is and it always been detached from resources produced imo.
@@jznemovitosti7229 this is a theory for countries printing its own money not companies, your metaphor is not applicable
look at china for example they have free ed free health etc, force high gdp and growth by infrastructure projects and ghost cities that are not needed etc
Where does that money come from? It is printed, why it is not losing value, because it is limited by their resources.
Look at usa and money printing in the last 12 month, why hasn't the dollar lose value?
The theory isnt about free printing money and paying fir anything/everything, it's about maximizing the potential of an economy.
Then again i am not an economist, i am just relaying what i understood and i maybe mistaken.
@@jznemovitosti7229 i piked this video better, maybe it helps to watch it
ruclips.net/video/W97s3zbFKvc/видео.html
@Hakim Habib there are many models that define and predict an economy, this one was by far the most convincing to me.
we are still stuck in the mentality of the gold standard, where as your government and many others have moved past that decades ago.
The slow inflation of MMT is essentially an invisible tax on the lower middle class
2.5% inflation is the target inflation rate economists have found for optimum economic growth. You can Google that for more research.
2.5% on the stuff you are allowed to do. Home ownership? Nah. That’s not included in CPI. The middle class doesn’t disappear because cheese gets too expensive.
@@swish6143 the variables in the equation being tweaked have have super-deterministic properties. You can’t just move money and expect it not to move people through different thresholds of requirement for satiation.
It’s like a sinking ship with holes in it, and you try to make enough buckets to empty the water by breaking apart the ship. The math cannot add up if you are making the buckets out of the ship. The Ship is a free market society, buckets are regulations. Buckets should only be cut out from the ship if someone is literally drowning below decks, otherwise we all drown from a ship with too many holes. The illusion of MMT is that you’re taking bits of wood specifically from parts of the ship you don’t need. That’s where the ship metaphor breaks down, because we don’t have a flawless affective economic theory that tells us what parts of the ship are necessary. It’s all based on a lie of false expertise.
That’s why it can’t work. We don’t have predictive models that make “making buckets out of the ship” safe, sustainable, and effective.
@@georgeemil3618 how does inflation boost economic growth lol
LOL the government should be "constrained" by a budget. As Alan Greedscam said the US government can meet all it's obligations pensions and other payments it can't guarantee their value.
I believe he meant that there must be real resources in the economy for the created pensions and payments to buy. That is the real constraint. We can always create the cash as the US has the constitutionally authorized monopoly power to do so. It is essentially just computer data that we can't run out of. It's easy to find statements from Bernanke Greenspan online reflecting this.
You make value in other part of econ to keep with that pension spending. That's why MMT guy prefer FJG than UBI because, FJG can in theory create consistent value because people literally working. How pension spending create value?? They create value by increase worker will to work with future promise. So the value isn't created by the current pension taker but by current worker that get pension later.
LOL, Of course, Wray as an advocate of MMT, does not mean that governments need to be constrained by revenue, but rather a budget designed to optimally allocate resources and avoid inflation.
This is the problema that this illusion of MMT supporters never explain. IF THAT happens the American Dollar would Devalue so much, no other countries would want it, the world currency would be anything else and that would crush the economy REALLY BAD
@@conradofmc_ny6706 you did not watch the video
MMT is not actually a "theory" it is an explanation of how a fiat currency based economy works and its interactions with the governments that create the fiat currency.
How does it work in a globalized world and many different currencies? What happened if people stop having trust in the currency / ability of the government to pay? Would the economic decline of oil (petrodollars) and of United States as the world economic superpower change anything to that theory?
It doesn't really matter if people stop having trust in the currency. It is issued by decree of the state and you cannot pay your taxes in gold or cryptocurrencies. In America, USDs are the only way to pay your taxes. If you want to go to prison, sure, you can try and pay in gold, but it won't get you anywhere but a prison cell for tax evasion, although that doesn't seem to be a big deal in America. But this idea of people losing faith, whenever this has historically happened, the currency is recalled and new currency is reissued. Legally though, you cannot pay your taxes without USDs.
As for the US, it can remain a superpower by aiming for full employment and living standards will rise, along with sustainable levels of GDP. The rise of the far right is due in part to the left's surrender to neoliberalism and leaving working people behind. Politicians on either side of the aisle, save a few, do not represent the people. They represent big capital. Domestic policy reform can heal the US and return it to its status of legitimate world power. That's what China is doing. Massive fiscal deficits, renewable and sustainable infrastructure projects and slowly but surely rising living standards.
Government always have the ability to pay in the currency they can create. The issue is getting the public to accept it.
If the people reject the government’s money then it’s because the government has lost the people’s trust in its ability to manage finances.
Hyperinflation is likely as the productive capacity of decreases as the number of goods and services available for sale dwindles. Its like a panic, or a stampede. Everybody is dumping the currency for real stuff - consumables like food or other assets like jewelry and foreign currencies. Massive hoarding occurs, corrupt is common as government insiders short the currency. People who can leave leave - mostly upper income professionals.
What really gets hyperinflation going is when the government prints more money to buy what is available. Without this, the price level will stabilize at some point.
This creates a vicious cycle as more devaluation causes less trust and more people dumping, more inflation, government prints more to buy what is left.
@@AFW007 I completely agree with your statement. It is also that self serving bullshit of the represents of big capital that put a dent in the faith in America.
I am quite sure if the politics gets better, which is very improbable unfortunately, other major economic zones around the world would have faith again in America and pose no threat to the usd.
The anti-American sentiment, the greatest threat to the USA, started when elites in America decided to only look after themselves and shit on their own people and ideals and friendships. They are only at after their own empowerment, at the expense of everyone, that includes the USA and the people living there.
I am not advocating for left or right or any current politicians and certainly not for Russia or China. I just want to remind the people of the USA that the anti American sentiment, or lack of faith in it by its allies, comes from the self empowerment of few, and by observing that things in the USA go down a very bad road and people start to get worse from were they were some time ago.
Randall Wray's opening statement is immediately false because he smuggles the word 'money' in right at the very end, when it has no place being. Money is only money if it can be used to store value over time and space. If we can't trust that some currency will be worth roughly the same in a year's time then it's not a good 'store of value', and if we can't trust that it will be worth roughly the same in a week's time then it's not even a good 'medium of exchange', and therefore ceases to be money at all.
To better understand Randall's opening statement, I recommend replacing the word 'money' with the phrase 'printed pieces of paper', giving us:
"A sovereign government that issues it's own currency is actually nothing like a household or firm, even though we hear this analogy all the time. If a government issues its own currency, and imposes tax liabilities or other kinds of liabilities in that currency, and spends only in its own currency, and issues debt only in its own currency, then it can basically never run out of printed pieces of paper."
Ahhh, that's better! 😌
You are the one who doesn't understand money apparently. If you live in a country like the US, which has a free-floating fiat currency - those dollars will always maintain at least some sort of value. This is due to the simple fact that you are forced to pay your federal taxes in US dollars, which the US government has a monopoly over it's production via spending that currency into existence. This forces you to always maintain some US dollars or at least convert your currency into the official US currency in order to pay them. Therefore, the the act of requiring people to seek out and hold US dollars to do this - gives the currency value. Just because you don't understand that a backed currency is a HORRIBLE system that would lead to an inherently anemic economy with vast amounts of government spending being forced to end and would upon being implemented would lead to a significant recession if not economic collapse. With a fiat currency, spending money into existence, (as the fed government does), doesn't automatically translate to dollar devaluation due to the increase in economic output that results from that infusion of new currency. Of course this is only the case though so long as there's still room for the economy to grow to meet the demand. But, if a government like ours were to continue spending long after reaching legit "full employment' and the economy can't expand any further, this would lead to possible hyperinflation due to the fact that there would simply be just too many dollars chasing too few goods. And it's then and only then, once the economy can't expand any further, that you would see dollar devaluation leading up to hyperinflation. Where as with a backed currency that's based on something finite, like gold for example, the very act of creating new currency automatically decreases the currency's value - inspite of any increase in economic output that could possibly come from the spending of that currency.
without mention that citizens are obligated only to pay taxes in its own currency, people could escape for its own currency.
Argentina for example, people loves US dollar not Argentine Peso, because the government keep spending and spending!
for more information search; Javier Milei, Javier Lacalle and Diego Giacomini.
@@robinhaffner2077 You don't seem to understand that pieces of paper are not wealth but only a means of bidding for wealth that is for sale in the form of goods or services.
You say "If you live in a country like the US, which has a free-floating fiat currency - those dollars will always maintain at least some sort of value. This is due to the simple fact that you are forced to pay your federal taxes in US dollars, which the US government has a monopoly over it's production via spending that currency into existence. This forces you to always maintain some US dollars or at least convert your currency into the official US currency in order to pay them. Therefore, the the act of requiring people to seek out and hold US dollars to do this - gives the currency value.
You are very much mistaken with this since the MMT claim of taxes 'driving' a currency (putting a value into it) reveals a shallow understanding of taxes and fiat money. Taxes are only money transfer and nothing else. If taxes put some value into money then taxes would have put a value into all of the currencies that have been driven into no value at all by hyperinflation. That includes all of the 30 or more countries that had taxes yet valueless currencies in the last 50 years - so valueless that you could get them for nothing since they could buy nothing.
That kills the theory of taxes driving a value for fiat money since anyone could pay with a currency that is available in such quantities that it can be obtained for no cost at all of goods or services - not even a clap of hands or a sideways look.
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The old economic notion was that real, true money had value separate from government or time. This is the concept behind gold and silver being the only real money. MMT is the complete polar opposite of this old notion. Real money is created out of nothing by government, and it is valuable because the government is forcing you to use it at the end of the barrel of a gun.
I wonder what the MMT answer is to selling our bonds to other countries, or buying theirs, and then seeing one hyperinflate their currency?
Can we just pay off our debts to China and other countries by printing it? Do you know how dirty and insulting that would be to those countries?
@@Creshex8 I imagine the Chinese would be absolutely delighted if the US just issued even more and more fiat money to pay off their obligations. They could use it to light their fires in winter because parts of China are really cold and the added cold feeling they get from being duped by the US would make them even more cold. At least that would abruptly end US trade with China and the stupidity of the whole situation of monetary expansion would be apparent to even MMTers. (although maybe not so apparent to MMTers because they don't seem to be able to get over their emotional desires and actually think ).
Trying to learn about MMT and found this now. Somewhat didn’t age so well with the comments about inflation and how developed countries can’t cause it. We now have it.
How do you think about that?
Aged like sour milk
What did? Monetary policy hasn't changed.
@@lepidoptera9337 Inflation is proving that this idea sucks. Enjoy the consequences bad ideas.
@@lepidoptera9337 Does all of the stimulus money not increase the money supply?
@@lepidoptera9337 Inflation is too many dollars chasing too few goods. People may not pay money for the dog doo stick, but giving people money helps to increase demand for products they actually want since people have more money to spend. I am not saying there are not supply chain problems, but the money printed and given to people is a big part of the problem. In fact some of the supply chain problem is due to the print and give policy. So, we are suffering the consequences of bad policy with the current inflation.
Randall Wray is amazing! Thank you and all of your colleagues for helping me be able to explain MMT to others with some expertise!
Imagine thinking the governments could allocate unlimited capital efficiently and not have it be completely corrupt
This is what I am thinking. Have these people been living under a rock? In Australia even the local government is slow and inefficient.
How productive could a worker be if they have a guaranteed job most likely with great benefits.
Imagine thinking this is a good take in the middle of a pandemic and biggest collapse in employment since the Great Depression
Okay. I imagined it
Better than unused. Use it for something, thats the whole point. Its a win win, people get income, state gets services and infrastructure vs people sitting at home doing nothing. Begging.
“We really have to worry about inflation”
the problem is there are incentives for politicians to ignore this. (we don’t trust you)
Actually, there is always significant hand wringing about inflation, even now. It is a wasteful fixation.
... Honduras can issue currency, issue debt in its own currency, and demand tax in its own currency.
Does not do em one goodgoddamn if they are blowing Lempira out of a snow machine.
What MMT does not contemplate is trust. Inflation is one sign, as are rising interest rates. The amount of trust in Honduras to repay loans if they start issuing to much currency is far more limited than the trust placed in top tier currency issuers.
The US has a massive economy, military, and experience as the guardian of world order. We have a large trust bank. But we will rapidly find out how deep those reserves are if we continue dumping cash into the market.
Did you actually listen to anything Randall-Wray said? Honduras' currency is effectively pegged to the U.S. dollar since they try to measure their supply off to U.S. currency (thus NOT "blowing it out of a snow machine"). The dollar is widely accepted, which undermines the Lempira and causes people not to convert export profits. They are also NOT running a stabiliser like the JGS and not reaping productivity returns. Also interest rates, as monetary policy, are not all that important when a country is not pegged to another currency. 'Trust' is thus meaningless metaphysics.
There is a big difference between 'dumping cash' into an economy and 'investing' it.
@@baronmeduse yep, I've listened to hours of MMT advocates. For one, they absolutely agree that their policy does not work for all currency issues, but only top tier ones and two you are naive if you think trust is not a key factor in a fiat currency.
And "investing" is a relative term. China is certainly "investing" a lot into its infrastructure and city building efforts... but the consequence is a MASSIVE increase in the amount of currency in their system.
It's irritating when conversations which include Venezuela as a 'warning do not enter' sign, don't even mention the damaging impact of the most powerful nation in world history putting it's thumb on the scale in favor of her demise (sanctions, attempted and threatened coups, etc). It's like talking about Cuba's flaws, while leaving out the nearly 60 year campaign by the U.S. to destroy her.
Yes, these places have their internal problems (name one nation that doesn't), but don't pretend that our behavior toward them is irrelevant. It insults peoples intelligence.
As for the jobs guarantee program (44:09) ; as Randall describes it, we already have one. It's called the U.S. Military. Guaranteed, 3 hots and a cot, with very good jobs training that translates well to 'the civilian sector'. The major difference being rather than an end goal of destroying infrastructure, we build some, which is much needed (GND for example).
jones1351 I always found people that uses pronoun on countries pretty weird. Are we going to call Germany the Fatherland again? Tangent but still, shows a little bit of the machine code on which you’re running. Venezuela is a failed attempt at post capitalism. Instead of using markets to leverage themselves into hard assets and diversifying their portfolio, they’ve double down on pure commodities, and if we actually read on economics, we all know about Dutch disease. Not only that, they’ve used Russia and China as markets because of their size, and basically went into indentured slavery by having to make payments on debts via commodity assets. Please, if you want to repurpose Chomsky’s shtick, do it correctly.
@@gaulindidier5995 Feminine pronouns for countries are common. PC? Don’t know - haven’t had any complaints.
Don’t know about Deutschland, but if we keep following the Right Wing down their rabbit hole, the moniker may apply to us someday.
Venezuela isn’t a ‘failed’ anything. Despite our many attempts, It’s still here. As to your sage economic advice. Well - I’m sure you know the saying about opinions, elbows, and assholes; every bodies got ‘em. Every nation learns as they go. America made a 250-year economic ‘mistake’ which finally took a civil war before she pulled ‘her’ head out of ‘her’ ass - and that, only partially. We are the wealthiest nation in history but get a D+ in infrastructure. 10’s of thousands of our citizens die every year for lack of healthcare. We’re burdening our children with mortgage sized college debts that land them in de facto indentured status - a master’s degree, working at Starbucks(?!) We have approx. 600,000 homeless with 12 million empty homes. Lots of folks wanting/needing work, lots of work needing to be done, and mountains of money, but can’t seem to put it all together. And, cherry on the cake… We just - well partially - dealt with the biggest ‘market’ failure since the 1930’s. So, before we go picking the specks out of other people’s eyes, maybe we should take the forest out of our own.
As for Chomsky. There's only one - but thanks for the unintended compliment.
@@jones1351 "Venezuela isn’t a ‘failed’ anything". LMAO just watch this video if you still believe that: ruclips.net/video/QEboAj5L2VU/видео.html . Venezuela's economic collapse of the past 2 decades can be attributed to the centralization policies under the Chavez and Maduro regimes, which was exasperated by their absolute reliance on pure commodities (oil) for any economic growth. The related statistics/graphs/facts about their economic growth, inflation rate, government spending, and oil exports make this clear. I agree the U.S. has meddled with many countries via the CIA and other covert operations (I'm anti-interventionist), but the core problem comes down to leadership and the economic system of the country.
@@atl4625 Just saw this. But, here goes. Didn't I say V has her internal problems? Every nation has them, even the wealthiest nation in human history US (suicides at record levels, 10's of thousands more dying from lack of healthcare; crumbling infrastructure - rated D+ by American Association of Civil Engineers - parts of China make us look 3rd World, etc., etc.).
But a 'failed' state is what we find in Lybia (open slave markets) following our kind and gentle intervention to 'save' them from a dictator. V has not failed - they've got troubles to be sure - and if we really gave a shit about 'the people suffering under a [elected] dictator', we'd abandon our one size fits all policy of 'regime change', lift the sanctions [food, medicine, really?!] and other attempts to destroy them. The Guido affair is an absolute joke, and insult to the intelligence of thinking people everywhere. Everyday they resist our brutal, inhumane, and illegal attempts to overthrow them is a success of superhuman proportions - not a failure.
ruclips.net/video/_fV-C1Ag5sI/видео.html&bpctr=1581716639
Basic economics is based on Demand and supply. Same applies to the currency. The more you print, the less valuable it becomes. Of course you can always pay of your debt by printing more, but you are devaluating your currency and purchasing power consequently causing inflation. So in order to fight that inflationary pressure, the government either raise taxes or increase interest rates. If they increase the interest rates, then it would make it harder for the gov to pay it off. And if you increase the taxes, the people will be having less money in their pockets which means they are slave to the government debts.
False. You are repeating the same creed of neoclassics of the 19th century. It is false that increases of the money supply cause inflation, for you to understand that you have to accept that money is endogenous. Raising the interest rate is immaterial to government debt as it is debt to be paid with the same currency that government creates. Government can retire all its debt any time it pleases as Japan did in a single day. Empirically speaking since 2001 money supply in the USA has increased by a factor of four and you are still wating and waiting and waiting for inflation to happen. Before you write anything you have to watch the video first and you will see that all your ideas about economics are nonsense
@@felroberto Well to go more in-depth for you, It's the velocity of money supply that creates inflation. Since 2001 the velocity has been dropping because the money supplied by the Fed is sitting on the chartered banks' reserves(trap). This means the money is not circulating. However, with the enormous direct deposit stimulus checks, the money will not anymore sit on the banks' reserves (fiscal policy). It will circulate as the economy is starting to open up and a slight increase in velocity can move the inflation by a lot. Btw keep it chill brother, your last sentence was a bit too much!
@@felroberto rising prices is inflation
@@felroberto they calculate inflation rates differently dumbass lol they don’t account for more fluctuating industries(which are more effected by monetary phenomena)
@@felroberto money isn’t endogenous in any way even money created by private institutions is only created with the approval and assent of the federal reserve and government regulators
In science (as opposed to colloquial usage) "Theory" means an idea that has been verified by empirical evidence over and over despite every attempt to refute it. Where is the direct empirical evidence supporting MMT? By refutation, wasn't the Soviet Union also an MMT country with guaranteed employment?
It was. And it worked very well. Its destruction was a political and spineless decision by a bunch of traitors.
What happens to the international contracts denominated in USD?
The monopoly to issue USD in the hands of US govt. means it can basically execute arbitrarily large contracts denominated in USD because it can issue all the money needed. So it can effectively buy everything that is buyable as deemed by those countries.
Many would argue that, that is effectively what CN has been doing. Government acts as the main lender to companies fronting for international tenders of asset purchase. What happened subsequently was, CN companies were forbidden to bid for certain asset classes in countries like AU / NZ for example.
So, if US chooses to go down this road, other countries will eventually realize that no bidding where US companies are involved, can be fair since if certain acquisitions are important enough, they can always get that money from the US government - which reduces or in some sectors, stops contracts being denominated in USD -> i.e. USD starts to lose its status as reserve currency.
I'm not sure if this reasoning is accurate but I will be glad if someone cleared it up.
"if US chooses to go down this road" - We're not "going down this road", we've been there for decades.
I guess I’m not understanding the issue. If something is for sale in US dollars and US companies want to borrow from a US lender, and the US lender is willing to provide the financing, then isn’t this the same arrangement as a typical financed asset purchase transaction? If you are talking about companies that are literally owned by government on the buy side, I can see why countries would want to prevent asset purchases from those companies as a national security concern. If you’re also concerned with the fed lowering rates so that financing is cheaper, nothing is preventing foreign institutions from borrowing at the cheaper rate to conduct the same transaction. In any case, as long as US consumers are willing to buy the world’s import, it’ll take some time before the dollar stops becoming the world’s reserve currency
His definition of MMT seems to differ from others. Other proponents say that the government has no need to issue debt or collect taxes because all of its spending can be funded by creating money. Taxes, they say, are needed only to control inflation.
A survey of the top 50 economists showed that none subscribe to MMT, not even Paul Krugman.
Good question Bob. The reality is taxes do not control inflation. That is apparent by the evidence of taxes failing to contain inflation is all of the 30 or more countries over the past 60 years where massive inflation caused their money to fall to zero value despite government taxes.
Taxes merely transfer spending capacity from the private sector to government which spends the money again to fund their budget.
@@Rob-fx2dw I think the MMTers are saying that taxes would be collected, and the collected funds then removed from the economy, sort of the opposite of money printing.
@@armandofernandez176 Their whole theory is jumbled up illogical mess of different concepts all of which whne put together spells Murkey Muddled Theory .
That claim of taxes removing funds from the economy is totally false. Taxes do not remove money from the economy because government spends them again and the proof is firstly in the historical evidence of the past budgets.
If taxes removed money from the economy there would be no reason for them to say taxes are to provision government since provisioning government requires the government spending money (taxes). There would also be no reason for them to claim taxes drive value into the money because if they reduced taxes the value of money would fall by their own theory.
You should read more to understand financial principles so you can see when these people are talking B.S.
Taxes aren't about inflation. Taxes create demand for the government issued currency.
@@joshuahoesly1569 but what if business fail due to hyperinflation and company exist. People move out of usa as we seen in Venezuela. The same demand will fall
Fantastic. Thank you so much Randall Wray, and all your MMT colleagues :)
@Redpill Progressive He was talking about countries to which MMT applies.
@Danger Zone wrong. Only countries that can print, tax, and issue debt only on their currencies. Most emerging markets can't.
I think u need to study MMT more closely. Why couldn't zimbabwe, Venezuela, and Argentina print their way out of debt? Because of USD denominated debt. This is MMT 101, the very basics.
MMT is like one of these free energy video.
each parts look legit, but as a whole its totally scam.
@@dwadd7528 doubt that you looked at it as a whole..
Always clear and spot-on analysis from Randy Wray!
What are the jobs they are going to "guarantee"? This is not wartime!
A lot of the stuff we rely on volunteers to manage could go into the jobs guarantee. Civil engineering as well.
@Brady Fox there's a lot of volunteering people do for their local community as well, park cleanups and stuff.
Those would be prime targets for a job guarantee.
Pick up garbage, plant trees, paint manhole covers, dig holes, refill holes. Doesn't really matter. I'm sure we could find something useful to pay people subsistence wages for. The idea is that we could avoid the cantillon effect of inflation and have a welfare system based more on participation than entitlements. Avoid opioid deaths etc. I'm open to it but still skeptical it would work.
@Brady Fox skeptical more of our politicians and the bureacracy that will implement the idea rather than the idea itself. Same reason I'm skeptical of single payer Healthcare
I have studied MMT for 4 years. I agree with 99% of MMT, but the idea that higher rates are stimulus is RIGHT ceteris peribus, but it is WRONG in reality. After 40 years of Fed puts and multiple expansion in the stock market, if interest rates are raised, APPL would be trading at 12 times earnings at 5% interest rates rather than 35 times earnings at 0% rates and QE. Imagine if everyone woke up and there stock portfolios were down 50%! Higher interest rates would also tank real estate and yes, money would flow from the gov to the private sector thru bonds, but net worth would crater and this would be restrictive, not strimulative. Someone please tell me why I am wrong
High interest rates would tank real estate everywhere else except in the big cities. The countryside would take the biggest hit. This comes down to the idea that high interest rates are an income raise for those who already have money(people who own treasury bonds aka rich people who tend to live in big cities). More revenues in cities has a direct effect on prices and means that flats become more expensive while poor people on the countryside dont get loans and houses start to lose value. To conclude, higher interest rates increase the money supply in the economy and the higher the public debt is the more money is being "injected". As you are aware of studying MMT, public debt equals private sector financial assets, so the bigger the debt is and the higher the interest rate goes the more stimulus it creates in the private sector in urban areas
This is doublespeak with doublethink. If this vision comes to light poverty will only rise and well get a fascist government. A lid has to be put on americas spending. You cannot just print money, that does not make any sense.
GORGEOUS. Thank you Mr. Wray & Bloomberg. from Japan.
Everything you would need to know about Randall Wray's attitude to questions he can't answer are as follows in his rude reply which sums up his childish attitude after I asked him a straight forward question and he directed me to purchase a book he wrote:- -
Here are his words :- " OK, please print my opinion: you are too lazy to try to figure out what MMT is; you want to be spoon fed like an infant. I have no desire to sell a book to you. But I cannot converse on this topic with someone who is so ignorant of what MMT is about. Maybe someone else will have the time to try to teach you--I do not."
I guess you pissed him off by being ignorant af, bruh. "Randall was mean to me so MMT is dumb and Trump 2020"... drool...
@@babasingh6606 No - you are wrong! You need to study people's body language to understand the driving force behind them. - He is pissed off by not being able to answer direct questions and this is due to MMT's simplistic badly thought out understanding of the situation. That added to his inability to control his internal anger when challenged which is apparent to any good student of reading body language.
You might like to explain in his absence why MMT claims taxes drive value into money when they failed to do so in All of the 30 or more countries over the past 60 years where inflation caused the money to become worthless. Ever single one despite the taxes.
Everything you need to know about MMT: It’s a speed-lane on the road to serfdom. The end.
Please explain what you mean gerbs?
Andrew Stabback do I really need to explain that you can’t spend your way to prosperity with debt, ad infinitum?
@@gerbs96 Sorry Gerbs. Thats not what Im asking you to do.
The point of MMT is to support only the parts of the economy that cant support themselves, which is clearly the less fortunate and the sectors of the economy that we need but extreme capitalism wont support because they cant make money from it. You know garbage collection , basic and essential health care, police although i know in the US even that has been Incorporated with disastrous effects. The stuff that if isnt done reliably and well causes society to collapse as we are seeing across the world today.
The point of MMT is to do the essential boring hard stuff that if isn't done people starve and society collapses.
Then when the economy recovers MMT shrinks into almost the background.
What Im asking you to understand is that as governments are different to businesses and households they should not account like households and businesses. A government dosnt have a credit card. They should account for their social responsibilities and outcomes and support the rest of the society and economy when it needs that support. Thats what good governments do.
Asking it to pay back the capital markets by raising debt through investment banks is just a sop to extreme capitalism again and it has to stop.
All Im asking you to do is change your lens. Just have a think about what governments should be about and who they are responsible for...that all.
Can you do that for a few minutes?
Andrew Stabback this is the steamiest pile of shit I’ve ever read, and possibly the most naive. We couldn’t normalize interest rates after Keynesian stimulus, and you think Keynesianism on steroids, MMT, just fades into the background? No. If MMT fully arrives it won’t go away. The Fed’s monetary & fiscal policy was already socialism for the elite, artificially inflating asset prices. In an environment of so much Fed created inequality, in a rigged game no less, you want to add MMT...you are talking about a permanent elite and a huge underclass of serfs dependent on freshly printed government currency handouts (money not created by the creation or exchange of goods and services), which will debase the currency into nothingness. Because at its core inflation is the printing of money. Make no mistake, MMT is inflation on demand, and an expanse in governments authority over you. There is nothing freeing about a planned economy, and no one is smart enough to plan towards desired outcomes. If everyone is getting handouts for spending, eventually no one is creating the “stuff” that makes up an economy, leaving everyone with too many dollars for limited goods...I mean wow, just...wow.
Every single fiat currency in the history of the world has collapsed and disappeared, and numerous civilizations have done the very thing MMT describes. The printing of worthless money sounds like an easy solution, and if it worked then the Roman empire would still be here. So yea, you can’t print your way into debt, and then solve a debt crisis...with more fucking debt.
@@gerbs96 You do have a very US centric view gerb which is fine and completely understandable given the quality of your federal government. I dont trust your government either. I mean thats some federal level incompetence and shitfuckery of biblical proportions......but I digress.
Inflation above 3% is not good and Hyperinflation is truly dangerous as you have quite rightly pointed out. So we both agree on that. Stay with me gerb ,it gets better!
Whats the thing that causes inflation?
Imbalance.
As in nature Capitalists love an imbalance and the best imbalance is a monopoly. Thats the best imbalance bribery and corruption can buy.
Inflation always occurs when demand ie money outstrips supply ie production which could be labour or materials or it could be rock concert tickets. It dosnt matter.
My point is that if the government dosnt want inflation then it gets the balance right between the demand , money, and supply or labour and materials.
The huge problem the world has in May 2020 is not inflation, in fact it's the very opposite and its only going to get a whole lot worse, particularly in the US.
The supply of money wont come close to the supply of labour and material. The US has just registered 40 million unemployed in the last 3 months. That's going to get worse before it gets better.
So what you have now is going to be complete and utter deflation of the low skilled labour market to Zero ie no work and no income for 40+million people.
That my friend is one huge imbalance so what you got right now is massive deflation. And that's real people's lives completely destroyed.
So gerb If you are a mum or dad and have two or 10 kids and your about to lose the trailor your entire family live in you know what you need a whole lot of right now ?
You need a whole truck load of God dam inflation and you need it big and you need it fast.
And then gerb once you got the balance between supply and demand you simply pull back on the fiscal stimulus. It's that simple. Well, if you didn't have a true c$#@t for a president!
Now given you simply got the saddest most immoral phycopath narcissistic conman excuse for a president the world has ever seen running the largest economy and......military .......during this crisis of a truly biblical proportion , it does concern me just a little , but gerb my friend , as they say in the classics, that is a discussion for another day and as I live in an entirely different hemisphere to you I have no influence on your political process even if the whole world pays a price for that fucked up process.
But please, just focus on the task at hand which is to get 20% of you fellow country men and women out of poverty and I'm sure you can with every justification then say you done a good days work.
Please gerb , just think about it.
The only thing that makes MMT fail is “Trust”
Is MMT going to force a sort of resource correction where commodities find real value? Ie: water, wood, shelter, food?
No
@@DMoneys36 we'll see
@@steeezyb MMT isn't a force. It's a way of looking at things. It doesn't change the world, just how you look at it
Turn up the volume FFS
I remember I was in high school, sitting in business class, and I thought to myself, "If someone has to spend a dollar for me to earn a dollar, how can we all 'make money' simultaneously?" Of course the business teacher had no clue. Fast forward about 15 years I read about MMT and the sectoral balances, it was immediately and intuitively clear, yet very few people understand the sectoral balances. Why is it so hard for most? What piece of information or understanding did I have at 17 that people are missing? About 8 or 9 more years later, I still haven't figured out what that missing info is...
hrmIwonder Theortically, if all working humans produce equal or more value to what they are paid we can all “make momey”
@op - profit, expansion of the money supply, and credit/debt, are all intertwined
You are missing the fractional reserve banking system/scam - whereby a banking license permits a bank to write you having a 'borrowed' a sum for which they only hold 10% or less of the actual money in their holdings - but get to collect the 90% of the balance and all of the interest.
Watch these:
ruclips.net/video/DyV0OfU3-FU/видео.html
and
ruclips.net/video/lbarjpJhSLw/видео.html
and
ruclips.net/video/5IJeemTQ7Vk/видео.html
Benjamin Adams You are assuming a lot into that and taking for granted the current system. He just mentioned sectoral balances as the mechanism. There has to be stocks and flows for such a thing, or then money, income, investment, taxes and spending and credit - it all just sloshes around, never changing, never expanding nor contracting, and then it really IS a zero sums game. Did that go over your head?
To answer your question: Margins for example. In most transactions the cost of making a product is lower than the sales price.
I didn’t get the idea of you don’t need taxes for the government to spend money. If the same Bernie sanders is saying to increase taxes on the rich for his medicare for all
Well this is going to end well
Yes, it will
The moderator starts off confused from the very start by characterizing MMT as the idea that the government can issue much more debt than commonly thought. This conflation of government fiat spending with "debt" is kind of the opposite of MMT. When you have the power to issue currency and pay for things with it and have everyone accept that currency no questions asked, it's kind of obvious that you aren't borrowing.
It's pretty simple. Inflate the money supply, so the government can pay down the national debt with debased dollars, and stiff the investors. Then tell consumers to suck it up
Your budget deficit comparison to WWII and the GND are not apples to apples. We already have massive debt and unfunded liabilities far worse than that of the economy in 1944. Moreover, all the industrialized nations in Europe and Asia were decimated and the USA was profiting massively from the world war even after the USA joined the conflict militarily. The presentation is NOT instilling confidence.
MMT=Maduro Mugabe Theory.The argument that to control inflation in an MMT environment,government spending will have to be curtailed wont work.Governments will always want to spend more especially if money can be availed thus causing inflation
Not happening in Australia. Our government can spend infinitely as Randall suggests and yet it's more interested in austerity.
Are they missing the middle ground where the government is completely inefficient?
How productive can a worker be when they are guaranteed a job, no risk of being fired with probably good benefits.
@@nambypamby5531 large organisations in the private sector have investors and private equity funds to answer to. Does the public sector have to answer to this?
A public sector job is a welfare job. Zero competition with no accountability.
@@nambypamby5531 I'm not just talking about politicians. I'm talking about police, doctors and nurses etc. These some government workers are not subject to strict performance reviews a private sector worker is subjected to.
*Could you imagine the amount of nurses, doctors, police, teachers and fire-fighters would be getting turned over if there were performance reviews and it wasn't so heavily unionised. These jobs are welfare jobs
Doctors in the private sector are more transparent, competent and efficient.
www.ncbi.nlm.nih.gov/pmc/articles/PMC3378609/
Private sector teachers and held more accountable for their students results.
www.epi.org/publication/books-teachers_performance_pay_and_accountability/
I don't care what you've seen. It's an empirical fact that the private sector is much more .Developing countries who ditch the public sector are better off.
www.undp.org/content/dam/undp/library/capacity-development/English/Singapore%20Centre/GCPSE_Efficiency.pdf
@@nambypamby5531 In the private sector yes. It's literally the opposite to the private sector. The private sector is looking to cut costs while the public sector is looking to keep them the same or increase them because they will lose funding.
The private sector can only do this because of monetary policy which effects and changes the spending habits of the country.
No, you have not lowered the unemployment rate. You changed how you calculated he rate. We still have unemployment rates over 19% if you use the calculous from the 1930's.
I think what most seem to miss, often in bad faith is that MMT is a description not a prescription.
Italian here, you’re absolutely right
What happens when you have to pay the debt to third parties and they realize you just printed more money to pay you? because by then it's value has diminished considerably. this is technically the same as a default. no one will want to invest in your country again..
This theory is based on management of your currency. Not management of foreign currency.
@@callumcampbell9492 good luck with that. I'll tell you what this "theory" sounds like. The last attempt to save a ponzi scheme from collapse
@@ruim8590 why don't you actually read the theory instead of judging it based on absolutely no information
@@callumcampbell9492 you guys are funny, thinking youre so smart. just print more money if its your own currency, youll never default, yeah, sure, like no one ever thought of that...
@@ruim8590 you didn't watch the video at all did you mate?
I bet those Soviet tolbooth clerks loved their guaranteed jobs :p
This is just Keynesian economics but rather than spending the money on infrastructure and something with an economic return just waste it all on whatever, like more diversity coordinators in govt etc. Rather than MMT they should just call it communism lite.
Yup, just ever bigger centralized government... sounds great.
Be honest and call it what it is: Socialism, most economists do not agree with MMT in general
Japan does
@@epicurean1868 Japan is about to belly up
The job guarantee program won't work. MMT is describing what's happening in favor of policymakers. It explains why the US can issue debt but has no idea what's the limit of that. There's no clear government bankruptcy procedure, which doesn't mean a nation won't go bankrupt. MMT is a different view saying 'yes, we can issue debt as we want for a long time'.
I won't because there is no guarantee about a lazy person get paid by government and just not productive, faking it and produces nothing or things nobody need (like a bad app/website nobody use)
Q & A:
We can always make the interest payments but interest rates must be low to keep COLA's down and to not stall the economy with high borrowing costs. To keep interest rates low, the government must print money and buy bonds. You will have inflation either in goods and services or inflation in bonds, stocks, and real estate. Professor Wray doesn't explain how interest rates are kept low. Money must be added to the economy. It is called QE.
"No laissez-faire in the real world. It is the Plan. Inflation: Fiscal policy works; monetary policy does not work!" 🤔 Interesting interview. 👏👏
I think Bitcoin is going to be the biggest driver of MMT. Otherwise government's will loose control.
March 2021...wonder how much "slack" we have left?
No one is talking about how MMT affects or would affect International Trade, Capital Flows, or FOREX. Is anyone thinking that far--because it sure as heck matters.
MMT describes the way our current system operates. We should have asked this question prior to implementing the system. If you want to know how it affects those things, just read the news.
International trade used to be either balanced, or the imbalances would be settled by gold every so often. The flow of gold would regulate trade. Those who were more productive would accumulate gold, and the other countries would court them with products so that they could earn it for themselves. There was a natural balance to it.
If you want to see how it all ends when you remove the value from your currency, look to all fiat currencies of the past. They work for a while, then they fail, as the issuer prints more and more of the things in an attempt to make it last just a little bit longer.
Jimbo Smiffey some fiat currencies still going strong after decades and decades. Australian Dollar, US Dollar, British Pound, Japanese Yen, Chinese Yuan, Russian Ruble. It’s the real resources of the earth those currencies measure that will eventually decline.
@@anniesuttler5904 If by going strong you meant that they still enjoy widespread acceptance, then that is true, but the purchasing power of each unit of currency has fallen drastically over their existence. Whomever controls the issuance of new currencies tend to abuse that authority to the point that the currency becomes worthless. This takes several decades, generally. Currencies shouldn't be used to measure anything, except in the very short term, because their value trends towards zero if they are not anchored in some way to things that actually have value in the real world.
Jimbo Smiffey - Gold, if that’s what you are talking about, only has value because we say it has value. What intrinsic purpose does it serve other than looking nice in jewelry? Gold standard created tremendous problems for societies as you probably know.
Food, air, shelter, water, those have value. So far we can use our unbacked fiat money to buy most of those without much difficulty.
@@anniesuttler5904 Gold has value not because you or I say it has value, but because many many people over history have chosen it and silver in the free market as the best forms of money. They have more or less stable values not because they are shiny or because they are used in jewelry, but because people hoard them, and therefore higher prices incentivize individuals to spend less and produce more, while lower prices incentivize people to spend more and produce less. This is a stabilizing force in the market that creates long term prosperity and fairness. The "tremendous problems" you describe have in fact been the results of more credit being created than could safely backed by the amount of real assets in bank reserves, causing panics. The "problems" caused are actually the side effects of the system being naturally pulled back into alignment, where the value of paper money is once again pulled back into reality after it had been abused.
I agree that gold itself has no substantial "intrinsic" value. It's main use is as a medium of exchange that is not easily counterfeited. Just a fair and honest accounting tool, really. If currencies are backed up by gold, then this restricts the quantity of currency and credit in the system, such that people that use the currency are less likely to suffer through the pain of long term inflation as they conduct their normal everyday lives, using resources and trading their skills and labor for the things they need. When the creators of fiat currency, namely banks and governments, are unrestricted by something like gold or moral decency, they tend to abuse the currency in order to benefit themselves at the expense of society at large. In effect, the average person becomes a slave to the government instead of the government being a servant of the people. The creators of our constitution required gold backed money because they had suffered through inflation and they didn't like it very much. I don't like it much either.
Prof Wray did an outstanding job of explaining MMT, but 39 minutes in the lady proved she didn't understand half of what Wray was telling her.
i like the US to experiment with this.
It has been for many decades. :-)
And where does this brilliant government planning happen? Fantasyland?
38:00 there you lost me... the markets might react positively BECASUE there is a debt limit. There are countless other countries that have debt limits, also in nominal value as the US or as percentage of GDP...
We are doomed
Lmao yes a man who get it
Yep
I like how MMT wants to explain the way the current system works, but I worry it's a trojan horse for certain policies. Should Italy adopt their own soft currency? Or should they get a slice from the euro?
oh how things have changed....
"we want people to be productive?" for who? Government or government's society?
People should be encouraged to work for what people is good at and what people likes to do. As Warren Buffett said, 'people just need cash". Being slaved by government programs and waiting to be picked up by a private sector shouldn't be even considered.
19:20
any source to this? I can't find anything.
Which
@@andrewprice8820 that governments used to burn tax dollars
Grubb, F. (2015) “Colonial Virginia’s Paper Money Regime, 1755-1774: A Forensic Accounting Reconstruction of the Data”, Working Paper no. 2015-11.
How would mmt effect entrepreneurship? Does it remove the incentive to take risk? It seems like it becomes more difficult to be rewarded for taking risk.
It incentivizes risk. If you let your money sit it will be eaten away by MMT money printing. You have to get your money working for you in a hurry or you're going to be left with Zimbabwe dollars.
can you be more specific.
You're putting microeconomic morality against macroeconomic rationality. The automatic stabilisers maintain consumer and investor confidence. This is good for entrepreneurship.
No, because the artificial value of the currency which they are rewarded with is universally perceived or accepted as intrinsic.
@@drmodestoesq I don't think I would bother working to earn a currency that is immediately going to start becoming worthless. I would immediately turn it into gold.
The main problem I have with MMT is that it sounds too good to be true over the long term. The idea that there is effectively a measure to create credit to perpetually finance whatever you need sounds like a lot of ideas in the past that turned out to be colossal failures: a never-ending housing boom, the idea that the stock market will perpetually go up through credit, etc. Over the long-term, reality tends to set in. The world is full of scarcity, even in modern times, and the idea that you can avoid reflecting that at all in monetary policy seems bizarre to me.
Where did Randall Wray in this video or any MMT scholar state or allude to what you stated?
@@user-ks1hp2pb5g "What we argue is that a sovereign government that issues its own currency is actually nothing like a household or a firm. ... It can basically never run out of money."
It's not what Wray says explicitly, it's what I think the consequences of it could be. This idea is at best hugely dependent on what production is like in the rest of society, and related to that is how much money you can raise through taxes. The second of these MMT seems to be more keen on stressing, but taxation is inextricably linked to production.
Often, it's coupled with the idea that the deficits don't matter, which in the long run is a very deep problem. I see this as an approach to money that is very undisciplined, and can cause serious inflation if something serious were to happen to affect production.
Keynesians are a bit better on this I think. At least they are in favour of cutting down deficits during good times.
@@BloggerMusicMan Ok, do you have discord? Because I can easily explain this verbally via voice chat.
@@user-ks1hp2pb5g Explain it here if you want. I don't have Discord and even if I did, I'm not really interested in giving something like that out to a stranger online.
@@BloggerMusicMan A government that makes its own currency can not run out of money. It may run out of good uses for that money, but the money itself can never be a problem. Compare that to governments that are not in control of their own currencies like Greece. You want to emulate that sh*t show? Why?
Is there an example of this actually functioning over a long period of time?
Yes, the US govt in the last 7 years.
@@wesleywhite8153 I think your going to have a difficult time convincing anyone, left or right, that our current system is “functioning”.
@@foreverendeavor5751 When is the last time we witnessed inflation or hyperinflation? We are currently issuing our own bonds, debts, securities, etc. Functioning well vs. functioning poorly are both, in essence, functioning.
@@wesleywhite8153 35% of all US dollars were printed in the last year... The more dollars that exist the less their value. Also the vast majority of that money went to large corporations not the people who are struggling to pay bills.
@@foreverendeavor5751 I mean given that's true, how is that still not MMT? Have taxes still not been prevalent in the last 7 years? is that not the means to remove some monies from the system to prevent inflation? Are there still not programs out there that put money in circulation for those people?
How does one square the "phase in of $15 min wage" with the Green New Deal suggestion that mirrors the WWII plan of "Postponed consumption" of not "giving you a wage increase now" (at 23:44)? Those two seem to be at odds, no?
@28:53 "the job guarantee is an example of an automatic stabilizer" The job guarantee works as a countercyclical anchor to the economy - true full employment and price stability - employing people transitioning back into the private market place - all while serving the public purpose. It will create millions of jobs, bring states billions of revenue - lowering state taxes while lifting the entire country out of poverty. Thank you Bloomberg for giving Prof. Wray the time to answer the tough questions.
It’s a big mistake to think that people actually want to work
@@soulfuzz368 tell that to a person who is willing and able to work. Some people don't fit in anywhere. There are maybe 3% of the population who literally can't find a "fit" into society and/or simply won't. They can easily be afforded a basic income (social security). Leave me alone, now.
casey X I don’t disagree with that, not sure if you are trying to argue or not. Perhaps I should of said *most
@@soulfuzz368 yes. ty
If MMT works as proposed, is there any need for the Federal govt to collect taxes at all? The Federal Reserve could simply print whatever money the govt needed. We could skip all that messy tax filing paperwork. That would save a lot of overhead at the IRS. People would have all that extra take home pay to spend. Let's get the party started!
Presumably the Federal government wouldn't get too crazy and restrain its spending so that there wasn't so much excess demand in the economy and avoid hyperinflation. You have to have a lot of faith in the government and the Federal Reserve to behave themselves. MMT seems like a recipe for the government to steadily take over the economy. That means cronyism and political connections rather than the marketplace would play a much bigger role in the allocation of resources. No wonder it's so popular among leftist politicians. You know, those Brahmins in DC who toil daily for the good of the mere mortals who are too dumb to manage their own lives.
I can also see state governments getting in on the action. They'd plead for more and more Federal funding of their favorite projects. Since the Federal government would have no spending constraints, the majority party could approve all requests from their politically friendly states and shut out those of their political foes.
The circle would be completed as the politically connected would finance the campaigns of their government patrons. Seems like we'd evolve quickly into a one party state. Political connections would be your ticket to enormous wealth and power. Kind of like the oligarchs in Russia. Fascism 2.0. I can hardly wait.
@K J He is totally wrong about taxes giving value to money. His belief that taxes drive a value into money is contrary to historical fact.
The clear evidence of his calim being false is in countries which had taxes and their currencies failed completely. Countries such as Brazil in the later part of last century whose currency the Cruzeiro fell to worthless due to massive deficit spending funded by money expansion. And Chile earlier which suffered the same fate and Zimbabwe whose currency also was expanded massively and fell to zero value along with thirty or more other countries whose currencies failed despite taxes.
I agreee. He is sprouting B.S. and has ignored historical facts. He is totally wrong about taxes giving value to money. That is not all he and MMT is wrong about.
The clear evidence of his claim about taxes driving a value into money being false is in countries which had taxes and their currencies failed completely. Countries such as Brazil in the later part of last century whose currency the Cruzeiro fell to worthless due to massive deficit spending funded by money expansion. And Chile earlier which suffered the same fate and Zimbabwe whose currency also was expanded massively and fell to zero value along with thirty or more other countries whose currencies failed despite taxes.
The very thought process he is using displays false reasoning since nothing can drive value into itself and only outside factors can put a value into anything. This is evident in the changing value of goods or money in changing circumstances such as comparing a value of a bottle of spring water which may be worth only a dollar in a supermarket but if one is in the desert and dying of thirst it is worth every bit of money one has be it a thousand dollars or more.
@K J
Is your argument now that foreign debts negate the effect of taxes putting value into the currency ? If so wouldn't larger taxes put more value into the currency to pay any amount of foreign debt ? Isn't that what you are saying now ?
So you claim they all borrowed heavily. What percentage did they borrow in foreign currency?
Which country has an optimal tax system where all the taxes are collected?
Did they never collect taxes ?
Why did the taxes they collected not put value into their currencies ?
@K J Your English is quite good. No need to apologise for that.
There are other considerations that put value into a currency. The only reliable one is productive output that people are willing to buy which affects the other parts of what appears to put value to a currency. Most other values are derived values and depend on the productive output of the goods that are in demand at an appropriate price to be able to sell them. That is where the Price must be included in any consideration of value of output.
Zimbabwe had the infrastructure initially but destroyed some of it by bad government administration. That bad administration mainly in government affected their output but not to the extent of ten thousand percent per year or more which the government created by expanding their currency by as much as they did.
What MMT ignores in their claims about foreign debt is the application of a sense of proportionality to foreign debt compared with the expansion of government deficits.
All of the views of what happen in economies must use a reasonably accurate sense of proportion or any excessive conclusion might be made.
You say that international debt is the problem. Not very true in the case of Zimbabwe when it only became a really big problem after the huge budget deficits that preceded it a which caused massive loss of purchasing power of foreign currency and foreign goods as well as local goods. I know people who lived and worked there and now don't after leaving because of the way things were going.
Any debt is the problem if money is owed since the ability to trade is adversely affected by loss of real value of a currency be it internally or externally. When you owe debt in your own currency to someone overseas it means they will regard it as default if you pay them back in money that is worth much less than it was when you borrowed from them originally. Foreign lenders don't care of it is default in the value of the currency or for instance the number of dollars you pay back. All they care about is it's total purchasing power.
@K J The facts are Zimbabwe created it's worsening financial position and it's economic woes by bad government and much of that was because impacts of bad decisions by government then translated to a lower productive output but that included government funding itself by massive over inflation of the money supply. That cause the hyperinflation. Not the payment of foreign debts which had fallen to 31 % of gdp in 2001. That rose later due to the deficits pushing the value of the currency down. They became a big factor after that because their exchange rate became hugely adverse due to government budget overspends which cause the inflation.
The only common factor is all sovereign currency issuing governments where the was hyperinflations in the last hundred years is large budget deficits all done by their central governments.
Their political party failed to heed proper budget restraints and they used their own "Policy Space" (another name for bad financial management) that actually did the massive ten thousand percent and then hundreds of thousands of a percent per year. Nobody else did that monetary expansion besides government.
thank you!
Hold up, Venezuela has just oil. Then what of Saudi Arabia? Why don't they go full MMT?
I guess I have to get a book by this professor. Too many variables and ifs. There isn't a clear cut model for MMT.
Listen to this podcast it will answer your questions about developing countries. Professor Fadhel Kaboub is an expert on mmt and developing countries.
www.bloomberg.com/news/articles/2019-04-08/this-is-how-mmt-applies-to-emerging-markets
Omg . Hey the green new deal is like ww2. Sounds great.?!?
They used to, at one time, actually burn the currency; true. They did that because the paper note, as a receipt for either gold or silver coin, was nullified on redemption of the receipt and transfer of the coin to the holder of the paper note. Zimbabwe (and many others in history) already tried printing fiat currency to prosperity. It doesn't work.
He said that Vuvuzela got hyperinflation because they had problems. Dependence on oil and dollar. What problems Zimbabwe had? Civil war?
@@carteor I wasn't relating to the cause, but the effect of unlimited currency printing. No nation is ever going to print its way to prosperity, including the US.
Philippesdad1 Well that’s fine because nobody has said that here
They printed money but were not backed by any real wealth so prices quickly spiralled out of control in zimbabwe. people had tons of cash but nothing to buy
@@Philippesdad1 All economies print their way to prosperity. It's called a bank loan. For you to start a business, you need a loan most of the time. Where do you think the money comes from? It is simply created by a bank.
Again - Randal Wray and false information about Italy's budget deficits. - Italy's budget deficits have not exceed 8% over the past twenty five years an that includes a 1999 when they joined the EU and had virtually none. He is confusing deficits with National debt which is a sum created by adding all previous deficts and why wouldn't that confusion happen when he cannot work out that tax reveues form most of the government spending without which the budget deficts would be almost 100 % per year .
MMT states that the government creates the money, spends it, collects it via taxes and destroys it. The deficit is how much money they leave in the system. If they left it all then inflation would be higher. This is how MMT experts have described it. Don't agree with the system.
@@emineo3252 I know what MMT says. You don't seem to be aware enough to work out what MMT says is garbage. The fallacy in MMT's claim is because money is not destroyed by taxation. That is because taxation merely transfers money from the private sector to the government sector and the government sector spends it again as funding for their budget. If government did not spend the tax money as funding for the budget then the budget deficit would be almost 100% of spending.
The historical facts of this are available as proof and are in the US historical records of the Whitehouse. They are at www.whitehouse.gov/omb/historical-tables/ and the specific record is at Table 1.1 - SUMMARY OF RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS ( - ): 1789 - 2024
If you want to argue with historical records you can but only fools try to change historical facts to cover their own mistakes or their fraud.
@@Rob-fx2dw I agree that MMT is garbage, I was merely saying what they claim. Technically if you collect the money and destroy that money and create new money, you are not at 100% deficit, you are at the new money - the money that you collected.
MMT I've also never heard them mention the fact that our currency is a reserve allowing us to consistently deficit spend. let me know if something like that exists.
Emineo Ok, so that first statement makes no sense. I don’t think you know what a deficit means: a deficit is just what we call the flow of taxes and spending in a particular year: when govt runs a deficit its destroying lesss than it spends, so income is flowing into the private sector where it accumulates as a stock of public debt, and exactly equal private sector savings. A surplus goes in the opposite direction.
Well then you don’t understand. Mmt asserts the demand for currency nationally is driven by taxation. Being a reserve currency has nothing to do with that, and so the govt can deficit spend. However the problem can come when that spending leaks out into the international economy. So being a reserve currency helps you run larger external deficits, but does not prevent you from obtaining full employment at home. We say a sovereign currency issuer can do the former. You can read stuff talking about deficits and their impact on exchange rates and inflation if you just take the time to listen or read mmt economists.
@@andrewprice8820 Apart from Randal Wray and the other MMTers what fool said money collected in taxes is destroyed ? Why do you believe this when the evidence of historical tax collections and spending is just the opposite. ?
Show me what evidence is there that taxes drive money when in every instance of currencies that due to inflation there were taxes that were imposed collected Yet despite this the currencies fell to No value at all. Their own governments ditched their own currencies. What more proof do you want that MMTers have lied to you about this ??
So, if the government can print unlimited amounts of money, why are we paying taxes?
If I understand things correctly, MMT proponents claim that governments use taxes to control inflation. They add money to the economy by printing it and then remove money from the economy by taxing it. How does taxing remove money from an economy? I have yet to hear anyone explain this. It seems to me that they think that when the government gets money from taxes, they then just destroy it or it goes into some magical abyss that takes it permanently out of circulation? I don't understand it at all.
I keep on sharing how Yahoo might have been based on "Gulliver's Travels"
(same with Studio Ghibli).
What would be the incentive for politicians trying to be reelected to spend less and/or tax more? Do you need a dictatorship to have this system work?
the system is controlled by the central bank, not polititians. it exists to ensure and backstop the banks, not fund public programs. congress would have to gain more control of the fed first
Add medicare for all to the mix job guarantee + health care guarantee. A health care guarantee frees the employers from that cost and also frees workers to leave companies and start businesses. I think that would add a lot of dynamism to the economy that is missing today.
I love how Professor Wray just gets more and more frustrated as these journos ask the same question over and over. "How is this not evil socialist garbage," they keep asking.
everyone gets a government job. The government pretends to pay the workers with deficit spending. The workers pretend to work. That is the definition of socialism.
@@NathansHVAC Akin to the Soviet Nail Factory ... :(
I don’t think he was getting frustrated. He even said it him self early in the interview that people where having a hard time wrapping their heads around the subject until recently. So by the interviews asking to break down MMT , I think they did a very good job.
@@NathansHVAC Happens quite a lot in capitalism too. I think public sector jobs in our society are often the most valuable and productive.
ruclips.net/video/kikzjTfos0s/видео.html
And the REALITY is ";
MMT does not correctly recognize the following realities..
The Federal reserve creates new money and buys Treasury bonds from the Federal Government's Treasury department and thereby government becomes the first recipient of new money. Government then spends that money as part of their budget spending program buying goods and services from the private sector and in doing so becomes the First spender of the newly created money.
Some of that money is then collected in taxes from the private sector and Used Again by government to Spend Again in the next budget.
Thereby government becomes the first and subsequent spender of new money over and over again despite MMT claims that taxes are destroyed. - an absurd claim given the historical records prove otherwise.
If it didn't spend taxes again and again the deficits would be almost all of the total of the budget spending which has Never been the case. Some years in cases of no federal deficit there is a surplus where taxes exceed the budget spending or a balance where taxes and spending are equal. That historical fact could never happen if taxes were not used by government to spend again.
It all clearly the case and you can see that by reading the Whitehouse records of budgets spending and tax revenues over the past two hundred years. They are readily available for interested people to read on :- www.whitehouse.gov/omb/historical-tables/ ad te table number 1.1 titled " Table 1.1 - SUMMARY OF RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS ( - ): 1789 - 2024"
The equally absurd claim made by Rrandall Wray in this video is that the government can never run out of money.
Another totally absurd claim that ignores the value aspect of money entirely substitutes a notional idea that money has a value despite it's absolute abundance in quantity. It would have to be the only item in the entire world that is still valuable to trade or hold onto if nobody wants more because they have excessive quantities available to them due to excessive manufacture and distribution. Like Zimbabwe dollars that are worthless because of their excessive printing and availability. .
The reality is he is making a pointless claim since it divorces the fact that to have any real value money must have a value (purchasing power) which is an essential need of all money.. That value will disappear if the government creates and spends excessive amounts of new money (new fiat currency) just like it has in all instances of countries that created too much money in a foolish attempt to pay for things that they could not afford. Examples of this are what happened in Chile and Bolivia, and Brazil and Argentina and Zimbabwe in the later half of the 20th century and earlier this century. This claim by MMTers is False when tested against reality.
The third absurd claim of MMT is that the taxes give the currency value (i.e. Drive the currency). This may appear to be so and may be initially accepted by some by some obtuse argument that you need money to pat taxes. The reality is in all of the countries where their currency fell to no value there were taxes and in some high taxes but their currencies still failed and fel to No value at all. .
MMT pushers like Randall Wray, Molser and Kelton cannot explain why these taxes failed to put any value at all into the currency in those cases. So the claim is again false when tested against reality..
Ther are may other false calims of MMT that interested people should study to see through it's general thust of ideas which render it as a garbage theory full of fallacies and unconnected thoughts that when reconciled to test their veracity show it' s a failed idea that has been tried before and will cause even more problems than the presnt.
MMT is the reason for vast inequality in the US
*More like unfettered capitalism.*
@@Jesus-kt5dc unfettered capitalism is when the CIA funds Amazon
@@pylianpbappe8898 which it does unfortunately.
Why does the US have aging infrastrutures then?
Failure of Congress to agree on amounts to appropriate, who to tax, and who will manage such a vast undertaking.
Failure of Congress to SPEND funds into existence to do so. Congress is INTENTIONALLY defunding programs to make them look ineffective under the guise of privatizing them...opening the gates for US to have to pay for everything in our lives, or die for lack of funds.
We spend all our money on weapons & invading countries!
The US literally studies East Asia and Latin American issues.
Really unique about college.
my theory on inflation in a QE world: QE and low interest rates allow companies that would usually fall by the wayside continue. In turn this creates more competition through more players being present in each industry. More competition forces prices lower, especially in industries where innovation is slow. The kicker, money is cheap, so why not go on a monopolisation drive by selling under cost and hope that you come out alright in 5-10 years when you have significant market share and everyone else is bankrupt. Problem being as we are money is always cheap so its a drive to who can last the longest losing money. CBs are implementing measures to combat inflation with tools that are deflationary. thanks, roast me.
What you've described is predatory pricing, where companies try to undercut competitors and drive them out even if it means taking a short-term loss. Aside from laws against predatory pricing, the greater competition and lower costs of investment (interest on debt) should lead to higher productivity which generates wealth as a whole, leading to economic growth, some of which is inflation, some of which is real. If you look at the fundamental equation of exchange in monetary economics, money supply x velocity of money (how frequently money is spent) = price x quantity, you can see that it's not just the increased money supply that's increasing price, which is inflation, but also an increased velocity of money from a busier economy. As most economies are growing, inflation is generally the "default" setting. Hope this was helpful.
QE causes artificial boom busts check out Austrian business cycle theory
@@davidzhiluozhang6205 the quantity theory of money equation disregards production stages lol and predatory pricing is a flawed way to beat out competitors as sowell explained in his book basic economics
If MMT just drives everyone into Bitcoin how will MMT work
in a few years when very few people are using a digital currency?
@@ernie3687 Why would anyone chose Fedcoin when their are better alternatives to escape taxation and maintain privacy? Probably no more than 20% crypto owners report taxes on their crypto so why would they ever opt into a Fedcoin?
@@ernie3687 The young people I know who own crypto would argue with you. I told them they better voluntarily report their earnings and they just laugh at me. Their response is "#@! uncle Sam" . There are alot of these 20 somethings with this attitude at work. I might be their manager but I can't get them to listen to financial advice.
You can only keep up a charade for so long.
Why?
The ride never ends
@@andersbodin1551 yes it can. MMT destroys the currency's creator (FED). Its balance sheet will only go up. If ALL countries play ball then it may last 10-20 years, but if they dont its bye bye. The SAVERS (bond buyers) would die, because thier isn't any yields. Then the questions will come up as to why save and why pay tax? The average American will realize that his money is worthless
@@Hussain-Almuflahi what do you base your estimates on
@@andersbodin1551 I based it on history and logic. History showed us, we can not lower our deficit, only grow it. Interest rates cannot increase without affecting the bond market which buyers like me and you cannot accept a lower rate to invest our money. (Look at the 10 year t-bill) unbelievable that we are getting less then 1% to park CASH for 10 years. Fed also lost control in November to peg the rates due to people's reaction. The spreads are widening due to new freshly minted T-bill for the fed to buy. Since removing the gold standard, the Dollar has lost its value.
You can easily look at a 30 year charts of FED balance sheet, DOLLAR value and T- Bill's.
Another example is Japan.
Funny how MMT "that works" is similar to fundamental Austrian economics.
Can you explain?
The $32k/yr-for-teaching Standard.
If they don’t run out of money then why do they keep a debt count ?
it creates demand for the USD
Did this guy just say everything is planned?
what in the actual F?
Can you point me to a firm that just wings it and survives?
Stewiehleba are you implying that economics is ran by supply and not demand? I feel like we have seen that movie before
Stewiehleba I don’t think you understand my criticism of what he said.
@@mikaellickteig3781 You didn't make a criticism. You just asked a question with no meaning.
Planned by the banks and the Fed that they own, bruh
He kind of mixed concepts. For sure most countries are doing MMT but the thing about securing jobs for everyone doesn’t make sense
Why ever not?
What a bunch of intellectual Fabian socialism disguised to be something different. Instead of "price controls" we say "economic stabilizers". Instead of "central planning", we say "well, the country has always had central planning" and we say that it's necessary for saving the planet. This is the same thing that's been circulating around since the beginning of last century just with different names for the same things. We say that the government spends first then taxes are collected. This very rapidly becomes a moral peril. We say that we're guaranteeing work for people at a minimum wage and due to the fact that everybody is working we have more money to pay them. This assumes that money stays in circulation by retail spending and nobody saves anything.
I do agree that monetary policy doesn't work but for the exact opposite reason: central banks don't work because they're controlled by the government so they're always pressured to create more money.
This scares me more than the current system.
Notice the use of scare tactics to sell this claptrap: we only have 12 years! This is pure emotional appeal...on top of the hidden centralizing agenda. The worst part is that Americans will buy this.
Actually if you read that textbook he was holding up the job guarantee, inter alia, IS referred to as a price control measure, though economic stabiliser is a better term because it isn't just about prices. Plus economies HAVE always been planned and used govt authority to guarantee it to some degree or other. You may not like this fact, but it is a fact. Money does stay in circulation by transactions (not merely 'retail spending'') and apart from some nominal level of saving it is sometimes a non-factor or 'anti-economic' as it is predicated on a base of lack of investment (as Keynes's paradox of thrift clearly shows).
Instead of democracy we say GOP
MMT is the current system, ur not listening.
Government need never run out of money but it's absolute real purchasing power can decline rapidly. It can create money, but not
value.
Diagrams and Dollars by J.D. Alt
Joe Bob says, check it out.
Holy crap. I was going to write that book the rest of this year. Thanks for the tip. J.D. Alt did it for us, so I can now relax and just advertise his books.
LOL how much can we go into debt without inflating the currency to the point where people can stand it and start to turn on us. lets convince our people to be willing debt slaves
Go ask the Japanese.
Scary skirts and exercising.
first thing to know about MMT, it doesn’t work
With the job guarantee concept wth MMT, why would you only set the minimum wage at $15/hour? Sounds like a way to keep people poor. Shouldn't everyone who wants a job be guaranteed at least $100K/year? Give people a prosperous standard of living
100K a year would then be equivalent to making $15K a year
Money trees are real:)
How is it that raising the minimum wage while simultaneously launching the job guarantee would lessen the impact on employers?
Usually in these types of programs the gov pays for part of the wages. Basically you get a subsidized moron to babysit for a few months until they go on another drinking binge and disappear. Sorry I’m projecting here...
@@soulfuzz368 Projecting your own history of being a subsidised moron? Or am I on the wrong track?