Stephanie Kelton: Debunking the Deficit Myth | Town Hall Seattle
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- Опубликовано: 17 май 2024
- Any ambitious proposal-whether it’s fixing crumbling infrastructure, instituting Medicare For All, or combating climate change-inevitably sparks a familiar question: how can we afford it? But according to economist Stephanie Kelton, this question means we’re thinking about government spending the wrong way.
Kelton steps forward with a livestream, setting the record straight with bold ideas from Modern Monetary Theory, a fundamentally different approach to using our resources to maximize our potential as a society. Drawing from her book The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy, Kelton reframes our understanding of important issues ranging from poverty and inequality to creating jobs and building infrastructure. She guides us to consider which deficits actually matter, offering critical insights about government debt, deficits, inflation, taxes, the financial system, and financial constraints on the federal budget. Join Kelton for a crash course on Modern Monetary Theory, and learn how to go beyond the question of how to pay for improvements and policies that are essential to our society.
Stephanie Kelton is professor of economics and public policy at the State University of New York at Stony Brook and Bloomberg contributing columnist. Kelton was chief economist on the U.S. Senate Budget Committee (minority staff) and an advisor to the Bernie2016 presidential campaign. Her op-eds have appeared in The New York Times, The Washington Post, The Los Angeles Times and Bloomberg.
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It's really depressing that everything has become so politicized, and within that sphere, we can't have an HONEST conversation about ANYTHING. And that includes both corporately captured sides of the aisle.
In Canada during WWII the first governor of the fledgling Bank of Canada (created in 1935 and nationalized in 1938), Graham Towers, was asked by parliament about the growing debt. He said it was not a problem nor concern because it was a private sector asset. The finance minister of the day, J. L. Ilsley, then mused in parliament about how to make the debt an asset of the people. And that debate should be what continues to the present times but often is ignored.
@Angelo Balbi you are not correct about post 1974.
I think the reason for this is the confusion of terms. When we left the gold standard where many of the things we considered important like keeping our gold supply equal to the outstanding currency in circulation. If spending was greater than tax revenue, the government had to mine more gold or borrow money to purchase more gold. Now that we are no longer on the Gold Standard, and on a different standard called Fiat, there is no longer a need to do this. As a matter of fact tax revenue is no longer needed to cover government spending. The confusion comes in when, based on an accounting procedure, the amount of government spending minus what it takes in in taxes is considered a deficit. It could as easily be called a surplus to the private sector. The accumulation of this so-called deficit spending is mistakenly called our debt when all that it really is is the total amount of money that our government spent into the economy minus what it taxed back. From that one can see that our national debt sits in the pockets of the private sector. Paying back the interest of the outstanding securities is done simply by creating more money. How long do we have to hear opponents of MMT claim that the so-called National Debt will have to pay it off? I'm 76 and I am one of those children and I have never paid a cent of it back.
At about 35 minutes, Stephanie addresses the Social Security issue which in Canada is what we mean by Old Age security and other programmes in the social safety net. I am a retiree. Last week I went to Home Depot, Home Hardware and Canadian tire and purchased things. I paid for those things and the salaries of the people who sold them to me with my pension money. My neighbours have just renovated their condo and their neighbours have just renovated their kitchen. They are retirees. The homes are 10 years old. There are plumbing and heating trucks all through this retirement community of 119. The first 30 homes built here need their roofs replaced. There is a crew of about a dozen men - mostly young - removing old shingles and replacing them. There are some other places where Bath and Kitchen renovators are working - I see their trucks. We are all retirees living in a townhouse complex. Most of us have private pension plans in addition to our CPP and old age security. Most of my OAS is clawed back. Once again the image of seniors being nothing but a drain on the govt is false.
She breaks down some of this in her book. I think what you're talking about is part of why she is saying that the logic behind not being able to pay for things like social security is just silly.
I'd like to know: is yours a government pension, and I'd also like to know your ROI on your pension.
I'm betting that, if your pension is from a private company, they're either bankrupt or going in to bankruptcy before all pensioners get their benefits (unless they've already stopped that program--and my guess would be that they stopped the program and have a government-guaranteed backstop if they happen to face bankruptcy). If neither of these is true, then someone needs to write a book on how this is at all possible. Also note: monetizing debt is also expensing your living on to other people--which is why Professor Kelton is wrong just on first principles.
This is the basis of the drain. It's not about retirees being a drain, it's about so many expensing their living on other people--particularly those still unborn when your annual government layout exceeds your annual tax revenues.
@@mrunfausted7746 I have three pensions. One is an entitlement that every Canadian has - the OAS - and is potentially augmented where there is need to a GIS - Guaranteed Income Supplement. The other is the CPP - Canada Pension Plan - set up by the federal government and is funded through payroll deductions and invested in government bonds until a better investment opportunity arises. It is defined benefit. And the third is OMERS for public servant employees also funded through payroll deductions and invested in bonds and then other opportunities as they arise. It is also defined benefit. The latter two had legislative provisions for mandatory employer matching. But are not company pensions. Those are always a problem. The ROI and EROI are sufficient to maintain their growth at a rate faster than payouts. Oh I forgot I also have an RRSP which was converted to an RRIF when I turned 71. It is very small. The CPP and OMERS pensions are indexed to inflation as is the OAS. So none are dependent on companies which are usually very poor and should not be operated by companies who regularly rip people off.
@@Herbwise
"So none are dependent on companies which are usually very poor and should not be operated by companies who regularly rip people off."
While I understand the sentiment here, I believe its based in the fact that pensions MUST rely on the willingness of the central bank to print money and therefore assumes that it is a good thing to print money. But, if a company did this with their stock (giving new shares to older share holders), everyone would have a problem with the fact that A the new shares devalue the old shares and B the distribution of the new shares is not according to the distribution of the current shares. Such a scenario is (besides being illegal) clearly a tax on new shareholders and a redistribution to older shareholders.
Herb W Nobody claims the retired and the poor do not spend their welfare benefits in the marketplace. The point is, they don't produce anything at this point in their lives, so technically, they ARE "a drain on the gov't, right? The $ they spend have to be earned by other people.
I have listened and thought about econies for years. This is the first time someone has explained the trade offs where I more clearly understand the big picture. The biggest take away was the national debt. Never made sense until now. Thank you.
Bidenomics is making me rich
If you think this makes sense, you don't understand anything about economics.
They forgot (or deliberately omitted) to mention that the National debt has to be all paid off by taxpayers when the Treasury securities that were sold to fund the debt mature. They all mature. Taxes are eventually the only way government gets money to spend.
Let me tell the rest of the problem Argentina's experience with MNT theory. We have and had government that openly adhere to MNT, and we are running 60% inflation. A MNT theory would say this happens because Argentina cannot issue debt in its own currency, but that is not really accurate. For a time we tried to absorb the excess currency with tax increased, but eventually the economy proved not to be big enough and it caused issues with competitiveness against foreign markets. So we did start to issue debt in local currency to absorb the pesos. The problem with this solution should be obvious to anyone. You have to repay the debt, plus interest. The problem is not defaulting it, of course, but that repaying dumps those pesos PLUS interest in the economy (which would cause inflation or devaluation) You cannot ever repay it unless the economy grows sufficiently first. So government decided to roll over on that debt indefinitely, generating an increase in the rate, which created this giant snowball of radioactive pesos. Eventually the investors realized that the only way to ever repay this debt was to print tons of pesos, that would generate a massive devaluation as each investor would run to the dollar when it collects. So they did just that. The bubble burst causing devaluation, inflation and hundred other problems. A US MNT theorist will probably tell this happened because Argentina is not a reliable debtor (which is true), but the same would be thought of a country whose plan would be just to print money to pay its debt. The reason US, Japan, etc can issue so much debt is precisely that they do not behave in this manner.
Would this be a problem with the central bank's handling of the situation?
You are not one of the sovereign nation that can print their own money. US, Uk, Germany, Japan and China. You are a occupied nation.
The reason why Japan and the US can be fairly reckless is because they have a lot of power at the world bank.
The world economy is not a fair one. Rich countries have a lot more power at the world bank and so can get a lot more leniency than poorer countries can. The US pretty much rules the world bank and so it's allies in Europe and Asia will always get special privilages.
Argentina has been massively screwed over by the world bank.
The big thing to ask with debt is to who it is.
Debt doesn't exist in a vacuum, debt is to someone or something. If you can dominate the world's financial institutions like US, Europe and east-Asia then the corruption of the world bank is to your benefit but if you can't like South-America, South-Asia and Africa you will be consistently screwed over.
Don't think that the age of imperialism is over. The IMF, World bank and WTO maintain the dominance of the white race still, it's just a little more subtle than it was in the past.
. @screenarts Germany does not create its own currency. They are in the EURO system. Just because a country issues its own currency does not guarantee a stable economy. MMT does not advocate endless government spending. The most ardent MMTer will tell you that there is a limit to government spending and that limit is inflation. All MMT says is that at least in the US, there has historically been considerable room for increased spending. They say that as long there is available idol resources to support increased spending, i.e. something to spend it on like unemployed workers, raw materials , idol manufacturing capacity, etc, that the private sector is not utilizing, inflation will not occur. All the world uses a fiat system. Their currency is floated in an international money exchange. There are a number of issues that cause a country's currency to fluctuate. I would guess that Argentina's currency is not doing that well in the exchange. Look at Japan's situation, though. Their so-called national debt is more than 2 1/2 times its GNP. They have no issues with inflation. As a matter of fact they have been trying to bring some on.
Thank you Stephanie. We need more of your insights,even beyond your book! 🙏
Who owns US debt:
Foreign: $6.81 trillion (in July 2020, Japan owned $1.29 trillion and China owned $1.07 trillion of U.S. debt, which is more than a third of foreign holdings)3
Federal Reserve and government: $10.16 trillion (June 2020)
Mutual funds: $2.5 trillion
State and local governments, including their pension funds: $1.14 trillion
Private pension funds: $819 billion
Insurance companies: $244 billion
U.S. savings bonds: $150 billion (June 2020)
They own debt in US dollars. We have all the power. We could pay off the debt instantly.
But what if the US just refuses to accept the debts? Will China go to war?
The flaw in thinking that a balanced budget, or surplus, one negative is in believing all excess spending must be had now. Yes, deficit spending is a positive contribution to someone in the economy, but why does it HAVE to be someone today? We can manipulate human behavior so that humans today can consume and enjoy more resources, but when drawing de a finite pool, there is a reality that we are taking away from future possible spending. Deficits are real, and they negatively affect posterity. We have no right to frivolously draw upon our children’s wealth.
An interview Stephanie did on Feb 8, 2024 titled “Was MMT right about inflation?” at 12:25 she says, “We are getting real GDP numbers that are eye popping”---She is ignoring the elephant in the room which is, how much debt was incurred to get those “eye popping numbers”? In 2023 the US government borrowed $3.2 Trillion, of which only $2.4 Trillion of GDP was recorded. The remaining $800 Billion generated ZERO economic activity whatsoever. She talks about the “multiplier effects” yet every 5 year period since 2006, GDP grew by much less than the increase in the debt which means that money vanished without generating any GDP activity. We would have been far better off taking the entire $3.2 Trillion borrowed and spent it entirely on battle tanks and aircraft carriers. We would have gotten at least $3.2 trillion in economic activity from such wasteful spending and that is with no economic multiplier effect, which is pretty hard to do. This consistent, horrific economic multiplier effect of less than 1, for the last 18 years goes against MMT theory. This theft from the US populace shows that government cannot, and should not manage all but the smallest amount of public money since they are evaporating money in a way that not even the Mafia could do.
There’s a free lunch over here, another over there ,another down the street.It’s all free.
Problem is Kleton made it so it may not taste so good after all. - choking material !
Lovely speaker very articulate. I am persuaded.
Where are the most current conversations on this topic with Stephanie?
Stephanie is a gifted communicator.
Is she a Democrat?
@@ShaneLindie Most likely would be my guess.
Stephanie Kelton is an imbecile.
Wish MMT would dive more into good vs bad debt. The rentier, or unearned income, aspect of capitalism has hollowed out Economies across the globe.
Sh0t and Michael Hudson
See Steve Keen, Michael Hudson, Warren Mosler, Randy Wray and Nathan Tankus, they have a huge body of MMT work on bad debt versus good debt. Stephanie talks about how the US deficit is bad in terms of unfair distribution, just listen to her other talks.
If only our forefathers had listened to Henry George, rentier interests would have been tamed long ago.
Socialism is unsubstainable
You may want to look up how "transfer of payments" is a key concept to understand.
Great job in writing "The Deficit Myth" Stephanie!
One of the most stunning things I learned about modern economies is that money is created when someone takes out a loan and goes into debt. I was well into my forties when I learned this about modern money. At first I did not believe it and it is certainly not what I was taught about money in my younger days. Modern money is mostly about getting governments, corporations, businesses and people into debt and there is also quite a bit of smoke and mirrors involved. The idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. The cruel joke is that the money given out for the loans that make up this debt does not exist. The money is created by entering numbers into the borrower’s account when the borrower takes out the loan. As the loan is paid back, the money that was created for the loan is eliminated and no longer exists, but the institutions that created the money get to keep the interest that was paid. So, the more debt there is, the more money there is and the more interest that is paid to these institutions. The other cruel joke is to get a loan like this, most of us have to put up some collateral, so if you default, they can take ownership of your collateral. So basically, they get your possessions of whatever collateral you put up for free and with no risk since the money they “lent” you did not exist. Supposedly, this has been determined to be a legitimate way to do business!
If money really needs to be created by simply entering numbers into accounts or printing it into existence, remember I am saying “if”, then the government should be the only authority allowed to create this kind of money for the nation without “borrowing any from the private banks since they don’t have it either and just simply create it the same way the government would. This way the government would not have a national debt and would not be paying interest on money that private banks did not have.
On the international level, debt has been used as a tool to gain power, status and influence over other countries for centuries. In the past century, the US perfected this technique. In the 21st century, China and some other countries have also learned this trick. Again, the idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. So if the country defaults, the “lenders” can take ownership of the country’s resources that was used for collateral. They get whatever collateral the country put up for free and with no risk since the money they “lent” did not exist! This is how America and the US dollar has been able to be the dominant player in the world economy but is now being challenged by other countries that have learned the trick.
The banks should only be allowed to lend a percentage of money that has been deposited by their customers. If the banks do not have enough money to lend to corporations and businesses so that they can expand or continue to innovate, then the government can create the money to lend them and the government can collect the interest for these loans. This would also reduce the amount of taxes that businesses, corporations and individuals would have to pay governments. For these ideas to work, governments would have to be democratic and elected in fair and free elections which is easier said than done and does not always happen!
The strategies used to keep the economy growing is by promoting and encouraging borrowing especially government borrowing which of course creates more government debt. The Gross Domestic Product (GDP) represents the size of the economy which is the amount of money
the economy is worth. When the economy is continuously growing, the GDP is also continually growing. Similar to any addiction, more and more borrowing is needed to have the same effect on economic growth. When the government debt starts to become greater than the value of the Gross Domestic Product (GDP), technically it will no longer be possible to pay back the government debt. If it continues, the buying power of money will start to be significantly reduced and if the government debt starts to become several more times higher than the GDP, the money and financial systems will probably collapse. If this happens, the system is reset and the cycle is repeated. During the run up there will be some good times but, after the reset times will probably not be good and war is also a possibility. This cycle has been repeated continuously throughout history from the Chinese Dynasties to the Roman Empire to Germany after World War One and to Argentina, Venezuela and to many African, Asian and Middle Eastern nations in the 21st century. If America with the US Dollar can avoid this cycle, they would be the first.
The thinking that the economy always has to grow for there to be innovation, progress and prosperity will eventually become a problem on a finite planet with limited resources. This may have worked well in the past when communities and societies did not know the scale of the planet and the environment. I think the focus now needs to be on sustainability not on growth! There needs to be flexibility in the system for the economy to be able to expand and contract and for a contraction to be considered normal and not a problem or a failure and for the contraction to be just as innovative and prosperous as the expansion. For this type of thinking to work, there needs to be some new economic models developed along with some new types of financial systems. I think capitalism is the best system with the best ideas but I also think some of the ideas of capitalism need to be amended with the primary focus and objective being sustainability not growth and perhaps reminding us that greed is really not good at encouraging and promoting cooperation, fairness and morality.
If the academics along with the economist, engineers, politicians, corporations, capitalists and entrepreneurs can figure out some new economic models that are based on sustainability instead of growth, I am sure there will be some noble prizes awarded. The way this can begin and at the same time improve peace, fairness and morality, is when our business, government and academic leaders, including our religious leaders, along with our wealthiest and brightest and smartest among us can start learning how to be much more truthful, honest and trustworthy so that the level of respect can rise to a point where humans will no longer be inspired to lie, commit crimes and make up stories about magical authorities that live in the sky and all nations will no longer feel the need to spy on each other and with the rest of us start understanding that the wellbeing and happiness of others benefits everyone and is the basis for morality. Maybe nations can also learn how to stop manufacturing weapons that can wipe out most of the life on this planet and from there start working towards reducing and eventually stopping the manufacturing of any weapons of war.
If people are struggling to survive or risking their lives defending themselves fighting wars, they will not care about anybody else or about the damage and devastation of their towns, cities and communities including the planet’s environment. They will also be much more aggressive and willing to commit crimes and behave in violent ways with animosity and hatred toward others that don’t look like them or do not share the same beliefs.
There is a “way out” or an “off ramp” for our religious leaders. The organizations, assets, leaders and members that make a living working and promoting their religion’s ideas and stories do not need to be eliminated. They can be transitioned and combined into the educational systems and into historical museums. Their fascinating stories and literature are well written by some of the most intelligent and enlightened thinkers of the past and can continue to be used as learning tools but they need to be recognized as fiction. All religious leaders need to recognize and stop pretending that the stories are real. There may be some truth in the accounts of the events in religious literature but these events can be studied and debated similar to how other historical events are studied.
I do not agree with all the ideas in these books, such as a basic government income for everyone, but “Doughnut Economics” by Kate Raworth, “Prosperity without Growth” by Tim Jackson, “Confessions of an Economic Hit Man” by John Perkins and "The Deficit Myth" by Stephanie Kelton and organizations like “The Centre for Advancements of the Steady State Economy” are promising developments.
The main obstacle to MMT is the idea that the government can't produce value in it's own right.
Politics and economics don't mix,period.
@@Fakeem1234 I do not agree. Trying to separate economics from politics is like trying to separate fish from water. You need water to have fish and you need politics to have economics.
Economics is a word used to describe the thinking and ideas we have about what the best ways are to innovate, produce and exchange goods and services and what the best ways are to try to organize ourselves to plan and set a vision for the future. It is what Politics is mostly about which is a word used to describe the thinking and ideas we have about what the best ways are to organize ourselves into hierarchies such as class or caste systems or political parties and this has also been done by fictional storytelling based on magical authorities that live in the sky and the word we use for this is Religion.
The lower you are on the hierarchy, the more likely it will be that you will end up doing the heavy lifting such as the physical labor or tedious repetitive factory work or even tedious and reparative office work that is required to produce the goods and services along with the physical infrastructure required to live with modern day standards such as electricity, running water, toilets, heating and air conditioning , automobiles and internet and of course abundant access to fresh nutritious food. Also, the lower you are on the hierarchy the more probable it will be that you will suffer abuse and discrimination from those above you. Slavery used to be a common practice in an economy and in many parts of the world still is! The higher you are in the hierarchy the more privileges you will have and the more control you will have on those below you.
Throughout history a large number of books have been about Politics, Religion and of course Economics and the latter tries to use the language of mathematics to explain and present the thinking and the ideas. The thinking that the economy (the production and exchange of goods and services) always has to grow for there to be innovation, progress and prosperity will eventually become a problem on a finite planet. This may have worked well in the past when communities and societies did not know the scale of the planet and the environment but, I think the focus now needs to be on sustainability not on growth!
Hey, Austrian economics follower here. There are two problems that Stephanie here is missing. The first is what inflation is. Inflation used to be defined as an expansion of the monetary supply, not the loss of purchasing power. That comes as a result of inflation. Its very important to understand how the change of definition is misleading people. The act of printing money IS inflation. Once that is acknowledged, it is easy to understand that government cannot control inflation through things like interest rates. I'd also like to point out that the loss of the dollars purchasing power is far greater than what the CPI says it is. It is currently around 10% annually, not 2%. Websites like Shadowstats can give you more information on the true rate of 'inflation'.
Secondly, Stephanie seems to believe that printing dollars actually produces wealth. it doesn't. Producing goods and services produces wealth. What she is proposing in order to eliminate unemployment for example, is to simply create jobs for everybody, even if they are worthless jobs that don't matter, we can just print the difference. That is inherently destabilizing and will only result in, you guessed it, inflation. This is all in defiance of 'Says law', that each individual is both a consumer and producer. Stephanie is advocating for the creation of jobs at the infinite expensive of government that will not produce anything of worth in order to simply eliminate unemployment. This will always result in hyperinflation. Because money is not wealth, products and services are. Any and all budget deficits from the federal government will always create inflation, which devalues every single dollar we have.
The US is on the cusp of a hyper-inflationary recession because of this backwards thinking. Covid has accelerated this coming dilemma.
lmao read her book nerd
Thanks for the comment. That's spot on. I would recommend this video. m.ruclips.net/video/YmqoCHR14n8/видео.html
She never said that printing dollars produces wealth, she said productivity produces wealth and that the government should not be afraid to spend to produce the things the private sector is unwilling to do.
You also make several assumptions there: For one that the private sector has no useless jobs which isn't true, there are plenty of those. That it is inherently destabilizing assumes the government doesn't know what it's doing. You also assume that the government can't produce value.
A lot of what you say relies on a lot of very big assumptions which boil down to thinking that only private capitalists can create value which to me is quite a leap.
Hyper-inflation is extremely rare. It has happened a handful of times in history and always as the result of a massive economic shock. Like the collapse of an entire economic sector of the overnight shutdown of close to 20% of an entire nation's economy. For example is Zimbabwe destroying it's agricultural sector or Weimar Germany having about half of it's industry occupied by the French.
With the Weimar Germany example if Canada had occupied the entire great lakes area and demanded more gold than the entire US gold reserve as payment to give it back the dollar would have spiraled into hyper-inflation as well. Hyper-inflation is extremely rare and you need something extremely dramatic for that to happen.
Boy, I am glad the educrats are working so hard on these big economic mysteries. I can sleep so much better 😂😂😂
I think the key to the entire discussion is to continue to encourage the advances in technology that result in increased productivity which has the effect of driving prices down. If the price of all basic items go down, there is less need for the government to authorize transfer payments to those who can't afford to buy these basic items. Federal spending becomes less important.
Thank you. I much better understand the dynamic.
This is good. Prof. Kelton, you made it easy. You annihilated the first myth of seeing sovereign debt through the lense of individual/ personal debt. For many others, thank you
Chimzie Sovereign debt IS EXACTLY equivalent to individual/personal debt, in the sense that it has to be repaid or defaulted. What Kelton doesn't seem to understand or be able to explain is that monetary inflation (spending money created by the Fed Res Bank out of thin air) is NOT ACTUALLY DEBT, because it never gets repaid. In reality, currency inflation is really a form of taxation, it is NOT borrowing.
@@clarestucki5151 Clare, sovereign debt is not the same as individual debt, it’s apples and oranges.
@@clarestucki5151 Hear! Hear!
Also, saving money does not take those dollars out of the economy, as she so ridiculously asserts, unless you just bury it under a rock. Those dollars go into loans for needy families and small businesses (don't I sound like a politician :D).
And of course if you run a budget surplus you are taking money out of the economy, but 1. the real numbers for budget surpluses (if they still exist) are orders of magnitude less than budget deficits, and 2. just as printing money does not create value, lessening the monetary supply does not destroy value but increases the value of everybody else's dollars.
@@myles5158 ... so you say... just as Kelton repeats over and over again like a politician, as though it changes everything. It doesn't. Of course we should use inflation as the primary metric, and anybody who knows anything about economics does so. But money is a promise... and the idea that the government can print it's way out of any level of deficit because "it is the issuer of the currency" is a fundamentally immoral view of money because it totally undermines the social contract entered into when money is issued in the first place.
As Clare has observed, increasing the money supply (printing money) does not create value, only labor (and innovation) can do that. It merely erodes the value of the dollars already out there.
@@previdTorres - The government uses its money to measure, organize and mobilize real resources. There is nothing remotely "immoral" about marshalling resources to some public purpose.
We can debate this all we want to, but the fact is what she is describing is how the Federal Reserve along with the government have been operating for years. The modern day chairmans of the Federal Reserve have all had the same understanding regarding currency and the power of the issuer. the term "MMT" is simply getting in our way because over time it has become a controversial term but also it is misleading because it hasn't been a "theory" for a while now. Whether you realize it, know it, undertand it, like it or not, it is how the government spends money. How else do you explain being in "debt" for trillions for 20 years without going bust?? Meanwhile we just spend spend spend. 15 trillion for defense... sure. 10 trillion for checks for the american people? of course! it's happening right in front of you, you just refuse to believe that it could be true that the government has no budget and can buy what it wants when it wants. Otherwise, you must believe that the govenrment looks in their checkbook to make sure they have 19 trillion bucks for the Defense bill or has a bank that just hands out huge wads of cash to an organziation that is on a fixed income and is currently "28 trillion bucks in 'debt'"? That's even more ludicrous than MMT!! So we walk around, no one really all that sure how this stuff works, debating as if we're studyiing the "philosophy of economics" no one really knowing what they are even talking about, perpetuating myths learned in middle school about a pre-digital system based on gold?!! Never before has the media has such a huge stranglehold on every part of human life, including academia. These are troubling times in terms of how the masses are getting their information and the constant power struggle to control the narrative. We as academics must rise above this.
Seeing this now, 3 years after it was published, the poverty of Kelton's seemingly articulate defense of MMT is apparent. As of today, the US national debt stands at 33 trillion dollars, $99,000 per person. Current defiict for FY2023 stands at 1.5 trillion dollars. It is expected that within the next decade, interest on the US national debt will exceed revenue. The sheer abusurdity of defending such deficits with such nonsensical logic must be highlighted. The only myth evident here is that deficits don't matter and actually good for the economy. This is a financial train wreck in progress.
This video is short on data and we now have about 10% average annual inflation, brought about in large part by the policies espoused here by Stephanie Kelton.
It's organized inflation. Record profits show us a monolopized market. Competition keeps profits down during actual unable to supply demand inflation. It's rigged!!!!
"It is not inequality which is the real misfortune, it is dependence." ~ Voltaire
Brilliant!
Thank you Town Hall Seattle for this very important and informative talk by Professor Stephanie Kelton.
Nobel prize, please, for Stephanie Kelton!
You must be joking.
@@blumengary I'm sure that he is.
Unemployment in 2019 was about 3.7% Substracting 'structural unemployment', that's close to full employment. So in 2019 Kelton would have been AGAINST printing money.
which is clearly a sign that chasing 0% unemployment misses the point, given the amount of misery out there
The economy in 2019 was doing well so there would have been no purpose in printing money. MMT isn't ALL about printing money. Money printing and money removal are the tools MMT uses to keep an economy running and inflation under control. What do you think is the basis of any recession? Lack of money. What do you think is the basis of high inflation? Too much money.
It's easy to keep inflation low while printing dollars when you exclude housing and assets from the inflation calculation.
More accurately, keep land price inflation out of the calculation. Housing units re depreciating assets. When land increases in price this is 100% inflation.
Does it count also construction materials inflation? Building a house now is quite expensive.
INFLATION IS M2 money supply 40 Percent increase in the past 2 years. PRICES ARE A RESULT of Inflation.The CPlie is a BS metric the FED uses to cook the books for COLA on SS,SSDI and SSI that punishes the poorest of Americans.
Not when you entrust corrupt actors with a limitless supply of money. How do you create productivity when endless spending on every socialistc idea conceived? Politicians who promise the most from treasury will gather more power. Eventually people will vote themselves the right to an income without productivity. Once this occurs, there is no recovery from the inflation cascade.
@@hughallbrooks8369 ??
Brilliant,so helpful!
fauntleroy elementary school west seattle 1975-79. in the house!
Thank you.
Deficit is not a myth for emerging markets.
I have never taken a course in economics or MMP.... and am retired, with a career in the life sciences. I have already order the book of which she is speaking here. I still would like to know why billionaires pay a much smaller % of their income/net worth to taxes than most of the rest of us. I would also like to know how many of the senators and congresspersons actually have any sophisticated education or knowledge in macroeconomics.
Canadian here. Canada has a sovereign currency just like the USA. I recommend people read over the document titled "How the Bank of Canada Creates Money for the Federal Government: Operational and Legal Aspects" lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201551E#a2. What Professor Kelton says is right in line with "How the Bank of Canada Creates Money" for the Canadian federal government.
Would you mention the maintenance of the minimum standard of living as the important quality of economic conditions. ?
I would suggest ending 40-hour week to enable more unemployed to find employment; pay liveable wages to the workers; end billions going to CEOs rather than workers; increase capital gains taxes; end income tax on workers: working for a living is a given situation on planet earth and should not be punished by taxation whereas capital gains, lottery earnings, inheritance and the like are far different gratuities coming your way for which you have probably utilized the infrastructure of the government which built the schools, the roads, the communication systems etc.
That would be awesome but multinational Corporations ain't going for that shit, but the 35 hour work week would be awesome
Socialism
You cannot reduce everyones total work hours weekly (Productivity) and expect peoples living standards to go up. This is logically impossible.
You have to get money i.e. legalized bribery out of politics first!
Money does not work the way the News Media says it does, if the truth was known people would think differently: ruclips.net/video/biWEcpp_ukE/видео.html
Thank you so much Stephanie. That was the most understandable, sensible and above all hopeful talk on economics I've ever heard.
Obviously you have not read about our economic problems of 1974. Check it out.
@@blumengary -Do you have a good book to recommend about our economic problems of 1974? Thanks!
@@randyallred2382 "Principles for the changing World order" By Ray Dalio
@@blumengary Gary, thanks. I've read some of Dalio's views, he's quite thoughtful, and accepts MMT. I'll add the book to my list.
If Stephanie Keltom could give a short talk-max 30mins-explaining MMT-a lot more people would watch and listen to it.
The first 20 minutes of this are a fantastic summary of MMT, the rest is q/a. ruclips.net/video/WS9nP-BKa3M/видео.html
I am a joiner. I don't worry about fire wood as I work with it. Fishermen eat lots and lots of fish etc. These 2 things don't get in the way of how any one lives their life with regards to the means of transacting time and recourse for the currency we use. The money , good and services are chopped and packaged into tens of different highly complex, often leveraged and not all ways understood ....by anyone!
We can police every product with our voting capacity. Any product we don't like for any reason: we get to find out at the speed of light any where we are at any time. Bureaucracy needs taking away from it all. Yes ALL. We can vote with our currency. Sick of Bezos lobbying 100's of millions to get billions in the market place? Don't use them. We can all have the accountability we deserve. If everything falls to bits then good! we will have deserved it! I don't want some simpleton voted in by "modern voters" ruining everything. At least let us do it.
Many a Johnny come lately!! Whom have now come to Enlightenment on consequences of greed and War !! keep going.................
The idea that governments can pay off their debts by simply printing money without any negative consequences is absolute bollocks. Has this woman ever heard of the Vimar Republic? The USA is currently printing money like there is no tomorrow. This will lead to very high dollar inflation. Why should other countries like China hold the dollar as a reserve currency if they know that it will be worth much less in a couple of years? They are more likely to exchange it for Euros or another strong currency.
Education and Training !
Nothing about the negative impacts of bigger government?
And inflation haven't gone up - but when measuring what?
Real estate? Meat? Food? Technology?
Wow it’s unbelievable
Prof Kelton consistently fails to differentiate between deficit spending financed by 'legitimate' borrowing (meaning borrowing from private investors or foreign governments), and deficit spending financed by having the central banks (the Fed Reserve for us or the ECB for Europe) generate $billioins of new money out of thin air.. The former definitely does constitute a debt which will have to be repaid (or defaulted). The latter is not even a debt, in the normal sense of the word, and will NEVER have to be repaid. Monetary inflation (printing $gazillions of new money) is basically an alternative to conventional gov't financing by confiscation taxation. It amounts to a tax levied against the nation's savings, (IRA's, 401k's, and other investments).
The money to pay taxes comes from federal spendng.
What is weird about the MMT craze is that the economy has been at full employment for awhile now outside of the recessionary period.
There is not a huge amount of slack. And if we do implement all these labour supports we risk creating a general labour shortage and structural inflation as businesses bid for absent labour.
The economy was not at real 'full employment'.
I wonder what would happen if local govts had their own sovereign currency in which they could receive taxes? Would local govts prosper much better and be more reactive to demand as it's easier to toss out a city council and mayor than a president and congress?
County govts could buy each local govts currencies (in their respective county) creating an averaged county fund, state govts could do the same for the counties funds making a state fund. The federal govt could then buy up each States state funds. The us dollar would then be the average of all of that.
That's a good thing. Raise tge standard of living, eliminate billionairs.
@@user-nf9xc7ww7m no! Think!
The thing though is that many do not trust capitalists to make good use of that labor force.
At some point, perhaps a few decades or centuries from now, let's say round about the time the debt is approaching $1 Quadrillion dollars, we should just decimate the dollar. There will be so many zeroes after every number that you might as well simplify it and divide everything by 10, or 100, or 1000. The median price of a home will be $300,000,000, an average middle class job will pay about $50,000,000 per year, minimum wage will be $15,000 per hour ($30,000 if Nancy Pelosi gets her way), and a gallon of organic milk will cost $6950. Just decimate the currency and keep on truckin'.
There won't be any people around a few centuries from now. None of the categories you are thinking in, right now, will have any relevance.
This sounds like what happened to the Japanese yen. The yen was once the "dollar" while sen was the "cents". Now yen are the "cents" in that 120 yen buys a coke, etc. Sen no longer is issued.
And korean won is three 0s out instead of the Japanese yen which is two 0s out: roughly
100 yen = $1
1000 won = $1
If the US is so worried about deficits we would cut the military budget and become a peaceful nation; Young people could be paid to work on environmemtal projects and other public services.
I wonder how the 9% inflation rate after the pandemic issuance period fits into all this.
Correlation isn't causation. Actually, even that isn't quite right because headline CPI went to 4.1% in March 2021 - only a month after the first of the pandemic benefits started hitting the mail. That's not possible, it's too soon. So, there wasn't even correlation! It takes 9 - 18 months+ for money supply increases to show up in the inflation data. There are faster transmission mechanisms for sure, but 1 month pretty much breaks physics, so no. Pandemic inflation was fundamentally a supply chain issue. When Friedman says "too much money chasing too few goods" people tend to focus on the too much money part - and ignore the too few goods part, which is just as important to the inflation equation as money. 80% of US consumer spending is in the services sector, but during the pandemic there were no services to spend money on. Obviously it's not like the extra billions didn't have any effect at all to inflation, but when all was said and done, the SF Fed estimates something like 30 basis points of the 9.1% headline CPI in June 2022 could be traced to Biden $1.9 trillion Pandemic stimulus package. Moody's Analytics and Goldman Sachs are directionally in agreement as well. The clearest evidence that supply chain issues during the pandemic lockdown, not stimulus money, was the biggest factor in inflation is that countries around the world were experiencing high rates of inflation, even those not spending very much at all on stimulus. Inflation's started coming down because supply chains are starting to heal. To the extent that some inflation remains sticky, a large portion of that is probably just plain 'ol opportunism by businesses keep prices high as long as they feel consumers have adapted to the "new normal" and are willing to pay the higher costs.
Sensible and understandable.
This book needs to be translated to PT-Br.
MMT has a very big assumption attached which is it assumes the demand for treasuries is more-or-less a constant. In the case of the US dollar, as the reserve currency there will always be some form of demand. If an alternative ever removed the dollar’s status, MMT fails because the US would then be subjected to inflationary constraints with respect to monetary supply.
That is false. Most prominent MMT'ers advocate eliminating Treasury securities. They are not needed and are a hold-over from gold standard era thinking and fixed exchange rate regimes were the money supply needed defending. That thinking is totally inapplicable to today's monetary system. Now that money is purely tax driven and exchange rate is floating there is zero need for Treasuries. All Treasury bonds are _in a floating fiat currency regime_ are welfare for those who already have money. See Mosler's paper on "The Natural Rate of Interest is Zero" (www.moslereconomics.com/wp-content/graphs/2009/07/natural-rate-is-zero.PDF0.
Money supply itself is not inflationary. Spending above capacity is what causes inflation, and it can ne infinitely sustained. What prevents inflation is the disruption it causes and the consequent lack of political will to sustain inflation. But moderate inflation is both palatable and desirable. It reduces the burden of past debt, and (very slowly) erodes the value (purchasing power) of hoarded wealth. A little inflation is far better than periodic catastrophic debt-deflation.
And hyperinflation, take note, is a totally different phenomenon, and has NEVER been caused by government spending or excess money supply (see the Hanke and Krus CATO study for that). A moderate progressive tax will always kill off hyperinflation once the underlying cause (usually war reparations, famine, corruption, energy price shocks) is eliminated.
And, assuming "the demand for treasuries is more-or-less a constant" never appears in any MMT assumptions. (Prove me wrong!) In some places Wray mentions that the demand for USD will continue "for a long time", and he explains why, but that is not an assumption needed for MMT. MMT is what we already have institutionally, it is just not understood. MMT has very minimal assumptions, in fact there are none really, since it takes the monetary operations as they exist in law and institutional practice. The only assumption is that people generally follow the law.
When a State uses a fixed exchange rate or gold standard or peg, then some will say MMT does not apply. But even that is false. In such regimes MMT gives you different policy space, more constrained. All of this is clear in the textbook by Mitchell, Wray and Watts, I suggest you red it before making ignorant comments. (Or try the free online series MMT Primer neweconomicperspectives.org/modern-monetary-theory-primer.html)
BTW, please spare yourself the effort by not bother trying in vain to prove me wrong, you'll be unable to. The only sources you will find that quote MMT assumes continuing demand for US Treasuries will be from hacks who have not read the body of MMT work. If you want to prove me wrong then go straight to the source, the Macroeconomics textbook by Mitchel, Wray & Watts, or the MMT primer.
@@Achrononmaster So MMT still operates on the assumption that the demand for the dollar is a constant. The Petro-dollar system does prop that up for now as nations need to maintain dollar reserves to literally keep the lights on. What happens if the dollar loses its reserve status?
@@donniedarko7114 the dollar losing its reserve status has nothing to do with the domestic economy
@@Achrononmaster hoarded wealth will not usually be hoarded in cash and the assets it's hoarded in seem to beat inflation
There are a lot of things not explained here to my uninitiated brain. One is: "why does full employment create inflation?"
@@lepidoptera9337 Thanks, but the 'experts' pretty much all say that it does create inflation. Have we designed a system where the only way to allow people (employees) to have a decent standard of living is to relegate a certain segment (structurally unemployed) of the population to be in the poorhouse due to not enough jobs to go around? That really sounds like a broken system...unless of curse we are prepared to go to some form of a guaranteed livable income so no-one is left out due to no fault of their own. In fact, perhaps those that are left out should be regarded as heroes willing (or forced) to sacrifice their economic wellbeing so the rest of the folks can do better....and we should compensate them accordingly so they aren't compromised. hmmmmm....but that is a bit circular......whacky times. The more I 'learn' about the current economy the nuttier and more skewed to reward the rich it appears.
We do need more of us to learn all we can about economics in order to help others learn. Some young people believe my generation took all the resources leaving nothing for them. The people who got greedy are not my entire generation but some members of the elite. Not all of them. But many.
The greed is not new. Its source is systemic, built into how our governments at all levels raises revenue. Our tax system was designed by and has always favored what is referred to in economics as "rent-seeking" (i.e., the ability to take from others without offering anything in exchange). The most important form of rent comes from the private ownership of nature, of land. Low taxation of the rental value of land means that public revenue must be raised from earned income flows, from taxing capital goods and taxing commerce. This is not what Adam Smith had in mind when he argued for laissez-faire policies. Read Smith's chapters on rent for his logic.
I'm a boomer, and we let it go, gave it all away, ON OUR WATCH. I have seen through this charade for 40 years, angry all the way.
Don't think of them as those who "got greedy" but as those who "got lucky", because there are not many who would have turned back from the road they traveled given the chance.
Of course. It's an old trick that the greedy parasites always use to deflect attention away from themselves. Even during the height of the British Empire, so many Brits were living in poverty and working in awful, dangerous conditions for a pittance.
It's always the same people who benefit and then blame the masses.
I don't accept any blame for anything I didn't personally do. It's just ignorance to blame a whole group of people for the actions of some anyway.
We are only responsible for ourselves.
You couldn't have stopped it because they weren't exactly advertising what they were doing. You can only be responsible for your own actions, there is no such thing as collective responsibility. In any case the people who are to blame are the people who profited, not us.
Try to fix and use a system that is designed to fail and run by criminals who pay to legalize thier deeds. ? The power will never let go,will always seek more power ,more money more chaos.
The federal government can't print money to have more money. The value of currency falls as they print money and the government the people owe dollars to China and other countries and institutions on an annual basis. The interest of Treasury bonds is consuming revenue and today this is the largest item in the budget. The military or medicare or social security entitlements are not as large as the interest payment on these Treasury bills.
A simple question that I think a lot of people have, that may well be based on my not grasping everything you are say (and if that is the case, I apologize). One of your big points is that there is a big difference between a currency user and a currency issuer. And that it follows from that that a currency issuer cannot "run out of money." Hence an analogy of the economics of our household is different than the economics of our nation. And, I hope without over simplifying, you say that a currency issuer can simply issue more currency by virtue of a keystroke, which would give us more resources to spend on desirable social programs. The sort of intuitive fear of this is, "well why wouldn't this creation of currency, not backed by some taxation scheme, create runaway inflation?" Why is that not the case? I think this is the case for Larry Summers and other mainstream economists.
Of course federal spending is backed by a "tax scheme"-the tax obligation creates demand for dollars, and offsets inflationary effects of the spending.
Also consider that "simply issuing more currency" doesn't "give us more resources" - we use the currency to *organize and mobilize* the real resources.
If the government would spend money at random with no plan and on all kinds of stupid projects that went nowhere it indeed would create runaway inflation. It's important to remember she's talking about spending, not printing. It's not a matter of just throwing money onto a heap and leaving it there. The government decides where that money goes to and if it's productive areas then there won't be any inflation at all.
However that is handing control of the economy from capitalists to the government which of course most modern economists consider unthinkable.
She is one of the best people in the country. She no longer needs to suffer fools, she has established herself as the top of the economics heap. This work is truly revolutionary and will change Econ forever. She is not walking alone, nor has she lead the pack, but she is brilliant and her skill is communicating the ideas. I would love to meet her someday to see what else she knows. Amazing person, really amazing.
on twiter @mmtconference
www.realprogressivesusa.com/news/article/2019-08-14-3rd-international-mmt-conference-2019 .
Absolutely true Stephanie Kelton is an amazing human being
@SpaghettiandSauce Zimbabwe's productive capacity was destroyed of course you're going to have inflation if you have no production. Do better research next you're going to come back with Venezuela.
@SpaghettiandSauce buy gold buy gold buy gold anarcho-capitalism anarcho-capitalism Friedrich Von Hayek is my God. Ayan Rand is a goddess selfishness at all cost
@SpaghettiandSauce but you didn't even bring up any points?
I am on Chapter Two of her audiobook. Absolutely fabulous. Get it!
This is an idea that will never work.
The last chapter is very inflated
Compare to e price of her book to a book from 30 years ago and get right back to me
That's the challenge
Birth of the peoples economy. The path to greater socialism through MMT. Her arguments are mostly that the government should run the economy. Lots of historical & current examples socialism. Yes, we have a fiat currency. There is really no other way to do it in the modern world. It does not follow that deficits don't matter. Deficits are government spending. Bad spending decisions by the government do hurt the economy by misallocation of resources. Government spending might help the economy if the market is making bad decisions. Unfortunately most government spending is incentivized by politicians needing to get elected or reelected. The real argument should be how much and how well the government can or should spend. Are top down government decisions better than free market decisions? Should we limit deficit spending to control government spending?
Hmmm! What about the forward looking push of "AI" and who may or may not have work?
Definitely an alternative way of thinking about our economy. I always thought that the feds finance the deficit through taxes and mainly selling treasuries. The bond market is huge. We sell a lot of bonds to foreign governments. That's how I thought the feds operate, through the bond market.
Kelton's claim that the Federal Reserve and other reserve banks are in charge of macro economic policy. It is the politicians who make so many other considerations about macro policy. Take for instance the climate change issues where the reserve banks have No input at all on macro policy or mining policies where it is the same or military build up where it is the same.
Here's a thought. Why not do away with the election process, replace elections with selection of our legislators by lottery (as was practiced by the ancient Greeks). Anyone willing to serve on a city council, in a state legislature or in the federal congress, would simply take and pass a civil service examination to demonstrate competency. When the term of one person ends, someone's name would be pulled to serve. No campaigns. No fund-raising. No undue influence by corporate lobbyists. Actual democracy, perhaps.
@@nthperson It might be an improvement and certainly would for some people presently in the system.
@@nthperson try understanding all this proves we need some in office with experience trump proved that. His experience was to lie cheat and steal distract cause confusion so know one can keep up with what you are up to.🌷
MMT understands that the Federal Reserve is in charge of macroeconomic policy, that is its main function. The problem is that they err too often. Congress makes decisions on spending. The Fed just follows orders on that.
@@BanBb1 I am aware of that. It is government policy in action which I am questioning. The government borrows from the Federal reserve via selling treasury securities to it and spends it then the taxpayer is forced to pay back what has been borrowed when the treasury securities mature. It adds to the national debt.
Kelton is also in denial of the fact when she has often said that the money does not have to be paid back.
Kelton's low inflation despite large Federal deficit beliefs is now Dead And Buried in the fact of the reality of inflation which is now 7.5% and rising.
Foolishly she said in mid 2021 it was just "Growing Pains" and was temporary.
The reality of proper economics is slapping her in the face.
@@lepidoptera9337 The inflation you mentioned .
Your head is really all over the place.
@@lepidoptera9337 So what is inflation and how do you measure it given what you said like you did "What the government and most people call "inflation" is a consumer price index. That is a highly unrealistic measurement for any number of reasons."
Your words not mine but perhaps you want to change your mind about that.
Looks like Lepi Doptera has no answer ?
Yeah, that Covid messed up the economy and caused a massive surge in demand that had been suppressed by the pandemic is no surprise. Especially since China remained in lockdown so much longer than other countries did.
Truly important. To recognize that economic theories are our human attempts to model economic behavior is to realize that our models can be improved.
and that economic models are not acts of god to be worshipped at all costs
Can be improved? Allen Greenspan testified to the fact that his Models were wrong! Systemically flawed to say the least.
Prices will rise, in our semi-capitalist system, if suppliers (sellers of goods-and-services) can get away with it. This is not necessarily connected to the simple level of unemployment or unused factory capacity.
They put the word out to raise prices. Organized capital is organized
The thing though is that there is a lot to do in terms of green energy, education and infastructure.
This is why the EU has struggled for the past 10 years as they limped along under austerity measures. They have learned with COVID that they have to stimulate their economy. The NZ government has just spent a tonne of money stimulating and investing in infrastructure, worker and small business subsidies. We just got the news today, eight months after lockdown that we have bounced back from the COVID recession.
There is this notion of "government spending" but that actually means very little. The government spending money to build palaces for it's dictator will cause inflation because that's not doing anything for the economy or for regular people. What Kelton is trying to do is to shift the conversation from "How much are we spending?" to "What are we spending on?"
Full employment is considered by the Federal government to be 5% unemployment, the "reserve army of the unemployed". This is the minimum considered necessary to guarantee there'll be competition for each job. When unemployment rises, big smiles come on the face of the employers because it presents the chance to lower their labor costs, i.e. wages. The interests of the two classes are diametrically opposite.
Businesses have done better in the states that raised the minimum wage to $15 an hour because people have money to spend. Some business owners were surprised but others already had it figured out in advance.
Except all those states are bleeding populations to states that didn’t.
The economy seems to exist to keep the status quo of people not realizing their full potential, instead accepting a meaningless life doing meaningless things to survive... economic law is not immutable, it can be anything we want it to be. I can't argue in favor of a system that deals in fiat currency, allows publicly subsidized gambling for the rich and protects the monopolies that are at the root of the problem.
I think we could do way better.
No, Dr. Kelton, MMT does not actually describe how the US monetary system operates. That's one of MMT's many *half-truths* based on the fact that MMT's description of how the monetary system works does agree with reality on a few points, but not the important details.
That's why few people have realized that MMT is incompatible with a central bank, such as our US Federal Reserve, which means there'd be no Federal Reserve to fight inflation. If the reader understood (1) how a central bank increases the money supply, (2) how a central bank fights inflation, and (3) how an MMT Monetary Regime has long-proposed to increase the money supply, then the reader would understand why any MMT Monetary Regime would be incompatible with a central bank, and why MMT instead proposes to use "taxes and borrowing" to fight inflation.
MMT is controversial because MMT Proponents have been changing the meaning of words in their discussions. Example: MMT often talks about the "combined balance sheet" of the Federal Reserve and the Treasury. But there is no such combined entity.
At 10:31, Ms Kelton claims that The Federal Government has "the sole legal authority to issue our currency", which is a *half-truth* because Congress gave that sole authority to the Federal Reserve in 1915, and never took it back. Furthermore, the Federal Reserve is separate from the Federal Government, it's an independent agent of the Federal Government.
What's an independent agent? Your doctor is an independent agent, he advises you to increase or decrease your hydration to preserve your health. But being an independent agent, you can't tell him to give you whatever you think you need, you don't have the expertise to know what's best for you. The Fed is a doctor to the US Economy, and provides monetary liquidity as needed by the US Economy ... and takes such liquidity away when inflation threatens, without the use of taxes or borrowing from US citizens.
If we were to have an MMT Monetary Regime, the US public would soon be subjected to stagflation, because if the Monetary Sovereign tried to borrow funds out of circulation (to fight inflation) then it'd be impossible to ensure that foreign-holders of US dollars bought the new bond issue. That would leave taxes as the primary tool to reduce the money supply. However, as we learned from the Nobel Laureate Robert Mondell, father of Supply Side Economics, when you use taxes to fight inflation, you will get stagflation. Anyone who scoffs at this is advised to review the decade from 1970 to 1981, and then read JFK's 1963 State of the Union Address. gotta run.
Bravo Stephanie, may the corporate- courtesan Joe choose you on his economic team, if he possesses any clue of macroeconomics.
Thanks Stephanie, 40 years of oppressive Freidmanite neoliberalism has turned many of us into serfs, while the oligarchy swells. Well done.
Agreed, it's great. I get to work my ass off for 10 years taking massive risks and eventually becoming the most productive in my industry...
Then I get to watch it all amount to nothing because all the small and medium businesses who would have been around to purchase my superior products/services (who actually care about quality and cost) have been driven to bankruptcy by inefficient mega-corps thanks to all the free MMT government-printed money that they're getting through pointless multi-billion dollar government contracts.
Then all these wonderful corporate employees/bureaucrats can use their massive government-subsidized salaries to bid up all the real estate prices where I live so that I can't afford to buy a house anymore.
What's there not to like about this?
MMT omission of facts that leads to lies about how the economy runs.
MMT's argument - 'Taxes do not fund government spending' and money collected by taxes is. Yet their original argument is as Mosler their own founder describes that taxes are to 'provision government'.
Let's put that together "Provision government " But no spending of taxes. How does that work ?
Her argument is that taxation is how to pull money out from the economy to prevent (hyper) inflation.
But one thing we know about politicians, is that they'll do whatever it takes to make them look good, hyper inflation will always be inevitable.
@@SmashBrosBrawl I haven’t read her book but what I’ve read on MMT. Taxes collected give the fiat currency worth by the people’s respect of the government to pay taxes.
Just read Keynes.
Her "constraint by economy" was not explained AT ALL. Truth is that we are waaay past that constraint. Now we are not constrained by our economy, but by the mercy of our creditors, who choose not to spend their dollars!
It is more correct to say you are constrained by your feckless politicians. Pass the right laws in Congress and you can wipe out the rentiers overnight... just takes political guts and voting in the right representatives. But sure, that's a BIG constraint itself. But not unsurpassable with education and dying out of the neoliberals (one funeral at a time policy?)
If a government that issues it’s own currency (I.e. has sovereignty over its money supply) can’t run into problems then what the heck happened in Weimar Republic of Germany?
She didn't say there would never be any problems. She mentioned this at the beginning of her talk.
@@reidwhitton6248 ... barely... and without elaboration, just as has been observed above
@@markteague8889 - Germany 1) had its productive capacity destroyed by war, and 2) was forced to pay massive reparations in gold and currencies that it didn't issue. The US has no such constraints, Weimar conditions don't apply to the US.
If I could print American dollars at will, that could be used for anything at all, I can't see myself just printing orders of magnitude more than I need just because. I'd print all that I need to pay off my home, student loans and vehicle (the only debts that I have), and then maybe enough for a salary each month. Or, perhaps I would print enough to buy more homes, fix them up. Buy a nicer vehicle. So the money would go into something real.
Boy, one has to have a lot of letters after one's name to believe in this spiel.
This is like listening to Milton without the IQ.
Good example of where anything like MMT has worked in history for extended period of time ? lets say 50-100 years. I would like to study this through the lens of history if possible. Any Examples in the Book ? We need something to change Central Banks have really screwed most the people over.
At its core MMT is not something you do -- it's a description of reality (with the exception of a few prescriptive elements like a federal job guarantee). It describes the monetary systems of countries like the USA, Japan, the UK, Australia, etc. -- monetarily sovereign countries that spend in their own fiat currency and have floating exchange rates (meaning that they do not promise to convert their currency to gold or a foreign currency at a predetermined fixed rate), and additionally do not take out large loans denominated in foreign currency (This does *not* include Euro-zone countries, US state governments, or developing countries that borrow in foreign currency or peg their own currency to foreign currency.)
It's been like this for the USA since the collapse of Bretton Woods in 1971, so that's a little less than 50 years.
But I think the gold standard was essentially abandoned much earlier, back when FDR was president, in 1933. FDR made it so that Americans could no longer trade their dollars in for gold. In theory, foreign governments retained the right to trade dollars in for gold until the end of Bretton Woods in 1971. But they didn't really invoke this right very much until they decided to invoke it en masse in 1970ish, which prompted Nixon to unilaterally abandon Bretton Woods, which had pegged the US dollar to gold and foreign currencies to the US dollar. So that's coming up on a full century in 2033 if you count 1933 as the date.
As an example, the basic sectoral balances equation with two sectors, is a fact of accounting -- true by identity. It's not something you do; it's just a fact, a description of reality.
(government sector balance) + (non-government sector balance) = 0
If you're (erroneously) referring to deficit spending when you say "do MMT," then I must point out that the USA has been doing that pretty much throughout its entire history (other nations, e.g., modern era Japan, as well). Typically when the federal government tries to run a surplus, a recession or depression follows.
edit:
If *100 years* is not enough for you, after you finish Kelton's book you might consider also reading L. Randall Wray's book from the late 90s titled "Understanding Modern Money" -- in particular, Chapter 3, "An Introduction to a History of Money." Short quote from Chapter 3: "'Chartal' or modem money is *at least 4000 years* old, and it is our proposition that the analysis contained in this book is not merely of a 'special case' to be applied only to the US at the end of this century, but rather that it can be applied much more generally to the entire era of Chartal, or state, money." (emphasis added)
You don't even understand how long the predatory bankers have been in control...start there. You will find the answers you're looking for.
MMT has worked in the USA that's why there is ALWAYS money for the US military. Every year the budget for the US military increases no problem.
@@unclefrancis5134 Exactly. Which is why it is SO heavily suppressed.
The war whores can-not allow the ignorant mases to learn this very basic reality.
Watch hidden secrets of money series by Mike Maloney on youtube and his book Gold and Silver to see how nonsense MMT is and how badly it will end.
Great presentation, but definitely a job for experienced interpretation of the language. That's why Accounting is so important.., and why I'm unable to comment, even in temporal terms of cause-effect, because it's a very big Elemental-Ecological Elephant to fit into this confined economic context.
Eg Burner MSRs Now!
Refer to Gordon McDowell for more information .
It’s hard to listen to discussions that are slow to get to the point. Thank you to faux news, politicians, and the ill informed for clouding thinking on economic policies. Journalist don’t work with politicians - lobbyist write legislation. Question is - how can MMT write legislation that matters?
I personally think that once we become adults we are caught up in a broken system acting as if we know something. Life is being a child, without sesame street, television per say but being mischievous, and fcuk the system's!
All dollars are property of the U.S. Treasury. It is not "my" or "your" money. Dollars are owned by "We the People". This is why the "taxation is theft" argument is complete and utter nonsense.
Stop fooling youself. - You don't own the money that others have earned. That is why taxation is theft.
mises.org/library/taxation-robbery
Perhaps when I rob you I can say you never owned your cash in the first place, so it wasnt robbery.....
@@daleholmgren6078 the key difference is robbery is without a social contract. Taxes are included in the social contract that is the constitution of the United States.
@@daleholmgren6078 So I never in your mind 'owned' the money I earned ??
You are wrong since I had the right to do anything with it I liked with it - even destroying it and not accounting for it after I had earned it!
If you are consistent in that idea then you will have to agree that a bank owned it since it was credit created by the bank and as such it is destroyed when the loan that created it is paid off and there is neither the money nor the debt. So who ever 'owned' it by your understanding? - The bank or me ?
approach, approximation, practice
@17:00 even Prof Kelton can miss-speak at times " ...the big problem MMT has with the current approach to macroeconomic policy..." should be parsed as " ... the big problem economists who see with the MMT lens have with the current approach..." This is an important distinction. MMT is what most countries like the USA, UK, Japan, Australia, Canada already have, as a simple matter of law and operational practice. The problem is the policy makers do not understand the system they are using, and so they come up with policy using the current MMT system that is counter to what all MMT aware economists would advocate. MMT itself does not advocate anything, it is a framework of understanding. MMT aware economists on the other hand are almost completely unified in advocating scrapping Government Treasuries and bonds, or going to ZIRP and going to full employment with a Job Guarantee.
Secondary policy one can _see as sensible_ through the MMT lens is letting the government deficit float (and instead guaranteeing full employment) and eliminating regressive FICA taxes and eliminating VAT taxes. Then if inflation rises too high beyond politically palatable rate then and only then use steeper progressive tax rate to cool things off at the top.
As someone who studies MMT closely, I would also suggest moderate nominal inflation is never a bad thing, and is indefinitely sustainable. What we do not want is deflation or _real inflation_ (lowering of your take-home pay purchasing power). Moderate monetary (nominal ) inflation is compatible with negative real inflation (increased purchasing power of your take-home pay), the key being optimising our productivity (hence full employment) and getting the best imports in return for our exports..
This is wrong, None of those countries have "MMT", at the end of the day new money created has an asset and liability side. You fools are going to turn is into Wiemar.
@@SmashBrosBrawl Of course it is wrong. I have had conversation with this 'Bijou' person before. It gets to the point where he can't answer questions about the math that underlies his claims. The math demonstrates that MMT is mostly fabricated facts omitted details or rationalized and emotionally driven ideas and wish lists rather than reality.
@@SmashBrosBrawl Warren Mosler recently co-authored a white paper on the Wiemar republic. His research looked at the causes of and the solutions used to combat hyperinflation. It's certainly worth a read.
The GPI is a concept that I promoted in the 90s or maybe in the early part of the century.
Nobody should be homeless or hungry. We ( United States) print our own money.
MMT allows inflation as long as it is not too high. AFTER PRINTING HUGE MONEY TO THE WORLD, the USA has high inflation now ( May 2022), and they need to solve it. Second, printing money seems to benefit Wall Street mainly and build weapons. MMT is political. Giving out money to societies is also political. It is hard to be fair and focus on the needed. Please take care!
Out of this world, there is no such myth. It won't take long until deficits lead into a substantial sclerosis
If wages kept up with inflation a huge middle class armed with cash buy goods. That is the strongest engine of an economy.
That depends on what you use it on. Deficits lead to inflation is just way too oversimplified. If you run deficits that produce 0 or even negative economic results then yeah inflation will happen.
How much inflation there will be if any depends on what you spend it on.
TV annoys me so I don't watch it. I'm considering buying the first one in my life in order to give me a large screen to cast video to.
This is a hazardous academic proposal.
The government has printed fiat currency for many decades, and I see no improvement. The fallacies of MMT include that government employees or elected bureaucrats know how to efficiently deploy capital. They do not. They are some of the most corrupt people on the planet. Only the marketplace with hundreds of millions of decision-makers effectively allocates capital.
Another fallacy is that we rely on the confidence in the dollar as a stable value for trade (what happens when the world moves to other currencies or doesn't accept the dollar).
The problem with inflation (too much money pursuing the same goods and services) was discussed and is a huge problem. Presently, the US economy is running at full employment. In theory, all government procurement programs would need to shut down for as long as full employment occurred during these periods.
From an implementation perspective, it assumes that the government can buy what it needs domestically. However, a quick look at the trade deficit shows that's not the case. The argument for globalization and comparative advantages moved manufacturing offshore. What happens when foreign companies decide that US fiat dollars are worthless because you have changed policy to print wild amounts of currency? What happens if US citizens decide US fiat dollars are worthless and start using Bitcoin, precious metals, rare elements, or other currencies?
This is another academic telling us to reimagine the world to achieve Utopia. These people are dangerous for presenting half-baked ideas. No, thank you, I have enough Wesson oil.
All family under one roof so to speak
Skip to 2:35 to get on with it.
Interest on the debt goes to the debt holders, i.e. the rich. So a large debt means a transfer of wealth from the poor to the rich.
It seems as if no matter what you do, money is going to flow to the rich. All roads lead to Rome. And the money that goes to the rich flows out of the country and hoarded away in shell companies, secretive accounts and other tax evasion schemes. In a way, the rich is the vehicle that removes the money supply from the economy and keeps inflation low.
So as long as the federal government keeps printing money and injects it into the economy for the working class at working wages, keep the hospitals running, etc the economy can be sustained.
depends whether the rich do want debt. if the debtor is unable to pay then no point owning debt.
Yes! I am always asking this question in the context of MMT and it is never answered. The national "debt" itself may not be a problem, but what about the interest on the debt? The lenders expect to get paid their interest. Average people must pay it by working more. It seems to be a conduit of wealth flow from the poor to the rich.
I have always wondered if an economy can function where interest is not allowed. Where people cannot make money just by lending out their money.
@@SolidAir54321 Because the federal government is the sole legal currency issuer, interest is not a problem either. The federal government actually doesn't need to issue any bonds or borrow any money. They act more as a service for those investors who hold a whole bunch of cash that don't do anything. So bonds and treasuries are issued to swap for their cash to give them interest. That is all. Then when the government recieves the cash, they destroy it and take it out of circulation. And when the bonds mature, the government prints out the money to cover the principle and interest and gives them back to the bondholders.
It doesn't work out this way for the average person and yes, money always flows from the poor to the rich. It flows more slowly if the money goes to the poor first in the form of new government contracts, or social programs because the money flows through the economy first. But government giving tax cuts would have money going straight to the rich and out of the country to be hoarded in secretive accounts.
Our current economic system would not work without interest. Interest and inflation are drivers for economic growth. Without interest, there would be incentive to lend money to any investor. The ideal rate countries have been noticing is 2% for optimum growth. It's low enough that inflation is not yet a problem.
@@georgeemil3618 You are wrong when you say "Because the federal government is the sole legal currency issuer, interest is not a problem either.". The federal government is Not the sole legal issuer of currency (money). The Reserve banks are the issuer of currency they have created in the same way that the private banks create new currency when they make loans to private and businesses. Private banks make most of the new money in the economy. They are purely private organizations who employ private people and who run on the private business of making a profit from lending to customers.
The Reserve bank does not involve itself in determining who gets those loans or what interest the banks charge. In some countries the Reserve bank determines a lending ratio of reserves that the private bank not exceed but take no part in the lending transaction.
The funds received by treasury bond sales are spent by the Treasury to fund the shortfall in taxes that is the federal deficit itself.
If it didn't happen that way there never could have been a Federal budget Surplus or balance and the deficit would be almost as big as the total of government spending which Never has been the case.
This information is available on Reserve bank sites of various countries for all to study.
Great observation of how things work! For the Dutch people... Dit idee wordt al enkele jaren onder de aandacht gebracht door het burger initiatief "Ons geld" en is ook in de 2e kamer besproken. An interesting fact is that the ECB's 1300 billion Euro Covid-19 crisis support fund actually strengthened the Euro against the dollar instead of weakening the Euro. So printing money is not an issue, it is all about balance.
One thing to keep in mind is that modern currencies aren't backed by anything, they are based on faith. The dollar weakened a lot during covid because of Trump's mismanagement of the covid relief with him denying care for blue states, sending needed medical equipment to allies, having a frantic lockdown, lift, lockdown policy and a very unbalanced bailouts of corporations vs people. The EU just did a matter job managing the covid response so that increased people's faith in the economic capacity of the EU. Trump's random sanctions and economic mismanagement had also caused several companies to from from the US to Europe.
There must be incredible “demand leakage” in the US economy since very little that people buy is manufactured domestically anymore.
She's a female version of "Helicopter Ben"😂
Got to love that genuine smile at 01:45.