Dr. Stephanie Kelton, Professor of Economics & Public Policy and Stony Brook University joins the Aggressive Progressives panel to discuss economic policy. Watch the entire show tyt.com/GETACCESS stephaniekelton.com/
Thank you Jimmy and Aggressive Progressives for having Stephanie Kelton on. She is a truth-teller about the economy. This is a sincere "thank you" despite any run-ins, Jimmy, you and me have had on Twitter.
A huge problem is that we didn't change the economic vocabulary when we drastically changed our econ system from being based on the gold standard, to what we call a sovereign free-floating, non-convertible, FIAT, currency. For example, a "deficit" is a bad thing for households and businesses, but not for the federal govt. Why? because households and businesses do not create their own money. The fact that the govt creates it's own money changes the whole game. Do counterfeiters worry about debt, deficits, and do they worry about balancing their budget? NO. What we need to do is balance the economy, not the budget.
Share this where you can. It explains why austerity imposed by politicians is nonsense and just a means to keep inflation in check by imposing poverty instead rather than maximizing the strength of the country.
Taxes do two things, first it gives money VALUE everyone needs dollars to pay their taxes which are denominated in dollars and PAID in dollars, you can not pay your taxes in Euros here. This is partly why the confederate currency collapsed, they did not actually TAX anyone in the confederacy which meant it had nothing to give it value. Second taxation reduces the money supply which CONTROLS the value of money by keeping the quantity relative to the size of the economy constant, or should you wish to inflate or deflate you make the quantity rise or fall relative to the size of the economy. Basically the thinking most people have of 'Tax THEN Spend' is backwards. We Spend and THEN Tax, the amount of tax is completely independent of the spending and serves only to 'mop up' the inflationary effect of the spending IF we choose to do so.
Kenneth Ferland, you’re mostly correct. But it’s not about the amount of money in circulation, in and of itself. What matters is what we do when we’ve exceeded our capacity to meet demand. At THAT point, the appropriate response would be to increase taxes and/or stop additional spending. Your main point is correct. Taxes reduce aggregate demand which can help cool a heated economy.
Jim Nickola What you've said here does not make sense to me based on my albeit limited understanding of MMT, where taxes have at least two functions: 1. Control inflation 2. Give value to the currency, (I think of this as: creating demand for the currency bcz taxes must be paid in the currency) This has nothing to do with the demand for the goods and services in the economy (aggregate demand), nor whether the people or materials are available to meet that demand as you claim. Am I missing something?
Kenneth Ferland But the problem is that taxes do need to be raise if inflation gets out of control. You can say what you want; but raising taxes is always almost impossible in most people. Especially when you’ll literally be destroying the value from excess demand from taxes. That is not go well over the people at well. Not only will you need to raise taxes to control inflation, but that money will not even get spent into the real economy. People are going to riot in the street. Generally, raising taxes is one of the hardest thing to do in a country especially since we won’t be taxing the top 1% in MMT; it will most likely be as broad of tax as possible when inflation control is needed.
Bill Mitchell summarised it best "The government is NOT like a household". Most people have trouble understanding MMT because they think in terms of their own household economics. That's why Paul Ryan was stunned when Greenspan told him "we just issue more" when he tried to press him to say that the deficit is evil. These politicians do not understand economics.
One of the best shows you've ever put together, Jimmy. Really solid questions. It's never the answer that matters. It's ALWAYS the questions that matter.
Stephanie, you and the other MMT people are the small bright light in the huge black depressing abyss that is our future. Keep talking you are reaching people.
Because that’s the answer!! It has nothing to do with taxation or “finding” the money. The US is monetarily sovereign. It creates the money. Dems always have to say they want to tax in order to spend when that’s not true. If we had universal healthcare and higher education paid for it COULD cause inflation which would be the only reason to raise taxes. Get taxes out of the conversation. Federal taxes don’t fund spending.
Stating something repeatedly doesn't make it any more true. If taxes fund spending, where did the first tax dollar come from? How did the nation purchase the gold reserve? Why would the monopoly issuer of the currency need to borrow its own currency? Wouldn't it have to create it and give it to someone before it would be available to borrow?
Ryan B--- Nobody's talking about 'willy nilly' creating excess currency except you. MMT doesn't advocate that... it advocates knowing the country's real resources and, with that knowledge, balancing the economy. That's how high inflation is avoided.
Thank you for doing this video Jimmy. The ignorance most people have about economics is astounding. They act like the trillions of dollars in existence have always been there, like some eternal precious stone that never bore the mark of creation. They think printing money causes inflation, when it's a shortage of resources that causes inflation. And, the vitriol when people have their intuitions about money shattered... I don't know whether to laugh or cry. Regardless those comments show how important this discussion is. Education is always the answer.
That's because you don't read. You're what I call a "full cup". You think you know everything already. Nothing more can go in. But, what you really have is conjecture and intuition. I was about where you are a year ago, but I was humble enough to ask questions, learn, and judge the merits of what I thought I knew against what is correct.
I've heard her explain this much better in the past, taxes dont fund spending, period. The deficit is the money spent into the economy that has not been taxed back yet. Pay off the debt, no money in the economy. Private debt, totally different animal.
The average citizen has to worry about debt because they have to borrow money, the federal government doesn't have to worry about debt because it's a currency issuer. It can always create more money through congressional authorization, just as long as it doesn't create more money than the productive capacity of the country.
So like you said all the government around the world just print print and spent spent? Do you even understand the word deficit? Then why the US owns 5 trillions to other countries to cover the debts from deficits?
Okkako1 - Kelton touched on this in the video. The government doesn't need to borrow - it just chooses to do so. The interest paid on the 'debt' is really a handout to the wealthy.
This country has quite a lot of productive capacity. If the government creates more money than there are goods and services to spend it on, that's when you have inflation. The government would then use taxes to take money out of the economy to slow it down.
It's kind of shocking how little people know about money creation. Like, the fact that private banks create most money. Shadowstats keep track of M3 data, compare that to actual physical money in the economy. Or look at the BIS's data on the size of the worldwide financial markets, derivatives markets. Many times worldwide GDP. Or that taxes don't determine spending, spending is determined in the political process. Or that public debt is not supposed to be paid back and that we issue bonds when there are deficits (which we don't have to) because the Federal Reserve Act requires us to. The fact that US bonds, the safest investments in the world, are simply subsidies to private interests seems to escape people. If people want to do informed critiques of MMT, they could at least study actual money creation (not from silly ass libertarians). Wray wants to put an end to the state issuing bonds all together when creating money, which it can do by not too complex reforms. Or take inflation, people think that if the government injects money into the economy, that inflation will increase. Not true what so ever. The money can be horded, used to play around in financial markets, used to buy up shares, it can be retained by companies, lost via the trade deficit, among countless other things. Also, if money is injected into the economy and we are not at full productive capacity and not at fully employment, we can produce more goods and services to match the increase in dollars. So, inflation would be modest or non-existent. The media and the right wing have lots to do with this, but there aren't many people even on the left that seem willing to really delve into MMT. While I don't agree with everything, it is right in many ways that the mainstream isn't, and many of MMT's ideas are really powerful weapons against the right wing.
Economics is one of the most complex fields to study. There are just way too many variables at work. People like Alan Greenspan barely understand economics. She learned her stuff in school and it shows. We have a deficit because crooks are stealing our money and that's why we are in this sh*thole.
Seudon Amous, you should take your own advice. Federal spending in and of itself does not cause se inflation. The inability to meet demand over a period of time is one cause of one type of inflation. Milton Friedman’s The Quantity Theory of Money is complete nonsense, based on his own ideology rather than on science. It’s the ultimate neoliberal go-to.
It's funny listening to this interview again, years later, now that I have a very good understanding of the basics of MMT from listening to many lectures by Kelton, Mosler and others. I'm impressed with how patient Stephanie is with people who are trying to understand how this works. Right from the beginning jimmy asks where does the money come from and after Stephanie gives a very clear answer explaining that it comes from the government, he then asks the exact same question but in a way that makes it sound like jimmy thought Stephanie didn't understand the question. I don't know if I would be able to keep myself from saying something rude or mean.
I am so glad you did this interview. I've never heard of this type of economics before and the explanation. I watch the Keiser Report sometimes and this is the opposite of what they discuss about doing away with fiat money. I really think the Progressives have to embrace this and get out in the public and push and explain how this works to the public. All the public ever hears about is the deficit and debt. Lets get rid of the Federal Reserve!
Tom Cop Tom you're right progressives do need to embrace the school of economic thought because it's the truth about how our economy actually works and the debt in the deficit or a bunch of nonsense but what we don't need is starting conspiracies about the Federal Reserve the Federal Reserve is not a private bank it's not the boogeyman the Federal Reserve Bank is a creature of Congress Congress created the Federal Reserve we can really use your help and understanding this but please don't start conspiracies about the Federal Reserve it's not helping thanks Tom
The reason I bring up the Federal Reserve because we use the Federal Reserve to create money through bonds, when we could be creating money interest free through the treasury.
Tom Cop Tom if you get a chance you might want to watch Frank Newman's video It's called how I learned to stop worrying about the national debt It's really informative I know economics is kind of like watching paint dry like I said if you get a chance be well
You know what is really tragic is that Professor Kelton has to explain what should be painfully obvious to most people that she has to explain reality that reality has to become acceptable that is truly tragic
Lana Dell hatestheclock yeah you're right we have been lied to for years for almost 50 years but what is frustrating is that I'm just an average person who was willing to listen with an open mind then after listening and also investigating all the material anyone with a sane rational mind would conclude that mmt is correct I think that a lot of people are more interested in belief then the truth folks just because you believe something doesn't make it true facts matter
Zach Davis no you're right man so many lies or stupid politicians no I agree with what you're saying here is the problem that if most people don't understand this we will never get Medicare for all or anything else I guess what I'm saying we can't depend on politicians to do the right thing we have to force them to do the right thing but if we don't understand the economics of all this if we don't know these things are possible then we can't force them to do anything so it's up to us Each one teach one thanks for the reply man
What a missed opportunity! From my perspective, as a political progressive with no particular knowledge of economics, Dr Kelton didn't manage to communicate her point clearly or convincingly. Of course, Jimmy pushing his own political views rather than being prepared to critically explore his guest's reasoning didn't help either. Anyway, I really look forward to you having Dr Kelton back, hopefully we'll learn more next time.
As long as we don't overrun demand for hard resources, we won't have inflation. Tarrifs and intentional shortages seem to be more a driver of inflation then investing in jobs, education, healthcare, and climate.
Printing more money devalues a currency if it produces ANY inflation. Inflation. by definition, is a devaluation of the currency. I could buy a Big Mac meal in 2000 for $3.50. That same meal costs me over $7 at the same location today. So a greater than 50 percent loss in purchasing power in 18 years. That's just about 5 percent inflation, year over year. Where are wages? Stagnant.
don't talk in VAGUE language and Terms. if you can NOT explain your positions in your own words. KEEP THEM SECRET. having said that. this was obviously joke i wrote bc of the stupid title. there's another post i wrote about deficit. go READ IT, and LEARN
Many central banks, including Bank of England, have already concluded that banks create new money when issuing loans. It follows that taxes don't fund public spending. Government spending is an engine in the economy. Every period of high economic growth in advanced economies has been caused by massive public spending. The government is not a household that needs to save money. Households can not print money. Austerity always leads to stunted economic growth. Right-wingers, as usual, have misunderstood basic facts.
It's not that simple. As they explained in the video, the economy has a limited capacity to produce stuff. If the government dumps more money into the economy, people will start to compete for products and services, which drives up prices and creates inflation. But if the government doesn't print enough money, or spend it the wrong way, then people won't have money to buy all the output of the economy, and that leads to depression.
@@andrasbiro3007 The question is where the government "dumps" the money. The government dumps (very few strings attached) trillions into the military industrial complex, and that doesn't create significant economic growth, because it benefits so few people. QE to wall street did miraculously not benefit workers.
Unlike $$$ created by the federal govt, bank loans have to be repaid, and even the interest goes to address the bank's overhead. So comparing $$$ created by banks and $$$ created by the fed govt, are two very different things. Fed money ends up in the GDP, private sector savings accts, and our billfolds and purses.
Yes, the government does a horrible job. And that's another reason why simply printing more money won't help. First the printed money should actually go into the economy and not directly into offshore bank accounts.
This comment section is a mess of regurgitated Chicago School arguments. "Printing money!" "Totalitarian Gov't!" "Debt economy!" All of which indicates a layman's understanding of economics. In this modern era, we are inundated with "experts" that got their "knowledge" from RU-vid and feel they can refute an actual expert in a comment section she may never even bother to look at lol
I have posted far too much in this thread for this very reason. It's really frustrating for people to think in these ways, because those huge misunderstandings have real world consequences. We are in desperate need of much more investment in the domestic productive economy, and this ignorance (which has been manufactured) is holding us back and is clearly making things progressively worse.
We do have a debt-based monetary system in the US whether you believe it or not. Money is created by issuing debt through a fractional reserve system. It is wise to be skeptical, even from "experts" on RU-vid as you say. Economics is not a settled subject. There are competing theories. It is unlikely any one theory is complete or entirely correct. I don't blame people for watching videos and trying to educate themselves.
Yeah, that isn't exactly how fractional lending works, nor is money created from "debt". That is a Chicago school argument based on the speculative economic models of Austrian economists like Von Mises et al. which presupposes a finite supply of money. This concept only applies to small economies with limited intellectual or serviceable sources of wealth generation. However, in a modern economy based on productivity from an educated and service abundant economy such as the US, money is created on a promise to pay(speculation on future) to generate value through labor which creates value for the signee and lender. To reiterate, the value is generated from the signature, not the bank. The law is clear on this, banks cannot create money, they can only accept for value. The signer creates the value with their signature but cannot accept for value. It literally takes two to tango in this specific commercial activity.
Third party is even less likely than reforming the democratic party. Jill Stein barely got 1% of the vote running against two of the worst candidates in history. The voting and campaign systems do not benefit third parties, they barely benefit the democrat party.
Jimmy, don't always repeat your cynicism about the Dems. You are depressing those who do all they can to change the party. If a third party is something we can unite all progressive forces behind that's fine, but if not keep on fighting the corporatists, cynicism doesn't help us. They want us to be cynical!
i agree. i think he can be quite negative. But we need the constant reminder that the democrats are not our friends. he provides that daily reminder and it is so important to have so i'll allow it.
The sad or funny thing (take your pick) about the thumbs down'ers for this presentation, represent a class of individuals whose minds are made up for them by some Pragu (sp?) University indoctrination zeitgeist that got to them earlier in life for some reason. It's laughable until you see it or hear it in a close friend of family member. Then is becomes a little more burdensome because you know the dead-end thinking and subordination of thought they have committed their lives too - and it is hard to have to watch and just let them be who they think they want to be. But it still hurts and reminds us that some things are just not in our hands - so to speak.
Yeah, Prager/Koch Brothers U... But Ms. Kelton nailed it... "I thought she did a great job. The problem isn't her explanation. It's the narrative/propaganda that has had DECADES of "from the cradle to the grave" indoctrination. It's simple: "The government(s) spend $100 and only tax "back in" $90 in taxes/revenues. That's NOT a $10 deficit...that is a $10 investment out "somewhere" in the people's hands...the economy...being spent. The ROI on $10 will VASTLY out-return it. The only fight left is where to direct those empowering "free" dollars...Enter Politics. So no, the problem isn't Ms. Kelton. The problem is this: "It is easier to fool the people than it is to convince them that they've been fooled." - Mark Twain Now, get busy on the REAL problem...not the messenger who did the work to carry the message!!!
Grizzly I read the only sane economists in active, Paul Krugman (who is right a lot of the time despite being Capitalist) and Richard D Wolff (actual socialist teaching in New York) and either I'm stupid or she's making stuff up or her "simplified" explanation is really clumsy. Everyone should know by now that it is the government's job to SPEND it's way out of a crisis instead of the Austerity that they adopted from right-wing US economists in Europe which keeps digging Greece's hole deeper and deeper. Did I miss her saying that? She just... I know other people find technical faults with her explanation but I'm beginning to wonder if I'm losing my mind here... Does she make sense to you or are you hearing what you wanted to hear without trying to parse her actual words?
Yes, poor, misguided Pete Peterson. But, in fairness, all he knew was the economic model that was taught him by those who also learned the wrong model.
01:10 - Where does that money come from ? 01:29 - Imagine starting a game of MONOPOLY and use double entry bookkeeping. ________ What leaves the bank (RED) and Goes to a Player (Black). ________ The End.
Understanding MMT shows us that we could easily invest into LFTR energy and chuck this carbon economy that is destroying our whole planet. Currently it's all about burning ourselves up to give the surplus of our labor to those that could care less about our survival.
Very complicated issue..but there is a lot to be said with this woman s argument..sadly the government in the US unlike European nations does very little to put out resources to help those truly in need help themselves long term..because the system benefits too greatly the way it is set up
I thought QE was the creation of new currency to increase liquidity in the system with the side effect of diminishing the value of the existing currency
We need a new party, let's call it the "Labor Party." It would have open primaries and a fixed platform that follows the popular progressive concerns like free college, universal healthcare, and a living wage. Then you let the candidates themselves state any other positions they like, for or against abortion, etc. with OPEN primaries. Primaries would put forward from a list of hopefuls those who's social policies fit the local bias. Abortion matters in every race, but on which side the majority sits differs by state. With abortion (for or against) off the platform, it completely neutralizes conservative and liberal polarization in voting for Labor party candidates. and frees the new party to do what's right for the 99% of us who've been marginalized and squeezed for the last 40 years.
What she's talking about is basically Keynesian economics, with a disregard for monetary debt. I don't think taxes should be considered solely as a fiscal resource and limit to inflation, they should also be seen as a tool for redistribution of wealth or reallocation of capital.
MMT is a post-Keynesian school of economic thought, yes. But really it's just currency analysis being applied to sound macro economics (i.e. national accounting. The flow of funds through economic sectors on balance sheets). Also she didn't say that taxes are only used to curb inflation. What she said was that that was one of the major roles taxes play, and that taxes are a SUFFIECIENT (not necessary but sufficient) condition to drive domestic acceptance of a currency. Of course they also influence wealth distribution, incentivize/disincentivize certain behaviors, etc etc etc.
And MMT doesn't "disregard" monetary debt; it accurately describes what it is and how it functions. The national debt, composed of Treasury Securities, is functionally a savings account that earns interest for households and firms etc. When Treasuries are sold, purchasing individuals checking accounts get credited downward. The bank's (at which their deposit is held) reserve account at the Fed is subtracted the same amount. Sales of Treasury Securities drain reserves from the banking system. In much the same way, Treasury deficits add reserves to the banking system. The supply of reserves , along with the demand for them, determines the price of them (interest rate). The central bank conducts monetary policy partly by setting the interest rate on reserves, through controlling the level of reserves in the banking system. So Treasury deficits not offset by the sale of debt, would add reserves to the banking system without draining them, causing the central bank to lose control over the price (interest rate) on reserves; i.e. the interest rate would fall. The debt is just a reserve drain. It doesn't finance the deficit, it just supports the interest rate after the fact; which is an arbitrary choice to keep it at any given level.
That was a great explanation of modern economic theory. Couple of problems with it though. I guess the biggest problem with this theory is that it only works as long as most countries have to buy oil in american dollars. The reason you guys can print as much money as you like without devaluing your currency is because everyone has to hoard american dollars. It's a unique position the USA is in, well it used to be unique. China's currency is accepted by opec now. Which brings us to the next biggest problem with this theory. What happens to this debt when the world has real alternatives to the american dollar?
I was under the impression that the system creates more currency by charging interest on loans and things like that. This way of thinking says you can just create as much money as you want.
Wrong the reason why the dollar is considered stable is due to it being backed by bullets. Venezuela has a shit ton of oil but cant pay for paper for newspaper. The importance of placing something finite behind the dollar is to make the dollar stable. Keltons point is that the government has to be more buisness minded with a unlimited money to make our economy improvements outpace the deficit. Paygo can work since it would lower inflation and force government to stop non economical government spending. But that will destroy welfare
The reason the USA can afford all those bullets is because they can just print as much money as they like without devaluing their currency. And the reason they can do that is because the world buys oil in american dollars.
Luke McGregor, the USD isn’t pegged to oil, gold, or any other commodity. We’ve been off the gold standard for decades. There are no problems with MMT. It’s also not hypothetical. It’s a description of how the monetary system actually works. Do we fight wars for oil and other resources? Yes. But that has nothing to do with how the monetary system works or what we can do towards the public purpose.
You blew my mind... in positive and negative way at the same time. It is brilliant system in which all the world working for you... as long as you're fair or at least appear so. But you are at the end of this now... what will be next...
Marcin G, What now? You continue to learn and spread the word, then you support true Progressives who are either willing to learn or who are already in the know.
I disagree that if we had no taxes, suddenly no one would use USD. Then what would we use? Money is only valuable because we believe it is. No one is saying I want USD because I have to pay my taxes with it. If that were the case, USD would simply be a medium of exchange. People would just keep their money in some other currency she thinks people would turn to, and then only convert a portion of it back to USD when you had to pay taxes. The logic doesn't hold up. But I agree we need taxes to stop inflation, and to redistribute wealth.
35:13 Jimmy doesn't get it and you can see it on Kelton's face she is crushed. This is the problem the MMT crowd needs to solve. We are willing to believe it, if they could explain it they way makes sense to us (without having to study economics at the post graduate level).
To be fair, understanding MMT is not a basic thing. Most people can not get past believeing that the government is "just a bigger household". It's not.
@@saudisdiditandtrumpdancedf6631 the theory can be simple to explain. Heres an analogy the economy is a stream of fresh water and it is constantly expanding by chipping at its walls and allowing the stream to move faster every once in a while the stream gets locked up and even though sooner or later it will get unblocked and flow again there is a risk of the water going stagnant permanently so you need to take salt water to make the stream go again and faster. If you use thw salt water sparingly you will have a nice healthy stream but if you recklessly use the salt water then you can no longer drink the water. If you also let the stream go stagnate then you also can't drink the water
If a hundred dollars changes hands 10-12 times, it's paid for itself in taxes. Sales tax in my state is 9.875% so closer to 10 times. I do agree inflation is a tax, but it's also necessary to wipe out old debt.
@@voteforno.6155 A lot of things in our world are human constructs and financial instruments (money, stocks, etc) are only worth what people agree they are worth.
MMT economists have a common trait of completely ignoring the time sequence of events in the economy. They imagine things that have to be created by work already exist before they actually have been produced and make plans to have them purchased by government before they have been brought into existence. This leads them to imagine they can improve the economy by re allocating actual goods and services which don't exist and then they talk as if that will produce more wealth. An example is the idea they put across that government deficit spending is wealth creation when in reality it is just re allocation of thing which must already have been already produced so they can be re allocated to others. No new wealth creation there. Another example is their idea of bringing into production machinery that the market has already determined to be under capacity. It is under capacity because people have chosen not to keep it n production due to may reasons of which one is it is out of date and inefficient so in reality any allocation of money into it's return to production is at odds with the decisions to take it out of production because the market already rejected it on efficiency and marketability reasons.
I remember in 2009, people were warning that economists would someday suggest we print money to finance gov. This could be the end of the dollar as the reserve currency.
One way or another government spending is equal to the total amount of tax people pay . Whether that’s through relatively honest means of taxation such as consumption or income tax , or by dishonest means such as inflation. I invoke the spirit of Abraham Lincoln ; you can’t fool all of the people all of the time.
The government makes the money and asks you to pay a tax as a citizen to create a need for you to have its money. Then it forces all business which is based off of debt and repayment in some manner to use its currency to keep track of that debt. So you want to live here you gotta pay taxes in U.S. dollars, well you need a job to make that money because all jobs pay that money. Then you want a house so you borrow that money from a private bank because they get access to that money. Then you pay that debt back in that currency. Then that bank destroys that money. The money that comes from taxes also just disappears. The reason fir taxes is to make there be less money in circulation because if theres too much that should mean businesses can charge more for the goods and services they provide because theres more money in circulation. But most of the debt is to very wealthy organizations or people, for them the deficit is their bank account. You put money in the bank then they owe you that money, except the government makes all the money so if theres ever a crash they still have the money even if the banks dont.
@@alexanderkesterson6338 You explanation is totally screwed. It shows a lack of knowledge of financial matters and an inability to understand that rational thought requires among other things to take notice of todays facts and historical facts and the time sequence of events. The reality is most money in the economy (about90%) is made by private banks creating and lending money to borrowers. It is not mostly from the government creating it or the Federal reserve creating it. Only about 10% or less is created by the Federal reserve and government creates none of it but merely borrows it from the Federal reserve or others such as it's own citizens or foreign entities. The situation of the sovereign money today is clearly laid out in explanations from the Bank of England (their central bank) as well as the Bank of Canada's explanation on money creation. These explanations are available in the Bank of England site and the library of parliament in Canada. You explanation of taxes being involved is as foolish as saying thieves create a need for money because they steal it. ,
@@Rob-fx2dwThe federal reserve and its subsidiary banks is completely under the auspices and control of congress. The reason you think it is not is because congress wants you to think it abdicates that power in the name of “independence.”
@@Trenton.D No. The Federal government does not have private banks as it's subsidiaries. The Federal Reserve bank is a separate entity which is not a subsidiary of the Federal government. The Federal Reserve lends to the federal government and provides banking operations for government. It is not under direction from congress and you can see that in their operations as when they put out policy statements such as when they say they will be increasing interest rates or decreasing the amount of debt they hold including Treasury debt that funds government borrowing. Private banks are not subsidiaries of the Federal government and Not agents of the Federal reserve or Federal government. They are separate business who do not get the money they lend from the Federal government because it is all credit created by them to lend to their customers. The Private banks are not agents of government because the laws relating to agency apply to intermediaries which do not sell or create the goods or services that are being transacted in but the agent merely participates in bringing the trading parties together so they can make the sales transaction themselves. The situation is most countries today as it is in the US is described in this explanation by the Bank of Canada's which lays it out in simple terms here :- lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201551E
*How will we pay for it?* The government prints the money. *Where will we get the money?* The government prints the money. *The government prints the money?* Yes. 35:15
Timothy27778: Flesh out your claim there. Explain your logic and respond directly to things she said. Since she is so stupid (so stupid that mainstream rags are now acknowledging MMT's insights in regards to money creation, what deficits are, and what public debt is), should be really easy for you.
Dude, she's nuts. She says 'congress is the source of the money'. That's insane. Congress is not a bank, it's not the source of any money. It's part of the US government which raises money from taxation and borrowing. Then she says congress making money could cause a deficit- WTF?!? You cause a deficit by borrowing money you have to pay back but she says that congress magically produces money. The fed which is mainly independent does QE but not for defense. She talks drivel.
It's simple: We don't have money, but we have to pay for something. So we have two options: 1. Borrow the money and pay interest. 2. Print the money with no interest. In both cases we need taxes: in first case to return the money and pay the interest, in second to erase the inflation. Question: In which case we need less taxes?
vote for no. 6 Agree that countries are made up of families. And in those families are individuals who want freedom to spend their work how they choose. Encourage them to invest. Interest. UBI for all.
For some it needs to be that painfully oversimplify we don't learn tax or the function of the dollar in American schools so for some who don't know operational reality or modern monetary Theory they need to be led
not a bad idea - except for that thing called "Productive Capacity." Your $$ figure is Way Beyond our productive capacity to meet that $$ amount. But, yeah, a $1,000 each?? Very doable.
Lol comparing the government over spending to buying a house is ridiculous. More like if you buy a house and keep on buying one and get further into debt.
As someone who had a lot of debt and has been debt free for a few years but also works around people who still have a lot of debt. Debt is a real shackle to your ability to buy the things you want and to have the financial freedom to do more. Think about the support the public would give to the political party that proposed through a government lottery system that 1 million middle and low income Americans whose personal debt was under $30,000 would be forgiven as a way of boosting the economy. Instead of these do nothing tax cuts.
don't confuse your debt (personal and a liability) with government debt, which is an investment into the non government sector(our local economies and pockets
Of course you are right. She applies twisted logic an fantasy beliefs to what in the real world where a whole lot of other things come into government creating debt which she ignores like the effect of the money expansion on existing debt and existing incomes. In fact the whole of MMT is a fantasy belief that has failed every time it has been tried. That is why she never participates in any open debate of the subject with qualified intelligent people who oppose her views.
It's disturbing that when referring to resources she mentioned labor, factories and machines. I don't think she once mentioned energy, without which nothing happens and there is no economy. But then, she is an economist, and they typically take finite physical resources for granted.
Energy is not finite in any terms with a time period relevant to humanity. Even without the 'someday' potential of fusion, we have the sun, the wind, and easily obtainable fissionable uranium and thorium sufficient for 100,000 years. With the political will and intelligent leadership, all it would take to make it happen is the labor, factories and machines that Dr. Kelton mentioned.
@Edward Siegel; ecological economists focus on limits to throughput and the limits to the aggregate generation of pollutants, as well as the limits of markets themselves. It is true that most economists (outside of ecological and environmental economists) ignore natural resources, but economists like Kelton focus on things outside of the connection between the environment and the economy, which is perfectly fine. I just think the insights of people like her have to integrated into those other issues.
Yeah, but many of the things they are saying cannot be denied. Markets ignore massive mounts of information, there a realistic limits to markets, and there are limits in regards to throughput and the creation of pollutants. Either we all adopt their insights and radically change the economy, or it's over.
Joan, a fundamental tenet of MMT is that money is a social construct and the economy that matters is the real economy and the flow and distribution of real resources. That is repeated time and again in the MMT literature.
So...money is like points, only LESS real? Nobody has to actually DO anything except mark it on a ledger. Money isn't real...just all smoke and mirrors and juggling columns. Great.
AP should not be behind a pay wall. Their message is too important to be for profit. Cenk the great capitalist knows that and uses it as leverage for memberships.
This analogy about the basketball scorekeeper reveals the ridiculousness about this. No ones question is “can the fed inflate money to infinity?” No shit they can just keep adding numbers
Disappointing that universal basic income was not covered. Also, while I agree with Modern Monetary Theory and Dr Kelton's arguments, I felt that her explanations in the video would be difficult to follow for someone without a background in economics or finance. Notice how Jimmy and co. couldn't understand why deficits don't matter for the US. Dr Kelton needed to explain how money is created and how it flows through the economy. The key point is that banks create money when loans are made. While the Treasury and Federal Reserve can create money, it is ordinary banks that create most money. Ordinary banks have too much power in my opinion. Further, she also needed to explain that the US Dollar is the global reserve currency and it is this fact - and this fact alone - that make deficits irrelevant for the US. Deficits matter for countries that depend on international trade for a substantial portion of goods consumed - which is pretty much every country these days. But as a lot of international trade (particularly crude oil) is settled in US dollars, the US has an advantage over the rest of the world. In effect, the US can export its inflation to the rest of the world. All that Quantitative Easing (a fancy name for printing money) and no inflation. There has been no significant inflation in the US since the oil price shocks of the late 1970s.
Industrialized countries can run deficits because they have power over other countries. The US can do this to the greatest extent as it has the most power. Further, there is an international basket of currencies that form the global reserve (see IMF's XDR that includes US$, Euro, Chinese Yuan, British Pound and Japanese Yen). So Japan can run deficits to a greater extent than most countries. With all that being said, Japan HAS had the sky fall. Its economy has been stagnant since the mid-1990s. Successive Japanese Governments have tried to implement reforms with minimal success. An unfortunate example at present is Venezuela: The Government is spending and printing money with reckless abandon. Inflation is out of control. This should not be happening because they have massive oil reserves. However, Venezuela has minimal power on the world stage and so has to be careful how it spends its tax or printed dollars.
+Damian It ain't that simple. Sovereignty is a limited power for most countries. Developing countries have sovereignty over their own currencies but are forced to repay loans in US dollars. Credit rating agencies have significant power over governments. + Vineeth Compare M0 to M3. The amount of hard currency in circulation is a tiny fraction of money. In the digital age, hard currency is less influential. Most transactions require no hard currency to be settled. The rise of the electronic transfer of funds has shifted power away from Governments/Reserve Banks to ordinary banks.
Neil, you seem to be conversant in Economics, if deficits don't matter, why the Republicans want to cut social programs since there is no empirical evidence that tax cuts reduce the deficit and how long do central banks play their game before the calamity, everything comes to an end eventually.
Argentina? They have their own currency. Why couldn't they print currency at will? Venezuela has it's own currency. So? I am trying to be a better person and not make personal attacks.
Stan Mann Venezuela has its own currency Argentina has its own currency but they both had their currencies pegged to the dollar so they were borrowing in a foreign currency
The question was about the basis of money and wealth. What supports it. Is it connected to anything. She keeps explaining the same thing, Congress spends because they are the government and the Treasury cashes the check. Yeah, we know. We also know that the government is the source of money. But the real question here is whether there is a money standard and how does that money standard work. C'mon teach, stop with the prepackaged explanation and listen to the questions.
Private banks don't create money. Only congress does by authoring spending. Article 1 sect 8 The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; To borrow money on the credit of the United States; To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States; To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States
