Modern Monetary Theory Explained - Is MMT Right or Wrong? 

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One of the first inklings I had about what I eventually learned was called MMT was the realization that a great many activities which can be easily classified as productive and profitable to society aren't getting done, while readily available resources aren't being employed. This means that availability of money is an artificial constraint on wealth production. This condition exists even at times of supposedly low unemployment, because a very significant portion of the literally unemployed aren't counted among those available for employment. This too is a false constraint. It is nakedly irrational to contend that greater wealth can be achieved by intentionally keeping resources idle than by employing them productively. Reduced wealth results when resources are misallocated to activities which are unproductive or consumptive. This can happen when too much money accumulates in the hands of those who don't need it, and aren't inclined to produce anything new of real value with it.

Worth a revisit, Ramin, after violent QE during ‘Covid’ has caused massive inflation.

At 8:44 you show the equation Debt plus interest plus spending minus income. Why is there interest on your own money. If I print my own money, who do I pay the interest to?

I thought MMT also involved government-created basic jobs so that in an economic down-turn people would go from working in the private sector to working in these government jobs (picking up trash, removing graffiti, building public works, etc.).

MMT is the reason why this economic crisis has created a wider wealth gap and every other crisis will continue to.

Another excellent video Ramin. The balance sheet of CBs have been increasing since 2008 along with countries debts. I haven't seen any debt reduction. Besides that is there any study on bubbles creation from MMT? Real estate is a classic, but about now when fixed income is so low and the slack from real economy to stock market is abysmal.

So now we should be massively raising taxes to sort out the economy during a cost of living crisis - maybe time to up fuel duty? MMT is very popular in periods of low inflation…

So basically, for every dollar created, 10 cents go to the people. If 90% is taxed, then why can't the fed raise the interest rate? Will the dollar eventually go to zero?

I'm far from convinced about MMT+QE, but appreciate the effort to present the arguements PC - I strongly suspect that there may be plausible theoretical arguements, that simply breakdown in practice especially because those government players printing/spending simply aren't paying any attention to the rules of these theories - But that's okay - These same players can just continue their forever-wars against their creditors, then default on the debt owed. God Bless the Global Economy 🕊🐖🕊

Sorry had to comment again as some of this stuff really does need to be challenged. At 9:16 the slide quotes James Galbraith as saying "The prudent policy conclusion is: keep the projected interest rate down" [in order to keep real growth higher than the increase debt service cost]. However this is economically illiterate. The real interest rate is itself a function of projected future growth. Real Interest Rate(Natural Rate of Time Preference, Future Economic Prosperity) In a high growth economy the real interest rate is axiomatically high - and the converse is also true. Yes the rate can be somewhat manipulated in the short run but only by more money printing. More and more QE and bond purchases would be needed to peg the long-term yields especially when inflation eventually starts to pick up and the yield start to rise. At some point the central bank becomes the only buyer in town and runs out of bonds to buy without the government issuing yet more debt. Then they move on to equities and eventually buy all those up. Then we have all the means of production owned by the state/central bank. This is called communism. Is this what you want? Maybe it is? But otherwise it's a completely circular argument.

JFK's conversation doesn't make any sense. We were still on the Gold Standard. MMT only makes sense if you a completely independent fiat currency.

History shows that most empires collapsed with increasing debt and effort to inflate out of it. Inflationary monetary policy has caused all empires to collapse. Now, because of immense technological advancements in information by internet, cellular phone, etc all of which are strong deflation force, inflation has not occurred with easy money policies.

11:29 The graph measures inflation with the CPI. I'm not sure if this is the right approach to measuring inflation in this case. There has been inflation, it has just gone to capital goods like stocks, which aren't included in the CPI. For example, the S&P500 has risen over 200% in the past 10 years. I don't think the price of Coca-Cola has doubled during the same period. At the same time, real wages haven't grown much.

Modern Monetary Theory: Free lunches for everyone!

At one one point, time will come when technological deflationary force will be less than massive monetary inflationary force.

Everything is braking. NAIRU is broken as is our 'labor participation rates. We have the most "Open Jobs in US history" of 10.3m jobs, with 8.7m unemployed. People are not going back to work after getting Stimulus Checks (MMT like), their staying in bed. The population is aging (98m Baby Boomers), so assume consumption will decline over time, house supply will greatly increase (80% BBs own homes), immigration has slowed, bubbles have inflated on all assets due to MMT like Fed over spending on non-productive investments. Today, politicians, on both sides are not worried about deficit spending, both are spending Trillions and they want to "increase inflation" to reduce the "Value of the $28 Trillion in national debts". Inflation is caused by 'money velocity' and we are at all time lows. Inflation has been caused by "Supply Disruption", which is worsening and may evolve into Stagflation soon. Since the Fed is already at zero interest rates, the only way out of this mess is to tax everyone with higher inflation. It's also easier than getting politician to approve tax hikes on the "Rich". Believe in what is real, MMT is as real as the 10000 new industrialized Bernie Madoff Ponzi Scams now being called Cryptos which show me NO Value, utility, productivity, or future.

A fiat currency is only valuable so long as those people consuming it believe in the issuer. Government debt can only grow so long as their are creditors. MMT will fail when one of these sentiments reverse course. Furthermore, Japan, as of 2022 is facing currency collapse. MMT is not the answer.

Oh Ramin, no, seriously? So much outstanding content on your channel, it's sad to see you hawk this insane theory. I urge people to watch George Gammon's video on mmt to see it placed in the full context of the real economy rather than a few narrow points on monetary policy and nods to causation, where it might appear momentarily to work in theory.

A most educational video thank you, ime in my 40's now & up till this last few years have not invested in my future, ime now pouring everything i get into hard assets such as vaulted gold & silver because it looks like i might actually live long enough to see pension age, your video's are most informative & enjoyable & pleasantly presented. Keep up the good work

Brilliant, thanks very much for putting this togther. I think MMT is misunderstood, it isnt a policy , its a description of govt and central banking mechanics. It explains what happens when a govt spends and taxes. The only policy is a job guarantee which is a buffer stock of employed people as opposed a buffer stock of unemployed people, which helps with price stability is a better automatic stabiliser and also is just generally a better policy !

One major hole in the argumentation about inflation is that it is viewed only in terms of the CPI. Money printing using QE did in fact cause a lot of inflation, but only in assets (stocks, real estate etc.). This is because that huge amount of liquidity technically couldn't go to other places much the way QE was used during the first rounds after 2008. In other words, all that money simply didn't get into the real economy boosting demand and salaries. This is why we have unaffordable housing, for example, and I think it might cause big problems down the road.

MMT solves nothing, just ask japan or Europe who have been trying to inflate their way to growth with more debt. Now an increasing amount of tax payers money is being used to finance the debt without anything to show for it. You can print money, you can’t print growth.

One problem for those who seek to manage the economy and maintain a steady but low rate of inflation is that not enough attention is paid to the nation's land markets. For not very convincing reasons, neoclassical economics has simply removed land as a distinct factor of production, despite the fact that land (i.e., nature) has a zero cost of production in terms of labor and capital. Every parcel or tract of land of whatever potential use has some annual rental value based on actual and perceived locational advantages. This rental value Henry George and many others have argued rightfully belongs to the community, to society. If the full renal value of locations was captured by government to pay for needed and desired public goods and services, there would be no actual or imputed income stream to be capitalized into a selling price for locations (or for other natural assets, such as frequencies on the radio and television broadcasting spectrum). Under current conditions, however, rents are significantly privatized. Speculation in nature can is often is quite profitable because of the under-taxation of nature. Land speculation is a major cause of inflation, a cause largely ignored by those who calculate inflation and the CPI.

MMT is effectively currency debasement and a justification for deficit financing and ballooning government debt, which results in a fragile financial system vunerable to collapse due to unaffordable indebtness. MMT theory seems thin on how to combat inflation. In the 1970s we had inflation spike to 20% and income tax levels were already 89%; yet "increasing taxes" is their answer at 18:00 ! Hard to grasp.

Zimbabwe and Venezuela need some mmt then. Lots left off the table with this theory.

I’m still not convinced

11:10 "Now after the [2008] financial crisis, central bank balance sheets grew imensely. Both in Europe, and in the US... Now the narrative that I remember in 2011 was that everybody was talking about the amount of money printing being done by the central bank - the FED - and also by the ECB. And the accepted wisdom was that this would be hugely inflationary. And although inflation did go above 2% - both in Europe and in the US - it certainly didn't stay there. In fact what characterises the decade after the financial crisis is that inflation was actually below target, and central banks were strugging to get inflation back up to that 2%, despite massive bond buying programs all over the world. So it turned out that this narrative that was almost certain that we were going to get hyperinflation was completely false." Not at all. Only the things that the new money is spent on will go up in price (inflation). And since the FED put the money into the stock market, the stock market went up in price. Hence why it is at all time highs despite the fact that we are now in the deepest recession since the great depression.

Really interesting, I wish i had a lot more knowledge of economics than i do, everything in this video makes sense but my gut tells me it seems to good to be true, but i dont have enough knowledge of the subject to substantiate my gut feeling

I'm thinking that UK (now Ex) PM Liz Truss was a believer in MMT... She's now the shortest serving UK PM to leave office alive... After immediately going for huge additional borrowing (on top of the current £2.5 Trillion national debt)... an unknown (by her at least) flaw in the govt debt structure meant she very nearly collapsed the pensions industry... and had to leave... taking with her the epithet "Brains"... The Bank of England now needs to raise interest rates because their economic forecasting model "isn't working"... and housing market crash looms... Seems to me... that MMT says: Borrow to invest, so debt grows, import cheap labour, give tax incentives to investors (and loopholes to take cash out by incurring debt)... so reinvestment, and new investment, and more govt borrowing is done... but that's OK because gdp grows... so (debt/gdp) is balanced... and it's a virtuous economic circle... But... what if gdp falters?... Maybe cheap imported labour leaves, because cost of renting is now sky high?... Maybe climate change means there's a water shortage, so people leave?... Maybe there's an energy crisis, so businesses close? Then... National debt remains... as (debt/gdp) rises higher and higher... The USA recently faced defaulting on national debt... and the solution was... raise the debt ceiling... Anybody see a looming problem??? MMT is definitely a Cunning Plan... like Ponzi Schemes...

I wonder if the way MMT is utilized in US is responsible for equities going ballistic in last 6 months. Take finest company Apple. How do you justify its 2t MCap. It got 2x in less than 2 year! Also, why is asset inflation not counted as a part of regular CPI inflation is beyond my understanding. You bet there is inflation. Just that it is in asset class and not yet getting reflected in normal day to day products ‘YET’. :)

These videos on marco are just fantastic - I'm taking MMT much more seriously having seen this one. Thanks so much!

​@Sundar Sarangan MMT is a terrible economic theory. It says countries should print money to pay for things they can't afford, and then when inflation rises, it says, "Oh wait, nvm spend less." No shit 😑

Its a massive gamble with extreme risk though, lets just assume we try MMT and do massive spending, but we discover MMT is wrong( no one has proved it can work so its hightly possible ) ,we now have massive debt many rimes higher than we have ever had before that will destroy future generations and the entire country .

So fast forward two years and the monetary stimulus has happened. Unemployment went to decade lows. Inflation run rampant. Demand pull inflation is happening. Supply shock inflation is also happening. And the MMT policy of jacking taxes to control inflation would break every Govt in the world. Let’s raise taxes when people cannot afford their heating bills. So we revert to Keynesian monetary policy to wield the megladon called public debt. Quantitative tightening fully involved. Rate rises without foreseeable heights. MMT is ridiculous because no mathematical formula can predict when the inflation and employment reach a cliff and we all retreat to our mud and wattle houses to eat grass! There are no jobs or services remaining in this end times scenario. That’s the ultimate end journey of MMT.

Proponents of MMT are debt deniers. They want to call debt an asset but only want to do that in respect of the Federal government and nobody else. Not even the state governments. Their belief is that somehow Federal governments debts never have to be paid back when the reality is the bonds that were created to fund them mature and are paid back on maturity which is process that happens every month of every year when bonds sold some years ago mature. They also claim that money collected from taxes is destroyed but the Federal budget surplus or deficit is calculated by comparing tax receipts with government spending but they can't explain how the Federal budgets have ever been in surplus if that is the case if taxes are not funding government spending. They are even in conflict with the central banks around the world whose explanations of how new money is created conflicts with their own explanation. Their theory is based on wishful thinking and when the errors in their assumptions and huge the conflicts and contradictions within their own theory are pointed out they run away and hide.

All looks good on paper- but if MMT is so great why do we have the so called “everything bubble”? Real estate is so expensive young people often fall short on getting a mortgage as they can’t even save for the down payment. Stocks on all time highs, crypto currencies are booming even cars are getting to expensive to buy without a loan... Truth is simple and painful. Constant printing of money makes currencies loose their value on record pace yet salaries are still relatively the same as 2-3 years ago. Thats the real effect of MMT. The public is getting screwed but hey, at least thanx to low interest rates governments can print (borrow) more and still technically not go bankrupt... ohhh joy. Saving money has no sense today (thanx to low interest rates) so people are force to either spend money on stuff they don’t need or invest in risky assets. But hey let’s all be grateful that we have MMT so the governments will not need to worry on how they will pay off their debts. Was expecting a bit more from you sir.

MMT was invented by the spoiled Boomers. Is anyone surprised?

MMT sounds like an idea that could work in a closed system… but how does the idea work in a reality of global trade?

MMT a fools errand. Excess government spending leads to money creation, which which leads to dilution of currency, and that leads to inflation. We’ve just had a recent spell of that. Other countries in South America have much higher inflation, exceeding 100% a year. Our socialist politicians are eager to go that route. Sure, if productivity is high, you can float debt a while, but if money creation continues too long, inflation will overpower that productivity. In other words more money is bidding for those goods and services, which leads to high inflation.

Most importantly, all fiat currencies are based on trust.. MMT will work until the big crash, but cannot outgrow deteriorating trust that will lead to it's demise. Once enough people think debt is unsustainable, see stockmarkets disconnected from real economies & 20% permanent unemployment, people lose trust in the system & withdraw money to purchase secure hard assets, gold, silver, real estate. The financial system has completely crashed roughly every 80-90 years, the average length of the long cycle, and a new financial system or reserve currency has always been created. Great video, but MMT is no different.

MMT exposes the monetary banking system as absurd and insane. That’s the entire point. Deficits are good while budget surpluses and spending cuts are bad. Governments suppose to fund the people. Not the other way around. Balanced budget amendments is just another cruel form of neoliberal fiscal austerity on the poor. Deficits and debts are good because it means the government is spending money on its people. Taxes are just used to pay off the perpetual debt topped with compound accrued interest, boost the currency, and control inflation when new money is being printed out. The more debt there is. The more money there is. Which keeps the economy from collapsing

MMT creates a system where we are indirectly taxed through inflation rather then being taxed for specific spending. This is in effect taxation without representation. It is easier for politicians to spend a trillion on arms to Ukraine with MMT than having to actually raise taxes to pay for arms to Ukraine. MMT sets up a system that incentivizes money creation without also producing underlying supplies and assets to meet the amount of currency in circulation. Politically and behaviorally it is unsustainable and will lead to inflation and social unrest.

A most excellent tutorial. Seems very accurate to me. My concerns about the Uncoventional measures taken by leading central banks are - 1) BoE has admitted to distributional impacts of QE most of the benefits of it have gone to the already rich. 2) Are we measuring inflation properly? 3) Why do we partially or completely disregard asset price inflation e.g. cost of houses, bonds etc? 4) Ultra-low interest rates distort markets and will cause widespread havoc if they ever revert to norm. The long-term consequences of ever more personal debt increases risk to debtor if their income folds in the future. The risk long-term that people are "willingly" taking on is scary. 5) What if ALL expanding Central Bank balance sheets prove wrong in the long term? What if all their unconventional measures prove misguided ? 6) The illusion of money being scarce, even if it isn't, can be a positive. Otherwise people might ask the question why do I work so hard for silly bits of paper or numbers on a computer? 7) What if foreigners no longer wish to hold your national currency or your Sovereign debt ? 8) MMT & QE look like great short term fixes despite the downsides but what of their unproven long term consequences ?

Broadly a pretty good video, thank you! 🙏 2 major hints from my side: (1) the QE program was/is not able to directly influence conventional inflation, since no orivate persons really got money from it to spend. But i did cause "inflation" in real estate and stock markets. (2) You might have more pronouced that that inflation-free spending, according to MMT is not limited by issued money as such but by the available ressources such as still available materials and menpower, including machines and the industrial capcities. At least, as long as targets of government spendings are not too much in concurrence for the same ressources as the pr8vate sextor seeks out.

MMT assumes a spherical chicken of a government that is nimble with taxes and properly spends money, it doesn't survive a single parliamentary session.

An interview Stephanie Kelton, author of the Deficit Myth 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.

12:06 "People said the money-printing during the financial crisis would cause inflation, and it turns out the narrative was completely false." Exactly *who* got that newly printed money? Was it poor people who spend most of their income on CPI goods? No, it went to wealthy people who spend a tiny fraction of income on those goods, and plow a far higher fraction into stocks, real estate, and other assets. The printing not only caused an *asset bubble*, it also artificially increased wealth inequality. MMT is great for moneyed elites and disastrous for everyone else.

There is so much wrong with MMT that I don't know where to begin. Perhaps here @17:58 1/ "When unemployment is higher, the government cuts taxes or spends more" The opposite is then held to be... 2/ "When inflation rises then raise taxes and/or spend less" In 2/ when inflation rises so much that is a problem then who is suffering? Not the rich: paying $1 or $2 for a loaf of bread is hardly noticeable, it's the poor. Using MMT logic we have to raise working class taxes (remember those are the ones you cut taxes for in 1/) and spend less which again hits the working class much harder than the elites. This is not new, in Germany just after WWI the rest of Europe tried to sort out the economy the 'normal' way but not Germany. They followed MMT although they didn't have a name for it and everything went great. They thought that they had discovered a new economics and Germany prospered as other countries looked on jealously as they slogged away in austerity. It all went great, until it didn't. MMT has been (re-)discovered before every hyperinflation event in modern history.

If inflation runs hot under MMT and governments have to raise taxes and cut spending (i.e. put people in the public sector out of work) that’s not going to make them very popular. It therefore seems likely that they would not take sufficiently strong action for fear of being voted out, and sooner or later inflation would get out of hand, no?

This was the top video when searching "mmt explained", thought that would be useful as your channel is doing something right

I would really caution people to put their money in the hands of charlatans...

to me, MMT is like the Ideal Gas Law in Physics. it may correctly describe how spherical chicken in vacuum may behave, but if you ever try running a chicken farm based solely on this theoretical construct..... good luck

Mark Hatt 1 second ago Thanks for your video on MMT. Mainly a good overview of the concept. It is however way to symplistic and the obligatory "straw man" objection posed to challenge MMT raises a question as to your serious engagment in the subject. This forum will not allow me to go into any deep analysis however I will add 2 most important takeways when it comes to MMT. MMT is a theory and I admit does look good on paper, however has some fundamental fatal flaws when it comes to the real world. First of all it assumes that the labour force is efficient, which of coarse it is not for a myriad of reasons. It does admit that they're "damaged goods" (the unemployed) but idealistically assumes that if you give them money or a job they will be productive and add efficiency to the labour force hence creating a better "more just" economy. The 20th century is littered with the failures of central planning to gain full employment. It also does no account at all for how human beings act, interact and what motivates or disincntives the majority of people. Secondly, It assummes that Government is efficient. That somehow policy makers and it's institutions can make the economy more efficiemt through their monitary and fiscal interventions. This we know ends in disaster, history proves it, and why?? Because government is made up of people who by their very role in government will be inneficient at best, corrupt and self serving on the main, or at worst, controlling, expoitive and totalatarian. So any theory, economic or otherwise, that does not account for the innate weakness in humanity, or at the very least does not account for its defficiencies, will be a failed theory and time will prove it so.

These people are insane

Asking if MMT is right or wrong is like asking if Chess is right or wrong. It's a made up system with made up rules we have all agreed to play by.

Nice review. You actually explained some aspect of the book better than the actual book (09:00). :D Anyway, I some times wonder if we in the future will view unemployment was a huge waste (fiscal policy to manage inflation) and instead of having people fired. They would from the get go have an A occupation and a B occupation. The A being the private sector one just like now, but instead of getting fired via downsizing. These folks would just swap over to their B occupation that they were also trained for at public mandatory school, but that was a governmental role. Ideally one could argue that one would utilized 100% of the workforce all the time and during times of recession people would get all their governmental queue removed because a slump in demand would mean more governmental workers when lines of productions were slowed down. Sure booking numbers in the debt might increase in those times, but if it just an accounting thing. Who cares if the debt is 5 or 10 if it is stable and long term the business cycle going up will in turn reduce the deficit.

True, governments can't go bankrupt, but that doesn't mean economies can't collapse. Everyone wants to talk about economies that print their own currencies that haven't collapsed but ignore all the ones that already have, I.e., Zimbabwe.

This all sounds wonderful and reassuring. But the problem's with MMT (and all other monetary theories) is they just cannot or do not account for countless feedback loops that can blow up everything fast.

Thank you for the video, I have read Stephanie’s book to and the one word I am left with is responsibility. I would struggle to see politicians being responsible when so many other human motivations are at play

The reason why inflation didn't go through the roof due to quantitative easing was that this money didn't get out to the public. MMT would basically result in anyone with savings being penalized as the value of those savings would go down, it's a wealth redistribution scheme at heart and Jo public would be the victim. Non of the ideas within MMT are new and most have been debunked. Have a look for the youtube video labeled Debunking Modern Monetary Theory (MMT) by Academic Agent short and to the point.

How do you compare or measure the impact of a dollar spent today on the economy, considering different levels of economic slack, both historically and projected into the future? The challenge lies in assessing the quality of the debt and understanding how much of the deficit will be recycled in the economy to generate additional useful products and services. Three different scenarios During the Trump administration, taxes on corporations were reduced through the Tax Cuts and Jobs Act, resulting in an increase in the national debt from $19 trillion to $27 trillion. This move had a limited effect on the overall economy but significantly boosted Wall Street. In contrast, COVID-related spending not only helped the economy weather the storm, preventing a significant GDP decline, but also preserved the capacity to produce. Biden's current spending initiatives are more targeted towards long-term structural improvements that aim to enhance overall productivity and the international competitive position of the United States. The question arises: is the economic impact of military spending equivalent to that of healthcare spending? In our democratic system, politicians often prioritize short-term results, given the potential for opposing decisions in subsequent administrations. This was evident in the transitions from Obama to Trump. Trump claimed credit for economic growth at the beginning of his term, while, in reality, the economy was responding to the spending decisions made during Obama's tenure. The economic effects can extend over a four-year period or more. During periods of low interest rates, corporations have significantly increased their debts. However, rather than channeling these funds into expanding production capacity, productivity, or innovation, many corporations have opted to boost their share values by buying back shares. This strategy poses a risk in the event of inflation, as it may limit the ability of central banks to raise interest rates without triggering financial challenges for these corporations. In the case of inflation, Modern Monetary Theory (MMT) suggests raising taxes or reducing spending, but these measures are often politically unacceptable. Global protests erupted when oil prices surged due to the Russia-Ukraine war, resulting in increased bills for consumers. In response, the political reaction was to allocate more funds to help people cope with the rising costs. While this was a short-term spike, it underscores the challenges of implementing corrective fiscal measures during times of inflation."

Watched this great explanation, end of 2023. Everything said here was already proved to be true in a period of just three years. Over printing, QE and QT to move from stable economic projections to highest inflation in 30 years and then back again to 2%.

I was hoping for more objections but was disappointed. Missed the part about Say's Law, where does the money from inflation come from (Cantellon effects) and that you cannot use fiscal policy/the free market to solve a political problem. Hyperinflation, here we come.

What about the velocity of money? Wouldn't that decrease if the debt to gdp ratio gets to high, and slow down growth? Also, wouldn't unhindered money printing cause people to loose confidence in the currency?

surprise, after the world printed tons of money, nearly every country has inflation never seen before. Well done

(Background music and singing ) " Everything is beautiful in a beautiful world ! " or are they singing the "Internationale" ? Problem # 1 : With digital dollars If the government controls the money then they also control you. Problem # 2 We actually owe a tremendous amount of money to foreign countries who have bought our treasury bonds. Are they going to accept our digital dollars in payment ? Problem # 3 If the government nationalizes all the companys then do they also decide who gets paid what ? My girlfriend seems to think that carpenters should get the same as doctors. I tried to explain that doctors have to study 8 years in medical school and has little time for fun nights and weekends while a carpenter doesn't have to go through the same amount of hard study. Reading the responses it seems most of the people don't think beyond the beautiful world they imagine.

With regard to increasing government debt and inflation - the pandemic shone a much more obvious spotlight (than QE - which was all rather hidden from the public). During the pandemic many countries massively increased their public debt with major spending plans to support the public - and in all stable economies that had no impact on the inflations rates. What did raise inflation was the war that resulted in a supply side problem (oil/wheat/cooking oil) resulting in inflation pressure on fuel (including electricity/gas/petrol) and food.

Not convinced at all. Cute analogies in 21 mins of theory will never be capable of explaining something extremely complex as economics. It would be great if this were our reality, but 2023 it’s about to finish and here we are

If the government runs a surplus and invests that surplus into the economy then it’s like having the extra liquidity of a deficit but without the interest payment.

If i have Koolade, and you inflate it 50% with water, drinking it faster inst going to make it taste any better

You won't like this comment, but in science we consider to the Nobel prize in economics is considered only "half a noble prize" as economics was never based on the "scientific method" : the process of using evidence from facts to determine correlation and causation. (there are many definitions - but that will do). Much of economics is based on dogma, and much teaching of economics is based on dogmatic definitions of economics. I am very happy that you actually show data/graphs and correlations and attempt to see causation - a proper analysis of economic analysis. Thank you for your video on this subject.

you are a smart cookie, aren't you

Depressions are natural after austerity. But depressions are not bad, either. Depressions and recessions constitute reallocation of capital away from risky, low profit ventures and to higher quality processes with greater ROI. It is an error to look at recessions and depressions and view them as a problem. They are the forest fire burning dead and dry plant matter to make room for healthy plants to grow. MMT has some correct analysis, but it has some very, very poor economics in it as well. Pretty much all of the policy prescriptions of people who believe MMT justifies their political positions are very bad.

What about the need for government's to purchase goods and services from other countries and the effects on their exchange rate by MMT,excluding the USA with reserve currency status.

MMT is wrong when sustaining its theory in the depressions that came right after expenditure cuts- its very logical this happens every time a society is used to moving thanks to State fictitious money and of course, everyone will suffer from the withdrawal fo all that sweet money. The thing to watch is the long term movie, how did those countries perform years after keping fiscal discipline? You gotta see the movie and not the picture...

Clearly Liz Truss and quasi Quarteng are out of date with their economic theories. Stuck in the 80’s with Thatcher, who was stuck in the 30’s with Hayek. So 90 years out of date.

19:35, this is a common mischaracterization of MMT - one that honestly never applied, in reality. MMT has never stated that deficits should be ignored. MMT argues that deficits can be too small, or too big. It states that if you want to avoid inflation, you must only spend into an economy that which can be "absorbed" by its markets. It recognizes the importance of the ratio between currency and real resources - where the real value lies.

And it's not a pie in the sky cure all in every situation. But the situation we are in now, low growth, low utilization (aka "the Rust Belt": Detroit, Cleveland, Rochester, Buffalo, Toledo, Akron ), underemployment, excess skilled workers (look how many 4 year degree people there are w/o 'real' jobs) plenty of surplus (food toxic environment, housing going to waste, farmers paid not to farm, grain prices below the cost of production,) MMT is on the mark.

What you are really saying is keep it within the bounds of the tolerances within truer economic models, and you'll never have to admit that you are wrong. You describe exactly what other models warn will happen ie inflation, not as evidence of mmt failure, but as something to dodge. Within tolerances you will, but you've proven nothing except that the reconning did come.

Just because government CAN do something does not mean that it SHOULD do something. Maybe if this were a one-off thing like WW2 and covid, but its not. QE has been a thing since 2008, and I can't see it ever being not a thing. Another problem is, should the FED ever need to increase interest rates, the debt will quickly become unsustainable and eat up the entire budget, and thus require more MMT, and then the inflation skyrockets. Now it has not happened yet, but the US owed SO MUCH LESS in 1981, when it last had to raise rates a lot to stop inflation, that the effect of doing another 1981 could be radically different than just a short double dip recession.

PROBLEM! Everything I have seen on MMT equates Federal Reserve with Government, but it's not. The Fed is privately owned and if that issues money and lends it fi government MMT is flawed. Can anyone answer this?

Fiat currency/ money are promissory notes. IOU’s. Money can only be created out of loans/ debt. With 3% actually existing in physical currency. While the other 97% exists digitally.

Barter Monetary Sistem, even slow in exchanging, but comparing with any another follwing monetary system (not only Fiat Money after 1971, but even Gold System) is the only sustainable one, besides being a minimalizer and environmentally undamaging including as a perfect global pupulation size/growth controller (1800 world pupulation was less than 1 billion while today 7,8 billions after just 220 years of capitalism age ). The reason, is that Barter System is the only one where the Real Value and Exchange Value are unseparable. Besides, it is very limited for value deposit. Now, as the case is opposite with the other monetary systems, here the continue retirement of money (notes and/or gold) for saving implies, not only continued shortage of circulated money and continued need for new emission of money, and all its corresponding problems/crisis, including the continued acumulation of wealth and powers in few hands, "multi-millio/billion-ism".

Very helpful tutorial and much appreciated. Curious how MMT relates to consumerism? Specifically, if the US govt were to go to a MMP, would this drive us to consume more, and how would that impact our levels of pollution, resource consumption, habitat destruction, etc?

You are rightly careful when you present Thayer's results concerning periods of debt reduction and depressions in the table at 7:11 minute mark - correlation is not causation. However, is it a coincidence that a lot of the depressions occur in the last year of deficit reduction? It makes sense that the onset of depressions induce governments to stop reducing debt and drawn on it more to support more aggregate demand and turn things around. So, if that is what we are seeing then the results in the table don't support the MMT argument at all.

Ramin, you mentioned the one of the ways to control inflationary tendencies within an economy, especially that of the sovereign wealth using MMT was to increase taxes isn’t that what is stealthily going on at the moment is the government using an MMT strategy but not telling anybody

4:32 "...many countries...CAN issue their own currency." But they don't. In the USA, ALL money is created when banks issue loans. Government gets all money from taxation and borrowing. Money creations WAS a public monopoly, but it has been given away to banks and is now a PRIVATE oligopoly. Banks create all money as debt, and they charge endless interest for every penny that circulates. This is still fiat money because the government requires us to use bank-created money for paying taxes AND settling contracts (legal tender laws). Therefore Mosler and MMT are wrong.

At 5:20 Ben Bernanke is quoted, "So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed." Then it is stated by the person narrating this video "that the money is literally created out of bits and bytes." The money created by this method is obviously not metal coinage or paper bills. Imagine that computers didn't exist, but the same exact process happened, except that instead of the account balance being stored on a computer, it was recorded on a paper accounting ledger. In either case, the money being created is essentially just a record on an accounting ledger. The computer is simply a way to record and save the record of the transaction, just like a physical piece of paper would be used. The real foundation of the money creation isn't the tool of either the computer or the paper ledger being used, it's that an amount in an account is being recorded that can be verified. So, it's memory storage and the capability to retrieve that information when needed. The computer records the accounting transaction in a certain way without using paper storage. It could be stated that money is literally created by an accountant writing a number on a piece of paper with a pen. And before computers, that's probably how it was done. The point is, that unless a monetary system has 100% percent backing by some type of material asset, then there has been and always will be SOME AMOUNT money in the system that is nothing more than a number on an accounting ledger at a government monetary agency or at a bank. Is that good, bad or indifferent?

RAMIN , Hi, your proposition at 20.30 is that say the gov issues bonds , ie borrows money, say $5, then orders the central bank to buy them back using printed money , ie , gives the money, $5, back using printed money , $5, so +5--5=0 with +5 left over ., the $5 would be inflationary . but I dont think it is the same as QE because the central bank did not buy back the bonds using printed money , and speaking from (a bad ) memory Bernanke specifically said the monetary base would not increase with QE . I am only a layman trying to get my head around the basics , but it cant be far off the mark because to date there has simply been no inflation , other than stocks/shares which has been caused by inflows of money from outside the country .

MMT sounds good, but it has always resorted in the abuse of one's currency. At which the currency devalues, its not Modern its been tried time and again. We are already seeing it happen, as money is printed or digitized with out massive taxation which forces the people to value that currency, we have devalued currency. 1+1=2 not 1

Lol...they missed to calculate crypto and the metaverse= negotiating power by some workers, but AI should offset that ...what a mess.

MMT is an idiotic concept not worthy of being taken seriously (allowing government misallocation of scarce resources slowly killing the productive economy). When I see videos like this giving it a veneer of credibility & the way the government is already behaving MMT is well on its way & it won’t end well.

"How would you be able to pay for it: MMT"...oh wait... that should spell "B.S."

Could it be that "they" do know all this but that to say so would bring down the whole shebang? In other words, It All relies on a central falsity. The Wizard of Oz is just an old man on a broken bike behind the curtain. The emperor has no clothes. The Matrix is an illusion.

Dollar will be further devalued. Time will come when usd loses it reserve currency status. All assists based in usd will be devalued. See the history of the world empire. British, dutch, Spanish, Roman, etc

I think the only reason why inflation wasn’t there is because other countries are also printing money. Imagine only US printing lots of money, then massive amount of US dollars causes the depreciation of US dollar. And imported goods and services will be the inflationary force. Any ideas?

Whenever economists say 'this time it will be different' you should be very worried. The governments of the world are pumping money into the economy and keeping the stock market artificially high, but that doesn't make the value of the economy higher in any real sense as we aren't producing anything extra. We are building in the conditions for inflation which a) we are already experiencing as the CPI is a con-game more than a real reflection of inflation, and b) is only going to skyrocket once the government has to buy back some of their worthless bonds with even more cheaply printed money. There has never been a free lunch in economic history and unfortunately this time will be no different (though I applaud the quality of your video for its clarity, even though the theory it describes is soon to be proven very badly wrong).

Why is MMT's chosen says to fight inflation involve raising taxes and decreased spending? It seems inflation is caused only when supply of goods is excited by demand. Why would MMT not try and identify those industries keeping up with supply and trying to fix that? For example in the auto industry inflation is out of control. The car companies failed to order needed microchips while other companies put in huge orders. There is nearly no supply of new cars. This has not been systemic yet as many people are getting a lot for their trade-in. in the end. But Biden did give Intel 48 Billion to build chips in the US so it does seem like this is a tool.

The illustration of the situation of deficits producing a surplus for the private sector is BLATANTLY FALSE and grossly misleading and results from very poor thinking. It relies on omission of facts to put across this false narrative. It is like claiming someone has increased their overall wealth when they borrow money which is itself false because their debt also increases by the amount they borrow or more. That is so because deficits are funded by bond sales initially and those bonds mature and the private (non government) sector forced to pay back the maturing bonds through their taxes. It is always a gross distortion of financial concepts to say or act like governments are exempt from the laws of financial responsibility. Anyone who claims different is financially challenged or frightfully ignorant of the facts. That legal power to create more money does not give the federal government any exclusive ability to flout the perennial economic concepts that deal with debt so creation of more money without restraint of balancing the budget will dire consequences of increased overall debt for the economy which those in the private sector are forced to pay back when the bonds that originally allowed creation of the debt mature. It just forces people to pay the debt off with interest when they mature despite the fact government got the benefit of spending hte money in the first place.