An excellent video. Mosler makes good points around how focussing on reducing the public deficit and the public debt is misguided. as government can spend without such limits, if it really wishes to. The real question to my mind is - what the government then chooses to spend on, and what the government chooses to invest in. What has happened of course is that powerful industry lobbyists has pushed government spending on big corporations, the richest 1% in society, and mal-investment in grandiose schemes and wars.
Historically in the US, we've been under a monetarist "supply-side" regime for half a century. Massive deficits were incurred under GOP presidencies from Reagan onward, followed by periods of austerity (deficit reduction) under DP presidencies. Supply-side deficits are achieved by tax cuts for the rich, direct subsidies to the financial sector, and a general policy of privatization. FDR through JFK, even Eisenhower, they understood the need for federal deficits, and to direct them toward "public purpose". That's all changed since the "Reagan revolution", and wage-productivity has flatlined ever since.
IMO concerns about deficits are not misguided. Inflation has Cantillon effects which punish savers. Savings are a cushion against the unforseen problems of the future. Cantillon effects reward those who spend NOW because they spend before the inflationary effects have eroded purchasing power. This shifts resources from conservative savers into profligate spenders. Why is this a good thing? Someone try to answer this question. Also - Can anyone point to a time when deficit spending was not used in a way that benefitted an already wealthy class of people? Sure some programs had great propaganda, but who got wealthy from them?
@@GenghisVern He 'understood the need' for, well, Hamiltonian programs to cushion industrial cartels with long planning horizons, vulnerable to vagrancy & chronic 'underconsumption.' Their excess output is shattered to pieces, poured into the stratosphere, sinked in the depths of the sea. Yet we're outwitted into believing the opaque bullshit of the state that casts 'corporate welfare' as public-spirited populism, a kind of impetus for positive change. A tumefied national government with a gluttonous appetite for 'public purposes' is a serviceable tool for, ahem, you know who: cronies robbing wealth for institutional parasites, ensconced in seats of power, regularly cozen the public out of billions & 'investing' from the virtual cloth of spending what they routinely don't earn.
@@jamesbuchanan3888 Precisely so. The corporate media brume around the Fed is so thick & opaque that its self-serving functions remain largely shrouded. It all sounds innocuous enough, but it's a veiled tax diluting the money in your wallet, relieving their books of the debt that only an institution financed by brazen theft would buy. Not to mention, it's never for poor, laboring beggars that 'public servants' sought to swell the state. Notwithstanding the tough talk for the hapless wage earners, 'deficit-spending' is a relentless parade of labor-harnessing pretenses that defraud a society of wealth. Although some stand to benefit considerably from the racket, the windfalls of the proposal will never reach the workers identified with such empathy in their eloquent orations. On balance the cronies will reap the windfall of our contemporary patronage.
@@saturngenesis1306 The shift from demand to supply side is what changed back in the 60s. It never trickles down. Austrian economics needs to be confronted. My 3-point fiscal policy is (1) to raise standard deduction to 100k, (2) to replace consumption taxes through federal grants to state/local budgets, and (3) to lift the burden of health insurance, pensions and education from the private sector. This would greatly improve our market economy. Republicans, from Lincoln to Eisenhower, had their problems with corruption in both private and public institutions. However, the private sector has largely produced and distributed the vast majority of goods and services that satisfy our needs and wants in a relatively free market. This is not "socialism". The above recommendation is a demand-side alternative to monetarism.
MMT is the future of macroeconomics. I used to subscribe to neo-classical economics when it came to macro, but now it is so clear to me that this is an outdated way of thinking. I have been a member of a conservative political party since I was 15, so my journey with MMT has definitely been a struggle. What we need to convince people of is that believing in MMT doesn't make you left/right wing, it is simply macroeconomic reality. What makes someone left/right wing is how they think government should use its fiscal power, i.e. its spending decisions. This is essentially where I am with MMT.
Yes, including the word "theory " in it was a mistake, imo, as in its essence, MMT is just an explanation of how a fiat currency gets its value from the tax liability. Only its possible applications are theoretical. And that's what most critics attack, it's possible applications, not the explanation in itself.
Government job guarantee is spot on. It is almost criminal for a government to allow any unemployment, not only criminal but incredibly wasteful. But having a "buffer stock" of labour ready for the private sector to hire is all well and good, until you take into account capitalist enterprises ruthlessly exploit labour. So what Mosler's policy needs to become truly ethical is worker cooperatives, where productivity surplus is shared, not hoarded by the very few wealthy capitalists who are themselves performing no useful work.
Mosler makes so much sense. If governments listen to him we can eliminate Greek, Porto Rico and other national crises and bring hope and livable conditions to working and retired people. It is a pity that governments listen only to orthodox economists that had brought poverty and inequality to this world. Hope someone would tell Mosler to speak bit louder. We can hear the host well but can hardly hear Mosler.
+Andrew Weeraratne You have to be joking. If Mosler's ideas were implemented then government politicians would take no responsibility for any blow outs in spending. Their spending is not the spending people decide. It is purely their response to what they think will get them re elected. That is almost never an accurate reflection of what is needed and what people's choices could be if they had the ability to make choices ona range of things. They only get one choice in a three year period to have a choice by voting for their representative. Not individual choices in arrange of products to suit their needs. Why can't you understand that government's pending is politician's spending and they have no idea what to put the money into that will produce growth. Why can't you see that the MMT idea is that government spends the newly printed money and it competes against money people have to earn by doing useful work . The whole MMT idea is based on ignorant people believing that only government creates wealth by printing money which is clearly absurd and totally irrational since it is useful work that puts value into a currency not a printing press or a computer keyboard stroke in a ledger like they say it is. Ask yourself - Does anything you own or buy or have had result from a person in government putting unmbers into a ledger? Does you food come from a ledger number? Does your car come from it? Does your fuel come from it? Does your footwear or clothing come from it? Does your medical attention come from a currency stroke on a keyboard? What about that bridge you crossed, or that home you live in? No it doesn't. They all come from someone doing useful skilled work. MMT ignores this purely to deceive people. All MMT is about is transferring wealth from people to politicians and having more power for politicians. They even lie about the scenario that government needs to spend money into the economy. It doesn't since it could just give the newly printed money to the taxpayers if it wanted to. But they don't say this because it would transfer power back to the people where it should belong. .
Rob Mews Keynes must have been one of the smartest persons lived on earth and with his ability to empathize with the suffering of working people he came up with a simple commonsense way to eliminate poverty and empower the working people. Unfortunately the rightwing economists who work for the .01% did not allow Keynesian to be implemented. Mosler and his Modern Monitory Theory (MMT) guys have perfected some weaknesses of Keynes. Thus if the governments implemented MMT economic theory we finally may be able to eliminate poverty, at least the poverty among the working population. All you got to do is to listen to their You Tube Videos and read the books they have written to understand this. You cannot hear them on our Corporate Media since the .01% that own the media wish to keep the population confused with slogans. An ignorant population is the only hope they have to keep the scam they are running going on forever. Just because there is enough money to address all our problems the system should not allow the politicians to spend on their pet projects (in fact that is what they are doing under our current system). That is a ridiculous argument. The system has to have control as to how the money is spent. Government has to spend money to create jobs. Mosler suggests that the government employs all unemployed people willing to work for a livable wage until they find suitable employment. That would eliminate most of the welfare and unemployment benefits. Also this working population will create so much demand for goods and services it would have an amazing multiplier effect. The money created by the government should not be handed out (as it is now being done by the FED to the bankers or by the Treasury as corporate welfare) but use it to create employment. In fact FDR used the government to create employment to get us out of the depression the rightwing economists gave us. Our services and goods don’t come from numbers put on a ledger but by people providing services and the government could pay these people to do such work when the corporate sector does not step up to the plate due to many convenient reasons I don’t have the time to go into at this time. MMT is not about transferring wealth, it is about creating wealth in the hands of working population as of now have no chance of creating wealth for themselves.
+Andrew Weeraratne The fact that Keynes assumed money was something that is actually worth something does not not make him smart at all. It makes him rather silly. His basic assumption on macro economics is based on money having an intrinsic value which it doesn't as well as many other poorly thought out asumptions which are simply false. His theory was dramatically disproved by what happened after WW2 when just prior to the end of WW2 the USA which had been operating on a massive deficit then changed their budget to reduce government spending to nearly half and despite the predictions of Keynsinas that the economy would tank it actually boomed with a drastic reduction in unemployment and rising growth. That alone should have given a strong signal to any economists who had been pushing the Keynsian theory. They should have realised something was drastically wrong with Keynsian economics and started looking for what was wrong with his assumptions. Some did and they advanced their understanding but many didn't and still keep pushing Keynes's theory. You say that Government has to spend to create jobs, but the evidence is otherwise since the history itself strongly indicates this is not true. There is no accurate or more efficient relationship between government spending and creating effective jobs. In fact the oposite is likely to be the case. How does a politician know what people want and are willing to decide between when choosing one thing over another to fit their needs. They don't and the history of them getting things wrong is well known. True that government can create jobs but that is no panacea for what an efficient economy needs. The jobs they create may be in supplying goods and services that do not fit what people want or need. This is very evident in those economies in which politicians have a large influence over allocation of spending and create a power down structure to allocate resources. This results ina very inaccurate way of doing things. A great illustration of this in the 20th century was the USSR where there were massive shortages and surpluses and governments set prices for all goods and services. It all resulted in huge waste and manufacture of poor quality goods for their own economy and a very small export industry simply because the quality of their produce was mostly low and their prices way above what the western world could offer. Few people bough goods from the USSR simply for these reasons. You just have to ask yourself a few questions before embarking on an assumption that governments (run by politicians) somehow know what people need and what is the correct or accurate allocation of resources in any economy. How does a politician know what people need or want or what choice is best for a whole range of people with different needs? They can't possibly know even if they actually care to. The people only have a single choice in every 3 years or so to allocate their preferences by voting the politicians in or out! Your dream about eliminating poverty by government creating more money and spending it to compete with other people's money is one of the central dreams of the Marxist idea that someone in a government somehow has a brilliant knowledge and will which can overcome the central problem of wealth creation. It is a belief that this 'someone' or group or people automatically knows how to allocate e resources in an economy to overcome the problem of scarcity . No such group existed or exists. Your belief that FDR got the economy out of depression is Totally incorrect - Just look at what happened when the centralist policies of FDR and the previous president were put in place. Unemployment rose when it had been falling the previous year. It rose to nearly 20% and then dipped a little then rose again to double digit figures. Then only the fact that over 13 million of the able bodied workforce was drafted and a shortage was thus created did the unemployment figures go substantially down. Things virtually stayed that way a until 1945 or after. In the meantime the wealth of the average person in the USA dropped. You say 'Our services and goods don’t come from numbers put on a ledger but by people providing services and the government could pay these people to do such work when the corporate sector does not step up to the plate due to many convenient reasons I don’t have the time to go into at this time. MMT is not about transferring wealth, it is about creating wealth in the hands of working population as of now have no chance of creating wealth for themselves.' The assumption that government 'creates wealth' by knowing firstly what people want is just not correct and has led to many misappropriations of resorces. Your numbers put on a leger ois about accountability and it appears from waht you say that this is the very thing you are not addressing dspite saying that government should address needs. How would government account for goods and allocate them without controls of a ledger or similarr? By voodoo?
Rob Mews I appreciate your time taken to write that and your convictions. You really should look at the facts you have started before blindly believing them. Keynes is not what you would like to believe and so easily dismiss. Read some books on his theory, his writing with an open mind and you will see. It makes no sense for me to try to convince you that. The mistake FDR made at the early stage was not making enough government spending. He was trying to balance the budget in his early days. The depression was cured due to the war-expenditure and the effect would have been the same if it was peace time expenditure. What Soviet Union had was a dictatorship. Not the sort of government MMT or Keynes advocated. Not even a society Marx advocated. What we want is true free enterprise system with no welfare for anyone, especially for those most powerful and super greedy guys who intimidate everyone to have an unfair advantage and use governments to get billions in welfare for themselves as it is today in the USA. We want government to spend money to provide employment (note: with livable wages--not Walmart wages) not as the first option but only as a last resort. That would eliminate having to give welfare, unemployment benefit and then create the multiplier effect to get the production going. That does not have to be a permanent thing but only till we reach full employment levels. They should not be operated by politicians but by civil servants. Politicians should not be even allowed in those offices. The government should provide the opportunity for small businessmen to start businesses and provide guidance as to how to do that right. Our SEC (created by FDR) for that matter is doing a great job. We need more such organizations working with people to increase that activity. Throughout history a small percentage of people have lived ultra luxury lives while the majority have been living in poverty. There is no need for that anymore since we have the answers as to how to solve it through economic policies. This is what MMT advocate. You should take the time to read the books MMT guys have written. I read some of them and even have spoken with politicians of various nations as to how and why they should implement MMT theory. I hope they would. I feel that is the most simple solution. I hope we can try this with one nation and show the results to the world.
+Andrew Weeraratne I disagree that the war ended the depression. A depression is a real fall in the standard of living compared with what had occurred before. The facts are that the depression continued throughout the war. The belief that it didn't may lie in the figures which show some nominal increase in earnings overall but that makes no sense when the inflation effect is taken into consideration. The buying capacity of people in WW2 was very low on a real value basis. Part of this was the drop in available goods and services due to the effort put in to support military activity. Many US military personnel had little opportunity to purchase goods and services if they were in combat areas or support in the Pacific or Europe. That accounts for a lot of money that simply was not spent by them and much of this was supporting the economy back home. The other aspect was the US had a big windfall from the opening of markets and the injection of billions of dollars of foreign currency and assets from the allies in Europe on a lend lease basis. Added to this was the huge dedt burden of the war which had produced a lot of destruction which in no way puts value into the rest of the economy but sucks real resources from it and destroys them. The Vietnam war did the same and caused the government to try to hide the cost by running deficit budgets. These were aided by Nixon's drop of the gold standard to fund it through other than disclosing the cost which would have needed a very politically unpopular tax increase. That is purely why he could deficit budget and hide the cost. The gold standard prohibited him from doing so. If the US had managed to avoid the European conflict and the Pacific it would have been immensely better off in financial terms. As would the general population which would have mised most of the burden of ectra workload particularly the women who bore a lot of the effort of having work and home duties as well. The effect allowed US companies to obtain footholds in Europe after the war which they otherwise would have been excluded from or had previously found difficult to get established in. The added effect is a huge number of women were employed in the work force to perform jobs the missing men had previously done. The lifestyle was impacted by this imposition of work which had previously not existed. Little or no account is taken in the figures of GDP of this huge contribution since it had previously not existed. Like comparison of the economic situation before and after the war is very skewed when the figures are distorted by neglect of this. You say politicians should not be allowed into the offices of public servants but public servants don't know waht values to put on things. they are driven by politically imposed laws which they are obliged to follow. They have no other option since their portfolio obliges them to do so whether they like it or not . You must realise tat the asserted belief of Mosler that tax revenues are automatically destroyed when they are collected is pure fallacy. They are not since they form part of the remuneration paid by government to fund projects and government employees' salaries. They are the largest part by far. No such nonsense destruction takes place. If it were so then the deficit in the budget would be the total of expenditure. It is nowhere near that. . I agree that Marx had never envisaged what would happen to his idealist society of equality portrayed by him in his writings but that only illustrates the folly of it all. It really is a fairy story based on ignorance of the human condition. It also is a warning to others not to follow such a path given the hindsight of this. Keynes beliefs are likewise based on ignorance and a lot of arrogance. That arrogance shines through in his foolish belief in genetic superiority which any informed person even in his day would have to have severe doubts about if they had read a little history. Of course Keynes was in his belief a member of the superior race. Keynes beliefs are very much based on one sided view of accounting and finance. He argues essentially from the perspective of credit accumulator or manufacturer. This is because he sees credit without the balance of debits. He is not alone in this by any means. MMT is essentially the same. It cannot address debits since it is all one sided when it mentions money. If one addresses the ideas from a debits side or financial balance then the whole theory disintegrates into an authoritarian regime pushing political power rather than creativity and sound business or accountability to the public.. . It is what Mosler admitted is monopolistic ' force' rather than anything else. Ironic since he decries anyone having a monopoly and points out the negative aspect of it except for politicians. MMT is just what dictatorial politicians want like what they wanted with Marxism which fooled a lot of people for a long enough time to allow the communist dictators to take over. !! There will be no free enterprise with an all power or more powerful government running things. That belief flies in the face of what Mosler is advocating. He is for more government power based on more force not freedom of choice but huge monoploy power by politicians. This is all done without realising that credit is only really a debit from another perspective. That understanding is totally missing from his view of economics.
Secondly, he's explained many times how interest on the debt can be driven down to as close to zero as we desire. Third, the original discussions on Platinum Coin Seigniorage occurred in comment threads at his site. And one of the most important discussion threads on the subject also occurred there with Warren asserting that PCS would work in lieu of debt issuance if the Government wanted to use it.
That has a purpose: the worlds private financiers want to keep their grip on governments the world around, once everybody understands that you don't need private capital to invest into the economy, their wealth becomes useless and their grip on the governments vanishes.
clarification of "they" @4:45, when *US Treasury* spends, as per budget of Congress and spending bills, or automated programs established by Congress, or Defense Dept or other dept based on allocations by Congress, then the Fed marks up accounts. Fed alone cannot mark up private accounts, except upon orders from Treasury & Congress. Fed can't just "pour" money into the private sector. Fed can't "force" banks to lend, or "push" lending via reserves. Treasury alone can write checks or order payments, but Treasury doesn't mark up checking accounts. Adding sums to private sector bank accounts is the Fed's job --- back room ops on banks' reserve accounts).
This is a great video. I think people are nitpicking some of the language in a 26 minute video. However, I think MMT should be explained in greater than one sentence. He also draws a great comparison between political staffers and actual workers who are elbow deep in the thick of it. His points on the jobs program is common sense, and is certainly an intersection of political economy which is a completely different issue. Ultimately, Warren believes in lower taxes and greater government deficit spending. And , like quite a few economists at the time, he saw the stimulus and the tax structure as inefficient during 2008.
You don't necessarily need a tax cut to go with the transition job. The salaries for the transition job will create demand, and sales, and cause the private sector to hire. Only if, after that, there are "too many" transition workers would you consider a tax cut. (Although eliminating FICA is always a good idea. Taxing employment is just wrong in every way.)
They forgot to tell you that companies get tax breaks for those transition jobs. Transition jobs need to be subsided by the family....holly crap, those tax forms, they create jobs for people with the patience to fill it out.
@@marciamartins1992 The employer is not a company. It is a local government or charitable organization. There are no extra tax forms involved, and no families involved (the worker need not have a family).
I have finished reading Stephanie Kelton's book, the Deficit Myth. I have not finished watching this video as I write the question, how would our country's financial and economic situation be today if the currency were still based on the gold standard?
All the gold would be in France (because of the Vietnam war) and in China (because of the trade deficit). The US would be broke and would have to borrow internationally to continue and become like Argentina.
@@georgeemil3618 basically yes.. even crazier is if they start mining gold on asteroids lol . Anyway, that's why it's good that we don't have a gold standard anymore. The money / banking system is corrupt in many ways but that one overnight move by Nixon in 1971 was a good one as far as I can understand things.
I just don't understand. MMT people never talk about all the interest due on all this debt. The interest due compounds exponentially. The total interest paid on years and years of outstanding debt dwarfs the actual principal borrowed in the first place. Compound interest is one of the reasons why we have wealth inequality, a growing disparity, and an increasingly powerful rentier class lording it over us. The public debt transfers a lot of wealth from the citizens to the real few who really control those Treasury Bonds. Why not just spend the money into the economy debt free?
Planck Brandt I have to admit, I don't think Mosler is the best at conveying these thoughts despite being a founding figure of it. What he left out in all this is many supporters believe a job program would actually help government debt, since it would boost GDP and more people would pay/pay more in taxes. Mosler said he'd leave other programs in place, but others have said they'd like to reduce other welfare programs, so gov spending may largely shift from that to a jobs program, which is of course better than welfare. Anyway I am not 100% sure but I believe many MMTers have said: 1: For currency issuers, unlike users, gov debt doesn't necessarily equate to higher int rates as the textbooks say, and in reality despite higher debt int rates have fallen and stay very low...this is not ideology, you can look it up yourself. 2: Boosted GDP, changing other gov spending and etc would keep deficits in check and probably reduce the gov debt and my two cents: I thought a good chunk of the gov debt was owed to itself...right in econ class, and I go to a mainstream normal institution, we saw the chart excluding gov debt owed to the gov and it was 70% I believe opposed to 100 so all this combined, maybe makes the issue not nearly as disastrous as it seems?
I agree. What about the slippery slope aspect of debt, as for example, the housing bubble of 2008. What if people (fraudulently) were encouraged to purchase homes well beyond their ability to afford? Is the answer a debt giveaway so that the government helps them make their payments? Do they go out and buy even bigger houses on the credit of the U.S. government, who is the American people? Do they stop repairing those huge houses, such that they actually deteriorate? (I know of an order of women religious who built half of a monastery then ran out of money, and it deteriorated for decades). Also, Warren talks glibly about inflation, which is a tax of sorts. He leaves many questions unanswered.
Huh? Most MMTers discuss the effects of the interest payments on a mounting debt. What they suggest is, stop selling bonds altogether. No more debt, once the existing bonds mature. You should watch videos with L Randall Wray, Stephanie Kelton, Bill Mitchell, Ellis Winningham, and also other videos with Mosler. The topic is discussed by all of them.
Jack Spirko Wrong. Alot of the MMTers are very knowledgeable in mathematics, econometrics, and statistical analysis. It doesn't take an advanced mathematical degree to understand the economic reality of MMT.
If loans always create deposits, then loans would always equal deposits. Just look at the latest H.8 by the Fed, you'll see that the amount of deposits exceed the amount of loans by around $2 trillion. Loans and deposits tracked 1:1 until right around 2008, when QE began.
The best way to get rid of the curse of currencies, including the dollar, disasters, collapses, monopoly ogress, crises and wars Scientific and technical development in general opens horizons that did not exist in areas that no one has addressed before, as it develops work and elevates it My humble opinion is that the economic system and the mechanisms of its employment and directing this development and the speed of its response to it is the key I want to repeat my presentation under my main name in the civilized dialogue website and its basis The best benefit we can get through artificial intelligence to calculate the value through one measurement knowledge of scientists for the value just like the units of measurement in the ISO system such as meters, joules, lots, pascals, volts, amperes and bits..... And blockchain technology to manage its circulation and get rid of the concept of currency To get rid of the curse of coins
Yay Serban, man I see you like me watch literally every youtube video on modern Money Theory, lol. Mosler actually isn't my favorite. I definitely like Stephanie and Randal Wray the most. But, Mosler still is pretty good
Robert Mews "It matters when one sector of an any organisation has the ability to increase spending when others do not results in power transfer from that sector to the otehr but not necessarily any greater wealth creation". How is this a refutation of the MMT description?
Hi Wilhelm, would you mind you expanding on this a little please? This sounds in line with what Mosler claims (that taxes can only be paid out CB held reserves which can ultimately only come from govt) but I've never gotten to the meaning of the claim and how it fits with endogenous money. CB reserves can't be put aside from endogenously created deposits? Any articles/vids explaining the mechanics of this would be gleefully received.
The government demands payment on percentage. Therefore, no matter how strict or loose the monetary policy, payment should be just as arduous in the long term. It will be slightly less arduous because some of your purchasing power is stolen without your knowledge through inflation, but issuing more or less money doesn't allow people to pay their taxes easier. Besides which, even if it were true, it would be easier to just not tax as much, than to wreck havok on prices through monetary policy
The US and other sovereign floating currency-issuing countries don't "actually" need to issue debt to spend. Issuing treasuries is a self-imposed constraint. However the Fed has control over the rates at which the debt is issued so it is fundamentally a different sort of credit. It is a net financial asset contribution to the private sector, not a liability that needs more financing.
The thing I find interesting, the MMT economist's don't finger point regarding the unseamly things that go on to bring about these crisis's. I would like to know what they think about the repeal of Glass-Steagall.
Oh okay, i totally get what you are saying now. Yes yes bro, you are entirely correct. People like me who have spent almost 10 yrs in college studying wit an MA in poli-sci, MA in history, specifically the 18th and 19th centuries in Europe, a BA in economics just last year and plus i minored while working on my political and history degrees, in theological study of comparative religions. And it is so fuckin easy to forget that most people have no clue what Mosler said here.
Tadit Anderson: Try reading a few books describing reserve accounting and macroeconmics. describing sectoral dynamics.Having a keyboard doesn't qualify anyone to make a recommendation on something that they clearly don't want to understand. Jct: All I said was he didn't take the debt service into account, the main problem. Google bankmath to see I agree with government funding if it issues the money interest-free rather than banks and borrow in our name and tax us to pay interest.
The interest rates are as much a problem for servicing the debt as is the debt: which is to say that they are not a problem at all. "Financing" of the debt is, for the sole issuer of the currency in which it is denominated, only a means by which to control the increase in the monetary base. Moreover, when a central bank issues money for purchasing securities, they swap a form of increasing money for a fixed one, so there is no inflation. You should judge MMT by its own merit, not your prejudice.
John, Warren may not have covered debt service in this conversation. But he has covered it often in other things. First, he knows that debt service can be paid for through further sale of debt instruments.
Robert Mews "It matters when one sector of an any organisation has the ability to increase spending when others do not results in power transfer from that sector to the otehr but not necessarily any greater wealth creation". Spending in what?
They didn't lie to get into the EU, but cooked the books to get into the Eurozone and adopted the Euro. Hence, they no longer have sovereign control of their currency any longer.
@@chrishealey4536 They shot themselves in the foot -Ttwice. Once by getting into huge debt and the other in trying to cover up. I guess it puts credence to the saying "you can't help stupid".
Can someone please explain something to me? Warren says is this interview and other interviews that the Federal Reserve can credit any accounts and create money like a scorekeeper. So, if the Fed can do this, why does the treasury sell bonds? Wouldn't the treasury just produce the money out of thin air from the Fed and not have to pay interest to the bond holder, like China or anyone else? Why is their any debt at all in the Federal government if the Fed can simply create money and then retrieve it with taxes? I am very confused. Thank you
a) to establish a risk free interest rate. The financial shysters need that to build the financial instruments to sell to the public. b) to give the public an asset class that is risk free and totally secure, done as a service to the public c) as a payoff/subsidy to the banking industry, which can earn a return on the Reserves they hold at the Fed. d) controlling the interest rate. Many other economists think that issuing treasuries isn't necesary
Policies like the one above done without addressing the lending issues would cause a greater bubble collapses down the road. You give the poor more money to give to the rich people who will inflate housing prices even more.
Ok. This is what I mean. "It is constraining and would make it so we were constantly battling deflation." This is something a lot of YT commentators don't seem to understand on here. It is not an easy concept to wrap one's head around.
If the FED creates $20 trillion of new electronic money and uses all of it to buy treasury securities then obviously the price of those securities will go up. So surely it IS printing money. Holders of those securities will get richer!
A government guaranteed job at $20/hour would not necessarily empty out the fast food and Walmart labour, it would just force them to pay a higher wage. I don't see much of a downside to that, other than the shock, crying and tears of the rich. The real problem are small businesses. So to support small businesses you just given them negative taxation --- algorithmically indexed to their per worker profits, so the small business owners can take home minimum $20/hour themselves. If it inflates prices just tax the One Percent and the cloistered Upper Class to cool things off. But I'd bet it would not cause inflation, because the higher wages would just be soaked up into the real productive economy in ordinary spending, meaning producers would not need to raise prices much, since by shear additional volume of demand they would meet their margins. Econs just don't get it. People in the rust-belt are suffering so bad, give them higher wages and they'd spend it all immediately to pay off debts and then put bread and broccoli on the table. The risk of inflation is extraordinarily low, at an all time low I'd guess. There is so much economic anxiety, misery and suffering to be undone, it will take a generation or more to get back to any remote risk of inflation. But after the oil shocks of the 70's we now know how to avoid inflation, just tax the shit out of the ultra-wealthy elites. They are the F-kers who cause inflation in the first place.
And now that we're in the year 2023 with significant inflation instead of 2018 or 2019 when you wrote that stupid statement, we can all see that you don't know anything about economics.
The most important part is not being discussed: the credit based monetary system. There is a very simple solution to our economic crisis, which in fact is worse today than it was 10 years ago. Watch the documentary 'The money masters' on RU-vid to learn about the privatization of the money supply. There are two easy steps: end money creation by banks (going to full reserve banking) and restore the power to create money to the government (eliminating government debt - to be clear now the government only has the power to print bonds). Now there's a very long history to origin of our current monetary system - which is explored in the documentary 'The money masters' - and it isn't pretty.
OK, thanks very much Wilhelm. Does that mean deposits created by loans cannot be set aside as reserves? Or am I misunderstanding you? Also how does this square with the '97% endogenous' account of money creation? Given how much government taxes out of total spending/income the idea that it can only tax back its own money seems incompatible with that.....(obviously im missing something). Sorry for all the questions. A referral to some literature might be the best way to get rid of me :)
The issue with mmt is that it demonstrates that our perception of value is to a degree subjective. Especially if you are not the one doing the work. On the other hand money is printed. Taxation is just a means to give an air of ligitimacy to the international money printing cartel. This would be ok perhaps if the government created the money but not paying interest to a private international money printing cartel. Also the principal of growth in real terms is nothing more than inflation which at the end of the day screws the lowest common denominator.
the debt is like a carrot on a stick, it gets pple working to pay off those debts and interests. and the US owns half of its debts to itself, citizens, corporations etc.. and the other half to the world, but the US also holds almost as much foreign debt as it owes.
Great talk but I'm just wondering what these relatively low wage and guaranteed transitional jobs would be that wouldn't affect the existing public sector or private sector job market. Build a new road in the desert then dig it up again when they've finished? You could just end up with dirt cheap public sector labour if it's not carefully implemented
I imagine it more like, if there isn’t private sector demand for labour, then the government can use that labour for other useful things that the private sector hasn’t prioritised. For example, build that road in the desert, yes. But don’t dig it up and do it again; go and make another road through a different part of the desert. There isn’t a lack of work to be done. These people could be hired as road repair workers (laying asphalt) or if they’re college educated for example, they could be used in elementary school classrooms as teacher’s aides. Something like that where there never seems to be enough people for these things to all get done.
IMHO, One of the reasons the economy is moribund currently is that it seems to be unable to produce new wealth. As far as inflationary pressures, I agree they are negative (we are light years away from cross sector inflation yes, but maybe not for essentials.) Seems trickle down theory is not working since the lower 50% would seem to be completely superfluous in the current international economic and trade paradigm. (I.e. there seems to be nothing worthwhile for them to do.)
Its not necessary for the Govt to issue securities. The Fed will not bounce Congressional checks unless Congress forces is to. Or you could have the Fed keep buying all the Treasuries, doesn't matter. In either scenario, the Govt's ability to mark up or down dollar balances at the Fed is unchanged. Issuing securities and paying interest to bond holders is 100% a political decision and has nothing to do whatsoever with funding the dollar issuer, aka Congress
Interesting point About Japan and germany trading real goods and services for fictional paper. Isn t it why Japanees firms bought us firms like CBS. To trade in paper for real goods and services. ?
Unless I understand "issuer" incorrectly, right off the bat Mosler's wrong. Private banks issue plenty of (electronic) dollars and the government accepts to be paid with those as well. And the government does not need to spend one dollar itself for money to circulate. Primary dealers borrow at the Fed window, they fractionally make loans on what the Fed provided to them and money starts to circulate... Unless I got this completely wrong...
That fraction is ultimately set by policy lol. and it defines the upper limit of additional credit that primary dealers can create on top of the base created by the government. so in that sense, the government is the ultimate issuer of $$.
Or it's a sign aggregate household demand is curtailed due to being maxed out, & private sector sees no fin'l. return in new ventures, so they don't employ or simply lay off. There's something to be said for NOT trying to overstimulate the economy & letting it exhale (sustained an. growth of 3 - 4% a year isn't always possible.) Besides none of this monetary policy talk addresses the upheaval when an entire economy is dismantled as relative to the rest of the world Americans have been overpaid,
What Mosler doesn't talk about is we have a limited amount of resources at any one time. So you can deflate to get back to equilibrium when people over promise and over borrow or if we do Mosler's teachings we will inflate... after inflation a $10/hr job will not help you. He is right when he talks about output and production... So they talk about China at the end who is creating real output and production the U.S. who is creating numbers on a fed balance sheet. I think the standard of living has gone up fine without all of these helpful government programs. Funny how for thousands of years we were under monarchy or government rule and only in the last 200 years when people were free with limited government that we have had the best advances in standard of living and innovation.
What is and isn't a "resource" is hardly self evident. The economy is not a zero sum game and furthermore you can make a fairly strong argument that we are currently wasting the largest resource we have. People. By leaving them unemployed. As for the Chinese their government spent like filthy maoist pigs during the recession and SHOCK they fared much better then we did...
I personally think that the current form of #Bitcoin is still bearish and drama of #FTX . I judge that 11000 is the turning point, so you can wait a little longer. btw, #defiwarrior will launch #themera mainnet later this month
An assistant manager at Dollar store, it pays $12 an hour, cashiers get 10 if lucky, t's a revolving door of workers. The owners get a tax right off for each employee that stays 120 hours or more.
It scares the hell out of me that MMT is getting any mainstream traction. It creates a misallocation of capital and eventually a destruction of the store of value, the dollar.
@@zackeryzackery9381 thanks for the reply, I suspect you may need to do some more research as to what Warren is saying, and therefore understand. It take a lot to grasp MMT intially as all the knee jerk responses come to mind, only when you study it, you quickly realise they have been answered, otherwise MMT has no value as tool to explain FIAT currencies.Ultimately it's about the resource and how we use resource, that's you, me, others and natural resources, money is the key to get us to work to unlock said resource. Money in it's self is not the resource Watch this and have Greenspan answer your question, under oath.... ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-5baKgv7Zl5g.html
7:45. im a economic idiot. But is this like the Milton Friedman tax also similar to a Basic income. But a basic wage everyone gets one amount no matter who they are. bringing many people out of poverty. See. Guy Standing. the "Precraiate"
The issuer of a currency comes before tax collectors. The chicken came before the egg which it issued although a case could be made that the egg issued the chick which transformed into the chicken. But the private banking sector issues credit or debt and collects back interest on that debt. While not fiat currency it functions as fiat currency. I can borrow from the banks to pay my taxes. I then owe the banks interest -- an added liability -- but my liability to the government is now a credit/asset with it. Still trying to figure out how that sequence plays into the theory. Seems there is another scorekeeper for money.
Wrong - You don't seem to be a Wiseman at all with that comment. Debt is created when new money is created. The public are the only ones who pay for that and they must payout on the maturity of the debt through tax collections from the private sector. Government cannot ever pay it's own debt but can participate in creating it as it does with budget deficits. You like government you cannot pay your own debt unless you work for someone else to do so and that requires you tor save by spending less than you earn.
Jct: Sadly, Warren Mosler speaks of using credit as if it was easy. But doesn't take into account the interest on all those borrowings he wants to do to finance his "jobs for everyone" idea. Until you can tell us how to cope with the increased debt for all your loans, I can't recommend anyone watch this.
Mosler at about 3:40 in does some typical, though fantastic , monetary obfuscatioI in advancing his WAN theory of how money systems work. .... at about 3:40 min. in ..... ""If you look closely at the accounts, and as a simple point of logic.... Government has to spend first, and then tax. Government has to spend first, and then borrow. Otherwise, how are the dollars going to be out there?"" 'It's like at the football stadium. First they have to put the tickets out there ..... and then they can collect them.' Warren asks us all to ignore, science, law, mathematics and reality. When the government taxes its citizens, it collects NOTHING of government issue. Ever. It collects privately issued (electronic) bank credits from the taxpayers checking accounts. When that same government borrows from the private sector, the private sector doesn't hand in government issued monies, but rather more privately issued bank credits, either from existing accounts, or the banks merely create new balances with which to fund the gov debt - with private bank-credit that the government spends. Taxes and borrowing are funded by the PRIVATE money power. This is the Bankers Money System. To claim otherwise is a sham.
+joe bongiovanni Treasury is essentially on the same level as banks, it transacts in reserves (government created). You're right to point out that the ultimate effect of taxing and spending is a reallocation of private deposits, but US Dollars play a critical facilitating role as the monetary base. If the monetary base meant nothing, than fluctuations in the base would not influence interest rates, which they obviously do. So, at the very least government is controlling the price of money. Also, consider if Treasury ran a persistent surplus...given enough time, it would drain all reserves from the banking system - the only reason it _appears_ as though Treasury is acquiring bank deposits is because it is returning the reserves to the banking system as fast they are draining them, which gives the practical effect that reserves in the domestic banking system don't change. However, when a bond is issued it creates both a new bank asset (the bond), and a new bank deposit (no different than when a bank creates credit). But an important difference, this new bank deposit is not coupled with a _private_ liability, so the deposits are free of private debt. Treasury is the largest _"bank"_ (Fed account holder), and enjoys all the same protections as banks. Banks create a credit boom (expand their liabilities)...The Fed will provide the reserves to defend their target interest rate. No different when Treasury creates a credit boom (expand their liabilities)...The Fed will provide the reserves to defend the Treasuries rate. The Fed will _not_ bounce a check issued on the fedwire service, this includes both banks _and_ treasury. If The Fed is mandated to protect the liquidity in the money-markets, it will definitive protect it's largest account holder.
Also, Wayne, so exactly what are you saying here? Something about the $US currency playing a critical facilitating policy role as the monetary base. Um, no. But that Treasury is somehow on the same level as banks? Only in the bankers' wet dream of our institutional powers, interests. and relationships.Why are progressives carrying the water for the Status Quo bankers? As far as the monetary base influencing the cost of money, you MUSTS be living on some far off monetary planet. I can wholeheartedly agree that SINCE the monetary base means absolutely nothing to the cost of money ….. as their GIGANTIC fluctuations have zero influence on interest rates - much more influence being the taxpayers’ payment to the bankers of interest on those reserves - there is no such thing as high-powered money (which should be as patently obvious as the myth of the money-multiplier ) and thus central bank non-cash reserves are a meaningless monetary system throwback to the gold standard. As to the Treasury being an institution that “transacts” its business of public spending in non-cash reserves (which have NEVER been government-issued except under some Moslerian-fog around the money system ..... tangentially woven into functional finance through sectoral bastardization ), I have never been able to confirm this, so please explain your source for the understanding that you are stating here. My research leads me here : I have written this question publicly more than once on both the Treasury and Fed websites and have not received a reply. THAT the Treasury must have an account at the CB, as the CB is the government’s “paying agent”, by law and regulation, has never been in question. THAT changes in the government’s TGA account balances affect changes to reserve balances within the various accounts at the Fed has never been a question. ……. these adds and drains among various account holders are a 24/7 CB operation.And not a Treasury department operation. But none of those CB - depository interaction means that the government ‘transacts’ in reserves, just that the government’s transactions (in bank-credit $US balance transfers - Thank You Very Much, SSA) have an ongoing and concurrent affect on the reserve balances of other account holders ..... seems just like any other checking account transfer. I have asked of Treasury - who is responsible for reserve management at Treasury? I don’t have any answer. Do you? For the Money System Common.Thanks.
Why does the GOV need to have a monopoly on defining what money is & how it's issued?? Certainly this incentivizes fraud & a system which harbors bad actors. What happens when inflation ensues in this system?? Do you raise taxes to take the too much money supply our of circulation??
To dismiss operating under a gold standard as ridiculous & akin to standing on one foot is smug & uninformative. The issue is so hotly adhered to by critics of our current state of affairs it demands a comprehensive explanation. Effective monetary policy is misunderstand by too many gold & silver pushers. Can truly fiat currencies work? Or are they always doomed by central bankers who don't know when NOT to throw fresh currency on an economy that can't create real wealth within itself?
The objection to MMT seems to be an apparent large and growing federal deficit, I see a solution in the accounting of this, the money and credit in the economy should be treated as an asset and credited against federal government spending to balance the books, any discrepancy will highlight transactions conducted in "other" currencies and private credit created by private bank lending.
Ian Colquhoun Why not have a shadow entry created at the bank ledger so that in the event of a weakening economy they can dissolve their deficit with the shadow entry?. At the moment there are only two entries. loan amount and loan paid back by debtor, seems obvious to me that the bank might need an indemnity column to correctly balance its books. you could do the same with the countries deficit! come to that.
+Ian Colquhoun No, actually the objection to MMT is its false foundation. NO government ..... creates new money when it spends, but it SHOULD ... and MMT's assertion that it does, PREVENTS the movement to reform money. The size of the deficit MUST be as Post-Keynesians describe - to fill the gap between output and potential output in the national economy. THE issue is how to fund the deficit. MMT says BORROW it. Reformers say - create it from the money power.
+joe bongiovanni , no where does MMT suggest the government borrow money, it asserts that all soverign government spending creates new money with no need to borrow or tax to fund spending, therefore there is no fiscal restraint to spending, only spending in excess of economic activity could lead to inflation.
@@iancolquhoun4200 - Above, you said, "no where does MMT suggest the government borrow money". That's wrong. MMT prescribes 2 alternatives for Uncle Sam to fight inflation: (A.) Take dollars out-of-circulation via taxes, to reduce the money supply, or - (B.) Borrow dollars out-of-circulation, to reduce the money supply. Unfortunately, in either case, the proceeds cannot be spent, as that would put the proceeds back into circulation. MMT proponents have gone to great lengths to avoid admitting that their 2 prescriptions for fighting inflation are due an incompatibility with a central bank. Do you know how central banks increase or decrease the money supply?
I saw this video for the first time in 2014 and it had very little comments from hateful and ignorant republicans who lack the intelligence, patience, and prudence to read the published articles on MMT. And WE all know that the few who do are fueled by hatred to do so.
How many zombie companies are there. Why would during a period of lost produce create new wealth. Why should wages stagnate, taxes go up and asset prices skyrocket compared to those stagnated extra taxed wages of ordinary people. When value is removed from a nation new dollers should not appear. You sir will own nothing and be happy because you sir are a leftist idiot.
I suspect Mosler (and MMT) is mostly correct. I say mostly because: 24:52 - 25:20 Malthus's ghost (and a few scientists...) would argue that it doesn't matter anymore, it's too late now... I wonder when will INET address this issue...this Economics's blind spot... head on...
Original money creation was not the government but the gold mines. We don't have to have governments to have money, and it's creation can be independent of it. So government=money is a false argument.
Love Mosler and MMT. He is wrong about though about world population going down (very wrong). Per Scientific American: Earth's human population is expected to coast upward to 9.6 billion by 2050 and 10.9 billion by 2100, up from 7.2 billion people alive today, a United Nations agency has projected.
Mosler's MMT theory does not pass a fundamantal a test of reason. Test it by looking at a mirocosm over any time. Introduce the variables he proposes and you will see the results. I have done this so many times for given assumptions and always come out with the same answer whcih is "It matters when one sector of an any organisation has the ability to increase spending when others do not results in power transfer from that sector to the otehr but not necessarily any greater wealth creation".
Yes, I also think so, depends what they do with the money then. The government employees will have more money (while building more infrastructure, hopefully), so they'll use that money to buy goods from the private sector, or import. Importing should raise prices in international markets, this seems pretty straightforward. Buying local from the private sector which now has less workforce will also raise prices. While not at full employment, this should work fine, but if the economy is at full production capacity, it should cause inflation. They are probably pushing this now to counteract job losses from automation.
"mortgage is predicated on income" ==> true but income had shrink compared to mortgage, this professor does not want to talk about that sustainability, his theory cannot fix high price of home
That the unemployed are considered unemployable (even after two months) is taken as a given without analysis and thorough investigation makes me sick. What it hides is the fact that the nature of being employed now is so distasteful, one would have to be crazy to come back to work if he has proven he can live without a job for any length of time!! Enough of this ivory tower analysis.
Serban, you dont know the basics. Of course a bank can NOT creat money. It can only creat deposits or loans but they are feeded by EXICITING money of the other customer
MMT allows the Fed to mark up the account whenever the banks ask for it. The latest "mark up" $1.5 trillion. The Unforgivable Terrible Effect: Title & deed to those who have the wherewithal to outbid, allowing hording of assets. Capitalism and MMT the dynamic duo leveraged by Citizens United and Dodd Frank Act. Without congressional oversight, bureaucrats/technocrats/the authorized appointed have power outside the system of democratic checks & balances...this taking is by design and made legal.
the score keeper analogy is nonsense the analogy presupposes the government be a disinterested third party with no ulterior motives or desire for gain and this just simply isn't true when 50% of the population wants to work as scorekeepers they're going to want to take more of your points and give themselves more points also
The scorekeeper, or the official or the game is to ensure all the players follow the rules. If he can't do that cheaters would close down the game and all future competitions. No game or competition can begin if clear rules are not set in place.
I'm very well aware of how the monetary system works. I know that banks don't lend from reserves, that's not what my statement was about. However, loan growth is not equal to deposit growth in this interest rate environment.
Stephanie Kelton was great, but some on the panel have a bit of work to do. I feel sorry for Stephanie having to endure that anti-Democrat rant at the end. The host was like a child having a tantrum, The same old d 'Everyone's corrupt and doing the bidding of the .1%.' rant. It isn't true. Good luck with starting your new party. Who were you planning on putting up for POTUS? You? No thanks. You'll end up saying everyone in that party is corrupt too, because deep down you think everyone that disagrees with your is corrupt. You know Stephanie is aligned with the Democrats. You just looked like another dude trying to berate a woman. How progressive of you lol. The problem isn't all the corruption that's in your head, the problem is that so few people understand what Stephanie is saying. The ranter said at one stage that spending on schools was good economically because the better educated would then pay more tax. No, no, no. You didn't understand what Stephanie had just told you. The Federal govt doesn't need tax money to fund anything. It issues new currency when it spends. Tax serves the purpose of backing the currency, and is a downward pressure on inflation. The fact that better educated people will pay more tax is And again one guy in the middle started talking about the deficit and debt as being a long term investment, like a house mortgage.. No, no, no. It's nothing like a house mortgage, nothing at all. Do you create the mortgage out of thin air and give it to the person building the house. You are a user of the currency, the federal government is the issuer of the currency. Completely different.
Interesting until he said that people waiting until they are about 30 to have kids was not a good idea. Not a very astute thing to say in terms of thinking about the system, I would have thought. Surely waiting until one's 30s to have kids is a very good idea, both in terms of population influence and parenthood. An unrelated point in this context, I know.
iammaxim Yes it is true that a country with a sovereign currency cannot become involuntary insolvent since it can always print more, however, this is just another tax that is levied on the masses on a whole through inflation" Mosler & other MMTers have repeatedly stated that Federal spending is constrained only by its ability to cause inflation. The vast majority of the money supply (~93%) is composed of private bank credit. It is reckless/fraudulent private bank credit creation that is the primary cause of asset price inflation such as the recent housing bubble.
Agreed - it is inflation in action taking the value out of every dollar. Government money printing makes the puchasing ablity of every dollar dispersed by there being more dollars in the market which is reflected sooner or later in higher prices. These higher prices could be first seen on the stock market, housing prices, bond prices, or consumer product prices or even the exchange rate. Whether one is affected first is dependent on other government policies or even natural disaters etc. No it is being seen in stock prices which are way ahead of their earnings multiple. Soon it will be in exchange rates or a collapse of one sort or another of financial instrument. It even may be a dollar colapse.
Rob Mews - "Government money printing makes the puchasing ablity of every dollar dispersed by there being more dollars in the market which is reflected sooner or later in higher prices." Nonsense. Government spending ("money printing") is rarely the cause of inflation. With more dollars comes more productive capacity & more goods & services. The vast majority of the money supply (~93%) is composed of private bank credit.
Rob Mews - "These higher prices could be first seen on the stock market, housing prices, bond prices, or consumer product prices or even the exchange rate. Whether one is affected first is dependent on other government policies or even natural disaters etc." Nonsense. It depends on what new Credit is extended for. This is why we've seen Asset Price Inflation & Commodity Price Deflation Asset Price Inflation is primarily caused by Commercial Bank Credit creation. Commercial Banks lend not to create new productive capacity but to purchase existing assets (mortgages, stocks, bonds, etc) Credit creation extended to purchase assets already in place bids up their price.
Rob Mews - "Soon it will be in exchange rates or a collapse of one sort or another of financial instrument. It even may be a dollar colapse. " Really? When? Japan has a Debt/GDP of ~240%. It's been running massive deficits for decades without any inflation.
Rob Mews - "Government money printing makes the puchasing ablity of every dollar..." Without Government "Money Printing" there wouldn't be a Dollar to have any "purchasing ability". You can't have Government Money without Government "Money Printing".
