Randall Wray-ri egindako bi elkarrizketa

(i) Modern Monetary Theory – A Debate: Randall Wray (Pt 1/4)


April 22, 2019

Randall Wray, one of the founders of the economic theory known as Modern Monetary Theory (MMT) lays out some of its main arguments. Paul Jay hosts

(Ikus bideoa)

Story Transcript

PAUL JAY: Hi. Welcome to The Real News Network. I’m Paul Jay.

With the development of this concept of a Green New Deal, and there’s much more attention being paid to it now that it’s being talked about in the halls of Congress, especially people like Alexandria Ocasio-Cortez, the question of how to pay for a Green New Deal has become to the fore. And part of the Green New Deal is the idea of a full employment plan. These two things have been connected. And it’s of course not new, but far more in the spotlight than before. And one of the ways to pay for it that’s being presented, including by Ocasio-Cortez, AOC has hinted at this, is an idea that has been called Modern Money Theory or Modern Monetary Theory. And if I understand it correctly, essentially it recognizes what is clear, which is the government creates money when it needs it. And many times the government spends money, for example, this new military budget or a massive tax cut, without clearly showing that if you’re taking a dollar from here, you’d better find it from over there.

In fact, the government kind of just makes up the money, the deficit grows, and sometimes austerity hawks scream about it, and other times they seem not to care about the deficit. So the idea of MMT, if I understand it correctly, is this same kind of concept can be applied to the Green New Deal, to developing what would be essentially a full employment program, and that the way to fund it is create the money, but within certain limits. When you start to reach full employment or when inflation starts to get above, say, six percent, one could argue about what the two limits should be, then you need to rein things back in again. But there’s a lot of debate. This theory is being attacked from a more conservative right position, and there’s also a lot of debate amongst left economists about MMT. So we are creating a series of interviews with people that are kind of pro-MMT, people that are critical, and we’re going to put them up and hopefully have some panels and debates, and people can decide for themselves what they think of this.

So now joining us is one of the, I would say, fathers of modern MMT, anyway, Modern Modern Monetary Theory, is Randall Wray, and he joins us. He is Professor of Economics at Bard College, he’s a Senior Scholar at the Levy Economics Institute of Bard College. He’s the author of many books, including Modern Money Theory: A primer on of macroeconomics for sovereign monetary systems. Thanks for joining us.

(a) Baliabideaz, finantza mugak?, lan bermea

L. RANDALL WRAY: Hi, thanks for having me on.

PAUL JAY: OK. Now that I probably butchered the explanation of what MMT, is you can tell us. OK, so give us the basics.

L. RANDALL WRAY: OK. Well, if we’re going to talk about the Green New Deal, what is important is the resource availability. If we have the resources available, if we have the technology that we’re going to need, then we should be able to find a way to finance that. Finance is supposed to help us do the things we want to do, and if we’ve got all the technical capacity that we need, there’s no reason why we shouldn’t be able to find a way to finance it.

PAUL JAY: OK. So did I have it right, that essentially the way this works is, for example, you need to pay for, I don’t know, a hundred thousand windmills and you want to convert a bunch of factories that are making something else and convert them to windmill manufacturing, but it’s going to take some public money to make this happen. You can create the money on this and other such programs, you can even have a job guarantee program for everyone–which is part of your program, which you developed the idea for before there even was this whole talk about Green New Deal–but a guaranteed job for everyone who wants to work, with a minimum wage of at least the minimum wage; in theory, a living wage, 15 bucks or whatever it is. And the limit of being able to create this money is reaching a point of inflation and/or when you get the full employment and you start seeing inflation go up as a result of wages going up. At that point, you kind of hold back. So explain how this works. What is the limits to being able to just create money?

L. RANDALL WRAY: Yeah. Well, if we’re talking about a sovereign government that issues its own currency, there is no financial limit. The limit is the real resources, that’s what you’ve been implying. If we have the technology and we have the resources that we can make available to the Green New Deal, then we can certainly financially afford it. What we need to do is budget for the federal government spending and go ahead and spend the same way that we spend on anything else. We don’t need to create any new forms of spending to allow the federal government to afford the Green New Deal projects. What we need to worry about is whether we can make available the resources. And as you suggested, a large part of the Green New Deal is going to be shifting resources around, taking them away from current destructive uses and putting them into constructive new uses to implement the Green New Deal.

PAUL JAY: Now what do you mean by resources? Because in my head, resources are the wealth that’s been created by the society, by the economy, and that wealth is in very few hands. What is it, six families control 50, 60 percent of the wealth? I can’t remember the exact stats, but a large amount of resources are in very few private hands. So to me, you want to shift resources around. Part of that shifting is getting some of the wealth out of those hands, and doesn’t that mean taxation?

L. RANDALL WRAY: Well, I think we have to deal with inequality. And part of the Green New Deal is going to be tackling that, both by raising the incomes and wealth at the bottom, and also by taxing away some of the income and wealth at the top.

In my mind, that has nothing to do with implementing, say, the job guarantee program or converting to carbon neutral energy production. Those have to do with putting real resources to work. So that is, I would say, a different issue from the problem of excess inequality, of incomes and financial wealth. So you’re right that the wealth distribution is highly skewed, and that could possibly create a problem in trying to move the resources–and I’m talking about real resources, I’m talking about the plant and equipment and the labor–away from the destructive uses, and putting them into the constructive uses. So we have to figure out how we’re going to go about accomplishing that.

(b) Jabego pribatua, plangintza, merkatuak

PAUL JAY: But most of that plant and most of the machinery is privately owned. I mean, all of it in the United States is virtually all privately owned. So how do you move it when it’s privately owned? Don’t you get back to the issue of you’ve got to deal with the wealth and the private ownership of these things? I mean, in some ways, you’re almost talking about a planned economy, which in principle is not something I’m against, it’s sacrilegious to say that in the United States. But how do you move these resources around when the people that own the resources are very happy the way things are?

L. RANDALL WRAY: Well, they are privately owned. A lot of those are public companies. And what we’re going to have to do is, say, shift out of mining coal and producing energy by burning coal into windmills and solar panels and so on. And so, I’m not trying to minimize the very significant changes that have to be done. We do live in a planned economy. The question is, who is doing the planning? Right now, it’s being done by megacorps and by the financial institutions that provide the finance to them. And it is going to require more planning, I think, at the government level, than what we have been doing for the past 30, 40 years. It will be, I would say, more equivalent to what we did in the early post-war period, where the federal government played a pretty big role in sort of private planning, cooperating with the big corporations, and also with what we did in World War II.

I look at the challenges that we face right now as being probably even greater than the challenges that we faced in the 1930s and 1940s, and I think that this is the way that the Green New Deal promoters, or formulators, and I was not one of them, are thinking about these challenges. I’ve become convinced that they’re right. We need to tackle this the same way that we tackled World War II. It is going to take a massive effort and cooperative effort among the government, labor unions, so far as they still exist, and private corporations. It’s going to require planning. We can’t rely on an invisible hand to solve this tremendous climate problem that we have in addition to other problems, including inequality and so on. The invisible hand is not going to solve these problems, the invisible hand created these problems.

PAUL JAY: Now, Gar Alperovitz, and there may be others, but I heard it from him, he suggested–and I don’t know where he stands on the whole MMT theory, but he suggested you could use this kind of mechanism to, for example, essentially buy the fossil fuel companies. Like you want to change the policy of Big Oil, take over Big Oil. Like especially wait for the next big recession or big dump in oil prices. I mean, is this part of what you’re thinking about?

L. RANDALL WRAY: Well, I think that we’re definitely going to have to phase out fossil fuel production and use, absolutely, and it is going to take leadership from the government to do that. The private sector is not going to shut that down on its own. I know that people think the carbon tax and so on can play a big role in that. I’m not taking a position on that, maybe carbon taxes are a start. I’m not convinced that you can rely on a market mechanism to solve a problem that was created by the markets. It’s going to take other mechanisms. So carbon taxes could be part of the solution, but I’m not convinced that you can rely on a market mechanism like taxes to solve a problem created by the markets. We’re going to need other mechanisms to completely emanate the use of fossil fuels. That has to be a goal.

PAUL JAY: Well, do you see that as one of those mechanisms, that essentially using MMT theory, create the money to take over sectors of the fossil fuel industry, for example. Like essentially nationalism, you buy the shares and so forth.

L RANDALL WRAY: I think what I am more comfortable doing is explaining how you can use the fiscal powers of the sovereign government to accomplish what you think are good ideas. That could be a good idea. I’m not taking a position on whether it’s good to buy them out or just shut them down, but something must be done.

(c) DTM, zergak, finantzaketa, lan bermea

PAUL JAY: But within the realm of MMT theory, that would be something one could do.

L. RANDALL WRAY: Sure. I mean, if the question is could the federal government afford to buy the fossil fuel companies and shut them down, the answer is yes, of course it could. You have to think about the consequences. If the government is going to be spending billions and billions buying real assets out in the markets, the question will be, what will be done with all the revenue from the sales of those things? If the investors then turn around and invest in solar power and in wind power, then that’s sort of the ideal consequence of the government purchasing the fossil fuel companies and shutting them down. That’s exactly what you want to do. So what we need to do is to focus investment on creating capacity to replace the fossil fuel sector. We’re going to replace it with alternative energy sources, and we need to get the investment there.

PAUL JAY: So I guess the major critique of MMT that I’ve heard, especially on the left, is that once you reach these limits of full employment and inflation, at that point, you do need to tax. Otherwise, you get into this kind of inflationary spiral. And I understand, to some extent, moving resources around, but if you’re hitting inflationary target and full employment target, one of those mechanisms that needs to kick in will be taxation, and one assumes it’s taxing the wealthy most, certainly undoing some of the big tax cuts that have come recently.

So one of the criticisms is that proponents of MMT don’t talk about that enough, that there needs to be more of a conversation within the context of MMT of both cuts to the military budget and cuts to the increase in taxes on the wealthy, and not just from the point of view of inequality or opposing militarism–which I know most MMT advocates oppose militarism and they want to reduce inequality–but also from just a point of view of the theory itself, there’s going to be inflation, if there isn’t at this point, of full employment taxation, so why not talk about that more as part of the discourse. Because I have heard advocates of MMT talk about it in a way that you almost never reach that point. The idea of having to tax and cut the military budgets is just for moral reasons, not for economic reasons.

L. RANDALL WRAY: Well, I think we need to back up. First, what we hear is these hysterical numbers. The Green New Deal is going to cost 93 trillion1 dollars, so that’s been floated around. And so, then the response is, well if you’re going to spend 93 trillion on the Green New Deal and you’re going to try to do that with no tax increases, and you’re going to do that over a period of 10 years, adding 10 trillion of spending per year to our current economy has got to be inflationary. And well, yeah, that could possibly be true. The problem with those analyses is that they’re not sitting down and looking at what is the net spending. So the big items in that 93 trillion are the Job Guarantee and Medicare for All. Well, these are not going to be expensive programs.

Medicare for All is probably going to actually reduce total medical spending in the United States. Now, there will be some additional use of healthcare providing resources, but we’re going to have a huge reduction of insurance provisioning, of administration, of billing; lots of resources are going to be released by moving to Medicare for All. The net of that is going to be resource reduction. We’re going to free up resources by moving to Medicare for All.

The job guarantee, the gross number looks very big, but the net impact is very small. Here at the Levy Institute, we did a simulation of a fifteen dollar an hour job guarantee program with generous benefits, and the net impact to the federal government’s budget is about 400 billion2 a year. But the program increases GDP by about 500 billion a year and creates four million private sector jobs. The net impact of inflation, according to the simulation, is far under one percentage point increase of inflation, practically negligible at the very beginning of the program, and that gradually tapers down to nearly zero after a four year phase in. So these numbers, the 93 trillion boost to spending, are just hysterical. They’re wrong. We need to look at the net demand on resources, and it’s going to be nothing like 93 trillion dollars.

PAUL JAY: Yeah. I mean, I think I’ve heard much lower numbers as well from certain of the left economists. I think it’s coming a little more from the conservative side, these great big numbers.


PAUL JAY: But we’re somewhere–it depends how you define full employment–but somewhere around four percent, which we’re kind of at now. One could argue, is that a real four percent now, so even if one argued in terms of real labor participation rates and other such, maybe it’s actually really higher. But it wouldn’t take that much more spending to get to “full employment” if we’re already at four or maybe even under four. So if you’re already at a point where you’re close to this tipping point where it might become inflationary, and now want to spend a whack more money on a new green infrastructure program, doesn’t that require taxation sooner than later?

L. RANDALL WRAY: At this point, I would say I’m still uncertain that we will need a tax increase. So the way that we’re going to get to full employment is through the Job Guarantee. The Job Guarantee only hires unemployed people. And so, that by itself is not inflationary. You are creating the jobs for people who currently don’t have jobs. We estimate that that will be about 15 million people. Now, those people are available to work in Green New Deal projects. They’re not going to be doing the major infrastructure kinds of projects that require skills, probably union labor and all that, but they can do a lot of the jobs that are being talked about as part of the Green New Deal, very broadly defined, including caregiving and service to the communities. environmental services. So employing those people, we are mobilizing resources that are not now being used and putting them to use in the Green New Deal.

There will be shifting of resources, as we were talking about before, from destructive use to constructive use. Again, that isn’t increasing employment, that is just shifting the employment. Some of those workers are going have to be retrained for the new jobs, so I realize that we will have to devote more resources to education and training. And I do think there will be a net increase in the use of resources. We need to try to get a handle on that. As we phase in Green New Deal programs, we’ll have a better idea of how many new resources are going to be employed. And it could be that we realize that aggregate demand is outpacing our capacity to produce and we will need some tax increases. We may need to employ some of the other methods that were used during World War II.

(d) Prezio kontrolak, II Mundu Gerla

PAUL JAY: Including price controls?

L. RANDALL WRAY: Including price controls, including rationing. As I said, we should think of this as something equivalent to World War II, where we will probably need a range of methods of tackling price increases.

PAUL JAY: Okay. Well, this is just the beginning of the conversation. What we’re going to do is go back and forth a little bit. We interviewed Jerry Epstein, who is a critic of MMT, and we’re going to show Jerry’s interview to Randall. We’re going to show Randall’s interview to Jerry, and we’re going to get them to respond to each other. I hope we can get some panels together with pro and cons. And as I said to Randall off camera in the beginning, I actually think there’s far more agreement about all of this than there is disagreement, but we’ll try to figure this out.

So Randall, thanks for joining us. I hope you’ll come back and we’ll dig into this deeper. But also, underneath the video, if you’re on our website or on YouTube, ask your own comments and questions about this and I’ll raise them with Randall, and we can interview some of the other people involved in the MMT school of thought, and others, critics. So we want to just start a conversation here about how this new funding is going to happen. Because clearly, for a Green New Deal to transition off of fossil fuels, it’s going to be a real restructuring of the economy. And the part we didn’t talk about in this interview very much, but we can in the future, there’s going to have to be a real change of who has power. Because both in terms of the power of the fossil fuel industry, which is very interlinked with the power of finance, and there’s no way that most capitalists want full employment. Whether they believe it’s inflationary or not, unemployment gives people that own businesses a lot of leverage.

I mean, we’re in Baltimore, and people work in a unionized place, Johns Hopkins, cleaning surgical rooms sometimes for 13, 14 dollars an hour after 14 and 15 years seniority. It only happens because so many people are unemployed and desperate for work. So a lot of questions to unfold here, and we’ll do more. But I just blabbed a lot. Randall, anything else you want to say, finally? And then we’ll pick it up again another time.

L. RANDALL WRAY: OK. Well, yes. Thanks for having me on, and I’d be glad to talk more about the financial aspects, which I’m much more familiar with than sort of the real resource uses that will be required in the Green New Deal.

PAUL JAY: All right, great. Thanks for joining us. And thank you for joining us on The Real News Network.

(ii) Modern Monetary Theory – A Debate: Randall Wray Responds (Pt 3/4)


Randall Wray rebuts Gerald Epstein’s criticisms of Modern monetary Theory. Paul Jay hosts

(Ikus bideoa)

Story Transcript

PAUL JAY: We’ve been doing this back and forth on Modern Money Theory or Modern Monetary Theory with Jerry Epstein and Randall Wray. And you’ll see on this page Randall’s interview and then Jerry’s interview, and then Jerry’s response to Randall, and now you’re going to see Randall’s response to Jerry. And without any further ado, we are now joined by Randall Wray. Randall is professor of economics at Bard College and a senior scholar at the Levy Economics Institute of Bard College. And he’s the author of many books, including Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. Thanks for joining us again Randall.

RANDALL WRAY: Thank you for giving me this chance.

PAUL JAY: OK. So over to you, you’ve got five-six minutes to respond to what Jerry had said.

(e) DTM-ko literatura, orain dela 4.000 urtetik

RANDALL WRAY: OK. Well first, I think that he’s very selective in his citations of the MMT literature. He claims that MMT has been developed focusing only on the United States and that it’s really only applicable to the country that issues the international reserve currency. And in fact, Bill Mitchell, one of the co-developers of MMT has applied that to small open economies like Australia. My former student, Fadhel Kaboub, for the past 20 years has been applying it to developing countries such as Tunisia, which is his home country. I have applied it, along with Pavlina Tcherneva, to Argentina, and we wrote quite a bit about that. So I think that it’s very selective.

Now, it’s true that developing countries do a face a number of problems that are very difficult to resolve, but we argue that MMT still applies. We show that MMT actually applies to the evolution of money for the past 4000 years at least, from Mesopotamia, through Medieval Europe, to the early American colonies, and finally up the present. So it’s very clear that these are not international reserve currency issuing countries. We argue that it applies to any monetarily sovereign country. Now, what do we mean by that? We mean a country that issues its own currency, that imposes a tax and collects the tax in its own currency, that floats its currency, and the government does not issue debt in any foreign currency.

Now, those first two conditions apply to almost all developing economies. Many of them fail to completely comply with the second two conditions. If they peg to the dollar and if they issue debt in dollars, then they don’t fully meet those conditions, and they’re going to face constraints. They usually will adopt austerity as a means to obtaining U.S. dollars, and that means that they have slow growth, they’ve failed to develop, and they are dependent on the U.S., the IMF, and the World Bank. So we recommend moving off the peg and stop issuing government debt in foreign currencies. Now, we know that’s a difficult condition, and it’s only the first step. They’ve got to move toward food independence and energy independence, because those are usually two of the things that they import. And they’ve got many other problems to deal with, political problems, corruption, and possibly foreign intervention.

(f) Lehendabizi DTM ulertu behar da, Fed-eko politika monetarioa, finantza krisi globala, akordio berde berria

So I think MMT falsely gets accused because we don’t offer simplistic solutions to the complex problems of development. All we say is that understanding how a sovereign currency works can help you to understand how your monetary system works better than the neoliberal myths about how money works. Now, Epstein is not a monetary economist, and that’s pretty obvious from the mistakes he makes in his comments on my work. He claims the Fed pumped money into the economy to keep interest rates low and that led to the global financial crisis. Well, two mistakes there. First, the Fed did not pump any money into the economy to lower interest rates, all that has to do is announce a new target rate and the interest rates will move to a new rate.

And second, the Fed actually had been raising rates from about 2004, and it was only after the Fed started raising rates that we got the very worst abuses of the lenders. They were creating dangerous financial products pushed on the homeowners that eventually led up to the global financial crisis three to four years after the Fed had been raising rates. So I think he’s got all of that argument wrong. He also claims that MMT advocates that the Fed print up money to pay for the Green New Deal. He misunderstands how governments spends. MMT does not argue that the Fed should pay for the Green New Deal. The Fed is the Treasury’s bank, and so all Treasury payments and all tax payments go through the Fed. Well, we’re not advocating that we change any of the procedures currently used in order to finance the Green New Deal. We would do it the same way. There is no such thing as the Fed printing up money to pay for the Green New Deal.

(g) Zergak eta gastu pribatua

Epstein mixes up the role of taxes in reducing aggregate demand and also paying for stuff. We deny that Uncle Sam needs taxes to pay for stuff, but we do agree it could be necessary to raise taxes in order to reduce private spending. That depends on a careful assessment of the resources that will be made available for the Green New Deal projects. We’re doing some preliminary work right now costing that out, and it looks like we probably are not going to need to raise taxes for The Green New Deal. The final point is that Epstein doesn’t understand the international role of the dollar, leading to two mistakes. First, he doesn’t understand the fiscal and monetary policy space that’s available to currency-issuing countries, and he also thinks there is a chance that we’ll run out of dollars and the RMB replacing the dollar as the international reserve currency. I think that both of those things are false.

(h) Dolarra, nazioarteko erreserba moneta, Txina

We are a long way off from the dollar being replaced as the international reserve currency. In addition to a variety of other reasons, the most important factor I think is that we just saw the Fed lend 29 trillion dollars to the global financial system. And before the Bank of China can replace the Fed, markets have to develop a great deal of trust in the international lender of last resort, and right now, that is the Fed.

PAUL JAY: All right. Thanks very much, Randall. So this is just the beginning of a back and forth on MMT, and we’re going to get different voices, and Randall’s going to come back and talk some more about this. If you have some questions, please send them in. We’re going to have more discussions, more debates, and it’s something we’re going to unfold over the next few weeks. So Randall, thanks for joining us.

RANDALL WRAY: Thanks a lot.

PAUL JAY: And thank you for joining us on The Real News Network.


Hasieran Alfred Mitchell Innes zen (1913 eta 1914): Credit and State Theory of Money – Arno – daastol.com

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    Randall Wray, nor profitatzen da hazkunde ekonomikotik?
    Trump Up in Polls; Who Benefits From Economic Growth?

    May 10, 2019

    GDP growth up, stock market up, will the economic expansion continue and who are the winners?
    Dean Baker and Randall Wray join host Paul Jay
    Story Transcript
    PAUL JAY The economy is growing and Donald Trump is inching up in the polls, but is this growth sustainable? And who’s benefiting? That’s next on The Real News Network.
    Welcome to The Real News. I’m Paul Jay. The official unemployment rate is down to 3.6 percent, the lowest rate since 1969. While wages have been stagnant for a long time, it’s reported they are now finally outpacing inflation and the stock market is hitting record highs. GDP growth, in the first quarter of 2019, clocked in at 3.2 percent, which is the fastest annualized growth rate since 2015. Now, I said the stock markets– record highs. I have to add, today the trade war with China might be back on. So today, it’s crashing a little bit, but the trend over this year has been higher and higher, and people in the markets have been getting richer and richer. But is the growth sustainable? And who’s benefiting?
    Now, joining us to begin with is Dean Baker. He’s a Senior Economist at the Center for Economic and Policy Research (CEPR). He’s the author of several books including, The United States Since 1980, Social Security: The Phony Crisis he wrote with Mark Weisbrot, and The Benefits of Full Employment he did with Jared Bernstein. And also joining us is L. Randall Wray. He’s a Professor of Economics at Bard College and Senior Scholar at the Levy Economics Institute of Bard. He’s the author of many books including, Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. Thank you both for joining us.
    PAUL JAY Randall, do you agree with Dean? And if so, the question is how sustainable is this?
    L. RANDALL WRAY Yeah, sure. I think Dean gave a very good summary. He knows the data better than I do. It’s very good that wages are rising a little faster than inflation. The headline unemployment numbers, I think, are misleading. I know Dean will agree with this, that it’s not counting a lot of people who want jobs. I mean, it’s not clear how many jobs you can create for the people who’ve been left behind strictly by pumping up demand through tax cuts for the rich and so on, without getting some inflation. So I don’t think that’s necessarily the right way to do it. How sustainable is it? I think it depends a lot on what the debt looks like. It seems like corporate debt is much higher than is usually reported. We know student loan debt is very high and growing, and credit card debt, auto-related debt. So I think, the sustainability isn’t really going to come in the real part of the economy, or unsustainability let’s say, is going to come in the financial sector again.
    PAUL JAY But Randall, part of the reason Dean’s saying the economy may not go into recession is because it’s unlikely that there’ll be a rise in interest rates. But that’s to do with the lack of real wage growth. There’s a little bit of wage growth, but not a lot. And certainly, the stat I have is corporate profits are up about 7.8 percent over 2018 and wage increases are a small fraction of that. It’s a double-edged sword, I suppose. One is, maybe the interest rates go up. On the other hand, people aren’t really making more money.
    L. RANDALL WRAY I think that there could be a problem in the data on profits. I don’t do this research directly, but I do listen to others who do. The profits could be overstated, which would explain why corporations are using debt for the buybacks, because if profits were as high as they’re reported to be, it’s a little puzzling that they’re going into debt. So I think there is some link, as you hinted at, between borrowing and the buybacks. I am less optimistic than Dean because again, I think that the problem will turn out to be in the shadow banking sector, like it was last time. If the Fed did start raising interest rates, then that could increase the debt-service ratio–
    PAUL JAY Randall, just for a second. Explain for people that don’t know the term “shadow banking sector,” what that means.
    L. RANDALL WRAY Well, of course, it basically means everything that is not a regulated bank. And  just like last time around, we just don’t know that much about what’s going on. We know more than we did last time, but because they’re in the shadows, it’s very hard to know what’s going on. The biggest banks are highly leveraged in a lot of the off-balance sheet stuff, so there are financial analysts who are looking at this stuff. It sounds very scary. I don’t know how much weight to put on that. The thing that I learned way back in 1996 when we were calling for the end of the Goldilocks economy, is this economy is very big. It gets momentum going in one direction or the other, and it can continue in that direction for much longer than you expect that it would. I agree with Dean that it looks like the Fed is going to hold off. I don’t think that the pace of job creation is so great, that the inflation pressures are going to get high enough, that the Fed is going to go crazy. So it could go on. It can go longer than I think that it would.
    PAUL JAY All right. Thank you both for joining us. It sounds like you’re both saying this economy we’re in right now could at least be going past 2020 elections. All right. Thank you and thank you for joining us on The Real News Network.

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