Randall Wray: Making Money Work for Us – Chapters 3, 4 and 5, RP Book Club
(https://www.youtube.com/watch?v=S8–2VxRwW8&t=1892s)
2023(e)ko mar. 23(a) #EachOneTeachOne #MMT #RealProgressives
This is the second session of RP Book Club’s series on Randy Wray’s “Making Money Work for Us: How MMT Can Save America.” Our guest is Yeva Nersisyan, an associate professor of economics at Franklin and Marshall College and a research scholar at the Levy Economics Institute. In this session we cover:
Chapter 3, Can We Have Too Much Money?
Chapter 4, Balances Balance
Chapter 5, Life is Full of Trade-Offs
Transkripzioa:
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foreign [Music]
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with real progressives I produce these events at real progressives various book
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clubs and webinars and panels I’m going to turn it over to our dear friend Tommy
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John go ahead right thanks Virginia so we have a guest you have a narcissian
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tonight to answer some questions and uh I guess if we don’t have a volunteer at
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some point I’ll give a little summary of the chapters I took some notes highlighted some stuff so it’ll be kind
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of stream of Consciousness all over the place but try to
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summarize the best we can and what I’ll do is I’ll introduce our guests now and just give you the info and then when I’m
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done as and I’ll turn over the mic to her yeva narcissian is an associate
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professor of Economics at Franklin and Marshall College and a research scholar
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at the levy economics Institute she received her ba in economics from Yerevan State University in Armenia
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and her ma and PhD in economics and Mathematics from the University of
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Missouri Kansas City or UMKC as it’s known around here
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yeva has published a number of papers on topics of Interest mmters including a paper she co-authored with Randy Ray
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with the title are we all mmters now not so fast
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she actually did an episode of macaron cheese about the paper which I just listened to it’s amazing check it out if
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you haven’t and uh the chapters we’re going over this week are three four and five hold
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on John Stephen D is here he’s the one who bones Stephen
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go ahead buddy okay can you hear me yes okay fantastic sorry call me John uh
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looks like I’ve stolen your thunder Ray you looked all ready to get worked up over this take it buddy it’s yours tell
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us where you’re calling in from Stephen in Western Australia
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and okay so chapter three can we have too much money
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chapter one we’re told that money is an IOU from the government uh you can
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always use those installers to cancel and debt you owe the government also known as paying your taxes uh because of
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this nearly everyone accepts dollars for purchases and the more money in circulation means more people are owed
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more goods and services and that’s all fine unless everyone starts demanding
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their goods and services also known as spending their money uh why is this because there’s a limit
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to the goods and services and economy can produce and if spending uses up all of those
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resources prices will rise and the value of the dollar drops
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they author introduces us to the fact that Banks can create money by making
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loans it’s a complex topic I hope the author expands on it in later chapters but
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suffice to say that’s control inflation governments must control lending as well
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as spending to keep the money in circulation down
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stuff out of that uh pretty much all I got out of that was the government deficit it was balanced by a
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non-government surplus and that Surplus is the money that’s in circulation which
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we kind of need and in chapter five we learned that the U.S government has been in deficit for
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most of its existence and that governments don’t ever have to actually pay off these debts and they might be
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just misnamed um they can just keep paying interest because people will always be looking
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for these secure Investments uh that we’re told that the debt limit is the
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capacity to pay that interest and the governments that borrow in their
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own currency will always be able to pay their interest because they are able to
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create money and that ability to create new money is
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limited by the capacity of the economy so that you can avoid inflation
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final night I have is the government’s tax in order to reduce private spending
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and re-up resources in the economy that they require or public needs and they
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can then spend those taxes into those resources
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that’s all I had nice job man I appreciate it yeah again
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uh real quickly I think from chapter three man I just think about Libertarians you
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know in their idea that the Venezuela Zimbabwe and print money inflation stuff
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it’s like God it rarely is it too much money it’s like other factors like productive capacity
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and things like that and mmt is not about just endlessly spending money it’s like targeted spending to where
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I mean think if Libertarians understood mmt they wouldn’t be Libertarians anymore
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in chapter five the one thing that kind of came out to me is
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I guess it’s uh it’s like the whole Phillips curve in the nairu and this there’s this natural
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I don’t know like area to where we have to have unemployment to keep inflation down and
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it’s just been accepted as well if it’s just you know like that invisible Market hand you know something we can’t control
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we gotta try to live with it or whatever and it’s just that’s the beauty of MIT it simplifies
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and demystifies a lot of the economic nonsense we’ve been taught to believe and gives us the answers and shows us
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that it’s it’s just accounting either way I am going to turn the floor
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over to our guest a yemma and I guess let’s get her some good questions but just before you begin
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I would just like to encourage people who are new to MNT to ask their
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questions this is not just for people who already know it it’s really most
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important for those who are struggling to understand it so please don’t be shy
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the only way to learn it is to just ask and ask and ask people who can explain
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it and so that’s why we’re doing this go ahead yeah
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yeah and thanks for having me it’s a pleasure to be here and I love solving questions that’s for sure I don’t think
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I Get Enough from my students and you know you’re not academic conferences most of the time is spent on
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presentations when I would rather have the interaction with the audience actually so just a couple of things that
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I want to add before we get to the questions so in the question of too much money can there be such a thing I think
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what people oftentimes talk about too much money they really what they have in mind is too much spending but they don’t
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say it that way and they because they just equate money with spending right more money more spending but then when
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you say well how is that money how did that money enter the economy where did it come from did it enter through
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spending did it enter from private Banks did it come from the government right so then it opens up all these questions of
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if it was created because there was demand for it how is there too much money right so that’s one way to think
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about it so I think that’s an important thing to keep in mind that when people talk about too much money changing too
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few goods the accurate way to put it would be too much spending chasing to a
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few goods right and that’s I think a point that Randy tries to clarify there um for chapter four the main point there
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is about this idea of imbalances right that Randy starts off by saying well
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what’s a balance it’s this idea of an ideal state in some sense right in economics we often like to talk about
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equilibrium which is the state of balance there is no sort of reason to move away from that point and whenever
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you see a deficit for example right you think of an imbalance and so there’s all these negative connotations associated
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with a deficit which is an imbalance right what Wendy’s trying to say is that for every deficit there is a surplus so
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you can’t really call that an imbalance right so if there is a sector that’s in a deficit position there’s a sector
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that’s in a surplus position um they are in that position for a reason in a sense right so similarly we
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have a current account deficit with China right a lot of economists make a big deal out of it not just mainstream
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economists because we have a deficit right but we have a deficit in some
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sense the deficit is good for us and it’s good for China and that’s why it’s the sustainable position right it’s not
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this undesirable position imbalance that has to be corrected all right
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um and from chapter five I think one of the key Concepts is this idea of a free
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lunch in economics we often talk about well masonry comments often say there is
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no such thing as a free lunch right that’s very well known and it’s this idea that if the government taxes a
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dollar and then spends it right it’s it’s not really adding anything new to the economy it’s not really helping the
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economy it’s just redistributing the use of resources for instance and so it’s not really creating any value it’s just
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redistributing it right so um the government can’t just take can’t just create something right out of nothing so
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more or less that’s what they’re trying to say so um an mmt disposes of that idea
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saying that as long as you have unemployed resources especially labor then you can put them to work and that
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is a free lunch or at least a very low cost one right so stop here and see if anyone has any questions
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yeah we’ll uh we’ll start with Alan sharples hello from Maui
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it’s not be our Hawaiian Standard Time right now so I want you to know this is
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my way of giving back my question is why are our politicians and I don’t just
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mean the U.S I think the same applies to Australia from talking to folks and the UK why are they so resistant to adopting
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an MMG perspective it seems like it would give them
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something like freedom to do whatever is on their agenda so just a general question why are they
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so resistant the trillion dollars more question well
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I’ve been thinking about this actually recently thinking that the Democrats are right
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now losing the debt ceiling right because they’re playing the Republicans game right that during Obama
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they were all for balancing the budget that they passed also to rules for that with the deficit reduction commission
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social security cuts were on the table they just weren’t big enough for republicans and so on so they were
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they’re playing this game right and it’s a losing game and so if it if Democrats
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would say we’re not playing by these rules anymore it’s that we’re just gonna say this is not how government finances
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work right come clean with the American people and say this is how it works and these are these are the real constraints
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and so on and they’re not doing it and and it goes back to the question of or the issue of there just being one party
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right so it’s not the Democrat it’s not the Republican it’s the party of businesses the business and corporations
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and so on so I think they say they want to do things but it’s unclear that they
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actually want to do them they will support like Democrats with say we want a higher minimum wage but when it’s time
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for them to do it when they’re in power they never do it but then when they’re not in power they can scream that they
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want a higher minimum wage and they never really do it so I mean political scientists might have a better answer to
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that but I I mean that’s I think what my answer would be
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absolutely our next question is Herb Wiseman herb
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you want to unmute yourself
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yeah I’m herb from Peterborough Ontario Canada the speaker women he was doing his
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presentation said something about taxes being spent to obtain resources I
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think he said and that is not my read of the role of taxes by government that
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when the government redeems the taxes they are destroyed and so I saw that as
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a bit of a puzzle and I’m wondering if yayva you could clarify and by the way hi again yeah I saw you at the summer
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seminar right yes taxes are not used to financing government spending right
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that’s not that’s not what they do instead the way we should view taxes is
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as creating non-inflationary space for for public spending right because if the
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private sector produces a hundred dollars it creates a hundred dollars of income right and that income if all of
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it is spent can actually buy all of that output so if the government wants some
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of that output to fulfill its public purpose whatever that is then they have to then they need to find a way to
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access those resources now they can always try to you know offer a higher price and bid it away from the private
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sector or they could just lower the private sector’s ability to purchase with some of that output right tax away
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20 and that creates then roomed for twenty dollars of government spending right so that’s the role of taxes in
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terms of financing spending so if there is any way in which you can think of taxes as funding government spending it
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would be in terms of real resources creating that real resource space to
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then accommodate public spending in a non-inflationary manner and by the way
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is there any follow-up questions I’m happy to answer those as well
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up next we have Wayne McMillan yeah well I realize this question is probably a little bit out of our topic today but
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I’m wondering in light of modern monetary Theory do we have an understanding of whether
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we might be heading into a world recession and I know this might be hard
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to predict but do the signs look like we’re heading into a world recession
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um it’s it’s still to say I think there is a good chance that we are and obviously
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what happened in the US doesn’t stay in the U.S if the U.S goes into a recession that’s going to have worldwide
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implications considering that the world economy is very fragile there’s the problem of the FED raising interest
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rates and it’s not just a domestic problem it’s a problem domestically obviously that can tip our economy into
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a recession um you know higher interest rates can can have two different kinds of impacts
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on the one hand higher interest rates means you know um higher costs of
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borrowing so that can lead to lower spending by businesses lower spending by consumers and so on so that’s one aspect
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of it the housing market obviously is the one that’s most affected by by this but then it has Ripple effects
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throughout the economy right what happened in the construction sector doesn’t just stay there it’s going to then have Ripple effects throughout the
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economy but then there is also the problem of the FED raising interest rates and what that means for uh other
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parts of the world that have dollar denominated debts right which might not necessarily be fixed in have fixed
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interest rates so that could then mean potentially bankruptcies around the world because of higher interest rates
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and by the way the same can happen in the US it sort of depends how much short-term debt we have right so if
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there’s a lot of short-term debts that has to be rolled over at higher interest rates or refinance at higher interest
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rates because interest rates are higher now than when the debts were originally taken then that could have financial
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implications in the United States economy as well so it’s it’s hard to
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tell it sort of depends on the health of the balance sheets right um
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that’s that’s the issue and of course inflation has been eating away at people’s real incomes right in a way the
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way we’re finding inflation we’re saying well we don’t want you to pay more for food instead we’re just going to raise
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your interest costs so it doesn’t matter how you’re giving that money out one way
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or another whether it’s higher prices or higher interest rate it’s going to be side up and away from us right that’s
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what’s going on so there’s a good chance it’s really difficult to say if it’s
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going to happen or not I I think the economy seems to be more resilient than I would have thought but also it takes a
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while for interest rates you know changes to have an impact in the economy and I think there is also
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this drum beat by The Business Leaders saying we’re going to go into a recession we’re going to go into a
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recession and I’m wondering why they keep saying that right because it doesn’t really help them in some sense to create this
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pessimistic Outlook right so why are they doing it is it is it
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going to be do we need a recession to discipline workers because workers are trying to unionize and so on man you
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know maybe that’s where things are going I’m not really sure yeah it seems that way seems a good way
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to keep workers in precarity okay anyways our good friend bakari go
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ahead buddy oh well thank you so much I’ve had two questions probably answered the question
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that I posted and I wasn’t paying attention because I’m multitasking around the race says that taxes are
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government revenue so I’m not quite sure I understand what he means by government revenue if taxes kind of destroy and the
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government doesn’t need taxes to pay for stuff and this let’s ask question one and the
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second question is why doesn’t like say a Democratic party propose that people
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who own a certain level of income do not pay any um federal income tax at all so in other
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words by people not paying income tax they were able to keep more money in their pocket and also keep one money in
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the States because if she is like the government doesn’t need that tax money and we see ablation happening and people
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can’t afford to keep up with it so why not just cut out taxis in a certain level I mean I’m certainly not for rich
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people because they knew need to pay taxes but they do they absorb a lot of money with those are the two questions
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thank you okay so um on the first question uh
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calling taxes government revenue I think the reason why we still keep doing that is because revenue is from the French
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World Revenue which is like return so it’s returning government is back to the
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government so in that sense right it’s still appropriate to call it Revenue not because it’s money that the government
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is going to spend right but it’s just the government is that were returned to the government
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on the question of tax cuts right and I think uh smart the Democratic party would be the Democratic party of tax
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cuts for the poor right or lower income or lower middle class people right so
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that would have been that could have been right the right strategy but every time there’s a question of text that’s
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like payroll taxes right let’s cut let’s give a payroll tax holiday I think this was getting this cost in this class
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during covet and then you have Progressive economists saying no no we can’t do it why not because
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um payroll taxes fund Social Security right if we cut payroll taxes which
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disproportionately affect you know lowering on people because those on the higher end of the income distribution
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don’t pay as much in payroll taxes right because of the cap right so then they
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said well then we’re not going to have enough funding for social security right because they still have that framework right that we need government revenue to
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spend any particular we need this particular Revenue earmarked for Social Security and we cannot touch it because
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then the Republicans will come after Social Security and they will say let’s cut it and they’re right Republicans
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will do that right but that’s because you’ve already seated like you’ve already accepted their framework you’re
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already playing by their rules so you’re going to lose so that’s one point but there is another Point here that if you
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are thinking of taxes as a way to withdraw resources right let’s say you’re fighting a war then you can’t
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just rely on taxes on the rich to pay pay for your war in that sense right to
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create enough resource to free up enough resources in the economy for fighting a
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war like let’s say World War II right you actually need people who are middle
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class who are lower income to cut their spending right because that’s where most of the spending in some sense is coming
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from because of the numbers right so then so then what do you do there right on
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the one hand for your taxes to actually create home for say a green New Deal you
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need to tax those whose consumption will be affected by the taxes right if you write Jay Bezos is tax rate they’re not
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going to cut their consumption so it’s really not going to free up as much resources unless you really raise their taxes really highs which I don’t you
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know which I’m not saying we shouldn’t do so there is a reason why there should be taxes on people but there is
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Alternatives right so there’s Alternatives you can try to encourage people to save by saying selling certain
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kinds of bonds that only to lower income people or middle-income people can buy and so on right would say high interest
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rates in a way like you are delaying their consumption rather than confiscating their income enhanced
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permanently lowering it right again happy to answer follow-ups
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excellent yeah and I think every Congress person knows mmt they know how it works and
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it seems to me like when you see the Fike attacks taken out of your paycheck it’s almost like a reinforcement of this
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illusion that taxes fun stuff it’d be bad if a lot of people knew mmt and they
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understood that taxes don’t fund anything and it would change the whole argument so maybe it’s
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preventing Revolt by keeping that illusion going or something I totally agree you could eliminate taxes
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working people okay on to Kenny savarese excellent well done on the last name by
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the way on page 6162 chapter 3 section A there’s
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a whole section around talking about this fixed price floating quantities
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fixed quantity for floating price the Alternatives two options of spending
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and you know that’s where they talked about treeing resources and stuff that was just hard
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to track for me so if you can maybe recap that and kind of the context of how that’s important and then I’m not
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sure if this is related or not but I’ve heard Lauren Rosler and interviews I like this
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government as the price Setter I don’t know it’s not if these two things are related
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yes they are they are sort of related right so what Randy is trying to say there is that government spending does
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not necessarily have to be inflationary right which seems to be the Assumption generally and so he’s saying there’s two
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ways you can do more more spending right if the camera wants to buy something
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they can say okay we’re just gonna fix the price and then we’re just gonna say this is the price we’re offering we’ll
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just buy whatever quantity is available at this price right so in that sense they don’t control the quantity but they
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can set the price and they might end up buying less or more then they might be wanting to buy right
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um or perhaps fixing the prices what they’re trying to do but the point here is that you’re not inflating the price
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of whatever you’re buying because you’re fixing the price well if you just say we’re going to buy at a floating price
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right so the market determines the price and instead we just set the quantity right in that case case you might end up
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having inflationary pressures a good example of this is the job guarantee right because this is an example of the
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government fixing the price and this is where Warren Mosler comes you know Moses Point comes into the picture as well
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right where he says the government fixes the price that it’s paying and in particular for labor right because
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that’s the most important sort of cost in the economy so to speak so then
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you’re fixing the price of Labor right with the job guarantee you’re saying this is the wage and we’re just we’re
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fixing the wage at say I don’t know twenty dollars an hour and then we’re willing to take to buy as much labor as
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it’s available so then you solve the problem of Labor being idle right you
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buy whatever quantity is there but you are not doing it in an inflationary manner
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so yeah with the fixed price floating quantity it just sounds like a standard buffer stock now that
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you’ve re-explained it that way right that’s exactly how people use it with food and stuff and then obviously that applies the child guarantee is there any
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type of buffer stock mechanisms where they do the floating price what they do the other way is that
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commonly used anywhere in our economies John’s like a bad idea but I’m curious
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if there’s ever any good use for it I’m not really sure but in a way if even if you do it for just one commodity right
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it’s possible to inflate the price of that commodity it doesn’t necessarily have to then become a generalized
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inflation price inflation unless I guess that Commodities oil right yeah but you
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know when you’re doing it with labor which is important right then the fixed prices yeah the job Guarantee Way
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great thank you awesome
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all right up next we have Stephen Cobb go ahead Stephen whenever you’re ready hi can you hear me
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indeed okay I have a follow-up question and this is a a follow-up to a question that I asked
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Randy Ray and his initial presentation and he answered it and frankly I didn’t
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understand it well enough so I’m going to ask you and here’s how I’m shaking at
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the moment we all know about the federal government’s Monopoly power
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to issue the currency you know Article 1 Section 8 makes it very clear
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that’s the only game in town it’s Uncle Sam that’s going to issue the currency well now let’s focus our attention on
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Commercial Bank and Commercial Banks find a credit worthy customer and the guy wants to add
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equipment to his business or buy a car or whatever the bank creates a loan over
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time the customer repays the loan so it extinguishes the debt the bank is the
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Creditor and the guy who gets the loan is the debtor
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and the creation of that loan is the bank in effect issuing currency
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and if it is is it doing it because it has been deputized by the Central Bank
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in other words the Central Bank says we can’t you know we can’t deal with all the many loan requests going on all over
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the economy so we deputize an individual low Commercial Bank to issue the currency
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for us and the form of the loan is that the way it works or basically I guess I’m asking about the difference between
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money and currency right um well uh I think really if the
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difference between currency and ious probably speaking right because what the bank is technically doing is it’s
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issuing its IOU right it’s issuing deposits and they are the banks I use it
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was sort of easier to see when Banks were issuing Bank notes right it was clear to see that these were the ious of
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the banks right now so anybody can is not just banks
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that do it right investment Banks do it finance companies do it you know
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households do it and the financial corporations do it right
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but Bank ious are special and um the reason they’re special is partly
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the government right that the government we have that we have FDIC guarantee right that we guarantee that the nominal
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value of bank I or use right will will be fixed just like the nominal value of
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currency is fixed right so 100 bill in my pocket in nominal terms is the same
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hundred dollars tomorrow and it’s the same hundred dollars a year from now right um the same thing with bank deposits 100
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bank deposit is a hundred dollars in nominal terms right not in real terms in
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nominal terms 100 a year from now and and so on even if the bank goes bankrupt that
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hundred dollars is still nominally a hundred dollars because of the FDIC guarantee so FDIC which of course
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confirms the government there’s also the Federal Reserve that stands behind both FDIC but also behind
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Banks right so I mentioned the banknotes and the banknotes of different banks did
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not exchange at the same value right if you were a small local bank in Missouri and if I had the banknotes of a small
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local bank in Missouri and I was in New York and I wanted to spend them I might have I might need to go to a bank for
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example in New York and try to exchange them for that Banks ious and maybe they
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would take it and give me a 50 cut right they would say for every hundred dollar
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Missouri Bank I I use you’re giving me I’m only going to give you fifty dollars worth of New York bank ious right
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something like this so today when we think of bad deposits we think of them as the same thing but in reality
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Citibank deposits our Citibank ious right and it’s like Citibank Bank
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banknotes and Bank of America departed their Bank of America so it’s the same thing the reason why we think of them as
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being equivalent is because of the FED because the FED stands behind the banks to make sure that
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the One bank that is owed money by another bank will always get paid even if they don’t have money right the FED
31:38
will make sure that the bank that’s due money will get paid we didn’t have that right in that period that I’m talking
31:43
about with banknotes because the New York Bank didn’t know that the Missouri Bank could pay them let’s say in gold
31:49
right how would you know if they had enough gold for example right and
31:55
now that’s not a problem because the FED will make sure that the bank that has to
32:01
make the payment has enough reserves or has enough Central Bank ious with which to pay the other bank right and so
32:08
that’s why we think of the ious of a small Bank in Lancaster Pennsylvania as the same as the ious of Citibank and
32:15
JPMorgan Chase right because the Central Bank makes sure that that’s the case otherwise our payment system would be
32:21
out of whack right like if I had a check written or a small Bank in Lancaster and
32:26
I tried to deposit it in my Bank of America account and they gave me a cut then that would be a problem so because
32:33
of the fed and FDIC then we technically review Bank either use as almost equivalent to US Government liabilities
32:41
because they are convertible or in demand they don’t their value sort of does not depend their nominal value does
32:47
not depend on the solvency of the issuing entities which is not the great case for other entities right that’s why
32:53
we like to talk about the higher to keep money where you had the government that stands at the very top and then Banks
32:59
come right after it and then you can think of none Bank financial institutions and then you know firms and
33:06
household and so on right so that’s yeah that’s really that I mean
33:12
again I’m happy to answer the follow-up questions to to that question
33:20
nice job all right next is my new best friend Stephen D who is so gracious to do the
33:27
chapter summary Stephen you want to unmute your mic and ask your question
33:39
I understand now that when buying bonds and Banks swaps its reserves and said
33:46
for bonds just don’t understand hands and effects of the money supply it’s
33:52
every Bank customer has deciding money in their bank account can you elaborate today
33:58
sorry say that again I didn’t hear the part about money supply what about the money supply
34:04
uh maybe I’ve misunderstood it well I thought the government sold bonds
34:11
to reduce the money supply but I don’t see how that works
34:16
oh how that works okay right so um
34:22
right so if we’re running a deficit right then in case in the United States the government is mandated to issue
34:28
bonds dollar for dollar for the deficit right but the reality is that what bonds
34:35
really do is they well a couple of things right and they’re related they withdraw those electronic ilus that the
34:44
government created when it’s spent right so they’re just changing the portfolio
34:50
of the private sector right so the private sector gets credits to their checking accounts and their Banks so
34:57
they basically have money now right because as we just said Bank deposits our money
35:02
and then the government says now you have the option of just keeping the money or you can buy the bonds right and
35:09
the bonds pay interest and then some people might swap right one for the
35:16
other so they don’t have the money anymore and that they have the bonds right so that’s how it would work so you
35:23
have to use your bank deposits from the individual’s perspective right to pay for the bonds
35:28
so then deposits will be minused and the bonds right on your balance sheet will
35:34
be plus right so then you can see that money supply technically is going down and there then the next step right
35:42
because process is not done yet the bank has to make the payments on your behalf
35:47
to the government right and that’s going to happen with those electronic entries
35:52
which we call reserves right which is like the L you can think of as the currency in the banking system right
35:59
it’s all electronic or mostly electronic and then so that has to be minus as well
36:05
right that’s that second step of that payment process right so your deposit get minus so money supply goes down the
36:11
bank reserves get minused because the bank is making a payment on your behalf right then you’re going to then
36:19
that’s when the transaction will finally settle so resource will go down and then the money supply will go down as well
36:25
but the key Point here is that why would the government want to do that right why does it make sense for the government to
36:31
swap one IU for another bulk of those are ious right at the end of the day
36:37
and the I and the point here is that with the bonds the government is now offering an interest earning IOU and
36:45
hence it establishes a non-zero interest rate so I have a currency that I use in
36:51
my classroom actually I call them Frank less because frankly in Marshall College and I guess Franklin’s kind of works for
36:57
money right and so I tax my students 25 Franklin’s at the beginning of the semester and they have to pay me those
37:03
25 Franklin at the end I mean it shows a bunch of things to them right for example it shows that the worthless
37:10
piece of paper that I showed them at the beginning of class right uh is not worthless anymore after I impose the
37:17
text right now it’s worth two weeks of their labor basically I then show them that each Franklin is worth one hour of
37:23
their labor more or less right because they have to earn the Frank list to participation attending lectures and so
37:29
on and so forth but I will also it also shows them that they cannot pay
37:34
their taxes at the beginning right they can only pay taxes after I’ve spent I’ve
37:39
bought their services like participation or so on so they can only pay their taxes at the end of the semester not at
37:45
the beginning but one thing that I also do there is I offer them bonds right I say okay I’m
37:50
gonna sell bonds and I do it like it’s in the real world through an action or the private sector gets to determine the
37:55
interest rate that they’re going to aren’t in a way and and what that shows
38:02
them is that if the bonds weren’t offered the interest rate in the economy would be zero because I’m not paying
38:08
them anything on their checking accounts right once I start paying once I start offering the bonds right then there is
38:16
an interest rate which is greater than zero and they can see that I don’t need to borrow money from them because that
38:22
money that they’re using to buy the bonds came from me right but they can also see that it’s for the interest rate
38:28
purposes that now the interest rate is non-zero when there are bonds now
38:35
given that the FED now pays interest on those accounts that banks have at the
38:40
FED then technically we don’t even have to issue bonds to maintain a non-zero interest rate that’s why we could just
38:47
stop issuing bonds tomorrow and then we would have no problem of debt ceiling because we wouldn’t not be issuing that
38:53
but that’s another question absolutely
39:00
all right up next we have Alan Alan go ahead and run me your Mike
39:06
I was looking at the chat and the Q a
39:11
and the questions seem to apply a level of hypocrisy on the part of
39:19
politicians and neoliberal type economies that I
39:25
find is it really is that as it seems
39:34
you mean the hypocrisy as bad as it seems
39:40
I mean I I you know I’ve only lived in the U.S 16 years now so
39:48
so I don’t have that sort of long ban of history or that I’ve lived through to
39:55
say okay this is you know how it is but to me it seems like it seems like it is right because Warren
40:03
Mosler like to often say that he would meet with people like politicians or
40:10
people who work at the fed and so on and then they would say well okay we
40:15
understand what you’re saying but we can’t go out and say these things right so there is a little bit of that I
40:21
suppose that nobody wants to be that I guess Trailblazer in some sense
40:26
but I feel like there there has been enough intellectual space and space
40:32
created by activists such as the people who are running this event where it’s
40:38
okay for politicians to take those risks and say it right and they’re not doing it so I don’t know
40:45
I think hypocrisy is probably a good enough in culprit here
40:51
I also don’t think it matters I mean there’s certainly some politicians who
40:57
just don’t understand it we forget mmt is crazy
41:03
everybody knows you need an income in order to afford something and so we’re
41:08
turning that upside down so they’re definitely people who don’t understand who are genuine in other words but so
41:16
what their actions promote austerity however
41:22
you look at it and even if they believe you need even if they believe the
41:29
Orthodox economists there’s they are deficit spending anyway
41:36
so they’re spending all they want on the military or on Wars so they’re
41:43
Hypocrites there as well so either way it’s their actions that are not their
41:49
internal feelings or thoughts that should matter right and the question about military is
41:55
an important one I was I’ve been thinking about this question empty budgeting right where you are you need
42:03
to look at whether a program will be you say okay what do we need and then
42:08
only you say well how much money do we need to do what we need right and I feel like we’re already
42:15
doing that for one part of our economy and that’s the military right we’re not saying how much is tax revenue can we
42:21
raise for the military is that we say what do you need and then we just make it happen and most of the time we even
42:28
add more to what they’re requesting right so if we do have that kind of mmt budgeting it’s just that we only do it
42:34
for a particular sector of the economy exactly
42:41
yeah I don’t know I personally think every one of these Congress people understands it if they don’t they’re not
42:47
qualified for the job and I think it’s more just it’s not in their best interest to stay in power and keep
42:54
getting donor money to start talking about spending on the public purpose and whatnot but
43:00
it’s a conversation for a different day we’re gonna get to the next question from David David go ahead buddy
43:08
hi this is well this is related my question was what makes you think that
43:13
the people and you’ve already answered it a little bit but I want to add I guess
43:19
I don’t actually think that a lot of them know you have to remember I work in the federal government in one of the federal
43:26
agencies specifically I work in small business administration throughout the pandemic we had these
43:33
internal phone calls big teams meeting calls or we were
43:38
talking about what was going on disaster loans and all and every now and
43:43
then one of the really senior people a political appointee would say something about you know and even some
43:49
of the senior career people so that they you know we’re stewards of the taxpayers
43:55
money right because the SBA guarantees loans we don’t make that many Direct Loans and
44:01
I would and I every now and if I got a chance I would go out on a limb and I’m
44:07
protected I can’t get fired even if they don’t like me I’m a career appointment appointed person so they can’t fire me
44:13
I do my job well and I’d say look no that’s not that’s not taxpayer money and then I would speak mmt without saying
44:20
mmt and I would have a whole bunch of people in the chat agreeing with me going yes that’s true
44:26
yes that’s true yes that’s true and yet we have senior people who still don’t understand Banks create
44:33
money they still think this because I’ve also been one-on-one in the room with them in conversation they
44:40
don’t get it and some of them are former bankers and then when you stop and you consider
44:46
and I’m saying this just to everybody on the call so you kind of understand that you got to stop and consider who gets
44:52
into the house right they’re not smart some of them might
44:58
the Democrats love people with law degrees from The Ivy Leagues to get into the house they love
45:04
that the Republicans love a lot of small business owners right just think of some middle of nowhere
45:11
District everywhere somewhere but some you know low population density state
45:17
somewhere with some small District not a lot going on in their economically who
45:22
gets in the Congress if you’re a republican you’re probably some like local business owner you’re probably doing about five million a year in
45:28
Revenue that’s not that much and um but that’s much more than everybody else and that allows you the luxury of running
45:35
for office and you get connected to the Republican party you get in it doesn’t mean you know anything it doesn’t mean
45:41
you know any economics accept the economics you need to know to run some small business and certainly the
45:48
Democratic types who you know they’re all ivy league people with law degrees from Yale or something and they don’t
45:55
know anything why do we think they know anything and so I I have to disagree that a lot of
46:01
the people in Congress know this they don’t know it because whatever economics
46:06
they know if they are not if they didn’t do an economics degree they had a semester or two of neoclassical
46:13
economics I find myself giving away professor kelton’s book like I’ve bought
46:19
used copies and I give them away I just give them away and people come back to me and go oh
46:25
now I unders oh I get it oh oh you know I’ll just giving it away to Bankers who
46:32
use our loan programs they give them away to my boss I give them away to to people I meet I just give the book away
46:38
without saying mmt and I say that this is about the economy are you worried about it just people don’t know
46:45
and you can’t assume that because they’re in Congress they know right they’re not smarter than anybody
46:52
they’re just someone who either by virtue of having the right law degree
46:58
from the right University the Democratic party likes them or by virtue of having
47:05
enough Idol you know enough cash available from running some small
47:10
business in a district a house district somewhere they now have the Leisure and luxury of running for office and
47:17
remember in a lot of these districts I’m from Southern California so those District races are expensive but imagine
47:23
running for office in the house in like Oklahoma it doesn’t cost anything
47:28
relatively right it doesn’t so just any Yahoo who doesn’t know anything
47:35
can end up in there and there’s room to educate them and
47:42
last thing I’ll say someone mentioned that Frank Newman book by the way that book’s even cheaper than Professor kelton’s I give that one to the people
47:49
who I think don’t have the attention span to read celted sport right because it’s really so I’ve bought dozens of
47:56
copies I mean literally does it two dozen copies I’ve thought of it and given it away and people go oh oh I didn’t oh that’s
48:05
interesting oh the people in Congress they don’t know some of them do but they don’t know
48:11
they’re no smarter than anyone they don’t know anything you know that’s yeah that’s my thing I completely
48:18
agree with that right the statement that not everyone is in Congress and smarter but do they do have access to more
48:24
resources than we do right they have stanfords they can you know get advisors and so on and I guess if this was 10
48:32
years ago I would say sure I completely agree with you but that’s what I was saying right that the mmt is now in the
48:40
National conversation in a way you have a position on it at least if you’ve been
48:45
in Congress for I don’t know more than a term or two right and and I guess when I say they
48:51
understand it I’m thinking of people like Chuck Schumer I don’t think Chuck Schumer doesn’t understand how government finances work right and
48:59
you know if he’s running if he’s running the Senate then Democrats have the house and they’re still not doing so that you
49:05
know those are the kinds of people that I have in mind I don’t mean just like any um member of Congress understands this
49:13
right but that’s the point is that mmt is now out there these ideas are out there right so if you
49:19
it you you are able to access them more so than you could say 10 years ago like
49:25
kelton’s book and that reminded me of when I was a graduate student at UMKC we were doing this post case and
49:31
conferences and we get ready to raise books out there who I guess we were selling
49:37
them at the conference or something and then met forsterer was there and we were like can we leave the table unattended
49:43
he’s like yes it’s okay if people stole the books that’s a good thing let them steal the books you know understanding
49:49
modern money was the book so yeah they just reminded me of you giving away the books
49:55
I think a lot of them or most of them probably all of them understand mmt like they understand I guess like Marx and
50:02
class struggle they’re just on the other side of it I believe and saying mmt
50:09
friendly things and public investment is diametrically opposed to what their donors are trying to do so I think they
50:16
just it’s all an act it’s all theater for us to argue about but that is my opinion and
50:23
we are going to get on to our next question from cagley if you’re ready buddy go ahead and
50:28
unmute you there buddy yeah I’ll go ahead and read it the concept
50:35
government debt is actually public sector Surplus could easily be illustrated by looking
50:40
in your wallet on the ten dollar bill that I pulled out of my wallet has printed across the trout
50:47
Federal Reserve Note this represents a debt obligation of the federal
50:53
government I can redeem this bill at any time for ten dollars it is part of the
50:58
national debt but it is my asset if the government paid off all of its debt I
51:05
would not have this bill in my wallet I would be ten dollars more could it really be
51:11
this easy to illustrate what mmt is saying
51:16
and that’s the question right um so
51:22
it’s difficult for people to understand that their income is somebody else is
51:27
spending I try to emphasize that point a lot with my students right because they
51:32
say okay well from the individual perspective where do you get your ability to spend right and that
51:40
ability to spend tons of earning income right but then at the same time your
51:46
income is scales ascending so then it seems like it’s a chicken and neck problem right that if income comes from
51:53
spending but the spending is income right which one comes first and so on and that’s where you can then understand
51:59
that some kinds of spending are independent of income so investment is one but also government spending right
52:06
and that then creates income out of which you can consume but out of which you can also you can also save and once
52:15
you understand that simple idea that at the the level of the economy right
52:20
income equals spending then you say well it could divide up people’s you know if
52:25
you say okay let’s take the difference between your income and your spending and that will be your deficit or your Surplus right then because income ends
52:32
up for everyone right and it all adds up to spending then all you know the then the sums of all the incomes and minus
52:39
all the spendings have to add up to zero right so I think the sectoral balances
52:45
right it’s a very useful tool to explain that government deficits mean private
52:51
sector surpluses and maybe I don’t know maybe I’m thinking of my students and I’m thinking of all the
52:56
time that I have in the classroom and perhaps there’s an easier way to do it right the question the point of the
53:04
dollar right in your wallet I think that’s a useful one and what I would say though is that’s already so first of all
53:11
we don’t count that toward debt right we don’t count that toward the national debt so I just want to clarify that only
53:16
the bonds will count although technically that’s also debt right so that’s one of the things that you can
53:21
point out you say well why do we have a debt ceiling for the bond and so we don’t have a ceiling for it the dollar
53:27
bills for example right or the reserves and so on and so there is that but that’s that’s the dead side of things
53:33
right so it’s not the flow of the deficit but it’s the stock of liabilities that are out there right
53:39
which is related to the flow right the positive flow of a deficit leads to a stock of National Financial wealth for
53:47
the private sector and so on but yes you could then look at this and say well it’s a Federal Reserve node
53:52
there’s a government liability and it’s my asset now the Panic right now right about the debt ceiling that illustrates
54:00
the point very well right um there’s a panic that what happens if the government defaults what about all
54:06
the 401ks that have government bonds right and so on and so forth they say wait a minute suddenly now the bonds are
54:14
a good thing right because they’re in the 401K or so on right then you see right that it’s well that it’s in
54:20
somebody’s 401k and that’s not the national debt right so um the current panic over that I
54:29
think it’s very um Illuminating absolutely all right next up we have my
54:36
comrade from another mom red Jeffrey Ginter go ahead buddy how you doing Eva nice to see you again
54:43
May the force be with you there’s two things that I just every now
54:49
and again I like to get saying is front and center because I think people just need to hear it so if you
54:56
could talk about two different things what is the law or rule when was it done
55:01
and under whose authority the relic of the gold standard stating that Bond sales must equal deficit spending like
55:08
we could talk a little bit about that and second what is the law or rule that forces the CBO or to tell Congress about
55:15
how budgets will affect the deficit almost to the exclusion of just about anything else when did that take place
55:21
yeah not sure but the first one I want to say from the beginning whenever we’ve had to
55:30
issue whenever we’ve had to run deficits which was usually War related but you
55:37
know but don’t quote me on that so I don’t know when we made it a rule that the deficits have to be paid for by
55:44
government bonds and I guess I should know this I should make a note to myself the second one the CBO was created for
55:51
that purpose right at least that’s my understanding that CBO was created to
55:57
score right the um the spending programs right according to
56:05
how much they would be adding to the deficit so it’s not like the CBO was there and then they decided to do this
56:11
as well I think it was created for that purpose and I’m going to quickly Google when CBO was
56:19
established because I think it might be related to that
56:25
no it’s not related to the 87 thing so it was established in 1974.
56:31
yeah so that’s what I think that’s that’s my understanding of where the CBO
56:38
and the score income so I think CBO was created for that purpose right our next question is from
56:45
go ahead and unmute your mic guy hi everyone hi Eva thanks for doing this
56:51
and I just want to say I’ve also appreciated a lot of content you put out on RP I learned a lot so I have a
56:58
question in the similar theme of the recent ones here so I mean especially
57:03
now with debt ceiling there’s been sort of This research and discussion about mint the coin I’ve also heard other
57:10
people including Warren and John Carney discussed the possibility of running uh
57:16
overdraft Accounts at the FED which to me personally not that means anything is actually a more appealing option in
57:23
some ways and achieve the same kind of political outcome can I just ask you then in your opinion
57:30
putting you on the spot a little bit is there any compelling argument for or against this idea an over draft account
57:37
perhaps there’s some law that’s related and is there any reason this idea hasn’t really gained as much
57:43
traction has meant the coin for example well we so I think the reason why the mint decline has has been
57:52
um advocated for by people like Rohan gray and others is because you don’t
57:58
need to change any rules for you to be able to do it you’re just using a loophole in an existing legislation to
58:06
do something I wrote a short piece and I don’t know if it will ever see the light of day but
58:11
I basically said Janet Yellen is right the coin is a gimmick because that’s what she said it
58:17
is but I said so is the dead ceiling right it’s like one gimmick to overcome another gimmick right in a way you have
58:23
the self-imposed constraints and then you’re finding trying to find a way out of them and you say here is a loophole right so in a way if the debt ceiling is
58:32
um sort of legitimate right then so with the coin in that in that sense if you
58:37
think uh I think so that’s that’s why the coin right it’s not that the coin is the preferred alternative it’s just that
58:44
the coin can be done without needing to for Congress to make any changes because Congress is not going to make those
58:49
changes right now ideally we should have an overdraft facility right
58:54
um at the FED where the government uh that the government can just use and then it doesn’t have to issue bonds
59:00
dollar for dollar it can still choose to issue bonds it can approach them in a functional manner right do we need more
59:06
bonds for Pension funds and insurance companies and so on right do we need more of those for instance um given the
59:14
kind of pension system we have right we might need to keep that and then we can just issue them do we need to issue more
59:21
short-term treasury bills do we need to issue longer term so we can sort of approach that whole bond issue more
59:27
functionally right depending on the needs of the economy for treasury Securities and then sort of and then
59:34
leave aside the question on budget deficits right and then if we have the overdraft facility then we can do that
59:39
right so basically use the over draft facility unless you also want to you
59:45
want to issue the bonds for a particular reason for instance although you cannot just you know do both at the same time
59:50
they’re not contradictory now we did have the option of the
59:56
treasury having a line of credit at the FED until it was either 1973 or 1978
1:00:03
when that was eliminated okay I don’t remember the legislation that eliminated that but until then we had that that
1:00:11
possibility now it didn’t mean that the treasury could just spend without issuing bonds
1:00:17
right there was a limit to that line but it was still there and it’s not there anymore now Bank of England right there
1:00:25
the treasury there in in the UK has a line of credit to Bank of England they
1:00:31
actually tapped that line of credit during covet right and there was a lot of
1:00:37
um a lot a lot was written about that at the time right that they’re printing
1:00:43
money to finance the government spending why are they doing that and so on if I’m not mistaken in Canada they have
1:00:50
that as well right so there is no reason why we cannot resurrect something like that but the problem is that Congress
1:00:57
has to actually decide on that then if Congress is not going to agree to raise the debt ceiling then there is no chance
1:01:02
that they are going to make these kinds of changes right
1:01:10
Tyrone whenever you’re ready buddy go ahead sure my question was kind of inspired by
1:01:17
the SDA guys Thomas and I was wondering I guess what you would say about
1:01:24
collateral requirements for banks and particularly When government backslows it seems like the effects particularly
1:01:32
on like small business SBA Loans or guaranteed loans you end up getting a
1:01:37
wealth pass which means fewer people of color fewer women fewer people with low income backgrounds
1:01:44
or not high income get filtered out of the potential create a a business
1:01:50
building affordable housing doing anything other than
1:01:55
working with during labor right and I think that’s one of the
1:02:02
issues that Rengar discusses in chapter three when he talks about the private money creation by Banks right
1:02:10
so when people talk about Dynamic money creation sometimes they will say the bank creates money out of thin air I
1:02:16
think that’s not exactly correct it doesn’t create it out of thin air it created
1:02:21
by accepting the IOU of somebody right whether it’s a household or whether it’s
1:02:28
a business right so then the question of say Bank Health right is about the ious
1:02:33
that it’s accepting in the process of issuing the deposits right if they’re accepting good quality ious and there
1:02:39
will be healthier and so on and so forth right but what brands Randy says there correctly is that we have this free
1:02:45
market approach right so we have banks that have that are subsidized in a sense
1:02:50
right they have all these public guarantees but then we allow them to sort of uh direct
1:02:57
society’s resources how they see fit right with a very limited exceptions
1:03:04
we can definitely do more of that right so a lot of mmters for example
1:03:10
support credit controls for instance right which can restrict some of that certain kinds of lending right that you
1:03:17
don’t want which can prevent asset price bubbles because you’re not sending so much
1:03:22
credit in one particle into one particular area you can do it on the other side as well right you could say
1:03:28
we do want to prioritize certain kinds of lending right we have the community reinvestment act which supposedly which
1:03:36
is supposed to do that to to some extent right that banks have to
1:03:41
make certain kinds of loans and reinvest in communities and so on it seems to not have been super
1:03:47
successful so we can definitely try to beef that up right
1:03:54
and make sure that everyone has access to credit because I think once you understand that money is not a scarce
1:03:59
resource right Finance is not a scarce resource then it opens up the possibilities for all sorts of positive
1:04:05
change right the problem is that it’s very difficult to
1:04:12
it’s it’s very difficult to win when you have the power structure that’s set up in a way to not want you to make that
1:04:20
those Positive Choices right I mean to put change it’s not choices yeah
1:04:26
all right our next question is going to be read by Virginia from Greg Rose who I imagine is laying on a pile of goats and
1:04:33
he cannot ask his question right now it’s probably milking the goats right right
1:04:39
but Greg is one of our most valued writers at real progressives he says could you ever please provide
1:04:46
some insights on the Saudi principle that sounds British doesn’t it you sawed
1:04:52
on the Saudi principle page 80 how compound interest on debt outpaces
1:04:59
growth our present path of asset inflation and wave deflation how might
1:05:05
it get Jubilee unfold Uncle Sam can roll over the dip forever so without policies
1:05:12
such as zerp that’s zero interest rate policy without policies such as zerp inequality
1:05:20
could in theory get worse forever we can’t spend our way to equality
1:05:26
without first canceling some of the inequality that’s a question is this our
1:05:31
situation please connect some doubts for me
1:05:37
right so I think it’s the idea that if you have an interest rate right that is
1:05:44
higher than the growth rate of the income then it means your debt will become unsustainable because if your
1:05:51
income is not growing sufficiently to at least cover the interest right that it
1:05:56
means you’re not paying down the principle and in fact you could be adding to the principal so in some sense
1:06:02
you become a kind of a posey right then you become a you have the positive position in them in that Minsky and
1:06:09
terminology right and so that’s not going to be sustainable now
1:06:16
so a lot of economists like people like Jim Baker write say how
1:06:22
come people aren’t appreciating the kind of economy we have it’s a very good economy and
1:06:30
I think okay if you look at it in a vacuum you would say this is a good economy relatively speaking right the
1:06:36
unemployment rate is low for example and so on but then at least compared to the
1:06:41
previous recoveries that we’ve had which been very jobless and sort of dragged out but at the same time you say well
1:06:47
you can look at it in a vacuum right there is all of this past 40 years where
1:06:52
wages have not grown right in real terms or inequality has been a problem where
1:06:59
we have the a problem with student loans because education has been unaffordable for most
1:07:06
people the the housing prices right we’ve had inflation
1:07:11
in asset prices for many many years now and obviously the ones who own the assets are the ones who are benefiting
1:07:17
from this inflation while the rest of the people who are trying to buy some of these assets like homes are not able to
1:07:25
so yeah that’s that’s sort of the context within which people look at the current economy and they say it’s not
1:07:31
working for me right because it has not been working for quite some time it’s not just about the current sort of point
1:07:38
in time it’s not just about that point is that macro economy politically right how much more can people take I
1:07:45
don’t really know I think I’m constantly amazed at how much more they take right
1:07:51
without being on the street especially in the United States they are in the streets in
1:07:57
France for their retirement stuff but um but but macroeconomically right if the
1:08:04
debt becomes too unsustainable it’s not going to it a process that is unsustainable by
1:08:11
definition cannot be sustained and therefore will have to have an end right so if the private sector becomes doing
1:08:17
that experience there’s then that’s definitely going to be a problem and so to the extent that inequality can
1:08:24
have that sort of breaking point right it could be that macroeconomically speaking uh
1:08:31
politically I don’t really know I’d like to make a comment
1:08:37
about the difference between the reality and the rules and think about
1:08:44
um well I think about when people use the word debt why are they talking about the national debt or personal debt can get
1:08:51
very confusing and the same is true with the rules about deficits for example you
1:08:58
know Stephanie Kelton uses that the analogy of the scorekeepers at a
1:09:05
sporting event and the scorekeeper never runs out of points
1:09:11
um but on the other hand there are some games like tennis where it can only go
1:09:16
to a certain you know the game’s over once you reach I don’t know 15 points or something
1:09:22
and so then you can say the score keeper ran out of points
1:09:29
I mean in theory they could play forever but once they reach a certain number of points it’s over
1:09:36
and I’m sort of feeling like that’s the issue with deficit spending because you
1:09:43
know if you say we can’t have new programs without income for them without raising taxes
1:09:50
that’s true it’s a rule but it’s not literally true
1:09:56
so I don’t know if this is a question but it certainly is something that I’ve been
1:10:01
thinking about right I mean they’re all these self-imposed rules that tell us what we
1:10:08
can’t do and what we can’t have right in some sense so in a way it’s like there they do have
1:10:16
that bias of not doing things right rather than the bias of doings and doing
1:10:22
things instead so yeah I guess we are playing the game of tennis in some sense that’s a good
1:10:28
technology right yeah and we’ve been somehow been taught that
1:10:35
we have this economy we have to support this fragile economy and there’s nothing
1:10:40
about actually supporting the people the people have to worry about
1:10:45
protecting the economy so our last question is from herb who
1:10:52
wants to weigh in on an earlier question so go ahead and unmute her
1:10:59
I wanted to address the issue about politicians again and why they do or go
1:11:04
do things according to MNT and it I did write it in the chat but I don’t know if
1:11:12
you’re recording that or keeping track of that there is a book called democracy
1:11:17
in chains by Nancy McLean and the subheading is the alt the radical rights
1:11:27
uh stealth plan for America and it documents the history of
1:11:34
neoliberalism and libertarianism mostly libertarianism from the mid 50s the
1:11:41
Brown versus the school board case moving on from there to the present and
1:11:46
all the various things that were happening in order to put libertarian thought
1:11:51
in uh dominance and I wanted to make a comment because we had the chapter
1:11:56
balance balances and the thought that I’d had around that was
1:12:03
that we have a strong Push by the libertarian
1:12:09
sect trying to diminish our personal
1:12:14
responsibilities our social responsibilities to each other in favor of individual rights and capitalism
1:12:23
Connie there you are coming and I think that that’s a real important aspect the
1:12:29
final thing I was going to say is that there was an excellent article written as skeptical Inquirer in the year 2000
1:12:35
December November December is she called why bad police don’t die I think that’s
1:12:41
relevant to the Congress members who have these beliefs they come
1:12:46
in with these police and they don’t change them very easily because it’s actually tied in with their belief in
1:12:53
the libertarian project and it’s tied into their other beliefs about how their brain sees the world surviving so those
1:13:01
are all complex issues that I see as being a very systematic or systems
1:13:07
oriented a way of looking at these things so to bring about the social change we need we need to have a systems
1:13:12
orientation and it gets really complicated I just wanted to make that comment for people but I recommend the
1:13:19
book democracy and chains by Nancy McLean it’s probably one of the most important books for people to read after
1:13:26
the MNT ones thank you see David you wanna
1:13:33
unmute your mic yeah hi sorry two questions I hope I don’t take time from
1:13:38
anyone I’ll make it fast I’ve been wondering about this since I’ve moved to DC four and a half years ago to work in
1:13:44
the SVA and I thought
1:13:49
I thought oh sure I’m gonna get to go you know what I was sort of excited in a nerdy way like
1:13:55
oh I’m gonna get to go to all these seminars by these think tanks that are sort of left of center right and that
1:14:01
like Roosevelt Institute the economic policy Institute Center for Budget
1:14:06
policy priorities that sort of thing they’re all kind of Center laughed a little bit left the center of stuff I
1:14:11
thought well surely they’re going to talk about mmt not a damn one does like I mean like if you say the word mmt
1:14:18
and I’ve done this if you say mmt at any one of these little things that they
1:14:24
have in the middle of the day or in in the evening after work and it’s easy for
1:14:29
me to go because I’m in DC if I say mmt it’s like I farted at the dinner team and I don’t like and I think these
1:14:37
should be the people they’re all supposedly heterodox economists there
1:14:42
these are the I’ve I’ve not understood this and I’m wondering if the professor
1:14:49
on the line has any idea because I don’t know the answer I really wonder
1:14:55
why are these leftist Center think tanks just not even on board with this
1:15:01
knowledge yeah David were you at the summer school at Levy this summer I was I saw you there
1:15:09
yes it was mind-blowing it was life-changing
1:15:17
glad to hear that that’s a very good question so some of the earliest people so the conference I
1:15:24
mentioned in 2006 was the post-cading conference some of the very first people
1:15:29
that mmters were trying to engage with were the post cases like we’re we’re
1:15:34
just continuing the same Canadian logic right in a sense you’re saying okay so spending creates income fine
1:15:42
um you know loans create deposits buying but then when you say government spending you know then creates the
1:15:48
income with which taxes can be paid no you know that’s where it’s so weird that you’re thinking it’s such a fit with the
1:15:56
Canadian logic right that the opposite like this idea that the government borrows from this sort of pool of money
1:16:03
that it that is sort of limited and so on and therefore we have to watch how much we’re spending and match it with
1:16:09
tax revenue and so on it’s it’s very bizarre and I don’t really know why I
1:16:15
mean it’s like the heterodoxy I guess likes to think of itself like as if they are thinking
1:16:21
outside the box and they are open to non-traditional ideas but I guess they
1:16:27
themselves are mainstream in their own way in the in the way that they that’s
1:16:32
the way things work and they that they know it right and they are not willing to entertain other ideas and in some
1:16:39
sense they are even more like I think dogmatic sometimes than the mainstream because
1:16:45
they you know they understand their heteroxy in opposition to the mainstream so they already have that critical
1:16:52
thinking about the mainstream and they are sure 100 percent that what they know
1:16:57
is the right way right so so yeah I mean a lot of the critiques of
1:17:03
mmt had been coming from what you would call heterodox economists right post
1:17:09
canes and marxists and so on We There is that post Canadian list
1:17:15
serves that’s run from by people from the UK and the UK is undergoing
1:17:21
potentially another round of austerity right and they they I mean their economy is in a
1:17:29
very bad State because of all the austerity that has already happened and yet you have this so-called post-kangians in the UK for writing a
1:17:37
letter where they’re basically saying we need to raise the taxes for the rich so that we don’t have to cut the spending
1:17:43
once you already work within that framework then you’ve lost you you can’t adopt that Framing and like an mmt
1:17:50
economist sent an email and said well you should not be framing it in terms of taxes pay for spending and they say no
1:17:56
it’s basically like if you don’t do it you’re not going to be taken seriously right it’s this idea that to be
1:18:01
considered to be taken seriously you have to work within this framework right I mean I was at a conference with Bob
1:18:07
Poland who was sitting right next to me and I presented my paper on the green New Deal basically arguing that it’s not
1:18:13
a money question it’s a resource question that you have to do a resource accounting and so on and he says yeah
1:18:19
but you still have to you still have to structure the financing like you still have to have a way like you still have
1:18:25
to say how much will be taxes how much will be bonds you know Green bonds red bonds whatever you have to have all of
1:18:32
that otherwise your proposal will not be taken seriously and that’s such a shame
1:18:39
yeah and I think it would be a hell of a lot harder to push austerity measures if
1:18:45
people understood mmt if they realized that money wasn’t scarce and that we don’t have to worry about the budget
1:18:50
it’d be a lot harder to convince folks that now we have to do this we got to eat our peas and stuff but
1:18:57
Jesus is such a mess all right we’re gonna we have two more questions I think we’re gonna wrap up Betty are you ready
1:19:04
yeah am I alone you are go ahead uh yeah I it worries me that even with mmt which
1:19:11
I think is great I guess that the economy have to keep growing and expanding and isn’t that
1:19:18
going to be a basic problem right
1:19:24
for the environment I suppose is the question right right
1:19:30
so I think growth for the sake of growth is definitely a problem right at the
1:19:35
same time we can’t say we can’t we have to stop growing our economy
1:19:40
because you know there are still people who know who don’t have enough who are poor now
1:19:46
we could say that some of it is a distribution question for sure right I mean in case of the us we probably could
1:19:52
do what Kay said we would could be doing which is like smell roses and watch ballet and so on because we are
1:19:57
productive enough where if we with the right distribution then we wouldn’t have to worry about it right but I think
1:20:04
worldwide we’re not at that point yet probably where all of our sort of needs could be satisfied with the size of our
1:20:10
current economy so in a way there has to be there still has to be some growth right uh the question is how do you do
1:20:18
it in a manner that doesn’t destroy your habitat as humans right so that’s the
1:20:23
important that’s the important thing that we have to consider and I think the mmt approach then allows you to say okay
1:20:28
well how do you do it like how do you transition to say A Greener economy how to transition to a more sustainable
1:20:34
economy and obviously the big thing you can do for this is to lower the amount
1:20:40
of inputs you need for the same output right which then means to raise your productivity for example right so we can
1:20:46
be more productive then we can use less resources to try to get the same kind of output and to accomplish that then you
1:20:53
need more investment right more investment in research and development and so on sort of more money being thrown at this problem which which you
1:21:00
can do I think with covet we saw how much the government can accomplish if it’s
1:21:06
willing to throw a sufficient amount of money right like why haven’t we why haven’t we still cured cancer right
1:21:13
we’re doing fundraisers to raise money for this and that and that when money is the least of our problems if we have the
1:21:19
resources to tackle those issues right then we can fund them and we clearly if we’re doing the stuff that we have the
1:21:25
resources and so on so that’s that’s the whole thing but and there is a question of the news has been replete of stories
1:21:33
about the robots taking our jobs right AI chat GPD is coming
1:21:38
for our knowledge workers and so on and so forth right so in that sense it seems like
1:21:44
productivity is not going to be your problem right that we are going to be sufficiently productive so if all of the
1:21:51
robots are producing all of the output right then you could say that’s a great thing right then people can’t smell the
1:21:59
roses and watch Bali and so all like King says in economic possibilities for our grandchildren but then the question
1:22:06
is the distribution right who decides who gets how much of what the robots are
1:22:12
going to produce right who decide to get how much and that’s the re the real issue at that point and so the problem
1:22:19
is that the robots right the problem is that robots can be the solution actually and Randy sort of mentions that in the
1:22:25
book as well the problem is what do we do once we have the robots producing everything right what do we do with the
1:22:32
rest of us right in some sense so so yeah that I would say lowering the
1:22:37
amount of inputs we need for the same output and obviously tackling the question of distribution right to make
1:22:43
sure that we can satisfy people’s needs with whatever we’re producing and of
1:22:50
course that then involves dealing with the problem of rich people gorging up to society’s resources right
1:22:58
much much more disproportionately I don’t know how you tackled that power
1:23:04
though because they’re not accumulating money for the sake of the resources they’re really doing it for power and
1:23:11
power is what they have and its power is what they use to stay in power
1:23:18
yes the problem with how things are organized knowledge like the Automation and the robots that I guess
1:23:25
the productivity in the Surplus created by them like the capitalists want to own that and then it’s like workers eth you
1:23:32
got to find another job the robot put you out of a job when realistically Automation and Technology should benefit all of us and give us more vacation time
1:23:39
kind of thing right but at the end of the day if robots are doing all of our jobs who are they selling the output to
1:23:45
how are we you know so there has to be some kind of income so that’s where this idea of universal basic income right it
1:23:52
seems so attractive and so on so uh and and we can we’ll just throw the prompts
1:23:58
to the people and I guess yeah I actually want to make a comment first
1:24:05
you know people are talking about the quality of public school education I’m a
1:24:11
lot older than most people here and I remember a time when the public schools
1:24:19
were amazing they were well financed oh well not all of them in the US let’s
1:24:25
face it but it was during the space race and
1:24:30
the Cold War and you know Kennedy talked about going to the getting to the Moon
1:24:35
before the Russians so they were gearing us up to be good you know computer
1:24:42
programmers technicians they wanted us to all know
1:24:48
understand that I went to a public school I was like 12 years old they started teaching us the binary system
1:24:55
they started teaching us to think that way I didn’t know what a computer was yeah anyway
1:25:02
you you have an early class tomorrow you have a let me just read Christina’s
1:25:07
question and then that that’ll be it and Kenny you’ll have to bring yours next week
1:25:14
Christina asks what would a sound public Sovereign wealth fund look like and is
1:25:21
there such a thing yeah I can’t see a reason for having it
1:25:29
why we need it’s our welcome in some sense it only makes for countries that
1:25:34
are not the us to have a sovereign wealth Bond because then they have their their say all revenue that they put in a
1:25:42
bond and then so the money they earn from us then they put it in our stock market which then it goes it’s part of
1:25:48
what Minsky calls the money manager capitalism right it’s part of the managed money that flows into assets and
1:25:55
inflates the price of assets which is not necessarily very helpful so recently the person who wrote how are
1:26:02
you going to pay for it which I guess was you know ripping off mmt a little
1:26:08
bit I don’t know the name but he was being interviewed about social security and his proposal was the government
1:26:15
should issue bonds and then raise that revenue and then invest it in the stock
1:26:21
market I just couldn’t like seriously that’s
1:26:26
one that’s the Grant’s plan to save Social Security right we’re just gonna add more money into into Wall Street
1:26:33
we’re going to send more money to towards Wall Street that’s our good plan I mean Germany wanted to do something
1:26:39
similar I gave a talk to a German group over the summer where they wanted to take I don’t know it was 100 billion
1:26:45
dollars or not too much and basically invested in the U.S stock market more or less I mean they said International but
1:26:51
I think the point was to invested in U.S stock markets and then to our the money
1:26:56
so that they could afford to pay their retirees which makes no sense right so so the point is that if you are a
1:27:03
sovereign government there is no reason why there is no way for you to save in your own currency right because you
1:27:10
can’t save your own ious right um the Franklin that I mentioned I don’t
1:27:15
save them for one semester to the next I don’t need to invest them in the stock market to earn return so I can pay my
1:27:21
students next semester it just doesn’t work that way now if you’re Norway or if you’re Saudi Arabia and you have a lot
1:27:28
of oil money which is in dollars so it’s a claim on the United States then it
1:27:33
kind of makes sense for you to do it is it a good thing not necessarily to the extent that it
1:27:39
contributes to asset price inflation man that’s it’s been real informative thank you for your time wrapping up next
1:27:46
week with the finale with chapters six and seven and the man himself the author
1:27:52
of the book Randy Ray will be joining us to answer all your questions yeah but thank you so much for stepping
1:28:00
up and helping us once again sure thanks for having me it was a pleasure and
1:28:06
thanks to everyone and thanks for the good questions yeah I’ll try to join rendez you know
1:28:11
when Randy’s doing the webinar next time so foreign
1:28:18
night everyone take care
