BRICS eta Warren Mosler

44 min

BRICS Has a Secret Weapon: MMT Founder Warren Mosler Spills the Beans!

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BRICS Has a Secret Weapon: MMT Founder Warren Mosler Spills the Beans!

Unlock BRICS’ secret weapon! MMT founder Warren Mosler reveals how Modern Monetary Theory can r

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hello everyone welcome to the Think  BRICS YouTube channel today we are  

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honored today to have Warren Mosler here he  is a distinguished economist the founder of  

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modern monetary theory and a pioneering  voice in contemporary fiscal thought  

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this marks the first of what we hope will be a  series of interviews they delve deeper into his  

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ideas and the implications of modern monetary  theory especially in relation to the evolving  

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role of BRICS countries in the global economy we  are also very proud to support and corroborate  

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the growing initiative advocating for Mr Mosler’s  nomination for the Nobel Prize in Economics thank  

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you for joining us today Mr Mosler oh thank you  very much for that introduction good to be here  

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yeah we’re very happy for you to be here so I  guess when uh as the founder of modern monetary  

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theory for people who have not uh don’t know the  full ins and outs can we start with a very 30,000  

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foot view on what modern monetary theory is yeah  so in uh the early 1990s uh we had a major budget  

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debate going on in the United States it was a  presidential election ross Perau’s platform was  

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balancing the budget fiscal responsibility  all the types of things you you still hear  

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quite a bit of today and I had the understanding  from my experience on Wall Street as a primary  

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dealer at Banker’s Trust and being involved  in monetary operations for a long time i I had  

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the understanding that the funds to pay taxes the  funds to buy government securities come only from  

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the government and everyone inside the Federal  Reserve monetary operations that I knew and spoke  

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with knew this implicitly they say it differently  they say we can’t conduct a reserve drain without  

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a prior reserve ad which means payments can’t be  made from the banking system to the government  

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unless the government first gives the banking  system the money the money that goes to the  

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government comes from the government uh or else  it’s counterfeit you know if you have a $20 bill  

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it’s signed by the Treasury Secretary you can’t  make your own $20 bills now everyone in Congress  

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at the time and they probably still do uh believe  that the they had to get money either by taxing uh  

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or borrowing and what they didn’t get from taxing  if they wanted to spend more than that they had  

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to somehow borrow it from the likes of China uh  and you know they talk about and leave that debt  

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to the grandchildren and that’s those are the uh  that’s the central discussion of the whole thing  

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is it worth borrowing from China to spend more  than we’re taxing the whole implication is they  

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are looking for money to be able to spend uh the  the correct understanding which is understood by  

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every central banker in uh monetary operations  and has been since the beginning because it’s  

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their job is that the government saves first you  know and then some of that money’s used to pay  

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taxes and the rest is not and it’s just saved as  uh in in the first case just balances and their  

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uh uh cash accounts at the Federal Reserve  and then after the money’s already been spend  

Government spending and Treasury securities determine the public debt’s nature.

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some has been used to pay taxes then Treasury  securities are offered so the rest of that  

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money that’s been spent but not yet used to pay  taxes has a different place to go and presumably  

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uh it’s it’s done at an auction to the highest  bidder so it pays a little more interest than just  

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keeping money in the cash account and it’s what’s  called a reserve drain it just shifts dollars that  

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have already been spent from the reserve accounts  the cash accounts at the central bank to treasury  

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securities which are savings accounts at the  central bank so the the public debt is nothing  

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more than all the dollars that have been spent  by the government that haven’t yet been used to  

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pay taxes it’s a residual it’s the net money  supply in the economy it’s the equity behind  

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our entire credit structure it’s not a problem  and I recall President Reagan saying “If it ever  

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gets to 90 billion we’re all doomed.” And it just  keeps going on and on like that with higher and  

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higher numbers and of course nothing ever happens  because it’s it’s not of any financial consequence  

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it has other consequences the spending has  consequences but the deficit itself is of  

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no financial consequence and that’s what started  the whole thing and then from there uh that first  

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thought that first understanding it expanded  and this expansion didn’t take very long i was  

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uh working you know at my desk at uh my firm and  I had my research people with me and very quickly  

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what we recognized was the currency itself is a  simple case of a public monopoly the government is  

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a single supplier of the thing that’s used to pay  taxes of the thing that’s used to buy bonds and  

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therefore as any monopolist it’s price setter that  means the source of the price level is necessarily  

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prices paid by government so I’m getting a little  technical for you here so I’ll let me uh stop for  

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your next question yeah no you actually make  there are two really good points that I want to  

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just kind of hone in on super quickly i think the  first is like you said modern monetary theory is  

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just is the recognition that the go the government  the state itself is the you know the uh the setter  

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you know they are the they are the only ones the  monopoly that can issue money and I like you said  

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central central bankers across the world already  know this yet for some reason it’s not getting  

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translated really in our uh in our fiscal and our  monetary policies and yeah so it yeah it answers  

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another question once you start on this it answers  all kinds of questions the fundamental question is  

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what is money in all the textbooks and they’ll  go on and on about it’s a unit of account medium  

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of exchange store value but once you understand  this you recognize that it’s a tax credit when  

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the government imposes a tax liability okay it  specifies what you need to pay that tax that’s  

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the tax credit and in the case of the United  States is the US dollar so I can’t answer the  

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question of what is money that’s just an academic  definition but I can answer the question of what  

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the US dollar is that’s the thing needed to pay  US taxes it’s a US dollar the US dollar is a tax  

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credit for the US government tax liabilities the  yen is a tax credit for Japanese tax liabilities  

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the euro is a tax credit for the tax liabilities  of all the Euro nations and so uh and that’s what  

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I was telling you about once you have the first  understanding that the funds to pay taxes come  

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only from the government all these other questions  are just immediately answered and become crystal  

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clear to anybody looking at it and it becomes an  excellent framework to analyze everything that  

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goes on in any monetary system yeah abs absolutely  and I think we can kind of see how that’s  

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translating right now uh in two different ways i  think in one way when I talk to other people about  

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um taxes and money and so on um they always assume  that the government is going to issue the tax to  

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first before you would basically get the money  spend it or anything like that when in fact it’s  

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actually the government it you know it’s the flip  uh the government’s issuing the money so you can  

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so it gives it so you could pay your taxes and  for the state to sustain itself uh yeah let me  

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just add quickly it’s like does anybody think  the football stadium has to collect the tickets  

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first before they can sell them of course not they  come from the stadium they have to sell the ticket  

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first before they can collect it the government  has to spend credit your account before it can tax  

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debit your account you know it’s that simple and  up until about 300 years ago this was self-evident  

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to every human being on Earth it only became a  mystery you know as the financial systems got  

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more complicated and the basic understanding got  lost yeah i mean you have uh uh President Donald  

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Trump now is on a uh you know him and Elon Musk  are on a tirade to you know destroy you know not  

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destroy but to uh reduce the government deficit  by really any means necessary you know cutting  

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Medicaid and cutting act you know cutting access  to social security and things of that nature  

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um so even though central banks across the world  know this apparently the president of the of  

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the most powerful country right now doesn’t know  this yeah I’ve talked to them i talked to senior  

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officials in monetary operations at at the Fed i  used to visit them couple of times a year and I’d  

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say well who who else understands this does  anybody on the Federal Open Market Committee  

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understand there’s 30 appointees there they said  no none of them do and that’s part of our problem  

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when we try to explain monetary policy they they  just don’t understand it at the operational level  

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yeah like um like we were talking before about  like what the definition of money is i think  

Understanding money’s definition is crucial for effective fiscal and monetary policy.

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everyone kind of has this everyone is everyone is  imagining money to be tied to gold everyone always  

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has money tied to silver anything like that um it  like the fundamental assumptions of what money is  

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and how monetary policy works is like completely  lost on uh really any uh fiscal or monetary policy  

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makers right now yes yeah absolutely i I didn’t  know there was going to be a test well I you’re  

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the you’re the guru i have to show you yeah right  right right so here is just a time series plot  

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about uh showing the percentage of government  debt versus the percentage of private debt and  

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you can see here that by the 2000 you know the  great financial crisis how low the government  

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percentage of debt was compared to the private  debt you can even see similar you could even see  

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it in a similar way with the uh with the great  uh recession as well if uh yeah well you know  

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there’s an expression that’s true and it’s loans  create deposits okay so if anybody has a dollar  

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in the bank it’s because somebody else and and  you know has more um they have unspent income  

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they have more uh they earn more they obtain more  than they spent they have dollars in the bank it’s  

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only because somebody else did the opposite and  that’s what that’s that’s how it works so that  

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means somebody else spent more than they took in  and so if you start with a room full of people and  

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nobody has any dollars nobody’s ever going to have  any dollars if they get $100 from outside the room  

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the total in that room is going to be $100 and can  be shipped between individuals but it’s not going  

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to go up or down the only way the total dollars in  that room can go up is if they come in through the  

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window from another room okay and those are and  this is what sector analysis is all about so we  

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have the government as a sector and then we have  all of us the non-government as another sector and  

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the only way the rest of us can have any kind of  a net money supply any dollars you know in saved  

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for lack of a better word here is if somebody  from a different sector such as the government  

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spent more than they collected spent more than  their income so the only way someone can spend  

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less than their income and have that money left  over is if somebody else spends more than their  

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income and it’s called the paradox of thrift it  goes back three or 4 hundred years in the analysis  

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this is not new stuff and so that’s and that  deficit spending is what creates the accounts the  

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the credit balances in everybody else’s accounts  now it there’s another way to say it and that is  

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uh unless the uh total deficit spending public  and private okay let’s put it this way the  

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total deficit spending public and private is  what equals the total uh savings okay and so  

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um when if people want to save money’s going  in a pension fund and it’s not getting spent  

Savings in pension funds require public or private deficit spending for funding.

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it can’t get there unless it’s funded somehow  and it’s funded by deficit spending from either  

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the private sector or the public sector and  so we can look at what uh we can look at that  

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combination of those two that will tell us the  total increase in what you could call the money  

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supply what I’d call the net money supply in  the economy well not the net just the the the  

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money supply in the economy the actual balances  created by deficit spending and uh it’s a policy  

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decision as to whether they’re going to come from  um private or public there are a lot of different  

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policies you can make to change that ratio that  you just showed and so those those ratios are the  

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outcomes of our policy decisions which we call  the institutional structure set up by Congress  

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it’s it’s just so interesting to me that you see  you you see in the great recession or the great  

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financial crisis and in the great depression  private debt to GDP is basically at an all-time  

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high public you know uh government deficit is  basically as a ve at a very small point so why  

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what why um you know policy makers have access  to this amount of data and more so why are they  

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why are they not considering private data here  what what happens is we have what are called the  

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automatic fiscal stabilizers and what that means  is during good times the uh tax uh liabilities  

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tax what they call tax receipts actually go up  faster than even the government can spend money  

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so if you look at the growth periods you’ll see  deficit spending going down because tax receipts  

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going up and government spending is uh for like  unemployment compensation transfer payments they  

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call it are going down and so you’ll see the  deficit going down automatically from these  

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automatic fiscal stabilizers as they call them  and it gets to the point where the government has  

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uh deficit has gotten too small okay to support  the credit structure that’s allowing that to  

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happen it’s private sector credit expansion  that’s paying the taxes uh you know as the tax  

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structure the aggressive automatic tax structure  is collecting more and more money on the way up  

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and the let’s call it the debt to equity ratio  gets stretched the private sector debt gets up  

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the public sector debt is actually the equity  of the private sector until it collapses and the  

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um private sector debt growing on its own  is unsustainable unless there’s sufficient  

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public sector debt to um to fund it to fund the  equity behind it and the whole debt structure is  

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required large ironically largely because of our  tax advantaged savings uh uh policies so when you  

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put your money into your pension fund you either  it’s taxdeductible you know it comes out of your  

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pre-tax income so if you’re putting $100 in your  choice is to put $100 into savings or to keep it  

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as income and pay $30 in tax so it becomes  a pretty easy choice to you know to put your  

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extra money into savings and not spend it and so  we grow this pool of unspent income because it’s  

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all tax advantage by the trillions we have 30 or  40 trillion of this unspent income that’s piling  

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up because of tax advantages which creates a  need for deficit spending public and private  

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to fund this thing otherwise you’re going to get  massive unemployment which happens periodically  

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when the deficit spending falls short you know  in which case it goes back up again fairly  

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rapidly in a collapse because tax collections  fall off and transfer payments go up it’s the  

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ugly way to you know to get back to the levels  of deficit spending you need to support these  

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tax advantages for savings you know so the same  people they’re talking out of both sides of their  

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mouth who want lower deficits are also calling  for more savings incentives not seeing as this  

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the opposite side of the same coin i don’t know  is that too complicated no it’s it’s it feels it  

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it feel it feels like you’re telling someone what  to do and then they do the exact opposite because  

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because this ent the entire structure is just so  completely misunderstood and when you’re ringing  

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when you’re ringing uh citizens really by you know  uh le you know shifting the debt more towards them  

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while you’re not spending money to keep a growing  population you know you sustained and you know  

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it’s just going to all fall over like a house of  cards like so yeah you could say you could say  

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fundamentally we have a tax requirement in place  which carries with it savings desires because the  

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laws give you tax advantages is for savings and  and we’re not spending enough to cover the need  

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to pay taxes and the desires to save and the  evidence is the unemployment rate goes up and  

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uh excess capacity goes up because of that and  so it’s a very simple identity really there’s no  

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theory behind this it’s just an identity yeah  and I actually I wanted to get I want to get  

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uh kind of wanted you to elaborate elaborate on  your thoughts about um the idea of unemployment  

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and price instability in particular like when you  when we talk about like inflation and when we talk  

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about like higher unemployment people immediately  think well let’s just uh you know inflation is  

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getting too high let’s raise the interest rate  you know basically stop the economic machine from  

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going until there’s a not until activity declines  so you know inflation goes down or vice versa but  

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you’ve uh said that because the state itself  is at the heart of the monetary system ideas  

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like unemployment and price instability are  political choices can you elaborate on that a  

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little bit more yeah you’ve got so much there  to unpack though i hardly know where to start  

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so look we know let me go back to what MMT is by  giving you you have to have you know we have a  

MMT illustrates government provisioning through tax obligations and job creation.

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model and I call it the MMT money story and it’s  a very simple model you have a government that  

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wants to provision itself it wants people to be  in the military it wants a legal system it wants  

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public health it wants whatever government public  education whatever government wants to do and so  

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how do you get that done you know what do you do  where do you start so it starts with a government  

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that wants to provision itself the way we do it is  the first thing we do is impose a tax liability so  

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in that sense taxes come first but it’s not tax  payments it’s tax requirements that come first  

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and to keep it simple so it can be understood i’ll  say we put a tax on everybody’s house do a simple  

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real estate tax we could use an income tax but  it’s complicated and variable and it extends the  

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discussion but so we’ll just use a property tax to  start here for for a basic model our empty money  

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story we put a property tax on everybody’s house  in something new called the US dollar that nobody  

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has it’s George Washington just getting started  now this is not a historical example i’m just  

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using this figuratively and uh and we say this tax  is payable you owe 10,000 you owe $1,000 per month  

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in property tax so we’ve just made a statement  $1,000 now everybody knows what a dollar is it’s  

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the thing you need to pay your property tax or  you’re going to get your house burned down or  

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your house is going to get sold you’re going to  lose it okay so we start with a tax requirement  

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now we have a population that overall needs those  dollars to not lose their house and so people need  

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dollars the only place you can get the dollars is  the government and and and that’s the that’s the  

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situation we created with this tax liability  we created a population of unemployed people  

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people seeking paid work who can’t yet find it  because there’s nobody offering dollars yet to  

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pay them okay so step two the government then  offers public service jobs to anybody who wants  

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to come and work paying in dollars and now you  will get people showing up uh so that the overall  

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the economy doesn’t lose its houses and people  will show up to work to earn the dollars that  

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they need to pay the tax and the and those will  be the soldiers and the public health workers  

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and the teachers and the uh everything else the  government wants the legal system the judges so  

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uh they show up for work then the government pays  them and then the taxes get paid so that’s this  

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what we call the sequence number one is tax  liabilities the first thing people say when  

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they hear about modern monetary theory is oh yeah  that means you don’t need any taxes it’s like the  

Modern Monetary Theory emphasizes tax liabilities as essential for government revenue.

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whole thing is based you know the tax liability  is fundamental nothing happens without that and  

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they think everything can happen without it  it’s nothing happens without the liability  

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now the government doesn’t start by getting the  dollars any more than the football stadium starts  

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by you know getting tickets from people it has  to sell the tickets first before they can collect  

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them okay and you’ve got a population that doesn’t  need the tickets to not get their house not lose  

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their house but they want to see the game so it’s  a positive instead of a negative uh incentive but  

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it’s the same thing so we’ve got um simple money  story uh taxes tax liability creates unemployment  

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people looking for paid work who would were  not unemployed before that tax liability hit  

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government provisions itself by hiring them and  then uh they get paid and then they pay their  

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taxes and that’s the end of the chain after that  the government has no more use for those dollars  

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it can throw them away and in fact it does if you  pay your taxes with actual cash uh if you’re a  

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waiter and you earned all these old $20 bills and  you use them to pay your taxes after you paid them  

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the government will send them out to be shredded  and you can go online to fact check me you can buy  

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the shredded money bags of it uh online you know  right right there that’s actually what they do  

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and it’s the same you buy a ticket to the Super  Bowl it’s $5,000 you sell it to the next person  

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for $10,000 he goes to the game hands it in the  guy takes his ticket and tears it up why would he  

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tear up a $10,000 ticket because it’s the same  reason the government tears up the money it’s  

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used up after it’s paid when the money gets paid  but when you do it on by computer the government  

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uh credits your account when you work you then  taxes it debits your account okay and when it  

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debits your account it doesn’t have anything to  spend it’s just a scorekeeping exercise that’s  

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the end of it okay and now they’ll account for  that and they’ll put a credit in the treasury’s  

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account but it’s look there’s this illusion that  there’s money flowing from account to account it’s  

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the same illusion as when you watch this TV screen  you can watch a TV and you think there’s football  

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players running back and forth but if you get  right up close to that screen all you have is dots  

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going on and off there’s nobody moving on your TV  screen likewise with money today it’s not moving  

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there’s just numbers go getting changed up getting  changed down in accounts uh you know dots going on  

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and off that that’s all it is and scorekeeping  so back to your questions now um about inflation  

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now we have to look at where the value of that  money is and the answer first is that the value  

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when you have a monopoly the value is what the  monopouist tells you you have to do to get it  

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if the government says you have to work you know  eight hours to earn $8 that money is going to be  

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worth $1 an hour of government time for government  work because if you want to do something else you  

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have the alternative of working eight hours for  the government and uh you know and at some level  

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uh if if if prices don’t aren’t at a level where  people uh where it’s attractive to work for $8  

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people are going to be losing their houses okay so  that that establishes a um standard in the economy  

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a minimum standard actually because the government  in this in my base case is offering a job to  

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anyone who wants one and uh and so nobody else can  offer less than that because you can always go to  

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work for the government and if you want to hire  people you’re going to have to pay more than that  

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or else they can go to work from the government or  it has to be more pleasant work but at the end of  

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the day it’s what you have to do to get that money  if the government instead of paying uh you know  

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$1 an hour for people’s work decided to pay $2 an  hour well now the money is only worth half as much  

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okay you’ve just had 100% inflation they’ve just  cried down the value of their currency by 100% but  

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it’s a policy decision they don’t have to do that  they know if they wait people are going to come  

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at whatever wage they say because if they don’t  they’re going to get their houses burned down or  

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they’re going to get them sold you know at auction  it’s coercive the whole tax system is coercive  

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once you need the government’s money and they’ve  got it they’re price setter they tell you what you  

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have to do to get it whether they know it or not  now our government doesn’t know it so when they  

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see people oh you know we should give everybody a  raise because the CPI whatever that is went up and  

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so we’re paying more they’ve redefined the value  of the currency downward so that was your first  

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question that you snuck in there about inflation  but that led to three or four other things which  

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I’ve forgotten right now so if you want to remind  me I’ll I’ll respond to those well yeah well let’s  

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look at unemployment is created by the government  in the first instance by design to provision  

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itself if we have re residual unemployment what  does that mean it means the government put a tax  

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in place which it alone you know created all these  people looking for paid work and then didn’t give  

Government taxation causes unemployment and economic desperation under flawed monetary policies.

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it to them and instead caused desperation where  people are losing their houses it’s like why would  

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you do that why would you put a tax on someone’s  house because you’re trying to provision yourself  

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and then not give them a job it’s like that  doesn’t make any sense it’s like uh you know I’ve  

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called it a crime against humanity nobody would  do that if they understood it i don’t think okay  

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you’d either lower the tax if you didn’t want  so many people showing up or you’d hire the rest  

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of the people that your tax caused to become  unemployed in my basic model you put a tax in  

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place causes a certain number of people to show  up for work you hire them pay them they pay the  

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tax why would you exclude anybody and and if there  was a line of millions of people still looking for  

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work what else can they do except either pay your  tax or save them those are the only two options  

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you’ve created both the need to pay taxes and the  need to save nobody is saving your currency before  

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it exists before there’s a tax okay it’s that  it’s just not happening any savings desires in  

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that currency come after the tax liabilities have  been put in place okay so if it it’s unemployment  

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is an absurdity okay by and it’s only due to  these people having the sequence backwards  

28:00

they think they need to get money to be able to  spend if they hire these people they’re going  

28:04

to run out of money or won’t be able to borrow  or some backwards notion of how the thing is is  

28:10

uh how the transactions work yeah that’s if the  people are not going to save a currency that has  

28:19

not been created that’s a very it’s a very  profound uh it’s a very profound thing right  

28:24

there it should be it should be but it that’s  that’s the sad part it should not be profound  

28:31

it it’s interesting though because we talk  about you know because I think you know un  

28:35

you talk about unemployment and we talk about uh  inflation and everything like that which are very  

28:40

prominent things that you hear from the Federal  Reserve that’s what they use in their benchmark  

28:44

their interest rates and whatnot um but I want  to transition over to uh you know uh nations  

28:53

in BRICS and also nations in the global south  too because you know when we’re talking about  

28:58

um when we’re talking about a country trying to  sustain itself how can you uh how can they apply  

29:08

uh the the idea of modern monetary theory  in their own monetary and fiscal policies  

29:14

to ensure that there is no unemployment and prices  are stable and people can find work that they find  

29:21

um I don’t want to say decent but you know  they feel they they are contributing to um  

Full employment policies can significantly boost emerging economies’ wealth.

29:28

more prosperous nation for everyone involved here  yeah so they could start out by offering a public  

29:35

service job to anybody willing and able to work  and if you look at most of these countries are  

29:40

classified as emerging markets i think every one  of them has that I’ve seen has very high levels  

29:49

of unemployment particularly uh when they look  at you know real unemployment or whatever they  

29:53

want to call it you know 10% 20% 30% when you look  at any uh what they call G20 country it’s always  

30:02

you know 3 2% 3% 4% levels of unemployment never  the higher levels so your real wealth is equal to  

30:11

your real output that you get from people working  okay that’s your pile of stuff plus any imports  

30:20

you get makes you gives you a bigger pile of stuff  to consume minus any exports you have to send out  

30:26

which makes your pile of stuff lower now of course  there are always strategic considerations and you  

30:32

know people look at that and they say “Oh well you  know therefore you should just import everything  

30:37

and be vulnerable to the whole world.” I’m not  saying that i’m just talking about your real  

30:41

wealth right now not what you should be doing  down to your last you know you know your last  

30:46

dollar policy decision but your real wealth is  your domestic plus imports minus exports that’s  

30:54

an accounting identity okay and so if you look  at these countries uh or the United States or  

31:00

any most any advanced country uh your domestic  output is the largest part of your real wealth  

31:09

okay and unemployment takes away from that the  more people you have working the more domestic  

31:15

output you have so the lowhanging fruit for  most of these countries to have a dramatic  

31:21

increase in their real standard of living and  I’m not saying that’s increase in real standard  

31:26

of living is going to be all these imported you  know trinkets and and luxuries and that type of  

31:31

thing but their real standard of living can can  be 20 30 40% higher by putting everybody to work  

31:39

whether that’s in public infrastructure public  education you know transportation and things that  

31:45

don’t require don’t necessarily require a lot of  capital goods now if you can get the capital goods  

31:50

the same number of people can produce more output  that’s productivity that’s also a big channel for  

31:56

increasing output but productivity gains are 1  to 2% a year maybe five or six if you’re at a  

32:03

very low level we’re looking at 20 30% gains just  by going to full employment policy and you can  

32:09

always do that with your local currency there’s  no obstruction other than um if you have an IMF  

32:16

loan their terms and conditions might prohibit  it but that’s different okay but you know that  

32:23

type of thing aside those kinds of self-imposed  constraints there are no constraints on sustaining  

32:28

full employment sustaining your real wealth and  the more things you produce domestically the more  

32:33

potential things you have for exports that would  be attractive to the rest of the world and uh  

32:41

therefore um you know you can um enhance your mix  of of output right some of it gets sold abroad in  

32:50

exchange for other things that you need more than  what you sold and uh and so again it it comes down  

32:57

to more domestic output always increases your real  wealth okay and so so for for any I’m addressing a  

33:07

couple of different points that you asked about so  number one yes any country with its own currency  

33:12

can sustain domestic full employment to to give  you the short answer to what you uh asked yeah I  

33:20

think for uh like we’re talking about nations like  in BRICS for example or ones that are um you know  

33:26

emer emerging countries like the uh like you said  you’re going to have the lowhanging fruit you have  

33:30

to talk about public infrastructure and developing  that priv infrastructure to integrate all the  

33:37

sectors in your economies that much more you know  building transportation networks diversifying your  

33:43

source of energy for your production because it is  that domestic it is the it’s the domestic demand  

33:48

that uh that will contribute to that output you  know Indonesia uh grew a little like 5% and you  

33:55

could see the work of the various uh you know  the previous president’s like infrastructure  

34:00

initiative you can really see that start to play  out um on their economic output right now uh but  

34:06

I do want to ask you just one more question  about Yeah let me just add if I could quickly  

34:10

the biggest obstacle that I see to this is the  export-led growth mechanalist narrative where  

34:16

the exporters are in control and they sell outside  of your country so what they want is the lowest  

34:22

possible costs they like people in desperate  situations they like high unemployment because  

34:27

it keeps their cost down and exporters you know  they have no interest in domestic uh well-being  

34:34

so to speak as long as people are kept alive get  enough calories a day to live and can work for  

34:40

them for the least compensation and and they’re  not like wrong for doing that that’s just the  

34:45

nature of their job but it should be the nature of  government the nature of the nation to understand  

34:50

that they should not have a seat at the table when  it comes to domestic policy because they have a  

34:55

whole different uh interest in mind go ahead yeah  no there’s a very um you can really see that idea  

35:01

of we want the lowest cost possible and you can  really see that fleshed out with the you know uh  

35:06

de-industrialization the United States and you  know um the everything that other uh nations are  

35:14

trying to do to basically subvert the development  of other emerging nations to keep the the costs  

BRICS seeks an independent payment system through a potential common currency.

35:20

down as best as they can for their own benefit um  but my but one more question I want to ask you uh  

35:26

actually relates to BRICS as an institution itself  yes we see a lot of talks about ddollarization uh  

35:32

and what the alternative it would will be and  there’s still not a clear-cut answer but one  

35:38

idea that’s been you know held out there is uh the  the BRICS dollar where the BRICS as an institution  

35:45

creates a currency that uses kind of like in  the uh Keynes’s proposed bank model to settle  

35:52

uh you know balance you know deficits and  surpluses between countries my question  

35:57

to you is is can BRICS as an institution not as a  nation where it doesn’t have any citizens that can  

36:04

uh sustain itself can it make a currency like  this uh sort of it would have to either have a tax  

36:14

liability or some basket of currencies but what  look what they want the way when I read between  

36:20

the lines is a payment system they didn’t like it  when uh they got cut out of the US payment system  

36:27

and uh so they could use a different currency  they could use euro clearer they could use  

36:33

whatever Russia uses domestically they could all  have accounts in Russian banks and a Russian bank  

36:39

or at the Russian central bank and and clear  in rubles with each other and then once they  

36:45

got those uh if they didn’t want that currency  they would know the exchange rate in advance  

36:51

and sell it for another currency uh the problems  being that there were sanctions and everything  

36:56

else by the United States against using Russian  rubles to clear trades and that type of thing so  

37:03

um but so so what they’ve been trying to do is  clomat to some kind of a payment system that’s  

37:09

independent of the United States and independent  even of other countries because you know payment  

37:15

system in the hands of another country you’re  kind of like out of the frying pan into a fire  

37:19

you know potentially again in the same thing and  they they they I’m not I don’t think they’ve like  

37:27

identified that they’re just trying to create a  new payment system and so they to do that they  

37:31

want a common currency that they could clear not  recognizing that these currencies are tax credits  

37:37

and uh could something be designed for that uh yes  okay uh but the way they’re doing it is to come up  

37:50

with a fixed exchange rate system uh whether it’s  gold standard or currency basket or something like  

37:56

this that looks to me like it’s going to have the  traditional problems of all fixed exchange rate  

38:02

systems and it’s it’s to the point where they’re  probably not going to do it um and so what’s  

38:10

happening is we’re seeing other payment systems  in dollars emerging like tether right it’s it’s a  

Alternative payment systems emerge to bypass US financial restrictions.

38:18

uh you can buy these things with um dollars  you can buy them with other currencies you  

38:25

know denominated other currencies and then you  trade that token can be exchanged to somebody  

38:31

else who can then um uh you know get back  a fixed amount of the underlying currency  

38:38

let’s say it’s the dollar it’s fixed one to one  or if they want to switch to another currency it  

38:42

would be at the exchange rate at the time so  it’s not going to be stable in every exchange  

38:47

rate it can only be stable in one but it’s it’s  no worse than just trading in dollars but without  

38:53

the US restrictions without the time delays  without the taxation without without the uh  

38:59

regulatory requirements of dollars so it’s a way  to have a clearing system that’s outside of the US  

39:07

um purview you know and so uh that something like  that you know becomes popular and it’s it’s always  

39:15

a response to uh problems with legal problems with  the current system legal restrictions that are  

39:21

put in place i remember um where did Euro dollars  come from well when City Bank dollars or bank JPM  

39:31

they pay you interest on those dollars or if  you loan them money they pay you interest and  

39:35

and the Federal Reserve was charging fees for  deposit insurance a few basis points so they  

39:41

set up a a company outside of the US where you  could put money on deposit get a little more  

39:47

interest because they didn’t have to pay fees but  you didn’t get the insurance either it’s the same  

39:52

thing where you have you know blood flows around  the clock when the government puts pots in there  

39:58

to try and tax it and regulate it you’ll see the  systems get set up around it most of the clearing  

40:03

in the US is cleared through private clearing  like chips and not through the Federal Reserve  

40:08

it’s only net through the F because they do  it cheaper and the Fed wants them to do it  

40:12

cheaper because they don’t want to clear all  those transactions for 4,000 commercial banks  

40:16

they don’t have they don’t want to gear up to do  that they’d rather have private industry do it  

40:21

so it’s the same thing here where you’ll I think  BRICS is heading towards maybe still the dollar  

40:28

as a numerator but some kind of a token like  tether to be used for clearing so that they  

40:34

can use dollars without the US being involved and  without having to own dollars without having to  

40:40

have dollar reserves without any of that you  don’t need any of that if you uh simply use  

40:46

these tokens right and I think just uh just a  quick is um basically the the United States the  

40:55

European Union using the basically weaponizing  uh weaponizing the dollar weaponizing the Swift  

41:00

payment system weaponizing Eurocar all you know  it’s all all of it is doing is incentivizing the  

41:07

uh not just BRICS nations but other nations that  they want an alternative where they don’t need  

41:12

to have as much investment in the dollar because  they don’t trust the dollar nor the leaders that  

41:17

are advising on these policies and saying you  know sanctioned Russia so on and so forth um and  

41:23

that’s what BRICS is gonna you know he’s aiming to  provide something that is completely impartial and  

41:28

something that works for everyone yeah and when  they do that there are no negative consequences  

41:33

for the United States yes yeah it just it just  doesn’t Yeah it just doesn’t matter so uh they  

41:40

set it up as a restriction to try and get some  political leverage over whatever you know Russia’s  

41:46

war or something and then if it doesn’t work it  doesn’t work they go on to something else and  

41:50

you know the US has nothing to lose by doing that  you know uh and so they do it yeah and we should  

41:58

definitely talk about uh what the if you know how  and you know if the United States has anything to  

42:04

lose as they as these payment systems develop  but for but for today’s uh program uh Mr mosa  

42:10

I want to really sincerely thank you for joining  us and sharing your enlightening perspectives in  

42:15

uh this discussion today and I’m hoping that  this conversation is going to just be the  

42:20

beginning of a deeper exploration more into  your work and the incredible transformative  

42:26

potential that modern monetary theory can have on  emerging economies and countries across the world  

42:33

uh we look forward to continuing uh this dialogue  here and supporting the recognition of your  

42:39

contributions you know especially the ongoing  efforts towards your Nobel Prize nomination  

42:45

again I really want to sincerely thank you for  joining us today this was an amazing discussion  

42:49

to have thank you very much very much enjoyed it  you guys keep me sharp and uh the more the better