(Euskal ikasleentzako saiakera ederra)
Sarrera gisa:
(https://twitter.com/wbmosler/status/1376538831558565893)
Warren B. Mosler #MMT@wbmosler
Discussion with U of Bristol econ students:
Video Conferencing, Web Conferencing, Webinars, Screen Sharing
In Conversation with Warren Mosler
Warren Mosler Discusses MMT with University of Bristol Economics Students – 29 March 2021
Bideoa:
(https://www.youtube.com/watch?v=SKMljJPcHHA)
Transkripzioa
Ben Pimley
00:07So recording.
00:11So over to you weren’t if you would just like to kind of.
00:19You know what is empty, why is it different from conventional economic thought.
00:27Just first that’d be great.
warren mosler
00:30Okay, so the.
Unknown Speaker
00:33I think the major contribution.
warren mosler
00:36Your economics majors but for that for people understand is sequence, which comes first, and so we have our Congressman you have your Members Parliament and back in 1992 and I was this is all coming together.
00:53In a continuous today, they all have this understanding that they have to get money to be able to spend, they have to be able to raise money through taxing if they want to spend money and what they don’t tax, they have to borrow so the sequence is we get money and then spend and.
01:11That turned out to be you know entirely wrong and it’s actually the other way around.
01:18And if you look through all the textbooks and all the models they’re looking at government taxation as a source of revenue for spending.
01:25is a source of revenue for spending, but it’s it’s the force is actually the other way around, so what happens is it’s the arm.
01:34The government is this the single supplier of the thing required to pay taxes, so all the dollars to pay taxes come from the US government’s pages, which is Federal Reserve.
01:46Or the pounds to pay taxes national taxes in the UK come from the back of him because they don’t come from anywhere else, so the central government is the source of the thing to pay taxes and so.
01:59what’s driving things is that the.
02:02it’s the Academy that needs the government’s money to be able to pay its tax, the government has to spend first before the funds are there to pay taxes before the funds are there to buy bonds
02:14So it’s completely the other way around, and that changes the whole nature of the political debate on fiscal policy.
02:23Because instead of saying okay we’re how we’re going to get the funds to spend we’re going to attack some we can borrow some and there’s an imperative on borrowing what What if we can’t borrow with the market on that is powerful.
02:38You know the all these questions become out, you know, put the clickable thing for the government is what’s for sale Okay, and so.
02:48tax liabilities tax requirements, not the tax payment requirement functions to create sellers of goods and services, who want those dollars in exchange, you want those parts of exchange.
03:02And so what determines the government’s ability to stand is what’s offered for sale and that cards so whatever is offered for sale in exchange for British pounds, the government has the option to either because it spends first by crediting accounts of.
03:19bias buys when it wants buys from the sellers that were created by the tax liabilities.
03:26And then those find some get used to pay taxes and so i’m getting used to buy box.
Ben Pimley
03:32What would you say then so so what you’re saying.
warren mosler
03:36Is it yeah.
Ben Pimley
03:37Like mint is not revenue restrained.
03:40Right right that issue of the currency okay.
warren mosler
03:43Right it’s constrained by what’s offered for sale.
Ben Pimley
03:46Right exactly so do they have to first spend into the economy to then tax, you know tax and then spin.
warren mosler
03:53yeah yeah and they don’t care about the tax now the government’s trying to provision itself wants people to work for the government so as long as there are people willing to work okay.
04:06they’ve succeeded in provisioning themselves the the process, they used to do this was the first create a tax liability.
04:13That creates people who need the money the pounds and creates people looking for paid work, which, by the way we call unplug.
04:21Okay, there is no unemployment, without the tax liabilities, creating a need for paid work Okay, so you get it’s not wrong to say that first instance.
04:31The government uses tax liabilities to create unemployment, so the US government’s tax liabilities created 20 million unemployed.
04:40And now the government can hire those people by spending it otherwise worthless dollars if but only hires 5 million of them.
04:48And they’re 15 million other still unemployed So why did you do that, you know why did he create 20 million, and we want to hire five were clearly because they don’t understand what they’re doing they understood how the currency work, they would do that.
05:03So we know the source of unemployment, which is the government not spending enough to.
05:10cover the need to pay taxes and to net sales people economy will work get paid in either pay taxes or Google net save those fun to the leaders pay taxes are well.
Ben Pimley
05:22And what does that mean for the for.
warren mosler
05:28yeah, so now we now, we take a look at what other dentists before the way it was looked at is it’s the funds, the government needed to borrow to be able to complete it spending.
05:42But that was when it was thought that they have to get the funds first before they can spend, but now it’s the other way around now it’s the.
05:48Money the dollar spent by the US Government that haven’t been used to pay taxes.
05:54This year, the Federal Government will spend $6 trillion 3 trillion will be used to pay taxes, the other 3 trillion, the name in the economy and bank accounts largely in the economy reserve accounts and securities accounts.
06:07So that’s the public to the money supply.
Ben Pimley
06:10Yes, the money supply, so the the whatever the government spends but doesn’t tax back out.
06:19yeah in the private sector.
warren mosler
06:21yeah that’s what I call the money in the street that’s the public debt.
Ben Pimley
06:25Right so.
06:26So, in that sense, because you know in in our world, the government deficit government debt is kind of like an Overhanging thing that’s.
warren mosler
06:36Right yeah, you know as opposed to a residual.
Ben Pimley
06:40Yes, on the surface, for us.
warren mosler
06:44yeah and it’s it’s what’s left over after people, people have gotten earned money from the government pay taxes with some and what’s left over, is the public debt.
06:54Now it’s already the money if you have you know, a million pounds in the Treasury situations, you have a million pounds it’s money in the bank and bank of it.
07:02Just like in any other So how do you pay back the money with other money, I mean it’s not an applicable question once you see it, the correct way around are these.
07:13This what turns into turns out to have been fear mongering about the public, that is just not even applicable not applicable questions.
Ben Pimley
07:22Right Okay, and that and that is comes from the fact that the government issues, the current state.
07:28Government doesn’t need to get.
warren mosler
07:29anyone else, yes, the sequence okay it’s like the nobody thinks that the football stadium collects the tickets first and then sales.
07:39Okay, they don’t, we all know, they saw the ticket first and collective we know the correct sequence.
07:43And then under Alfred the great everybody knew Alfred great put a tax on everybody’s plan or something and then.
07:51He would buy things with, as otherwise worthless tokens as money, and then they would return those tokens is as tax payment or save one or the other.
08:01And you know they can be archaeologists have found them I hope so and that’s why it’s called a tax return because returning the word revenue means to return, you know back to the issue and.
08:13render unto Caesar that which is season, they all know, everybody knew the coins came from CS yeah Okay, but we’ve lost that knowledge, we lost it about 200 years ago I think something somewhere around.
Ben Pimley
08:26We recently had the gold standard or y Z night.
warren mosler
08:30yeah yes, and so we lost the knowledge with fixed exchange rate policies, I don’t know which came first the loss of knowledge of the fixed exchange rate policies followed by the loss of knowledge flooding.
08:42I was, as it was at least 20 years before I was born okay.
Ben Pimley
08:48So then, and so, given.
Unknown Speaker
08:50This.
Ben Pimley
08:52i’m talking sectoral balances now.
08:58Maybe about the the foreign trade sector, for now, but say the economy is just the government, the private sector.
warren mosler
09:06Yes, and that’s how I begin I just making that conceptual division.
Ben Pimley
09:10yeah yeah So then, if the could you just explain about you know if the private sector, wants to save which, for whatever reason, we do.
warren mosler
09:23yeah So if you put.
09:26You know if everybody in this room, right now, how many people in London.
09:31 16. so you know if we each had $10 in our pockets to be $160 and that can’t check, we could give them to each other, one person could walk away with 160 but the total is always going to have 260 unless it comes from outside the room.
09:48And so that’s what that’s the reason you divide coming into sectors for this purpose of this type of analysis is to look at the balances and to sell on.
09:58If none of us had any dollars, then there’s no way we can ever get save dollars unless somebody outside the room buy something from us and people dogs and that entity outside the room could be the government, so if the Government gave us all $10 and the savings in the room and go.
10:17down so that that’s that’s what sector balance does this word says it’s it’s really not a big deal but it’s it’s a way to help myself and it becomes a formal model, something that looks a lot more complicated than this.
Ben Pimley
10:31yeah yeah and and so.
10:35You know it it’s called used to be called inside or.
warren mosler
10:38Outside you are enough turn.
10:41It inside and outside money if you have a spreadsheet debits and credits, you could shift the credits and debits two different camps and that’s got inside man, if you make an entry from outside the spreadsheet hot the audience Okay, so all right.
Ben Pimley
10:57So that’s the Government doing that.
warren mosler
10:59In this, yes, so if you’re.
11:00Using two segments, then the government payments to the non government sector would be considered an infusion of outside to this to that sector yeah okay.
Ben Pimley
11:11So then, in.
11:14From empty his perspective, then.
11:19Yes, when that when there’s not enough money in the economy to go around to buy all the things that are on the shelves right yeah.
warren mosler
11:30The things on the shelf aren’t getting bought.
Ben Pimley
11:32yeah.
warren mosler
11:33It might it might be because of not enough money.
Ben Pimley
11:36Okay yeah.
warren mosler
11:38That normally.
Ben Pimley
11:40yeah.
11:42And and and so that could be caused by the government not deficit spending enough.
warren mosler
11:49Okay, so I mean build up that concept and it’s called under consumption theory.
11:54I think the first Paper was published on that in like 1598 so it’s not so people always have known this for a very long time, but again now there’s last right, and so the GDP in the US is now, I want to say 26 trillion.
12:12So that means 26 trillion was bought him 26 trillion was salt, there was sales of 26 trillion, which was somebody in.
12:22So those are evil Okay, so what what we can say is that.
12:31And this was for last year, so what we can say as last year $26 trillion of income was spent to purchase of $26 trillion cheaper.
12:40Okay, so what that means is if any one person any entity.
12:46That earned any of that 26 trillion didn’t spend it.
12:52Then the GDP would not have been would have been that much income, so what that means is that for everyone who spent less than or in.
12:59Some other entity spent more than.
13:03spending more than your income is deficit spending so we probably had 5 trillion of income that wasn’t spent and then 5 trillion of others that was where the get entity spending more than deficit spending, so the total deficit spending.
13:19Last year offset the total unspent income right otherwise.
13:26it’s just you know just it’s straightforward accounting again Okay, so that the deficit spending could be private sector or public.
Ben Pimley
13:38So then, what happened so in 2008, for example when.
warren mosler
13:42We saw the private sector deficit spending collapsed in the middle of 2008 when we have Lehman Brothers Bear Stearns in the banks all sort of shut down and so people can buy houses and cars and when that that spending collapses income collapse.
13:59Because that is spending his income, and so you get in this downward spiral and it’s also in that situation is called the paradox of thrifty familiar.
14:08Okay switch says he take the extreme example if everybody decided not to spend anything in GDP goes to zero.
14:15And then there’s no income and then there’s no savings and so decisions to save actually cost savings for down because they reduce income, therefore, they do savings that’s called the paradox of threat it ties into under consumption it’s really the same thing.
Ben Pimley
14:31And so that’s why the government when when the person is ending enough, the government has stepped in to.
warren mosler
14:37Try to say if the government doesn’t step, then we have what happened in 2008 so in the middle of 2008 I was proposing we eliminate payroll taxes have a payroll tax all these are taxes on people working for a living there are highly aggressive they’re kept that.
14:55Back then hundred 10,000 years of income and above that you know you don’t pay any more, and they were you’re removing something like $625 a month on the average family’s income, and so, by eliminating now the average family that $625 more take home pay.
15:13And of course it’s not moral hazard, these are people who are making everything there is, these are the working people up with nobody works, we have nothing right.
15:21And so, and then they would have been able to make their mortgage payments that would be able to make a car payments GDP would have been okay to be no bank bailouts and no car company, but not but.
Ben Pimley
15:31Also government we didn’t have any risk of people.
warren mosler
15:37Right, so that, so this would have been a trillion dollar tax and the government would do it because you’re scared to death, and how are they going to replace that money, what if they can borrow it with the markets because they had the sequence.
15:49That they understood sequence like they do today we’ve passed $5 trillion in net spending and no one’s mentioned the text.
15:59I think they’re starting to get the idea that.
16:02These financial risks have never been there.
Ben Pimley
16:05yeah so actually that brings nicely onto Elliot question which is, do you think empty is change politics in the UK, especially us, if so, what is an example of this.
warren mosler
16:17yeah i’d say dramatically, I think the examples are.
16:22The latest policies were going through.
16:26increases, without even a discussion of paying for taxes, I don’t think that would have happened, I know it didn’t happen last research.
16:34And I don’t think it would have happened without the awareness now what I think circumstances drove people to to that awareness Okay, you know, but still, yes, I think you have to get full credit particularly stephanie kelton who’s the weeding face it say.
16:56terms of celebrity status she’s got the best selling book yeah she’s had high profile jobs with senate Budget Committee, the Bernie Sanders campaign and then she’s at stony brook now and she’s with you know getting.
17:14she’s she’s driven people to.
17:18Take a look at what she’s talking about because she’s got the largest audience video on it by a factor of 100 and so i’d say single handedly.
17:29The awareness has centered on her income from her and spread to a lot of other areas and then work its way back you met by read her book first where she mentioned me and then come to me but.
17:39Most of the guys you got to first.
Ben Pimley
17:43I did that.
warren mosler
17:45But, quite a few people i’ve come in directly because of her you know.
17:50yeah no ability to publicize you know her success and publicize me, so I think on that score, she has to be the most influential comes world only because influence this year means people paying attention to him to yeah.
Ben Pimley
18:05I would say it yeah no it’s definitely it’s definitely sweeping the economics world pretty rapidly.
warren mosler
18:11yeah and she’s she’s as good as a cut basic comment awesome which is helpful but.
18:17she’s got the right ideas at the right time yeah.
Ben Pimley
18:21Okay, so just a quick word I want to talk to you about cutie.
18:28Yes, here’s I think that it’s a pretty important topic to cover.
18:33yeah and you, having worked at the Fed you know exactly what goes on.
warren mosler
18:38I didn’t work at the Fed but I used to visit the set and discuss.
Ben Pimley
18:42yeah so.
18:43You know what happens behind.
18:46talk to us about cutie operational, what is it.
warren mosler
18:50Okay, so I know all the people in monetary seriously said when I know curious just a placebo doesn’t actually do anything Okay, so it is when the Central Bank buys.
19:03Governments curious, so what our government security so just accounts at the Central Bank and normal bank would call it a savings account.
19:11But they give it a fancy name card of treasury secure if you buy one you send your money to this to the bag central bank and then they send it back to you with interest, just like any other savings.
Ben Pimley
19:22Time savings account, but for the financial.
19:26Institutions of the country.
warren mosler
19:28For anybody.
19:29You can walk into your local bank and in.
19:31England and by the US Government treasury securities, you know you can give them pounds and sell them for dollars and.
19:39anybody can have a security now you’re back will be your.
19:43agent will be a custodian but you know, send a counterfeit.
19:51And the Federal Reserve offers two kinds of accounts, which is normal back recalled checking and savings, but they call it reserve accounts that reserve.
19:59and securities accounts US Treasury securities and I suppose that’s confusing they just said, we are checking accounts and savings accounts, maybe at the big deal over this, but they don’t okay so with qed.
20:13If you have money in a savings account at the Fed treasures.
20:20You don’t know who’s a buyer you don’t really the buyers who just go to the your bank and say, I want to sell this treasure security and you can sell it any day you want, whether the feds buying.
20:30You can sell your if you ever feel at Bank of England, you can sell them any day like you don’t notice the Bank of England buying.
20:38But what happens is if the Fed has a policy to buy the security than somebody like yourself goes to sell your hundred thousand dollars treasury securities, it may be the Fed, on the other side is.
20:51In in our could be another bank or city could be an individual you don’t know it actually doesn’t matter which i’ll get to him just y que he doesn’t do anything so if the Fed buys your security, so you have to pay for it.
21:04And so you had money in a savings account they paid for by putting money in your checking.
21:10So your money has shifted from your savings account to your checking because in the Fed has bought securities, which it now hold and that’s queuing so.
21:22You voluntarily sold them because you don’t want them anymore, in fact, the interest rates to model.
21:30It was you wanted to, for whatever reason you decided, you want to say it wasn’t because the Fed came in and beg to do it.
21:38If you just happen to be in the market selling it every day there’s hundreds of billions of treasury securities bought and sold, but people don’t know or care whether the feds buying.
21:48When the Fed bias there just another buyer waiting to turn mine through the highest price a.
Ben Pimley
21:55So people call it after Gordon printing money.
22:00Am I right saying there’s no actual net change.
warren mosler
22:04yeah so.
22:05What you have to do is say look at the definition of money when they make that state they come money in the checking accounts of satan’s and one maybe him to Croatia, they don’t count your dollars in the securities accounts as money.
22:22The Federal Reserve Bank of England had broader monetary used to include those as much it’s arbitrary, whether you include them as money, the reason you would include the reason they do that is trying to find an aggregate that somehow explains the kind of.
22:39So you say, well, what is money and they go I don’t know it’s dollars and checking account savings accounts that reserve accounts.
22:45Well let’s let’s just try these accounts call this one run our models and see if that corresponds can.
22:52Now that didn’t work let’s add especially security so let’s see what that so that didn’t work we have so and they come P Star and they come up with all these military aggregates trying to develop them as tools to conduct you know fiscal management awesome so.
Ben Pimley
23:09But essentially.
warren mosler
23:10The academic definition of money.
23:13don’t include credit cards they’ll include you know if you eat your meal and you owe money on a check, they say, well, that check is money that restaurant sell it because you always have money any debt is money you know the academically could be any.
Ben Pimley
23:26yeah.
warren mosler
23:27Sorry academically that the Treasury securities would be money just much reserve accounts.
23:33right therefore therefore QA just shifted from one category of money to another.
Ben Pimley
23:40It would be kind of like me, putting taking money from my savings account and putting it in my current account.
warren mosler
23:46To spouse yes it’s not like that it’s exactly that.
Ben Pimley
23:50So and OK, and then that would kind of explain why there’s not much evidence of curious done anything.
warren mosler
23:58No, no, because you’re going to make that decision whether, when you do, that what you don’t know what your savings account when you do that maybe the bank replace it with another one, maybe they don’t.
Ben Pimley
24:09Because no one was forced to sell that securities right it did.
warren mosler
24:12A voluntary job market.
Ben Pimley
24:14Okay, so Okay, so the demand was already there yeah.
warren mosler
24:18And if the reason is the interest rate you think you know at interest rates have gone to law on this series anymore, I want to be in cash that doesn’t cause somebody to spend.
24:28Now there’s just an investment decision that pension fund me we’re going to increase your cash to 20% 10% because we think interest rates are too low, you know, whatever.
Ben Pimley
24:39So I mean, in a sense, so oculi does is it it just takes the base rate down to zero.
warren mosler
24:48Yes, except, it would have.
24:52us now paying interest on reserve want the base rate to be higher.
24:55ticket, which is another good point the base rate will always be zero unless the government takes action to make it higher either have to sell securities.
25:05To support interest rates power levels, or they have to pay interest on themselves Okay, but in the absence of that very close to zero, so when they say they’re.
25:16suppressing rates or there’s you know some kind of financial repression going on pushing rates down it’s actually the opposite, they have to they have to proactively work to keep rates up so letting the Left rates come down by withdrawing.
25:32What you’re doing it’s not a question of pushing rates down that would otherwise go higher yeah.
Ben Pimley
25:37Right right yeah.
warren mosler
25:38takes energy keep the right time yeah.
Ben Pimley
25:41So I didn’t know that the in the US to pay interest in reserves.
warren mosler
25:45Yes, yeah it’s.
25:48When you do QA and you have other concerns.
25:51They did it before the policy ready to zero, maybe 2% it will go to zero, he said, unless he paid interesting job so they did, that is raised support an active policy to keep rates it to instead of zero that pushing rates up now holding down.
Ben Pimley
26:08Okay, interesting and so just keeping on the banking side of things.
26:17explain what Aaron tears mean when they say because.
26:22What we’ve kind of been taught is you know poetry needs to save a lot in order for country to be able to invest money create loans, etc.
26:36What does it say about that.
warren mosler
26:38Well, we actually say the same thing that other mainstream economists saying deepen their textbooks, but they seem sometimes they seem to forget so it’s not like a new contribution, but it’s just as real and that is.
26:52The causation backwards on that house its investment that cause of savings, savings is what I call the accounting record of adjustment.
27:00and not the other way around, so if you go to buy your to sell your House say i’m retired I retired, I want to sell my house to do and and I just want to put the money in my savings, so you go to the bank and borrow.
27:16$500,000 to buy my house.
27:19The Bank would volume you the money which creates a deposit the you would sign a note promissory note which you can talk to the bank.
27:27The Bank by side note from you gives you $500,000 credited to your account, which is brand new to new balance, because it wasn’t there before consistent You then have that 500,000 transfer your account to Mike.
27:42Okay, so what I have in my account is there because you created you borrowed the money to take.
27:50OK, so the investment that the loan created the deposit and that’s always.
27:55correlate the causation the deposits are all the liabilities that acid created by sign know.
Ben Pimley
28:03So, in that sense, then it is it correct to say that actually banks are not restrained by reserves because.
warren mosler
28:12Correct they’re only.
28:18narrow sense illegally constraint, but that operation.
Ben Pimley
28:22Right, so it doesn’t matter.
warren mosler
28:25yeah but.
Ben Pimley
28:29If a bank wants to loan money they don’t kind of go check their reserves.
28:36If they can’t they just do it.
warren mosler
28:37Just do it, they know the price of reserves and and that affects how much interest to you have to charge on the loan to cover the cost.
Ben Pimley
28:45yeah.
warren mosler
28:45be competitive yeah okay so because they compete with each other, but they have cost yeah yeah and So yes, because now what are this breaks with the post Keynesians years and years ago where they would say.
28:59Thanks create loans which create deposits and then you have reserve requirement, they would say the Central Bank, this was in the US, so the Fed has to land those reserves, otherwise the banking system would fail or be too disruptive you know so they have to do it there’s no option.
29:17So I said no you’re correct lunch great deposits, but then, if there are reserves in the first instance, they are an overdraft in your account at the Central Bank, you have a negative balance.
29:29Okay, and just because if you had a reserve requirement you don’t need it and settlement date that you have a negative out desk that’s a negative balance in your account, and so the negative balance is alone from set.
29:43So, in that sense the loan creates both the deposit and reserve requirement has a matter of accounting that’s the way you account for an overdraft years is a long it’s booked us along it’s the same thing that’s where you get the idea discount well it’s all the same thing.
Ben Pimley
29:57yeah makes it.
warren mosler
29:58So, in a post gauges.
30:00argued a lot, I think the promise to argue.
30:04They don’t say it that way.
Unknown Speaker
30:05yeah yeah.
Ben Pimley
30:07Okay, great and then the last two things I wanted to talk about was.
30:17So obviously you must get this all the time, so but we’ve got to go for it so obviously lots of people argue, you know the government starts spending loads then we’re going to have hyperinflation we’re going to be Zimbabwe.
30:35And, but why is that not true.
warren mosler
30:39Okay, so it would be true, but only if the government pays higher prices, the government sticks to his guns and says, the US Government, we spent $6 trillion last year we’re not going to pay a penny more this year spent last year.
30:55And let’s say prices went up for.
30:58government spending would go to zero just not gonna pay it.
31:02Okay So where does the Academy get the money to pay the tax Where do they get $2 to pay taxes so you’ve got a massive deflation going on, you know contractionary for us.
31:13there’s a huge money shortage of six whatever you need to pay the tax Captain that says the pension funds on that, which will be five or 6 trillion and.
31:23It starts selling things to each other to get the money is what happened in your product you’re selling asked and prices will come down until the government.
31:32Which is the only source of those dollars you’ve got it eventually come to the government to get them.
31:37Because the prices will come down to what government was willing to pay, and then the price level and not go up so if government is spending on a.
31:44Price constrained based says look, this is all we’re going to pay this year more than last year, no matter how much expands it’s not causing inflation.
31:53Because, because the prices are the same.
31:57pays more more than it’s, it is a source of information.
Ben Pimley
32:01Right so because I know a lot of hyperinflation people think that it’s.
32:08The money supply affecting the price level but.
32:11Actually it’s often the other way around, is the price level going up, causing people to have to print more money in order to sustain to buy things at that price.
warren mosler
32:20Well yeah to make change.
32:22How much cash do you need in your cash register.
32:24On your store if you need $1,000 let’s say you get 10 times inflation now, you need $10,000.
32:33So it happened.
32:34In Weimar, Germany, the inflation was so high yeah they could keep up with enough money, just for the kind of the merchants, to make change, and so they were printing that those bills as fast as they could and it wasn’t enough they went private companies print money.
32:49So that people would have money to make change.
32:51and free didn’t have to pay for that right, you can just this crazy.
32:56yeah because up now, and the other thing that happened was in 1979 us because of the inflation.
33:06Inflation adjusted value of the public debt actually down.
33:11The number went up by 10% but the inflation was 12 and 14 so the actual amount went down, so it was in real terms, it was a contraction of the money supply.
33:21And created this big recession, you know because of the inflation by contracting the value of the money supply create the money shortage and.
33:31You know, there was a recession so it’s interesting the way that happens now, the empty contribution is that the currency itself is a case of monopoly simple public.
33:42Okay, none of the other schools and understanding, and so they don’t have any source for the price level.
33:48What your micro one one course showed you first thing you learned was monopoly took about 15 minutes and an apple says price right.
33:56And there’s not a choice there’s no competition go pick some price right now, like it, you could set quantity and take a guess and trying to adjust it but.
34:05it’s totally impractical, the practical way to do is just set a price, which is what governments do the currencies and monopoly the practical way to set a price we don’t.
34:15And so instead we try and set quantity through budget that’s completely chaotic, we have all these account is trying to figure out this chaos chaos, so we created by not understanding the currencies America, so we know why prices are what they are because prices.
34:33Prices function prices, because all the other schools of thought, are still talking inflation expectations.
34:39Okay, the reason that make up this year is because expected inflation or something they can’t, they can always they can’t tell you why the price level is where it is except.
34:50That it was somewhere last year and then change by inflation expectations, so I have is infinite regression it goes doesn’t go back anything on the price, though, that there is no fear the price well Okay, and none of their models have money they had money as a numeric just too.
35:08Young to have to label for not as a monopoly and they don’t certainly don’t recognize it as a coercive monopoly, that is, you know taxes, introduce course.
35:20Now, how can you have course of taxes and on a massive scale, not that it matters and say that you have neutrality that immediately obvious any sense of.
35:32That money is neutral it’s valid you know things in real terms will grow where they’re going to grow that money’s just labels and we put on things to for relative value informational purposes.
35:46You can’t do that when you’ve got a case that we that’s all imperfect competition, and so it just totally.
35:55Changes these models in the models are wrong through omission, they can take the general equilibrium models model, the currency is a public Napoli.
36:05To get much better exercise what’s it doing will get a whole lot closer they have other assumptions that need to be thrown out her shouldn’t be there.
Ben Pimley
36:16And Okay, and the last thing I want to ask you about is your job guarantee scheme.
warren mosler
36:21yeah so remember, I told you about the US Government puts on a tax which creates a need for dollars for two things to pay taxes in that side.
36:32Because we have all these savings incentives like tax advantage incentives for pension funds and everything else, the amount that people want and that saves actually hired attacks, but that’s another story Okay, and so.
36:46So the tax creates 20 million unemployed people who want to.
36:52Are enlightened way willing and able to work for for the dollars, and the only possible reasons are to pay taxes or say there’s no nothing else you do the dark it’s just a tax credit.
37:02convertible Okay, and then we only hire 5 million and so there’s 15 million unemployed cycle what’s going on it’s almost sadistic why you wouldn’t do that if you understood it, if you only wanted to hire 5 million people you put on a smaller tax that would.
37:20That would only create 5 million unemployed and there wouldn’t be any other Okay, but no, we put on a taxi create 20 million roughly 120 million people fine just hire them all, then they’re not there’s, no, no.
37:32We don’t want to hire 2012 they say well you know we really didn’t know what we were doing we’d like to hire someone.
37:38We want to hire 5 million more for the Green New Deal site they’ll hire those but now you still have.
37:42The taxes still to archos employee so now that the Government spend all the money wants to streets already paved with gold.
37:49education’s free free healthier you’re still unemployed now lower the tax until they go away well there’s a problem.
37:57The problem is that people have become stigmatized the private sector doesn’t like to hire people who are unemployed.
38:03And that’s why you see the neighbor getting higher and higher cycle, because the long term unemployed, nobody wants to hire.
38:10They don’t know if their work habits or any good if the come in on time they get fights maybe you’re on drugs you’re not clean just don’t know so they’d rather hire somebody then working maybe they get a good report from your supervisor or something like that.
38:26So how do we help these unemployed that we don’t want in the public sector okay transition back to the private sector.
38:34If we want them in the public sector just higher level public sector wages and everything, but if we don’t want them, how do we get them back.
38:42Well, if we give them a job to do this job guarantee which I call a transitional job because the purpose is to promote the transition from unemployment.
38:52Which is public sector we pulled them out of the private sector, not working in the present the transition from unemployment back to the private sector.
39:02By giving them a job, where they come in, they have supervisor visible to employers the work habits are visible, they will then have a much higher likelihood of being hired by the private sector and.
39:17They also form a much better price anchor then a pool of unemployment, the reason we use unemployment.
39:23And all the reason that government or just hire them, so I think if you lower the unemployment rate you’re going to get inflation, because of Labor shortages.
39:31Because, if you have a lot of unemployed competing for jobs that helps keep wages in life.
39:36Okay, but if if the government has if the private sector doesn’t want a higher than keeping anything you’re now you’ll get bottlenecks and and you get wave Spikes and you know local areas, you know specific areas where.
39:53Business doesn’t want to hire the unemployed you’re willing to pay more and more sense to hire people who are working, and you can get inflation from that source.
40:00Now if you’ve got a pool is employed under the job guarantee transition Labor the being paid whatever 12 pounds an hour.
40:10$15 now the private sector knows, they can hire from this boy have some spread over that amount, maybe two or $3 an hour hire factor.
40:19and fill their employment needs that way they don’t have to go out and eat Labor force you’re getting people who are already working have a supervisor they come and clean every day they don’t get in fights.
40:30You know they’re not on drugs and things like that, and in a good economy way this is always trying to tell people you don’t feel.
40:38I remember when I first started the bags, with hundreds and hundreds of people every year train them all and then keep maybe half of them are.
40:49In a good economy can charge enough for its product bringing workers and training it’s always done that up until the last 40 years or so, in NASA suppression of aggregate.
41:01Something place at the edge it’s not the way the economy supposed to work, so the job guarantee to me.
41:08promotes the transition from unemployment to private sector employment it’s an imperative of government, because government created the unemployed right like by imposing a tax liabilities have created more employees than the one time.
Ben Pimley
41:22And in that sense, you say then unemployment is like a government policy kind of it because.
warren mosler
41:28It can come from anywhere else.
41:29got any example of a non monetary economy doesn’t have unemployment is no people looking for paid work, you know, in a monastery or you know.
41:39Any place the North America or Africa before the Europeans came in didn’t have anybody looking for paper.
41:46The grandmother was helping take care of the kids you know she wasn’t like an employee if they invented some new technology, you have a ship station or Australia, the middle of nowhere.
41:55And all the brothers are working, the plasma fields and they get a tractor now they’re fixing the fences working on the House, it looks like it’s a non monetary system yeah yeah yeah.
Ben Pimley
42:06And so on the same topic actually led.
42:10Could you expand your argument for real estate tax to anchor the currency.
warren mosler
42:15yeah so i’m a.
42:18Progressive economy, so you have to recognize that context, and so I think it’s a lot more progressive than.
42:26A matter of how you structure the income tax and it’s a couple of problems structure, you can text with john.
42:33One of it is, if you tax higher income people you know that’s fine for social equity, but doesn’t do anything for making fiscal space or aggregate demand because you’re taxing money that wasn’t going to be spent anyway.
42:46And so it doesn’t help create things for sale so again i’m not against it categorically than just telling you it doesn’t create sellers of goods and services for the government and your tax lower income people yeah then then then you’re creating.
43:00You know, things for sale, that the government can buy, but the propensity to spend at the high end can be very much lessons.
43:12It does you don’t reduce anyone’s consumption necessarily via who has a lot of money by removing some of it so that’s one point there’s a lot of points.
43:22The first macro point is transactions taxes in general, because I real estate an asset tax and I.
43:32Like that better than transaction transaction taxes work to reduce transactions are almost always progress, so a va tax, for example, to me, is maybe one of the worst tax out there because it’s.
43:48You know, first of all it’s paid disproportionately by the lowest income people so it’s highly regressive you can hardly think of the woman’s dress tax and it works to lower consumption and it works to lower transactions people buying and selling from each other, and so, if you’re.
44:10Cutting grass or something like that and and keeping trees trimmed here.
44:16And i’m a dentist i’m good at taking care of teeth.
44:20You know, we I want you to do my grass and you are made it through your kids teeth.
44:25But if you put a high enough tax on these transactions, either through an income tax or vtt tax or anything else.
44:31My kids are gonna have great teeth and my wife’s gonna look terrible your kids you’re gonna have a great one nice garden your kids teeth are gonna be falling down right, so we want.
44:41You know, real wealth is enhanced by people specializing in doing things for each other, taking care of each other and.
44:48Economies of scale and division of Labor whatever happens because those are all the things that enhance real productivity at the macro level and so transaction taxes work against.
45:00So you’re actually making yourself poor with this transaction tax, if the reason is to raise revenue off of the different way, raise revenue, rather than shooting yourself in the foot okay we’ll come up with a way that doesn’t do that.
45:12So now we come to the income taxes, which is a tax on transaction waiver transactions and as part of your cost of hiring somebody until you’re less likely to do that, so you get the same you know, lack of comes scale.
45:29Terms called specialization Okay, but you’re one more thing you’ve got massive compliance costs for both va te.
45:37So I was talking to some needs to go to university Chicago about the clients real class for the income tax and I suggested, maybe 10%.
45:49And I hear another name for it because they’ve stated, he says no, I think it’s a lot higher.
45:55it’s 15% if you think of all the human half yeah, it is a cost people taking care of their taxes, all the information and write down.
46:05All the other says they get worried about and all the drugs.
46:08And then all the irs revenue agents and then all the legal system, the courts and all the record keeping and.
46:15Real resources electricity going into computers running spreadsheets and then all the offshore things that are set up.
46:22yeah the average companies, large companies spending billions of dollars in tax compliance okay that’s money that paid to people were doing jobs that could otherwise be cured cancer doing something useful so so we can all be.
46:38The economy could be producing is this is the fire sector right finance insurance real estate, this is a sector that’s just.
46:45People digging holes of people filling it in doesn’t add to this complying with institutional structure that’s why it’s there it’s not there for any.
46:53productive for us it’s there because our legislators have created a structure that demands so by eliminating the income tax, you will eliminate, which is part of the structure created by her witches.
47:06you’re freeing up 15% of GDP of real resource that could go into consumption.
47:12So, because it’s all about consumption at the end of the day, you don’t build anything so something like us, otherwise what’s the point given us artwork you want to look at you don’t go work for the way, so let me see okay so.
47:25Who who’s going to get to consume this extra 15% of GDP it’s not going to be the highest income people because they’re already eating three meals, a day.
47:34Their children are already going to the private schools are already taking six weeks vacation not going to be more they’re already find private jets.
47:43Go it individual private chances with their consumptions not going to go up in real terms, but so it’s all going to go to the lowest 50% of this is 15% of GDP Gordon wasson percent that’s over 30 right.
47:57yeah there’s probably close to the half you get rid of the MIT could look how the record keeping for VIP and all the criminal activity, it generates right yeah same thing with income tax, you know you get rid of all that immediately, and so, and so what you’re doing is.
48:15Increasing the real standard of living up the lowest income earners by 50% with the stroke of a pen yeah Okay, so if you compare.
48:26Who pays the tax and one person who pays tax the other fine you could get marginal differences, maybe you want to progress attacks on real estate so.
48:35If you have more square feet you pay higher taxes that’s fine Okay, but the differences between those are totally dwarfed by this 50% increase in a real standard of living for the people with the lowest standard of living, right now.
48:50yeah but much of it and services, public health, education, transportation, whatever else those will all be added, free of charge, so to speak, you just shifting.
49:01The production of compliance, you know, on these taxes to production of services for the lower 50% income earners.
49:13This enormous now well any other progressive come out there saying we should replace the income tax with real estate tax, no.
49:21I think i’m the only one i’ve given this talk to a lot of people, including want to stephanie comes class no video like Come on, with it, because it makes you know marginalizes it’s just too extreme but you asked a question so i’m giving you the yes yeah.
Ben Pimley
49:37So i’ve actually got one more question.
Unknown Speaker
49:39yeah.
warren mosler
49:40feel free to cut me off with them these detox.
Ben Pimley
49:43And it.
49:45Does the instruction of robots in the production process limits the suggested policy to reduce unemployment, so the job guarantee scheme.
49:54You know what jobs will they have and his his his upcoming limited by the use of technology and robots.
warren mosler
50:02Okay, so what’s happening is a productivity story is getting confused with an unspent income store.
50:10Okay, unemployment, always about the government hasn’t spent enough to cover the need to pay taxes and the desire to say.
50:18You can always reduce taxes, so that the unemployment, as we know it goes away Okay, and if you on the other hand, so it has nothing to do with productivity, so, if you look at 200 years ago, or maybe less 99% of the people have to be an agriculture we all start.
50:37Only a handful of people were allowed to go to university because they had open to everyone there won’t be enough people in the fields and everybody would start people are actually needed to do that and so only the.
50:49promising or rich or whatever, a few 1% ever got to go to advanced education, it was a luxury to pull them off the field okay as productivity increase now in the US 1% of the people are employed in.
51:03farming and agriculture and we not only feed ourselves producing 8000 calories a day per person just crazy are all getting obese, but we also.
51:13Have a massive export food to the rest of the world with w work, so what happened to the other 98% they’re not unfamiliar with so we had a.
51:22Law and productivity story and they all went into manufacturing, education, research assistant medical research and everything else, public health, public safety.
51:33Military you name it we’re we’re 90% service at 10% manufacturing, so the manufacturing went from very high percentages it’s only 7% of the population in the US, if it ever went to 8%.
51:45Now this rule would be filled with junk and move around Okay, we don’t need more people in the factory because of productivity, so we could all outlaw.
51:52lawn mowers and require wines couple scissors and we have jobs but that’s not progressive that’s backwards, that is the opposite of Labor saving the base that works against our.
52:02standard of living and, if you look at the jobs in the service sector there’s no limits to how many people can be employed that even with robots it’s just just more how many.
52:13It if the government was willing to give every university professor, a budget to hire research assistants, how many research assistants, whatever university assessor higher I don’t know.
52:25These people who be out of control right.
52:28Everybody wants to go research what happened.
52:30You know 400 years ago and it took a lot on archaeology and do all these things so there’s plenty of jobs it’s about payment right it’s not about the.
52:40funding, and so the other example I give is how many people would like to have a personal assistant.
52:47Just to help you sort your emails your photographs keep your schedule your appointments make sure I don’t run over on my time I mean how many people would like to have personal assistants and if you have a room full of people.
52:58Like everybody raises their hand they all want a personal assistant, so I said okay so let’s say the government.
53:04Funded enough money so that everybody could have a personal assistant, how many personal assistants would there be an answer zero because if we all want one who’s going to be the person listens.
53:15to him right so what’s happening is we’re all waking up in the morning, with at least 100% Labor shortage is a permanent the human condition is a personal is a permanent Labor shortage.
53:28On the lots of people to do things for us if we ever had the money and people who have a lot of money as people doing things for Okay, so we all want that, so you kind of know how many robots you have you still want people to do things for.
Ben Pimley
53:43Okay, so you’re not right, so you don’t seem very worried about the whole kind of robot technology.
warren mosler
53:49No, no, you have to you have to promote that as much as you can, and then you sustained for appointment with your fiscal balance.
Ben Pimley
53:55Right okay yeah that’s that’s optimistic that’s cool.
warren mosler
54:00I mean it’s all the evidence.
54:02there’s no dispute about that
54:04You talk to any condoms about the details, they agree and then, then they don’t even talk about it anymore, because it makes them seem like something wrong with them with this i’m talking about.
Ben Pimley
54:17yeah and so elliot’s got a good concluding question actually so.
warren mosler
54:23yeah.
Ben Pimley
54:24I will end on this one So what are the three main things to take away from empty.
warren mosler
54:30Okay, the first thing is sequence.
54:34You know the order that happens if you know the government spends first you know you can’t crowd anything out you’re just.54:41Borrowing back the money you just spent that it’s just sitting in your own account your own bank account go anywhere else any so sequence tells you everything the source of the price level is the fact that the government’s monopoly monopoly pricing.
54:55So you’re going to public monopoly which tells you the sequence, and also tells you the governance process.
55:01The next important thing which we haven’t started on which i’ll conclude with which we need desperately to get out there is that the central banks have an interest rate thing that.
55:11They think raising rates fight inflation and all the evidence rich for just a paper shows and see absolutely raise rates it causes more influential.55:19In my White Paper it’s very short I show the reasons raising rates creates more inflation will already rates reduces inflammation.
55:26And that’s why as we’ve loaded rates in the world, come down and stayed down will go up one of the reasons system zero rate policies support zero inflation pay it.
55:40You know the US for seven or eight years with zero raised the European Union negative races 10 years and Japan for 30 years they all say the same thing oh rates are models work low rates will have to come just need a little more time that’s after 10 years.
55:59Back in Japan, after 30 years we just need a little more time got it backwards and the problem with them having a backwards is you’re afraid to.
56:10run you know for deficit spending because it creates what’s called public that the funds outstanding securities constant they think that if this ever inflation.
56:20they’re going to have to raise rates to fight and raising rates, going to be paying interest on all this public debt to fight inflation and that’ll just create more inflation, which is why i’m telling raising rates creates more.
Ben Pimley
56:32Because the interest to the private sector.
warren mosler
56:34yeah it’s I call it basic income for people who already have there’s a lot of people who support basic income, but none of them support it only for people who already have one.
56:43that’s what a positive interest rate policies pays it pays government money deficit spending, the only for people who already have money it’s basic income for people.
56:52So they say you know well, every night, the whole budget of everything will be disaster well.
56:59If they realize that we’re already at that we’re raising rates causes inflation, so we can’t do that anyway, then that argument won’t even come up.
57:07So if they want to argue against why we should sustained for play with they can’t say.
57:11Well, we can’t have full employment, because our leads to more deficit spending and then, if rates went up we wouldn’t be able to fight inflation that argument goes away once that argument goes away their last arguments gone Okay, so the last argument you know the flat earth people have.
57:29Is that they is based on the premise that raising rates causes inflation.
57:35And once that’s gone then we’re clear to make public policy based on public purpose and what the real choices are and not some you know the sky is falling mythology.
Ben Pimley
57:45yeah okay very interesting well, thank you very much for coming to talk to everyone, and I really appreciate it.
57:56message to you guys, if you want to know more about it, I would say, go to our Moses site, he has lots of articles, etc, he has one of his books one of them’s on the site one of them’s right.
warren mosler
58:11yeah this they’re both they’re the seven deadly innocent projects, you know your foot in the status Mosley economics.com is my email is worrying dump Missouri she knows.
58:24When don’t you know i’m w.
58:29Eva da South county economics it’s just a paper that somebody putting the book my family.
58:37was never done as a book.
58:38But but that’s on the site loss so soft currency economic easier, as is the seven deadly innocent tries to offer everything i’ve done is free.
Ben Pimley
58:48Trade if you are interested go and read those.
58:53If you I like talking about this stuff So if you want to email me i’m like happy to like talk about this stuff I love it so it’s.
59:01Okay, but well, thank you for coming everyone, and I hope to see everyone seemed to Warren Thank you so much it’s really nice to meet you.
warren mosler
59:09You too, and thanks for having me oh.
Ben Pimley
59:11that’s right yeah.
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Chat Messages
Raul Crespo56:16
Does the introduction of robots in the production process limit the suggested policy to reduce unemployment?
Thank you very much Warren – extremely interesting!
Many thanks. Very interesting.
Thank you!
Thank you !!
Thank you!
Oharrak:
i) Amerikar bilioi bat = mila milioi europar
ii) Amerikat trilioi bat = bilioi europar bat
