Warren Mosler PK konferentzian (2008)

@tobararbulu # mmt@tobararbulu

Warren Mosler speaks at a lunch at a PK conference in Kansas City, Missouri

(https://www.youtube.com/watch?v=tCVgBTC2ySE)

Transkripzioa:

0:02

thanks i I just want to say a word about

0:05

charterism but I forgot what it is and

0:08

Paul

0:08

Davidson named it so what what is

0:12

chartism

0:23

yeah how did how did you come up with

0:25

that name for Is that from NAP or

0:26

something i didn’t come up with Now who

0:28

came up with it somebody just wrote come

0:29

up with it cuz I definitely

0:33

Who came up with the

0:37

name dates back to right but who here

0:40

who started calling this whole thing

0:45

it’s got to be Paul

0:50

the Saudis say they don’t set price and

0:51

he said he didn’t call us

0:55

journalists all day right

1:00

but it had to be from someone who knew

1:02

Latin so

1:06

you know I

1:08

what what this is all about and I

1:10

started this a while back with uh Paul

1:13

and Randy and whatnot is that there’s

1:15

certain uh

1:16

basic I’ll call them accounting

1:19

identities fundamentals um operational

1:21

realities of our floating exchange rate

1:25

system our monetary system that were

1:27

being totally uh overlooked and actually

1:30

um worse And the whole idea is once you

1:34

understand understand these then

1:36

different options open up and one of the

1:38

options that opened up was this whole

1:40

employer of last resort now a lot of

1:41

people have talked about it for a long

1:43

time but unless you understand that

1:45

there’s not a government solveny issue

1:47

that it then you can’t do it okay and it

1:51

just becomes a lot of talk and so uh I

1:54

think it was

1:55

um there were people uh Bill Mitchell

1:58

had this idea of a a labor buffer

2:01

stock which he was developing at the

2:04

same time called the BSC but he didn’t

2:05

have the the um support on the finance

2:08

side it comes down to the same thing how

2:10

you going to pay for it the same reason

2:13

why uh John Kerry couldn’t name any

2:15

programs because people say “Well how

2:16

are you going to pay for it?” And that

2:17

implies you have to have higher taxes

2:19

and it all comes down to the idea that

2:20

the government if you ask any

2:22

congressman he knows exactly how it

2:23

works the government has to tax or

2:26

borrow in order to get the money to

2:28

spend right and what and if you go down

2:32

to the train system in New York City and

2:34

you watch the tokens you know exactly

2:35

how it works first they collect the

2:37

tokens and then they issue them no first

2:40

It looks like it but they don’t first

2:42

they issue them and then they collect it

2:44

anytime it’s your own token you have to

2:46

get it out there first before you can

2:47

collect it if you’ve got a dollar in

2:49

your pocket it’s because the government

2:50

spent it and hasn’t taxed it yet and in

2:53

fact the government has the money to pay

2:55

taxes comes from government spending the

2:57

money to borrow they borrow comes from

2:59

their spending they got to anytime the

3:02

Treasury tries to increase its balances

3:03

at the at the Fed or the

3:06

CB the uh central bank has to do repos

3:09

in other words they have to do a reserve

3:10

ad before they can do a reserve drain

3:12

government spends first and then

3:13

collects this it’s completely the

3:15

opposite of what everybody in policy

3:17

thinks and until they start thinking the

3:19

opposite things are going to keep going

3:21

the way they are and

3:23

so and I I know I heard Pavilina say

3:27

something uh is Pavina here oh there you

3:29

go err is charterless position well it’s

3:32

an option that opens up once you

3:34

understand you’re collecting and then

3:36

spending and then when you say something

3:37

like uh and I’ll pick on Pavina because

3:41

she’s strong the strongest

3:43

uh but it but it’s a

3:45

good would these other people talk about

3:48

whether the Treasury has to borrow in

3:50

order to spend well you know legally

3:54

they do there’s laws that prevent them

3:56

from spending without having money in

3:58

the account they’re not allowed to run

3:59

an overdraft at the Federal Reserve that

4:02

Congress has uh they can’t spend because

4:04

they impose debt ceilings on themselves

4:07

so there are all these self what we call

4:10

self-imposed constraints on the system

4:13

and as long as you have these

4:14

self-imposed constraints it’s like tying

4:17

your shoes two places together and

4:18

saying you can’t walk well sure you

4:20

can’t walk untie your shoes and go ahead

4:22

and walk right and and so what what

4:25

we’ve done is is shown that these are

4:27

self-imposed constraints they’re not

4:29

inherent in the system and that yes the

4:32

US government has Treasury has to borrow

4:35

first it has to finance its spending

4:37

with taxes or borrowing but that’s a

4:38

self-imposed constraint it’s not an

4:40

operational

4:41

constraint okay and we know it’s not an

4:44

operational constraint we go through all

4:45

these examples you know if you pay your

4:47

taxes in actual cash they throw the

4:49

money in the shredder how does that pay

4:50

for social security and we you go

4:52

through all these kinds of things and

4:54

then

5:01

um let me let me just throw this out and

5:05

I I re appreciate it if anybody has any

5:08

residual questions about this about what

5:11

we’re actually saying what it is and I I

5:14

think everything at least that I’m

5:16

saying basically is irrefutable it’s not

5:20

theory it’s just an op a review of of

5:23

operations of how things actually

5:24

operate okay and I I don’t mean ever not

5:28

ever but in general to go past that when

5:30

I do get out of just operational reality

5:32

into theory I usually specify it and

5:35

I’ll say

5:37

uh all right let’s so let’s look at one

5:39

more thing that’s operational reality

5:42

the currency is a public monopoly i mean

5:45

does anybody disagree with that there

5:48

any hands up here that’s not a monopoly

5:51

okay now we all know that uh from Basil

5:54

Moore’s 1988 book that the reason the

5:56

Fed sets interest rates is because it

5:58

has a monopoly of net reserve issuance

6:00

and so when it leaves the banks short

6:03

uh you know uh in a net borrowed

6:06

position the banks then have to come to

6:08

the central bank to borrow it the bank

6:10

oh yeah you can have it um well if we if

6:13

it’s an overdraft it’s going to cost you

6:15

X but if you do it through open market

6:17

operations it’s going to cost you a

6:18

little less and if you do it this way

6:19

it’ll cost you this and all they do is

6:21

price the overdraft and because they’re

6:23

a monopoly there’s no other place to get

6:25

it it’s a simple case of monopoly now

6:26

nobody it’s when you have the whole

6:29

spectrum from monopoly to perfect

6:31

competition as you get towards perfect

6:32

competition it gets pretty fuzzy but as

6:35

you’re over monopoly it’s crystal clear

6:36

you’re price setter and there’s two

6:38

prices that a monopolist sets how is

6:40

thing exchanges for itself which I

6:43

believe Marshall called the own rate and

6:44

so with your currency it’s how that’s

6:46

the interest rate how currency exchanges

6:48

for itself and then how it exchanges for

6:50

everything else and what you do is you

6:52

set price and let quantity adjust you

6:54

don’t have to do that but it comes down

6:56

to it and if the government has five

6:58

public monopolies the electric the water

7:02

the trash pickup and a couple others it

7:03

sets the price and then what’s the

7:05

quantity flow it doesn’t say we’re going

7:07

to sell two billion kilowatts this year

7:09

we’re going to let the market decide the

7:10

price don’t work that way you could but

7:13

it would be chaotic and you need an army

7:15

of economists to figure out what would

7:16

happen to price which is what we do with

7:18

the currency you say “Oh we’re going to

7:20

spend uh two three trillion dollars this

7:22

year.” This getting lost with the

7:24

numbers we’re going to have to take some

7:25

zeros off the US dollar pretty soon be

7:28

understanding the uh and and we’re going

7:30

to spend it at market prices because we

7:32

don’t understand we have a monopoly we

7:34

don’t understand what price we you know

7:35

we think we need to get the money

7:37

through taxes or borrowing and we’re

7:38

going to spend it and so it’s chaotic

7:40

what the price level is going to do we

7:41

have armies of economists to try and

7:43

figure this thing out because of the way

7:45

we’re operating our simple monopoly now

7:48

I know that if I’m a monopolist I’m

7:50

price setter that to me that’s a

7:52

fundamental is anybody disagree that if

7:53

you’ve got a absolute monopoly on

7:56

something you’re not price setter no

7:58

okay so we know we’re price setters so

8:00

if we come to some area where somebody’s

8:03

claiming that we’re not price setting

8:04

that that government doesn’t have

8:06

control that you can have inflation is

8:08

something they do then we know there’s a

8:09

mistake in there because we can back up

8:11

to saying we know the monopolist is

8:13

setting price right and so it gets into

8:15

well what about on the lending side you

8:16

know if you have credit creation and

8:18

it’s driving up prices what what so okay

8:21

let’s back up we know we’re price set we

8:23

know we can set the price level so let’s

8:24

say I’m setting the price of oil I’m the

8:26

Saudis and I say it’s $140 a barrel

8:30

It’s not going to go to 139 without

8:33

somebody shutting the lights off at 3:00

8:35

in the afternoon and stop driving right

8:37

because I’m I’m a

8:38

monopoulos i know it’s not going to go

8:40

any higher because I have excess

8:41

capacity i’m selling all that they want

8:43

at $140 a barrel today and somebody

8:46

walks up to me and says “Uh I’d like to

8:49

borrow some oil.” Like what why am I

8:53

doing any oil okay you want to borrow

8:54

some oil well what are you going to give

8:55

me as collateral would be my first

8:57

reaction he says ‘Well I want to borrow

8:58

it just unsecured just give me oil maybe

9:00

I’ll pay it back maybe I won’t well now

9:01

if I do that what’s going to happen i’m

9:04

going to wind up lending a ton of oil

9:06

he’s going to be selling it at a

9:07

discount and the price is going to go

9:08

down does that mean I’m not price setter

9:10

as monopolist no it means I was caught

9:13

sleeping okay now does that happen sure

9:16

we got caught sleeping with the SNL

9:18

prices we said to the SNLs “Yeah you can

9:20

borrow all the money you want unsecured

9:22

uncolateralized because we have FDI

9:24

FSLIC insurance and you go out and raise

9:26

deposits and you’re getting government

9:28

money.” And we forgot to tell them what

9:30

they could do with it so they just did

9:32

all this stuff and we had all kinds of

9:34

you know inflation and aggregate demand

9:36

built up and shopping centers built in a

9:38

desert and then when we figured it out

9:39

the whole thing collapsed and came apart

9:41

okay we weren’t you know we got caught

9:44

out and so yes that can happen now was

9:47

that because the interest rate was zero

9:49

no if I’m lending you oil and I don’t

9:52

charge you and I charge you 20% interest

9:54

but it’s uncolateralized and nonreourse

9:57

doesn’t matter he’s just going to borrow

9:58

it and go out and sell

oooooo

@tobararbulu # mmt@tobararbulu

Transkripzioa:

0:00

okay there’s more to it than just the

0:02

interest rate

0:03

the snl crisis would happen no matter

0:04

what the interest rate is

0:08

so at the end of the day and i might be

0:11

missing something here and

0:12

a lot of you understand monopoly a lot

0:14

better than i do

0:15

and you can think it through and be part

0:19

of the answer i guess rather than part

0:20

of the problem

0:21

and recognize yes monopolist or price

0:23

setter okay on the lending side we are

0:25

the monopolist

0:27

the central bank needs to make sure it

0:30

has

0:30

it doesn’t loan unsecured in unlimited

0:33

quantities because

0:34

it will result if risk doesn’t have to

0:37

happen you’re risking some kind of

0:38

hyperinflationary situation

0:40

what does that really mean well when we

0:42

land on home

0:43

fh the government agencies have access

0:46

to

0:46

basically government insured funding

0:48

well can they just give people a check

0:50

and say go buy a house and just promise

0:52

me that you’re going to buy a house no

0:53

they take a first mortgage they have

0:55

appraisals can they say uh look

0:58

there’s appraisals but we’re worried

1:00

about those housing bubble and

1:01

everything else

1:02

we’re the ones funding it we want to

1:04

like limit these you know we’re going to

1:06

go examine these appraisals and

1:08

we’re not going to allow this sure you

1:09

can do all that stuff or none of it

1:13

and the consequences are to me obviously

1:16

what’s going to happen or

1:17

the risks are obvious or what’s going to

1:20

happen and what’s going on is obvious

1:21

and it doesn’t mean

1:22

that the government doesn’t have control

1:24

of the prices and it doesn’t mean

1:26

that you’re not priced at it it means

1:28

you’re

1:30

you’re doing what you’re doing i think

1:31

you know what i’m talking about here now

1:33

let’s look at the other thing

1:34

price center suppose the government said

1:38

okay we’re not going to pay a penny more

1:40

for anything that we spend than we paid

1:42

last year

1:44

and then all prices in the economy go up

1:45

for whatever reason what happens to

1:47

government spending

1:48

goes to zero and then what happens

1:51

okay you get a little bit of deflation

1:53

suddenly there’s three trillion less

1:54

than government spending

1:56

and because where’s the private sector

1:58

going to get the money to pay the tax

2:00

they have to come back to the government

2:02

and hit bids

2:03

and buy and sell to the government

2:04

there’s no other place to get the money

2:06

to pay the tax now that would be a zero

2:09

inflation environment

2:11

if that situation occurs when prices go

2:14

up the government has the option to just

2:15

say we’re not paying it now we saw that

2:17

happen in a limited way as monopsony

2:18

buyer in the

2:19

medical area prices were going up too

2:21

fast and all of a sudden medicare with

2:22

these i said well we’re not going to pay

2:23

that much

2:24

well nobody has any other source of

2:26

funding and prices don’t go up

2:28

now there’s other consequences people

2:29

don’t go to medical school you don’t

2:30

have doctors you know you’re left out in

2:32

the hall

2:32

i’m not disagreeing with any of that but

2:34

at the very narrow idea

2:36

of being a monopolist you you are

2:38

setting price

2:39

but it might not be good policy it might

2:42

be better policy to just go ahead and

2:43

pay more as

2:45

price center let some inflation take

2:48

place or let a one-time adjustment

2:49

because

2:50

you’re not forced to accelerate this

2:51

thing every year

2:53

than it is to just say no we’re not

2:55

going to pay any more we’ll let it come

2:56

down

2:57

the option that opens up with the the

3:00

elr

3:02

is that you use that pool to set the

3:04

price of unskilled labor

3:06

right now we set it at zero with

3:07

unemployment we have an unemployed

3:09

buffer stock

3:10

buffer stock is only effective if it can

3:13

provide

3:13

what we call two-way action you have to

3:15

be able to absorb labor as

3:17

it gets shed from the private sector

3:19

then you’ve got to be able to feed it

3:20

back in as the private sector expands

3:22

otherwise it’s not an effective buffer

3:24

stock okay

3:25

and so unemployment is not an effective

3:26

buffer stock and that’s why this

3:28

neighborhood thing gets higher and

3:29

higher and i would guess that

3:31

they really think it’s about nine

3:32

percent in europe and seven percent of

3:34

employment is scaring these

3:35

central bankers and they’re going to be

3:37

raising rates even with no growth

3:39

because they see a little labor unions

3:40

here and there

3:42

they’re in a panic when they see seven

3:43

percent uh here i think we’re

3:45

going in that direction and i predicted

3:47

we’re going to see studies showing that

3:48

the real nehru here is uh

3:50

seven percent and not five and the only

3:51

reason it was five was globalization and

3:53

now that’s over

3:54

it was an artificial thing they’re gonna

3:56

come up what’s happening is

3:58

as they see inflation they’re trying to

4:00

use unemployment as a buffer stock and

4:01

it takes a larger larger pool

4:03

because it doesn’t function in a two-way

4:05

direction yeah

4:06

it’s like somebody said the roach motel

4:08

you know you check in you never check

4:10

out

4:10

once you become unemployed your ability

4:12

to become re-employed has gone way way

4:14

down

4:15

nobody wants to hire unemployed people

4:17

they only want to hire people who are

4:19

already working

4:20

and we have good data on this from the

4:22

heifers program in argentina

4:24

where daniel’s not here this time but

4:27

after argentina blew up with

4:29

32 dead in the street one night with uh

4:32

another blown up fixed exchange rate

4:35

he got this program in where they had a

4:38

they hired anybody

4:39

uh had a household willing and able to

4:41

work for peanuts

4:43

uh and they got two million people in a

4:45

population of a little over 30 million

4:46

took this job who had never worked

4:48

before

4:48

never had any prospects of being in the

4:50

labor force within two years 750 000 of

4:52

them

4:53

were hired by the private sector so

4:56

you’ve got a company that needs somebody

4:57

to work in the kitchen

4:58

making soup and you see somebody in a

5:01

hefe’s program soup

5:03

cafeteria is already doing it you go to

5:04

the boss this person any good yeah okay

5:07

we’ll hire

5:07

now if that person was unemployed

5:09

wherever they were before it never would

5:10

have happened

5:11

and so what happens is this employed

5:12

buffer stock gives you two-way action

5:15

it’s it’s easier to send people in

5:17

because you’re not sending them

5:18

pushing them down so far when you don’t

5:20

need them and it’s a whole lot easier to

5:21

hire them

5:22

they actually do get hired versus

5:23

unemployed you never get hired

5:25

am i plus enough statistics okay

5:30

so this becomes a policy option only

5:32

when you

5:33

understand that you don’t have a

5:34

government solvency issue

5:36

and that’s the whole point of this

5:38

approach we’re making what we’re trying

5:40

to get into public policy is that there

5:41

are other options

5:43

when some of these myths or mental

5:45

blockages go away

5:47

right and it’s not because you know

5:50

trying to

5:51

advocate any one policy over another i

5:53

just know that there are all these

5:55

options

5:56

that are pro-agenda for most of the uh

5:59

political parties that don’t even get

6:02

considered

6:02

now i was in washington a few weeks ago

6:04

and i had two meetings one with a guy

6:05

from the far

6:06

right heritage foundation former bush

6:09

speechwriter

6:10

pushed one i thought that’s any better i

6:12

don’t know why i qualified

6:15

and uh we go through this exact same

6:17

thing he goes yeah i’m going to put this

6:19

in my blog which he did

6:20

and uh is uh you know we got to keep in

6:22

touch and i’m coming up with ways i want

6:23

you to speak here his feet down it’s

6:25

like okay i guess

6:26

excuse me some kind of right wing or

6:28

something then i meet another guy my

6:29

partner’s brother alan rieger who’s way

6:31

over on the left he’s

6:32

what he does is digs up dirt on all the

6:33

right-wing guys so that the democrats

6:35

can win their elections

6:37

and uh we go through this whole thing

6:39

and he goes

6:40

yeah this is good stuff we got to get

6:41

this out there and he’s starting to talk

6:43

to me about his friends who i have to go

6:44

talk to

6:45

so i i think i’m pretty much apolitical

6:48

on all these things and i do think they

6:50

serve

6:52

the debate uh in general and that’s what

6:55

is trying to be promoted that whatever

6:57

you are whatever

6:58

side of the political spectrum you’re on

7:00

there are options that are not being

7:02

considered now it’s just talking about

7:03

oh it’s gone talking about mexico

7:06

there’s a lot of options that aren’t

7:07

being considered because they’ve got

7:08

these

7:09

mental blocks about what you have to do

7:11

with the exchange rate what you have to

7:12

do with the budget what you have to do

7:13

with this

7:14

these things don’t exist okay and this

7:17

is what this is all about

7:19

and thanks for attending and hopefully

7:21

someone gets back

7:22

and uh does anybody have any questions

7:24

because

7:26

you know the answer here and getting an

7:28

understanding of his worth

7:30

is what it’s all about not the not the

7:33

form but the substance so

7:37

yes other than mario’s name go ahead

7:44

i’d like to ask you what you just said

7:45

at the end yeah

7:48

i mean i could imagine a right-wing

7:50

government implementing an elr

7:52

in a left-wing government implementing

7:54

an er right and

7:56

my concern would

8:09

yeah i could see a neoclassical central

8:12

bank demanding it

8:13

as a more effective buffer stock for

8:15

unemployment right

8:16

and so you know is there really a

8:18

difference fundamentally

8:20

between neoclassics and kenzie

8:24

and keynes or anybody else on any of

8:26

these points well when you get down to

8:29

specifying what currency regime are you

8:31

talking about because i’ve seen

8:32

arguments back and forth where there’s a

8:33

violent disagreement but i know one’s

8:34

talking about

8:35

fixed exchange rank one’s talking about

8:36

floating but so when you

8:38

when you really get down to an

8:40

applesauce comparison

8:41

there’s very little and you know i did

8:43

anybody hear my canes versus the

8:45

classics thing

8:46

you know the argument is you know kane

8:47

said without a monopoly uh

8:50

the classic said you know without a

8:51

monopoly you don’t have unemployment so

8:53

we’ve got to break the labor unions and

8:54

all this and then the market

8:56

will clear and there won’t be any

8:57

unemployment kane said even with

8:59

out even in the absence of monopoly

9:01

you’re still going to get unemployment

9:03

why because you’re going to have lack of

9:05

aggregate demand in the late

9:06

the in the monetary system and and for

9:09

whatever reason and you know uh

9:11

margaret principe or whatever so am i

9:13

right paul

9:14

yeah okay tell me just start don’t let

9:16

me get go straight here

9:18

okay and what i’m saying look what

9:20

keynes was talking about

9:23

is a currency monopoly and so in that

9:26

sense

9:27

the classics were right that you can’t

9:28

have

9:30

in the monopoly the monopolist is

9:33

putting a tax on the population and then

9:35

not spending enough to fill the need to

9:37

pay the tax

9:38

and to net save so it’s a monopolist

9:40

restricting government not spending not

9:41

deficit spending enough is a monopolist

9:43

restricting supply

9:44

which is exactly what the neoclassic

9:46

said causes unemployment and exactly

9:48

what kane said

9:50

you don’t have to have and then he

9:51

described a monopolist restricting

9:53

supplies

9:53

as why you could have unemployment and

9:56

the classics disagreed with him

9:57

so this argument was just talk

oooooo

@tobararbulu # mmt@tobararbulu

youtube.com

Warren Mosler speaks at PK conference, Part III

Warren Mosler speaks at a lunch in Kansas City, Missouri

ooo

Warren Mosler speaks at PK conference, Part III

(https://www.youtube.com/watch?v=-0p_5g_EKX0)

Transkripzioa:

0:00

so they may end up for example the worst

0:03

possible case as long as the big public

0:06

stockings in China

0:09

with where people are willing to work 70

0:11

cents an hour or seven cents an hour

0:14

that the only job that the United States

0:17

can fund will be jobs that can be not

0:21

tradable jobs let me make sure yeah

0:23

cleaning out yeah but let me rephrase it

0:26

okay we’ve got 180 currency monopolists

0:29

around the world different countries

0:30

however many there are anybody know how

0:32

many countries there are right now the

0:33

currencies

0:34

200 okay 200. we have 200 currency

0:38

monopolies around the world does that

0:39

include yeah 201 now let’s look at you

0:44

you know with the Buckaroo the

0:46

government the school does not restrict

0:47

Supply and there’s no unemployment and

0:49

just like with the bar because anybody

0:50

can go to work and earn a bucket wrote

0:52

anytime they want and there’s not only

0:55

no inflation it’s been the strongest

0:56

currency in the world the Buckaroo has

0:58

gone from ten dollars a piece five years

0:59

ago to twenty dollars a piece now I’ll

1:02

perform the stock market I’ll perform

1:03

anything else

1:06

yeah

1:08

and with zero interest rate policy so

1:11

it’s been

1:16

foreign

1:43

they’re changing real terms of trade on

1:45

us and there’s nothing we can do about

1:46

it so it’s almost an exercise of

1:48

futility but apart from that we got 201

1:50

currency monopolies and each one of them

1:53

imposes attacks in each one of them if

1:56

there is any unemployment it’s because

1:58

in any one of those currencies

2:00

unemployment is currency specific and

2:02

somebody looking for paid work in a

2:04

specific currency

2:06

any one of those

2:07

is creating that is allowing that

2:09

unemployment because they’re not

2:11

spending enough to cover the tax bill

2:13

and the net savings desire in their own

2:14

currency now we know also as a point of

2:17

above

2:18

as a beginning point that

2:20

that the cause of unemployment is

2:23

taxation the point of Taxation is

2:25

unemployment we’re trying to move

2:26

resources from the private sector to the

2:28

public sector that’s what governments

2:30

mandated to do and the way we do it is

2:32

we impose a tax and now all these people

2:35

who are previously doing whatever they

2:37

were doing if you start with a

2:38

non-monetary society like the British

2:40

did in Africa and they wanted to get

2:42

people to move to the coffee plantations

2:43

they imposed a Hut tax on everybody

2:46

now all these people who are doing

2:47

whatever they were doing are unemployed

2:49

in the sense that they need British

2:50

pounds to pay the tax so they get their

2:52

Hut burned down okay now that what do we

2:54

have to do to get it okay they go to

2:56

work you can work in a coffee plantation

2:58

for one a day

3:00

and so the tax creates the unemployment

3:02

and then the spending gives the meat as

3:04

a means to

3:06

you use so when we create the

3:08

unemployment we’ve at that point moved

3:10

everybody out of the private sector into

3:12

the public domain when you’re unemployed

3:14

you’re in the public sector you wouldn’t

3:15

be there if it wasn’t for the public

3:17

sector tax the unemployments to find

3:18

that you’re looking for that paid work

3:20

not that there aren’t things to do in

3:21

the world that you’re looking for that

3:23

specific paid work so the tax has moved

3:25

you out now you’re in the pub now what’s

3:26

the public sector going to do with you

3:28

well for most of you it’s going to give

3:30

you a job you’re going to be in the Army

3:31

you’re going to be building aircraft

3:32

carriers you’re going to be doing all

3:33

kinds of stuff

3:34

and then but for some of you it says

3:36

okay that’s it closed five percent stay

3:39

unemployed that’s our buffer stock

3:40

against inflation

3:42

all right those are a creation of the

3:45

tax and a spending insufficient to pay

3:47

the tax and that’s safe

3:49

for the further purpose of establishing

3:52

price stability

3:54

fine and they’ve got all these

3:55

mathematical equations which say if you

3:57

don’t and you allow price stability

3:58

you’ve got problems you’ve got to run

4:00

away placing

4:01

so what we’re saying is that we have an

4:04

option now and we understand how the

4:05

currency works that

4:08

the um this buffer stock can be an

4:10

employee buffer stock rather than an

4:11

unemployed buffer stock okay and then

4:13

the people you’ve moved out of the

4:16

private sector into the public sector

4:17

you you’re using them all private sector

4:19

still has its people if it doesn’t have

4:21

enough you can cut your taxes and then

4:23

you won’t get so many people to out of

4:25

the private sector if you cut your taxes

4:27

to zero they’ll all be in the private

4:28

sector nobody will use the currency or

4:30

work in the public sector

4:32

all right enough my done

4:35

go ahead yeah

4:40

South Africa and Africa and sort of

4:43

developing countries yeah

4:46

so that has your way of kind of employer

4:49

of Last Resort in the sense that half of

4:52

its

4:53

positions in the government sector are

4:55

unfilled

4:56

now they’re only hiring black guys

4:59

but the couple is

5:02

the skills are so low

5:04

and

5:05

um

5:06

if I speak to any Economist in stone

5:09

books they say all that employment is

5:12

structured

5:14

is that aren’t skills out there

5:17

do any of these things that are demanded

5:19

and there are minimum wage laws so

5:22

basically you’d like to say

5:25

if you wait you’ve got to pay unskilled

5:28

workers in the former sector it’s just

5:30

too high so they’re not they’re not

5:31

they’re not going to get hired

5:34

now

5:35

um

5:37

you know I can remember yeah I was busy

5:39

in your in your Authority I think

5:49

that that passes

5:53

look when I was a little kid I was

5:55

hearing my parents talking about them

5:56

reading a paper about lack of skills

5:58

there’s always a lack of skills

6:00

there’s never not you can’t by

6:02

definition there’s always a lack of

6:04

skills always always what I mean all the

6:08

economics and so that even they’re 11

6:09

guys

6:10

out of a structure

6:13

the government spends

6:15

it’s going to be primary places

6:19

you offer a job to anybody willing and

6:22

able to work at a non-disruptive wage

6:24

and then there’s a lot to do for example

6:27

if I offered funding to everybody in

6:29

this room for personal assist everybody

6:31

in the United States everybody in this

6:33

room for a personal assistant

6:35

who would not go out and take me up on

6:38

that everybody would right because

6:39

nobody can even keep their photographs

6:41

straight

6:42

on the computer anymore right everybody

6:44

needs help people manage them and do the

6:47

value they can add yeah so you would be

6:49

not only three or four personal

6:51

assistance but a manager for your

6:52

personal assistant okay and they all

6:54

need their own personal assistant so how

6:56

many would actually get hired and the

6:58

answer is zero

6:59

everybody would want one there wouldn’t

7:01

be

7:02

be a personal assistant there’s an

7:04

infinite amount of stuff to do the

7:06

question is funding and in the way the

7:08

monetary system allocates who has to be

7:10

the personal assistant who gets the

7:11

personal assistant who has to dig the

7:14

gold and who gets to take it to London

7:16

and buy a new suit which we talked about

7:17

before so there’s there’s always

7:19

infinite things to do and even in Africa

7:22

before it was monetized it wasn’t like

7:25

everybody’s sitting around with nothing

7:26

to do everybody was busy occupied doing

7:28

things

7:30

well yeah it’s informal but before you

7:32

know the way monitors okay if again if

7:35

you offer everybody a job and give them

7:37

things to do that you might have

7:39

previously considered informal jobs

7:41

that’s fine but there’s all kinds of

7:43

child care of just people holding hands

7:45

in the nursing home there’s like

7:46

infrastructure repair maintenance

7:48

there’s all kinds of there’s like

7:50

infinite amount of things to do teaching

7:52

assistance helping the police department

7:53

uh night Watchmen in the neighborhoods

7:56

all these things that if you offered

7:58

funding through all this stuff this is

8:07

20 percent

8:09

less than one percent grows all the food

8:11

right another 10 or 15 percent does all

8:14

the manufacturing what do the rest of us

8:15

do

8:16

other than digging holes and filling

8:17

them in oh yeah very important legal

8:19

paperwork and tax work and all this

8:21

stuff yeah we’re doing some stuff I

8:23

don’t

8:24

it’s all up for grabs right

8:27

so

8:29

but the point is once you understand

8:31

that it’s not as you can’t even begin to

8:33

tell South Africa or discuss offering

8:36

everybody a job wants a job and then

8:38

having them do basic infrastructure work

8:40

or whatever unless you understand there

8:42

isn’t a solvency issue because there’s

8:44

an implied solvency issue this is not

8:47

discussed is this even discussed

8:48

anywhere no when you go to India why is

8:50

it a limited program where’s the money

8:52

going to come from why do they drop it

8:53

in Argentina because uh somebody spent

8:56

that money there instead

8:58

there isn’t any that money there with

9:00

this you know so once it takes getting

9:04

past the basic accounting of how the

9:06

monetary system works before these ideas

9:07

even get discussed

9:11

everybody hovers around my grandmother

9:13

because he

9:15

yeah right

oooooo

@tobararbulu # mmt@tobararbulu

Transkripzioa:

0:00

you know that’s the way the way it is so

0:02

uh

0:04

well people spent a lot of time building

0:06

pyramids building pyramids was

0:08

considered worthwhile employment

0:10

who’s to say what’s worth what you’ve

0:12

got let me let me explain basil’s point

0:14

and he has a very valid point the

0:17

structuralist position

0:18

which i think has some validity is that

0:21

south africa’s

0:22

productive capacity yeah of the things

0:26

that people currently want

0:28

the way we measure production yes yes i

0:29

i i understand that all those night

0:31

watchmen who could be doing services and

0:33

all that too

0:33

right but the stuff that it currently

0:36

wanted is that full at full employment

0:38

they don’t have more manufacturing

0:39

capacity if you go

0:41

and you want more electric power to

0:45

there’s no more power available right

0:47

they need to build more power plants if

0:49

they want to do more of that stuff

0:50

yeah yeah but and uh well that’s i’m

0:53

just trying to give an example

0:55

you’ve had the microphone for a long

0:56

time

1:09

and indeed we couldn’t build the

1:10

pantheon today we don’t know how to all

1:12

right

1:13

now the point is that if you start to

1:15

create alr jobs and you do create these

1:18

night watchmen position and so

1:19

so on you will pay them they will then

1:22

want to start to want

1:24

the sorts of things like televisions and

1:28

and meals and food and so on and south

1:30

africa doesn’t have the capacity to

1:31

produce it

1:32

that there’s two things they already

1:33

like that stuff they already want this

1:35

they do i know okay

1:37

what i’m going to get to is the problem

1:39

here of inflation and politics

1:42

that money will be chasing after those

1:44

goods some of it will leak of course a

1:46

lot of it will leak into the current

1:47

account and the trade deficit

1:49

is bad already you of course say that

1:52

the current account that the exchange

1:53

rate just depreciated

1:54

that will of course cause more inflation

1:56

what you’re going to be doing is

1:58

changing the relative price of that

1:59

let’s say

2:00

go ahead yeah you as a result of the

2:03

chasing after more electricity because

2:05

the folks who get these

2:06

eli jobs one electricity and their

2:09

hudson so later

2:10

um that will have profound political

2:14

effects in the sense that those who were

2:15

employed will now find themselves having

2:17

a decrease in the standard of living

2:19

and would be very opposed to it and they

2:21

are the politically powerful

2:23

right in addition i’ve talked about sort

2:25

of how you’re going to have these

2:26

effects through the

2:27

open economy effect now that is a

2:30

huge political problem that just

2:32

recognized and i call it an economic

2:34

problem because it’s a real world

2:35

problem you’ve got to trade off now

2:37

between creating these night watchmen

2:39

jobs and

2:40

changing relative prices in a way that

2:42

will be very disturbing to many

2:44

society and who will oppose it okay so

2:47

this is a political problem until

2:49

society

2:50

values full employment enough to accept

2:54

some reduction

2:56

those who are employed may have to

2:57

accept some reduction in their own

2:59

standard living because as far as i’m

3:00

concerned i don’t i i don’t want one of

3:02

your systems you want to do offer to me

3:04

for free

3:05

i haven’t got the time to manage okay

3:07

i’ll withdraw my offer okay

3:09

so uh

3:12

all right

3:15

anybody else doesn’t want their personal

3:17

assistant

3:20

you offer it to anybody who wants it you

3:22

don’t force it this is not slavery is

3:23

that anything okay

3:26

okay so look the cost the real cost

3:30

is always the incremental actual

3:32

increase in consumption

3:33

is this person going to eat more because

3:34

they have a job are they going to be

3:36

driving more

3:36

are they going to be you know watching

3:39

more electricity more television

3:41

and you know not to violate lerner’s law

3:43

but there is some argument that says you

3:45

know are they going to be

3:46

right now they probably probably eat

3:48

less you probably need less health care

3:50

you probably have fewer family issues

3:52

you probably have fewer broken windows

3:54

during political demonstrations you know

3:56

so you can argue that and if the real

3:59

costs do go up you say okay well

4:01

let’s look at the actual incomes we’re

4:02

talking about and it comes out to

4:04

something like

4:05

less than one percent of gdp and you’re

4:07

talking about a place with

4:08

excess can go through the numbers if you

4:10

want but in the us at ten dollars an

4:12

hour

4:12

you get 10 million people you know we’re

4:14

talking like peanuts okay so

4:17

yes the answer is qualitatively yes it

4:19

can add demand yes it can eat this

4:21

now the then you have some real benefits

4:24

on the other side such as

4:25

if you can get some useful output maybe

4:27

it’s worth you know feeding them a few

4:29

extra calories so they can

4:30

you know do that useful output now

4:33

there’s some argument that nobody in the

4:34

public sector can do some

4:36

any useful output and you know i mean

4:39

that’s a political

4:40

decision and we have our own means of

4:42

valuing these things so

4:43

i’m not going to disagree with any of

4:44

that i’m also uh

4:47

and these people are already unemployed

4:49

and they are collecting a certain amount

4:50

of income

4:51

and doing some real consumption with

4:52

that income and so you’re looking at

4:54

incremental differences the other thing

4:56

you’re looking at is

4:57

because they are working and they are

4:59

now a fluid when aggregate demand does

5:02

increase assuming the rest of the

5:03

economy is

5:04

um has some productivity increases

5:07

and are not even productivity increases

5:10

develops uh some you know tries to hire

5:13

more people

5:14

okay for whatever reason they can then

5:17

hire these people and

5:19

demand constraint isn’t really the right

5:21

word but

5:22

you know other what happened argentina’s

5:24

other business expanded and needed to

5:26

hire people they were hiring people out

5:27

of this buffer site they wouldn’t have

5:28

been able to hire before

5:30

and so it because it’s a more fluid

5:32

buffer stock than unemployment it

5:33

actually keeps inflation down

5:35

and it strengthens the currency this

5:36

would be my argument but now i’m getting

5:38

a little bit in the theory and i don’t

5:39

mean to argue that but you know i can

5:41

always say i think it’s

5:42

more effective than the unemployment

5:44

that we’re using today incrementally

5:46

and certainly no worse it’s very

5:48

difficult to make an argument that it’s

5:49

any worse than what we’re doing today

5:51

and it’s very difficult to make an

5:52

argument that even though again i don’t

5:54

want to violate learner’s law but that

5:55

the money

5:56

is material even if it was you can go

5:58

through other reasons where

6:00

it might be something you want to do and

6:01

if you’re affecting

6:03

and and all i’m saying is this

6:05

discussion for that

6:06

because we’re not going to finish this

6:08

discussion here i’ll talk to you another

6:09

time

6:10

this discussion is not taking place

6:12

right and if this

6:13

if there were five tom pallies for

6:14

different slightly different political

6:16

uh with your education with slightly

6:18

different political views having this

6:20

discussion

6:21

i’m sure things would come out that i

6:23

haven’t thought of there

6:24

and they’re all good and i know that

6:28

fundamentally this is a you know going

6:30

to be better than

6:31

this is an option that wouldn’t be

6:32

discussed isn’t being discussed because

6:34

they don’t understand the solvency issue

6:36

they’re worried about the

6:37

intergenerational transfer issue they’re

6:39

worrying about uh

6:40

whether we have leaving this debt to our

6:42

children so that in the year 2020 when

6:45

we build 20 million cars we have to send

6:46

them back to 2008 to pay the debt

6:49

okay just like today half of what we

6:51

build goes to 1945 to pay for world war

6:53

ii

6:54

like what are they talking about you

6:56

know we’re the macro economists here

6:57

guys

6:58

so uh this whole thing’s nuts right and

7:00

so because they’ve got these

7:02

i talked to this guy from morton’s

7:04

matters you know that guy

7:06

you know he’s got this unfunded

7:08

liability 72 trillion dollars

7:11

so what about the demand leakages

7:13

because what are those

7:15

yeah maybe that’s not enough to have a

7:17

72 trillion dollar deficit in 30 years

7:19

maybe it’s going to be deflationary

7:20

because

7:20

the pension funds are going to have that

7:22

much oh how’s that worth that’s i said

7:24

well

7:26

then because i said well you know

7:27

operationally the government’s not

7:28

constrained into spending there’s no

7:30

solvency issue to this

7:32

he goes well you’re talking

7:33

operationally i’m not talking about that

7:36

so you know we’re like people standing

7:37

around like this watching this guy don’t

7:38

worry

7:39

who is that what are you talking about

7:41

they were financial markets people he

7:42

was just

7:43

dismissed but he’s still out there with

7:45

all these kinds of things so what’s

7:46

happened is because there’s not

7:49

because there’s this assumption that’s

7:52

before any two intellectuals in the

7:54

economics world start a conversation

7:56

the assumption is there are these budget

7:58

constraints there are these this and

8:00

that the other thing

8:00

and so it never gets here so the

8:03

conversation you want to have isn’t

8:04

happening anywhere else

8:05

it doesn’t really matter whether we

8:07

resolve this or not it’s not happening

8:09

between uh

8:10

bernanke and paulson okay and that’s

8:13

where it needs to be happening

8:14

and so uh number one we have to

8:17

understand that

8:18

it’s not you know whether

8:21

it isn’t happening we have in a sense

8:23

failed over the last 10 or 15 years to

8:25

get it happening at any policy level

8:27

or maybe it’s in the process of

8:29

happening and we haven’t got to some

8:30

kind of uh

8:31

what they call a tipping point or

8:33

something yet i don’t know

8:35

okay i’m cut off thanks very much

oooooo