She explained inflation and how it happens. An imbalance in demand creates an imbalance in supply, which drives up prices. We didn’t cause inflation by keeping people employed, fed and housed; we caused inflation by refusing to tax excess capital out of the economy. Inflation is caused when people with excess spendable income buy luxuries, not when people living paycheck-to-paycheck buy food. Spending on infrastructure, for example, can increase economic growth, which then pays for the spending. Spending on another aircraft carrier doesn’t stimulate economic growth, in the long run, but does contribute to inflation by driving up demand for something that doesn’t equally drive growth.
@@Kazakor No, printing money drives inflation, as surplus of money in circulation diminishes its value. Her proposal will be detrimental do low and middle class. How that printed money gets in to economy is also very important.
The basic point that has been twisted is: just because we have a “deficit” against the government budget doesn’t mean we don’t have the economy to support the spend. That’s all fine and dandy if we could predict next years gdp, the reason we have the budget is to put some restraint on speculating against our future economy. I’d be all for basing the budget on last years gdp or similar, but we spend well beyond our industrial capacity and kill our ability to pull that trigger when a real crisis comes along. Also a 6 does not become a 9 when viewed from the top, it’s just a misunderstood 6, and ironically a good illustration of this talk.
@@ronobrien7187 no it wasn't. It was mainly price gouging and disrupted global logistics from the pandemic, which placed added pressure on the demand side. Her argument is completely correct.
@@sotaque So you're claiming that increasing M1 supply has no effect on inflation? You might want to look back in history, in particular Germany after WWI.
@@ronobrien7187 Not since we officially dropped the "gold standard" in 1973 (NIxon), which is what she mentioned in the TED talk at about the 4 minute mark.
Taxes are used to ensure we will USE the dollar and not some other means of trading. If you MUST pay taxes and you MUST pay your taxes in dollars you will NEED to find them. So you will insist that you're paid in dollars. And so will everyone else. Everyone using the same currency has HUGE advantages in an economy. Taxes are also used, albeit less often, to decrease the money supply and slow an over heated economy. There is disagreement about how well this works. Mostly because Congress has to increase taxes and we all know how Congress gets things done. So it isn't a "go to" solution we use.
@@mikec2582 Good response - taxation is mainly an incentive producer, but it also removes money from the economy, regulating the money supply and therefore inflation. To work really well, taxes need to be well targeted. On the other hand, in her book she is arguing that leaving it to the Fed (or other central banks) to exercise monetary policy alone (QE, interest rates, etc.) is not a "go to" solution either (although it is how things currently work). Even the heads of central banks are calling for a combination of both monetary and fiscal policy (the latter being government spending and taxation) in order to control inflation and unemployment. Taxation on really wealthy people is especially important, not because currency-issuing governments need tax revenue to fund their programs (according to MMT they don't), but because really wealthy people horde their money and don't circulate it as readily in the economy. They are effectively removing dollars from circulation...
Sure is tough to buy a house or even pay rent nowadays. Driving up asset prices through inflation is a terribly regressive system, i guess we wont call it a tax though.
MMT is a pipe dream. A govt that prints money is a cog in the wheel of the global economy, not the basis of the global economy. Every time the treasury “prints” dollars, the value of the dollar drops. Then we all have to accumulate more of them to retain buying power. The theory that you can create currency without harming the economy relying on it is false. All you’re doing is decreasing the relative value. The economy hasn’t grown, it has merely been scaled up, relatively. An economy only grows when new products and services are added. This activity creates jobs and increases the value of resources. Printing money only masks the true value. Govt doesn’t create anything. It is only a drain on the economy.
Inflation is a supply/demand issue, with too many people trying to buy the same goods and services. If the additional money printed by the central bank is only spent on investments in infrastructure, rather than consumerism style spending like the Covid cheques, then inflation wouldn't be affected much
There's some interesting ideas here (and in MMT) and I agree that inflation rather than deficit should be a better measure of an economy. However, the MMT idealogues are in my opinion missing two things that always happen in practice: 1. squirting fiat into the economy pretty much always ends up with _residual_ inflation even after government re-balancing measures (through taxation, interest rate hikes, etc.). 2. Governments spend a significant proportion of what she is defining deficit surplus not on the local population but quite often on foreign investments, foreign contracts that don't benefit the tax payers. So you have an open economy. So medium to long term money just leaks out the closed economy to make MMT work. I think it's important to not to be too ideological about MMT. Aspects of it do work but at the end of the day, if you squirt in excessive amounts of money into the system far and beyond what the country can produce then you're going to get inflation. At the end of the day, money (or wealth) is only a measure of the country's output and that's fundamental. And that is what Thatcher was really saying when she made her quote about there is no government money.
Great comments. She didn’t mention that the UK and USA don’t produce the raw materials anymore, so a large portion of the money goes abroad, to China for example.
"if you squirt in excessive amounts of money into the system far and beyond what the country can produce then you're going to get inflation" This is fundamental to MMT. It consistently and explicitly places the real resource constraint at the front and centre of fiscal policy decision making. Mainstream macro obsesses over the red herring of arbitrary government balance sheet positions over an arbitrary time horizon when deciding on spending. THAT is the crazy one.
MMT is nothing new. Most people taking an economics 101 class can think up of something along the lines of "how about we don't tax people, and just print more money and tax them via inflation?" The real problem is who is doing the printing, and who they are giving that money to. Turns out people are corrupt, and they give that money to themselves and their buddies, and have everyone else pay for it via inflation.
Fiat money has always baffled me, banks create it out of thin air, and I (and the rest of us) spend practically the rest of our life, working away paying back with interest, a mortgage ...its basically an I.O.U system the whole world of money runs on.
It is fun to think about it for me, how the banks create money. Ironically banks create money when we borrow it. Oh the supply and demand curves of debt and money supply.
@@MrRichbc yeah we did that with the gold standard back in the day. Fiat money was a really important step in expansion and creation of our current economy
@@MrRichbc Nobody really forced their internal financial politics to hold on to them. They estimated that they would make a good deal for themselves holding bucks. Now, if you want a piece of the action with the big boys, you have to pay the price and take some risks.
I wish I could ask Dr. Kelton one big question about the interest payment on the government issued bonds and treasure notes. The bigger the national debt, the bigger the interest payment. Am I wrong to think that the federal government should reduce the amount of national debt so that the government would not allocate a large percent of its budget to this interest payment.
She would tell you that she wouldn't care. Ultimately, the Treasury could simply borrow from the Federal Reserve Bank (who can effortlessly create money to buy Treasury Bonds). So, even if interest payments grow, the Fed can finance it. The only worry that MMTers care about are the political consequences of inflation, which could get their advocates thrown out of political office. That's probably what they are most concerned about now.
@@logosao88 The myth that the Federal Reserve Bank is an independent Agency from Treasury, appears to reflect the reasoning that Fiat Currency creates. When proposed the Currency change to the FED issuing Dollars, was presented as the value of the Federal Reserve Note, was supposed to be backed by the US Treasury selling equal value Notes to support the FED Dollars. I studied Econ in 1970 as the proposals to solve the currency crisis of 1967 that could not appropriate funds for the War on Poverty, because the Colonial Conflict in Southeast Asia had used up all the profits. We assumed Americans were too smart to fall for a system like we have today. But here we are..... If Treasury is incapable of demonstrating an equal value from their sales of Treasury Notes and Bonds, the Value of the FED Note falls. We are foolish enough to throw Balls at Targets at a Carnival to win a Teddy Bear. Even directing a Grenade Launcher at some Carnival targets will not dislodge them from their perch. But our faith in our hormones or our strength keeps Fools paying a Buck to throw some more. The Government or the Bankers, provide lovely Ladies like this one to assure us that the system is sound, the Dollar is secure. The fact that a complex web of Government Agencies and Bankers now shift the support among a multitude of Players to offer the appearance of stability. When Humans begin to doubt the stability of the Currency, the value plummets. The US Economy has become a Carnival, and Pickpockets and Carnival Barkers just take the money as they see fit. We have been too long at the Fair. The economy is simply an illusion supported by smoke and mirrors, as bright lights distract us. The Fact that the BRICS Trade group now has within their association around 70% of the available resources on the planet, and the US Threats of military power that can overcome any obstacle, are diminished by the appearance of Pentagon Audits, that indicate that corruption has stolen trillions from the money allocated to scare the Citizens of the World. The Carnival of US Economic supremacy, is about to fold up the tents and split for another Town...... The illusion is over.
You are 100% right, She lives in Lala land where the laws of physics & thermodynamics dont apply, Just because they print money, doesnt mean that goods and services are produced, An economy consists of goods and services, and a toilet paper they print is no longer valuable as they print more and more, buy Bitcoin or Gold, even stocks are issued by companies, the higher the price, the more stocks they issue, ridiculous, and We have to work for thay crap
@@logosao88 I think you underestimate the consequences. To paraphrase a quote, when the poor can no longer afford food, they will eat the rich ... too bad she's so thin
@@logosao88 I don't think this is right. The Fed is not the one that creates money - only Congress has "the power of the purse" and can spend money into existence. The Fed can apply monetary policy to try and add funds to the money supply and does this mainly in two ways: 1. changing the target fed funds rate with the goal of affecting other interest rates, and 2. buying Treasury securities on the open market to add funds to bank reserves. MMT is arguing that monetary policy alone is not a good solution to the problem of inflation. In addition to monetary policy, it calls for fiscal policy (government spending and taxation) to play a larger role in controlling inflation, and many heads of central banks agree.
If the issuer of currency can never run out of money, why do we have taxes? Some of the largest growth the country has seen was before there was an income tax.
Great question, I assume taxes were a form of kick starting an economy because only a government could collect them. And if no one had any money how could you collect taxes, so governments must have been the the first investor and issuer of currency and taxes were used to keep money circulating and thus keeping the perpetual monetary system we know as an economy going. Really I think taxes are just training wheels and can now be removed to really accelerate prosperity.
@@seanwalsh999 Yeah this. Establishing a money system goes hand in hand with the creation of taxes. It creates the demand for the currency. There's a difference between federal taxes and state taxes. The federal taxes could be removed. But the state gets it's budget from the fed and needs to manage it. Therefore States do rely on taxpayers money.
It's to keep the currency relevant. Without tax we could choose to trade in whatever currency the buyer and seller agree on. With tax reporting the government has control over ones transactions as they could ask to audit you and see receipts. Also tax has to be paid in the local currency thus adding to this. Tax is 100% not needed for spending by the government, but it does help with some wealth equality as tax bands get higher with income.
Taxes play several roles, a few of which are: 1) They remove currency from circulation, canceling out the new currency issued, thus controlling inflation. 2) They force people to work for the currency that is demanded back as tax, thus incentivizing productive labour. 3) She explains in her book how FDR created payroll deductions for Social Security because otherwise people wouldn't feel entitled to these entitlements.
it might take a minute to understand her but she is 100% correct in her assessments. We're still thinking in terms of a gold standard currency when in fact we have (thank God) relieved ourselves of that limitation. It limited our growth and as evidence just look at a chart of our countries wealth over the last century and how it has sky rocketed since leaving the gold standard. And you might say "yea but only for the rich!" and you would be correct our govt. chose over and over to give tax breaks to the wealthy and huge subsidies to billion dollar corporations while spending less and less on us. Most of the new wealth generated by the working class was confiscated by the idle rich and the congress they made sure got elected. Our battles are in the primaries, vote for people like yourself that will spend money on improving the average Americans lives not give tax breaks to the idle rich.
@@AndyMorrisArt printing money to generate economic wealth is a fallacy. The issue of how tax burdens are distributed among society affects how economics are applied but doesn’t change the laws of economics themselves. She has conflated two different issues and created an illusion.
It's pretty simple to understand. The whole "We the people" who should be actually participating in this government make a plan to do stuff, fix things and help each other, then they open the Fed's cash hose for a bit, and things start happening. Orrrrr... we don't do any of that. Then people start reverting to their animalistic selves, with people dying homeless on the street from easily curable waterborne illnesses in the middle of a giant famine-blackout where nothing works and nobody cares. The rich people who skipped out on their tax bills have enough to float around pointlessly on their golden parachutes for a while, but eventually even they will touch down and get thirsty. I see a lot of room for Capitalism to produce the things that Capitalism is designed to produce, like poverty, pollution, corruption, resource overshoot, market externalities galore... but I don't see any fallacy. You can either hit the brake or the gas... which one do you want here?
Watch until the end. She discusses the circumstances in which increased spending can't fix a problem without excessive inflation. It essentially is when the economy no longer has the extra capacity to produce goods and services with that money. We just went through a period of supply shocks, restricted immigration, and corporate price gouging that worked together to cause inflation. We simply didn't have enough goods and people to spend the money on, so prices rose. If we had just increased legal immigration and restricted M&A over the past few decades, there would have been very little inflation.
@@kyleolson9636 Ah, thanks... that makes a ton of sense now. Imagine how susceptible to inflation we're going to be when Amazon envelops every other business. Then again maybe their closed-loop ability to drive and anticipate customer demand, combined with the fact that they'll probably end up being the sole employer, educator and payroll for this nation's "governmental" regulators / legislators... maybe they can respond more quickly than any goofy notion of "The Free Market" ever could, since the only mechanism they ever had as feedback was pricing. Lol what a nightmare we made for ourselves, allowing Capitalism to continue long past it's obsolescence. I'm ready for NL/RBE at this point! I always thought inflation was due to hoarding wealth when there isn't enough competition due to patent trolling. The inflated cost of something producible by only one vendor, is provably the individual unit-sized component of what we actually mean by the word "inflation". Now I can see how that's actually true, as it artificially creates the exact bottleneck Kelton described in the final section of this talk. Allowing all that dynastic wealth to stagnate and congeal in it's own little pocket of corruption simply due to all the "yes men" that are hoping for a piece of it, with their meddlesome outreaching tendrils that break good-faith systems we've always assumed reliable. I guess the patent system never anticipated people who would be morally willing to ransom something all of humanity actually needs, like vaccines, fertilizers for growing food and battery technologies. While MMT is more correct than older theories, it doesn't suggest any solution to the corruption problem. I think this is @robertgillespie6890's "fallacy" he was looking for.
Question: What happens when payments for interest on the debt become the biggest budget item? Does this crowd out other spending? As debt goes up and up will interest payments crowd out more and more? Or is this 6 really a 9?
Dave: that sounds like you're fundamentally (and fairly rudely and ignorantly) ignoring the core premise proposition (and factual reality empirically warranted by simply observing the actual extant data), that federal budgets aren't household budgets. Period. The only way to cling with a death-grip to that fallacious myth, that somehow something as complex as an entire state's financing is magically the exact equivalent (or even just a bigger version of same) as some relatively small handful of people, is to ignore how systems of every kind work, in nature, in human context, always -- and how that fundamentally differs by scale, because emergent properties increase, when you have more factors involved, more elements, more components, just plain more. Here the simplest debunking of the foolishness of the entire misplaced paradigm and ignorant way of thinking is this, inherent in your own off-base questioning's basis: as described clearly and hard to misunderstand in the vid (unless mired in a whole worldview that blocks even looking at the point and hearing any single word said), when the government spends money, and so increasing what is mis-named "debt" overall and each year's "deficit," it isn't borrowing from anybody, ever, not really, and certainly in no way whatsoever like when we individually do that, or as families, again, in households. Simplest to see, because that money "spent" is actually going into the very same *revenue* sources that pour in money *to* the government, and *not* by "increasing taxes" as in raising a rate (even though that of course could and should be done for certain very small and resource-hoarding subsections, extremely rich individuals, and incessantly profiteering-to-insane-levels corporations). But rather, simply because when *people* have more money, they can actually spend it, as well as afford to do other things that cost more money, including set up businesses, move to where higher paying jobs are, buy houses and other owned homes, not to mention just live longer, and be more productive, etc. etc. etc -- all of which, at the *same* tax rates will nevertheless pour *more* money into the federal (and state/province/etc.-sub-federal governing levels, city and county and so on as well) funding coffers. It's really as simple as understanding math, and knowing that the numbers mean nothing unless you correctly apply units, i.e. the names of whatever the numbers apply to, aka context. Of course you'll probably intentionally perpetuate your own misunderstanding by misreading this, per the obsolete legacy "gold standard" etc. bs paradigms (such as scarcity model, chicago model or whatever of economics, aka racketeering imposed on you by perpetrators past, and which you become the perpetrator of as long as you buy and swallow that feces continually as a sewn-together human-centipede segment). But hey, maybe you could become humanized again and stop pushing the lies and violence that protection rackets always peddle. Who knows? If so, welcome to the human race again!
@@avirichar4981 Your reply is just rubbish. You are ignorant of the fact that all of the money government spends is ultimately tax money. That is because the majority is tax money to start with and the remainder is borrowed money they get from selling bonds to the Federal reserve or to the public or overseas entities . All of this borrowed money has to be paid back when the bonds that were sold to get it actually mature with interest. The bonds All mature in time so eventually all of the borrowed money becomes a burden for the taxpayer. Ultimately there is no free money or non tax money. You say "when the government spends money, and so increasing what is mis-named "debt" overall and each year's "deficit," it isn't borrowing from anybody, ever, not really, and certainly in no way whatsoever like when we individually do that, or as families, again, in households.". This indicates you are also ignorant of the fact that since 1971 all the so called sovereign money is credit and your response displays this ignorance of the nature of sovereign money today .
@@avirichar4981 "understanding math". Yes, a negative number in your account means you've spent too much and the answer apparently is to steal the difference.
@@avirichar4981 Do you realize that you avoided answering the question with all that word salad you produced? Or was that your intention? What actually does happen--take the time to explain in fundamental mechanics--when the interest on the government debt becomes the largest item in the government budget? Suppose interest rates run to 15% on our current roughly $30 trillion. Let us readers know your answer please.
inflation is an invisible tax on people who dont have enough money to invest. if you really "care" about inequality and minorities then stop printing money, stop bailing out banks, and start helping people understand what fiscal responsibility entails. its easy to claim MMT will work, but if people cant invest then your saving accnt interest will never keep up with inflation and thus the CPI will slowly outstrip their ability to live comfortably... this is why millennials like myself have a more difficult time affording housing than our parents. also its really easy to say printing money will fix things when you have a tenured position that safe and hermitically sealed off from the markets at large.. shaking my head sadly right now...
On the contrary, high inflation generally leads to investors losing lots of money in the market. Just look at what's been happening to the markets since the Fed started talking about upwards of three interest rate hikes coming. Soon as the Fed changed their tune from transitory inflation to not transitory, the markets tanked.
@@maxmoser412sure that's true, but it still doesn't change the fact that people without disposable income are more heavily impacted by inflation than people who invest. Even with a downward trend in the market here and there your 401k will still outperform any sort of savings someone with no disposable income manages to build up.
@@jobegerlach87 totally agree, was just pointing out that inflation does impact every American, wealthy or not. Certainly not to an equal extent as you pointed out.
It depends where the money that cause the inflation went. (unless it's cost-push inflation, which is mostly what we are experiencing now, which sucks and has nothing to do with fiscal or monetary policy) If the money went to "people who don't have enough money to invest", then they win. If it went to someone else, they lose. Either way, it's just redistribution of wealth. Good for some, bad for others. Either way, wages will eventually catch up to inflation
How does MMT handle debt service? As the Federal Reserve raises interest rates to fight inflation, the US budget must accommodate higher spending for debt service in the yearly Federal budget. The debt service is currently 7% of the budget. Chairman Powell states the current spending is not supportable long term.
A lot of MMT economists advocate for permenant zero interest rate policy (ZIRP). They argue monetary policy is the wrong tool to combat inflationary pressures and much stronger automatic fiscal stabilisers are preferred (i.e. the Job Guarentee acting as an Employed Buffer Stock as opposed to the currently used Unemployed Buffer Stock which is far weaker a stabiliser).
Keynesian Economics versus Austrian/Free Market) Keyensine econovis always leads to boom and bust cycles. It was developed before and during WW2, and caused the Federal Reserve to be founded by the government, JP Morgan, and John Rockefellet at a hotel off GA’s Atlantic shore.
@@JGS2295 but if you set the interest rate to zero while you have high inflation who would buy the bonds. It doesnt make any sense, u less you force people to buy those bonds. But thats just taxation with extra steps
@gustavomendez2891 bond issuance is *literally* not a necessary fiscal operation. If the non-gov sector does not wish to store its net dollar saving in bond form, then it will just be stored as the only aggregate alternative (currency deposits). Neither form has any different impact on aggregate demand or inflation than the other.
There's actually a couple solutions. One is the Constitutionally prescribed path, the Platinum Coin; denominated in any amount we see fit. That's mostly ritual and what effectively occurs can be done the same by Debiting Securities Accounts of bond holders at the Federal Reserve and Credit their Reserve Accounts. Problem solved. Column A to Column B.
So after telling the public for decades that government debt is bad, now that it can never be repaid, corporate America is now selling it as though it’s not bad..
Debts tend be bad, because there is an impatient creditor with the ability to force you to pay it back on their onerous terms. That does not apply to the United States federal government. The one issue that must be respected and accounted for is the strength of the dollar internationally. And this is largely kept stable by America’s military, which is widely welcomed and invited into every 1st world country. All those foreign governments that want US troops to keep them safe also have an extreme bias in favor of the US dollar remaining stable, so they will circulate the dollar which fights inflation.
Did I miss the part of her talk which deals with the impact of a 6% terminal rate resulting in 40% of the federal budget going to service annual debt costs?
Implied in her scenario would be higher taxation of the rich (including elimination of the Social Security and Medicare caps), and some form of wage and price controls to keep a lid on inflation, which is a result of creating as much profit as the system will bear. Retained profits and accumulated wealth are uncollected taxes paid by all of us. So to tax profits is simply the return of the people's money to be used for purposes other than allowing people and corporations to become morbidly rich. Deficits and national debt are offset by the enormous assets, resources, financial power, and military strength of the nation. All together, it's called the wealth of the nation.
I like the use of the term " morbidly rich " not sure if you coined it, but I have never heard the term before. I just heard another new one today, " Cryptopia " @@palladin331
@@palladin331 Higher taxation of the rich only works as long as they play the game along. Many rich people have the means to easily move to another country and take their business with them.
She says inflation is the real limit. I guess that limit got hit pretty fast…having this talk right before the biggest inflation period since the 70s 😂
@newsoul.9 The very definition of inflation is too much currency chasing too few goods.....Physical resources. Your comment is a distinction without a difference.
@@dcj3831: Inflation has very little to do with how much money is out there. Inflation rises when supply is smaller than demand. Inflation shrinks when supply is bigger than demand. That’s all there is to it. If supply is limited and demand is bigger than supply the greed of the seller rises the prices. Very simple. Instead of raising interest rates the government could tax the greedy to reduce the inflation. That would be the more intelligent way to keep inflation in check.
@@dcj3831 : „Newsoul“ is right! And you are basically saying the same thing without realizing it. Inflation is what needs to be held at around 2% . The available resources (human work force and materials) are the limitation of growth and therefore the amount of circulating money needs to be in balance with that. Even if the amount would be above that, as long as its parked on savings accounts inflation doesn’t get affected.
She completely glosses over the fact that our government deficit, or debt is borrowed money. People invest in government bonds, because they expect a return on their investment. If there is no return, there is no investment. You also can’t just print, or virtually create money out of nowhere, because it devalues the currency.
they don't care. I have never heard one of these modern economist explain how they are protecting anyone's actual worth. what hey are peddling is government control at the cost of independence and liberty from such nonsense.
A fortiori, why does the government tax or borrow? According to this econo-nincompoop all it has to do is print funny money to pay for everything. Taxes and borrowing could be reduced to zero and inflation would be beyond Argentine. Zimbabwean!
You've asked a very good question. Modern Monetary Theory actually proposes that we have it backwards on why we pay taxes. In the past taxes were used to bring money into the government to pay for services. Now under FIAT currencies it's more accurate to say taxes are actually used to remove money from the economy to prevent inflation. The roles flipped around once we took currency off the gold standard.
Taxes were originally designed by sovereigns to prevent wealth hoarding. A handful of wealth hoarders could become hegemons and stage coups. Once these aristocrats took power they hoarded natural resources and charged an arm and a leg for them. The people thus became rent-paying plebeians, serfs and peasants. Nowadays not paying taxes lands you in federal hoosegows, unless you own a platoon of treacherous intellectuals trained in tax and corporate law who via lobbyists wrote tax law and understand tax havens and off-shore accounts. Thus, these hegemons pay little if any taxes. So they can become bigger and bigger "influencers." (or "powerful"). Ain't finance capitalism grand? Taxes should in theory only be paid to entities that can't print money such as states, counties and municipalities. Be well.
@@jackbrons4904 They tax you via inflation, and then they take your money to "keep inflation down" while you don't have the money to pay for goods and services that they supposedly kept inflation down for you to afford.
The problem is that the United States does not have the physical resources she mentions. The US is issuing money to buy huge quantity of resources from foreign countries. How much federal debt would it take for foreigners to refuse to accept the US dollar any more? 80 trillion? Maybe 267 trillion is acceptable? Better not find out.
Our Interest payments is now bigger than our Military budget. We pay more for nothing than the largest and best military in the history of the world. Just pay our bills and don’t spend more than you take in. It’s really quite simple.
This was painful. Deficits are only ok if the money spent had an net surplus to productivity. Paying for social services because ppl could only consume and not save is like throwing good money after bad.
She kinda answered it at the end. You can’t have the government spur growth initiatives when there is full employment or a lack of resources cause that leads to inflation.
Except she's lying / completely out of touch with reality. Only one thing causes inflation, money printing. Without that, an increase in price of one thing would mean an equal and opposite decrease in price of another thing. Not in her world, we're getting increasing prices of almost everything, while paychecks aren't keeping up. So damaging.
@@Mctazin Any increase in price of one thing causes a decrease in price of another, if money were real. Since our money is fake, prices for ALL things can go up. This is only due to money printing. No money printing, and any "inflation" is temporary and is with one sector / set of items, offset by decreases elsewhere.
@Pine Wood what are you talking about? Why would an increase in one price necessitate an equal and opposite decease in another price? Also the framing of this is bizarre. Obviously we are talking about the way inflation functions in the modern economy not whatever imaginary "real" money economy you are talking about. I feel like your first comment was wrong but almost made sense and now the wheels have come off and I'm just reading nonsense.
@@Mctazin Because if more dollars are being spent on one thing, less dollars would be being spent on other things, because of reality. The only way both things go up in price is if more and more fake dollars are printed out of thin air. Otherwise where would the dollars come from? The only thing that was nonsense was this TED talk. There's a reason it's called Modern Monetary 'Theory'.
This is why we have had such high inflation for the last few years and the environment and infrastructure are still degrading. The environment and resources are limited, but they printed tons of money for PPP loans and to stop job losses during Covid. You can spend / print money, but if production is the same, inflation goes up. People have more money to spend on what they want, but there's not more to buy. If production increases, the environment suffers from increased energy and resource consumption. Either way, through debt, environmental damage, and disinformation, we're screwed for generations.
MMT is a very interesting theory (which has other authors at the frontline). Yet, the high inflation in US and around the globe (I’m writing this commentary 7 months after the video was posted) challenge some of her assumption and prove that it is not so simple.
@@HistoritorJimaldus what caused inflation? I dunno maybe printing trillions of dollars in the past few years? And yet we should have printed and spent more???? 🙄 Hmm
@@michaelcap9550that was Taliban trump that gave the money away. He spent almost a trillion dollars to keep people employed and still lost 2.8 million jobs. Pay attention.
Nothing is "free," including money. The Fed is stuck with the task of putting the fire out, and it has to do that by raising the cost of money; and the more the Govt borrows the harder that task becomes. Her solution is the same Keynesian nonsense that was practiced in the 1930s -- demand-side economics, stimulated by government tinkering and their exclusive power over the nation's currency. The minute Bretton-Woods collapsed was the minute we went from a save-and-produce economy to a borrow-and-consume economy, and we haven't looked back. That can only last so long before the bill comes due; and then what? Well, it's two years after her little Ted talk, and we've seen the answer -- which was as predictable as the day is long. Too many dollars chasing too few goods. What did they think was going to happen? What does the government care, frankly? All money is the government's anyway, don't ya know. And only by the benevolence of our comrades among the political elite are WE allowed to keep ANY of it. This Keynesian gobbledy-gook is what got us where we are now. A national debt 50% larger than the entire economic output of America. You could liquidate the entire economy and only pay off 2/3 of what the government owes. What happens when the dollar is no longer the world's reserve currency? Which of course will be the end result if we stay on this road? What then? The answer is shared misery -- and those responsible will never be held accountable because most of them will no longer be in office. What this lady is selling is snake oil. There's a limit to resources and labor, and if we're gonna have a fiat currency it needs to reflect the monetary balance between the two, otherwise the only beneficiary of this planned inflation is the government; the rest of the unwashed masses suffers for it.
NO, the inflation you see the US is the result of the food and oil supply problems due to the war in Ukraine. There was no inflation from the pandemic, that is simple data to see. The world inflation increased rapidly as Russion oil become restricted, that is trivial see in the data of inflation and cause and effect. The inflation we see now is supply side inflation which is decreasing now as there is more oil available on the market eases as less people are dependent on Russian oil There is high food inflation due to the lack of food from Ukraine that supplied most of the cooking oil and other food resources. That is why European inflation was much worse in food as much of the core food supplies comes from Ukraine. Now we have a current lifting of wheat embargo from Ukraine started to ease the inflation.
By extension of the logic, there is no need to ever issue government debt, or impose any taxes to obtain revenue. You just print it. Seems like flying blind, using ‘inflation’ (whatever that is) as a sort of financial altimeter while adjusting speed based on the fuel gauge. Could be dangerous in the mountains.
This is not what she's saying at all 🤦🏽♀️ taxation is necessary to take money out of the system to avoid inflation and to redistribute to those who don't have enough. Inflation is a fall in the purchasing power of money
Inflation is the only real limit to public spending however, if public spending of X amount leads to an increase in goods and services produced that is greater than X, then that spending was actually deflationary. The money circulating in the economy falls in comparison to goods and services produced, and costs fall making us all better off
You wouldn’t need to tax to take money out if you hadn’t printed too much previously, would you? But I appreciate your effort to tell us what she wasn’t able to say for herself.
@nadinefisher5871 you're an absolute moron if you believe any wealth is being 'redistributed' to people in need. Take a look at how much of our budget goes into social programs versus the amount awarded to DOD vis a vis "foreign aid" (like Ukraine and Israel) that is REQUIRED to be spent buying arms from our military industrial complex. Or how much is spent subsidizing "research" on behalf of big Pharma and "green energy." All of that crap winds up back in the hands of the Oligarchy and is exactly what is meant by the "upward transfer of wealth." *THAT* has become the purpose of taxation in our corrupt system.
She writes a lot about taxes in her book. They're needed to make money valuable, manage inflation, discourage and encourage certain behaviors, and manage inequality.
She says “We’ve all been *conditioned* to worry about deficits”, as if concern about spending more than you earn is simply some emotional blockage to move past. It is frightening to hear people actually believe this absolute absurdity.
Thanks boomer, we know how to balance a checkbook. The difference between personal finance and Federal funding that this actual economist was trying to explain to us cretins is that we can't have the central bank create money based on our good vibes.
Please provide her the platform to update her perspectives on the current deficit, inflation, and how Congress could stop repeating their seemingly unending drama with keeping the Government "open".
“Are these things worth doing?” is the correct frame. The problem we face is the monetizers are almost exclusively the ones who are (for lack of a better word) allowed to ask and answer this. Waste water treatment is not and never has been a profit center. Yet it is indispensable. Just saying 🤷🏽♂️
Because it’s a limited resource. So you don’t use 4 times the amount you could get by on because it’s free. There isn’t enough for everyone to water their lawns for 3 hours a day all summer. Y
"... finding the money to pay the things we need in a Country like USA or UK is never an issue..." The rest of the world must take note on "Contries like USA or UK". Because printing money have been the tomb to the economies of latinamerica for example.
You are wrong. Printing money is only a problem when your debt is in someone else's currency. If you print Yen to pay US debt you had to buy US dollars, which lower the price of Yen, which then increase the price of the debt. This cycle cause hyperinflation. But this does NOT happen if the debt is in local currency. If you print US dollars to pay debt in US dollars, the debt gets paid off because it gets devalued WITH the currency. The key is to not have forign currency debt. Local Currency debt doesn't matter (at least not matter enough)
@@jackprescott9652 Did you READ anything I wrote? The South Americans buy imports using US dollars, not their local currency. So the debt is in US dollars. And trying to print their way out doesn't work because the debt gets bigger that way. But if your debt is local currency like in Japan, or if you are the US of A, then it doesn't matter because the debt gets devalued by printing. and if you don't understand this then you don't understand hyperinflation.
Her argument is pathetic- and anyone who has an IQ of over 85 and is not a gullible fool and is willing to actually think could also do it. But I guess her usual audience don't quite get to an IQ of 85.
Aaaaaaaaaaaaaaaand, its a whole year later. Plenty of time to have a video. radio interview, article, or fully researched paper showing off your "destroying" all her arguments ready to share by now, yes?
She's wrong, but those that say the deficit falls on tax payers are also wrong. The deficit falls on *EVERYONE* holding US Dollars. Printing money with a computer is still printing money. That money is owed to the Federal Reserve, thus the deficit. It doesn't magically disappear. That money printing both causes the inflation that she says is the "real" problem *AND* devalues the currency on the global market. The deficits are good for the politicians that hand them out to get bribes and power. The deficits are good the the big corporations and shareholders that end up with the money and quickly convert them to assets before the inflation and devaluation hits the rest of the 99%. Want to flight inflation? Pay down the deficit to reinstate value in the Dollar. Cut the budgets going straight into the pockets of the 1%. Get the economy running efficiently without government interference.
@@pauljarvis902 start with the money going directly corporations: bailouts, interest-free/low-interest loans, subsidies, military industrial complex, etc. Move on to wasteful spending. Eventually, get to indirect funding that destroys markets and raise prices like Medicare, student loans, etc. Basically undo what the government did to ruin things like health-care, insurance, education, etc.
It sounds like bullshit at first, but she actually makes a valuable statement. -> The sum of money a government spends is not important, but the impact on inflation and how it is spent are. Although the first half sounds like "the government can throw money around without consequences", that's not the point she's trying to making (I hope)
Correct, that is not her point. There are consequences, but she's arguing we're looking too strongly at the 'consequences' of deficits, instead of the more important consequences of inflation.
Your hope is in the wrong place. That is in fact what she’s ultimately arguing. Essentially she’s claiming that we do not live in a world of finite resources. And that there are enough resources to ignore basic economic principles.
Indeed. Government spending is a soft limit, not a hard one. If we spend money on productive things then inflation won't happen as the economy will grow alongside the money. If the government makes profits from it's spending then government spending can even be deflationary.
@@l3ailey2 But also many seem to be working on the assumption that government spending just means givng money to people. What she's pushing is for the government to be more proactive. Inflation doesn't matter if you take away costs for people. Like for example nationalized healthcare would save the US economy hundreds of billions a year and massively reduce people's cost of living. Even if it would cause some minor inflation that is more than counteracted by the reduction in living costs.
I've read her book the deficit myth. The problem you have is Kelton talks about inflation as being the watchword.....now look at our our current position; the government in the US and UK have issued currency to prop up their ecconmies and as a result inflation is through the roof. It's simply ignoring the problems of inflation and pittingbthe public and private sector against each other. It's already been proven as a non starter as inflation is through the roof globally as a result of measures like this.
Yes, but look at where the government spends the money. Does it spend it to make Education free for all? Daycare guarantee for all parents? Comprehensive, full healthcare including vision, dental, hearing and MENTAL HEALTH? Does it use the money to make a Housing First guarantee? Basically, do single-payer for housing like it is done for healthcare. Government pays the developer or land owner directly the cost of the housing unit and because it is done 'in bulk' can also negotiate lower costs for housing and free people of one of the largest debts they have. People could still pay for and own a home, if the housing is heavily subsidized. Wouldn't that do a whole lot to reduce inflation? Inflation, if you don't know is just when 'prices go up' and why do prices go up? Because corporations are encouraged to be greedy to raise prices as high as they can get away with. This isn't directly tied to taxes, social spending and Federal deficits. Now, understanding MMT and how it can benefit the people more doesn't solve the structural instability of the monetary-market system. But it does give a lens for people to view it and advocate for policy that actually helps people live better lives, rather than hurts it. I think we need community, grassroots alternative systems to rise up from people volunteering to do something better, more collaborative and cooperative to create sustainable abundance and prosperity where they live. Something like what has already started with the One Small Town movement.
a one-time money creation creates a one-time inflation (assuming we are already at productive capacity, otherwise it could cause no inflation). Now inflation has already come down. So the question is: is the change to higher prices (and higher wages) worth whatever we got for the money? It's a question about the real world, not just economics. If it saved enough lives from coronavirus, then it's be worth it. If it secures our freedom, it's worth it. If it vastly improves our economic outlook in the long term (infrastructure, education) it's worth it.
@coolioso808 ok so yes, I do know what inflation is and what drives it. Firstly inflation is a supply vs demand issue. For example if the government subsidised the cost of property it would vastly increase the supply of houses and in the short term prices would come down.....but then the bill lands when the supply of labour is short, so suppliers raise wages, building supplies become harder to come by, causing an increase in demand and therefore price; this ultimately at one point or another ends up with hyperinflation at its most extreme or stagnant growth in the long term. Germany in 1923 saw how bad goings can get when the government just printed more money to pay striking workers... There are no easy answers and governments printing more money to ease temporary issues is not the answer.
@coolioso808 respectfully the UK funds healthcare...not perfect but then no-one dies in the gutter waiting for treatment or is left with a lifelong debt afterwards....but this has its limits. The best way for people to thrive is to seek opportunities and start small businesses...the government printing money devalues currency and makes life harder for the man on the street...not easier. It is not the job of any government to wholesale take care of those that can fend for themselves.
@@ChrisAddis You are going back 100 years to find a fear-mongering example of hyperinflation? That's not very relevant, I'm afraid. There was more to the hyperinflation incidents in Germany 1920s, in Zimbabwe, and other places that had it. The real issue isn't even money printing, it is money itself. Combined with a market economy and private property used for maximizing profit, it's a totally unsustainable train ride off a cliff. Leave that big issue for a second ... Go back to MMT and government 'printing money' which is mostly a misnomer, because very little money is actually printed. Governments create money out of thin air by the Central Banks, it is digitally created, going straight to the accounts of the parties involved in whatever legislation or funding bill was passed. Taxes come out later, deleting some money from the economy. The only limit in this case is the real resources to do something. Subsidizing houses so nobody has to live homeless is extremely rational and has no indication it would lead to hyperinflation in and of itself. Just like Government Funded Universal Healthcare makes sense, so nobody dies in the gutter, or goes in debt or bankrupt due to medical treatments. I hesitate to even use "Universal" because in Canada, for example, it's really just basic treatment and doctor visits that are free (government paid) because dental, hearing, vision and mental health services are out of our own pockets or perhaps part of a work-related healthcare program that reduces some of those costs. All this does not magically make everything more expensive. Most expensive cost of living items currently are food and shelter. Your concern about government subsidizing housing so people can access their first home and not live on the streets or in a crowded apartment or basement suite or whatever, is that costs will go down but then bounce back up to hyperinflation? Not necessarily. If private land owners continue to exist, especially foreign land owners and they still drive to maximize their profits, under the rules and incentives of capitalism, then yes, costs may go up. But that can be mitigated with regulation AND community co-operatives that also build housing and it is for the people, by the people for the NEEDS of the people, not for some maximum profit game. Also, Japan has been in deflation for years, even though they have 'printed' so much money to activate projects. Why do you think they are in deflation and not hyperinflation? Canada, USA, UK, etc. can all do better with a modern monetary theory in practice to reduce inequality and dignify people with basic needs being more easily met and also community-driven co-operative networks that localize the means of production as much as possible, reducing costs.
The FACTS are as follows: "The U.S. will always be able to pay it's bills because we can just print money. HOWEVER we CAN'T GUARANTEE the purchasing power of those dollars ". - Alan Greenspan (Former Chairman of the Federal Reserve)
I do not understand why she didn't address the principal concern about the national debt and deficit spending. That an increasing portion of the budget every year is paying interest on the debt and at some point people and organizations around the world will not be willing to keep buy our T-bills if it appears we can not pay the interest. When the budget becomes 90% interest on the debt and only 10% other things how does that make sense? Look I really want to believe what she's saying because it sounds great, but she completely avoided the reason most people worry about the national debt. It's most definitely NOT that the word "debt" and "deficit" sound bad. It's that IRS pie graph that shows that something like 30% of the budget goes to paying interest on the debt. That doesn't seem good to any tax payer. Please tell me why I shouldn't worry about that.
"the government has infinite money guys, they don't need to tax you." Meanwhile, when they double the money supply, you end up paying twice as much for everything. Then they hit you with the "we tax you to keep inflation under control lol."
@@TyrianHaze The causes of the recent inflation spike are well known: a spike in commodity prices (due to conflicts and crop failures), a surge in the global demand for goods and services post-pandemic, the post-pandemic labour shortage, impaired supply chains... Pretty much nothing to do with MMT or the money supply.
@@ianfryer Sounds like a bunch of bullshit made up by the government. Pro tip: printing trillions of dollars leads to massive inflation, regardless of your excuses.
She must have missed that econ class where they talked about inflation and how it decreases the value of our money. When you deficit spend you create money out of nowhere. More money chasing the same amount of products and services means the prices have to go up unless productivity expands. If the government spends all that productivity increase with deficit spending they are robbing everyone of a possible higher standard of living.
This is so basic that I'm flummoxed that I'm hearing this BS from a friggin' _economist!_ What makes her think that shrinking the value of the dollar makes ordinary people better off? It's pretty obvious that she sees government power as omnipotent, and they can call a dollar anything they want. They redefine it every single time it borrows from the Fed. Keep doing that and you've got the Wymar Republic -- Brazil. Argentina. This is snake oil. I'd like to hear her excuses today after what this profligate govt spending has done to the macro-economy today, two years later. Housing so overpriced people are literally out in the streets because they can't afford it. Gasoline at $6 a gallon, groceries 30% more expensive than two years ago because of those transportation costs. A blazing hot labor market that is continually putting inflationary pressure on businesses to pay the salaries demanded, at a time when inflation is just as hot. Her excuse is "Hey, we've got the Fed! The Fed controls employment! The Fed controls the currency!" This is madness.
This lady did not say the secret part out loud, she just whispered it “countries like the US and England”, Yep, those countries are the only ones that can borrow money from the rest of the world in their own currencies. What she is not saying is that the rest of the world is picking up the tab for “those countries“ deficits. That’s why “those countries” need to have the mightiest armies just in case some other country doesn’t want to take their currency.
Our interest on our debt will soon exceed $1 trillion per year. This is money that cannot be used to build infrastructure or improve healthcare. Where will it stop? Are we headed to a debt spiral? Is our debt sucking funds from economic growth leading to a stagnate business climate like Japan?
@@MrRichbc Bitcoin was born as pure hate against the government. It is advocated by financial illiterates who ignores the fact that deflation is even worse than inflation. That doesn't prevent bitcoin from being attractive and it actually makes a great deal for some financial institutions. Simple business, easy money, the more anti-system idiots in the crypto game, the more profit for the big sharks 😁 Another great robbing tool 😁 ...fine, go ahead and buy bitcoin ! 😂
@@tudorioan5104 of course BTC was created for hate agains the government. Don't you hate those who rob 50% of your labor and destroy the currency you were forced to keep your saves in? I do. Bitcoin is only deflationary because dólar, euro and other fiat are inflationary. As long as it keeps decentralized and I remain vigilant on my private keys, no one can put the hands on the fruits of my work. And that is extraordinary, unprecedent and priceless
Is it possible that a day could come where the interest owed on the debt starts increasing at such a rapid rate that the computer software won't be able to calculate the number?
No reason at all. Since the government has infinite money they spend as much as they want to spend. The thing is though that the US government is highly corrupt and usually capitalists don't want the government doing stuff. After all you can't sell people something they are getting for free. If the government were to create public healthcare that would cut into the profits of the insurance companies.
@@TyrianHaze They do. What would the limit be if you can print your own money? The answer is the limit is the real economy and the means within the borders of the country.
Probably worth mentioning, for the uninitiated, that Modern Monetary Theory, which Kelton is a chief proponent of, is widely dismissed and even ridiculed by mainstream economists, both left and right. The logic presented in her book (The Deficit Myth) have been ripped to shreds by a whole host of economists who pointed out its lack of grounding in data, lack of empirical observations, and logical fallacies, circular reasoning, etc. The fantasy that deficits don't matter and massive debt-fueled expansions of government are wise is just as preposterous as it sounds. When she says "I'm part of a handful of economists..." she is literally expressing the place she occupies in the discipline. She and a handful of people believe this nonsense, and basically no one else. Her chief fallacy, incidentally, is the contention that fiat money is somehow "unlimited" because it can just be printed, given it is not backed by gold. She doesn't understand that money is a representation of community wealth, represented by paper. If it isn't gold, it is (as is the case with fiat) the gross-domestic product of the nation that backs the fiat currency. The circulation of money is representative of the wealth that exists. You can't create more wealth by printing more money, so if you were to do that you would be introducing hyper-inflation into the system because more money is now representing the same amount of wealth. She is babbling utter nonsense here. But, given the fact that she is saying that you can have your cake and eat it too without suffering consequences, there is a contingent of people who WANT what she is saying to be true, and so advocate for this. But it is absolute garbage.
It should be noted that almost all of what you say are myths. Most 'mainstream economists' like Krugman etc... agree with 99% of what MMT economists talk about. And MMT economists never say that all spending is good spending. Another mischaracterization, which you could easily find if you bothered to look
And MMT economists are often the only ones, it seems, that talk about the real resources of a country. They talk about the different constraints on different types of countries (look into Fadhel Kaboub's work specifically). This also isn't hard to find. But yes, you absolutely can increase the real wealth of a country with govt spending. How do you think WWII happened? People weren't taxed of everything they had to 'pay for' all the tanks and guns needed to defeat the Nazi's. And inflation is caused when the price setter raises the price. Most Fortune 500 companies made record profits the last few years. It's not hard logic to see who causes inflation.
@@nlewis-vg3kcMMT has been thoroughly examined by economists and has been rejected for good reasons. Of course the proponents are always rejecting the rejections, counter-arguing that everything has been misunderstood, etc. MMT cannot be understood because one isn't supposed to. You're supposed to accept the claimed superiority of the proponent's understanding of economy, then you understood "MMT".
What about the need for money in developing countries? When we issue fiat currency it does not need to be paid back/ What's the deal about "loans" to developing countries, in Africa for insance? I understand "we" have saddled them with the obligation to "pay us back".
The real problem is that most governments only think as far as the next election. The people need long term policy so we can invest in a better future for all of us and our children.
Some policies do end up long term. Just look at Obamacare. Something all Republican voters hated (for many odd reasons), but ended up wanting to keep it because getting rid of it would hurt them very much. When Trump tried to get rid of it, a federal judge shut him down knowing how much it would hurt the country. Obamacare was just a stepping stone towards universal health care. Obama knew there was no way he could get a universal healthcare bill to pass because there are way too many greedy people on both sides of the isle.
@@thomassenbart Your mistake is thinking MMT isn't already what is happening since the end of the gold standard. MMT doesn't CHANGE anything; MMT is just what real life is doing right now. You are already living in MMT even if you deny it. MMT is just describing the CURRENT monetary system. How money works NOW.
@@VallenChaosValiant No, I'm not. Gold has no more intrinsic value than paper, which has no more intrinsic value than trust in the federal govt... If the public loses confidence in any medium, currency crashes. MMT is something at another level because it asserts that there is no connection between public confidence and the value of money and that you can make as much as you want without consequence. You can't. The latest round of inflation is the tip of the proverbial iceberg. As govt. debt continues to increase, it crowds out all other expenditures and the only way to end this debacle is through inflation, which will destroy the debt but that only happens if govt. restrains spending, which it does not seem capable of doing. Gold is not the answer either and any attempt to go back to this standard would destroy the economy as quickly as MMT. What is needed is responsible governmental spending and taxation, roughly in balance. Such a formula allows for an ever more prosperous society, all things remaining equal.
There’s a problem with the video in which she’s assuming it’s a closed economy and lightly touches the inflationary aspect. G20 people earn 10-50x more than some of the poorest. When government does spend for products there is a gain, but when it gives out money for no purpose then asset holders get richer than “welfare” recipients. Money spent by USA also goes outside the american economy as many goods are imported. So if USA prints money above the world rate, then inflation skyrockets. Money spent carelessly, sends money from the poor to the asset holders. Think of a building owner which takes money from subsidies due to housing low income families. The building debt get paid off from the money given by tax payers. The holder of the building has a massive asset. Lastly spending other people’s money has an enormous chance of corruption. When you spent your money you can only be foolish but not corrupt.
If Johnny can't read/write or do math due to equity, of what value is free college. But the good news is that the fed government charges 6% interest in all college loans. Counting on the government to distribute money will always be filled w waste and chronyism.
Nowhere does she address the mounting debt service costs created by annual deficit spending. How could an economist leave that out and talk only about the upside of government spending?
What is there to address? There is no limit to federal spending so the idea that it would come at the cost of other programs is kind of explained already.
@@MrMarinus18 You missed the point. Borrowing to buy current wants results in bigger debt until debt service becomes so large it eats up all discretionary spending. This year the only budget item bigger than debt service is military spending. Inflation is the penalty we pay for borrowing from the future to fund current purchases, and total purchasing power is reduced further the more we borrow. The solution is higher taxes especially on the 1% whose share of earnings and assets is double or triple what it was 50 years ago.
@@Johnhart1944 you missed the point. The government prints the money. They control the inflation by controlling markets. The government is not a house hold. They don't run out of money.
@@Johnhart1944but we want to borrow for NEEDS. Not wants. Healthcare, roads, housing. Not rocket ships and bombs yo 😭😭😭 why is this so hard to compute ????? Elon dug tunnels to NOWHERE under the false pretense of a mentally fabricated, untested technology that never came to fruition-and we still won’t tax him…We already know how to build infrastructure. Stop turning our country into a billionaire’s sandbox.
@@denniscarney5249No, the scary part is that it's actually working... Low unemployment, stock market up, GDP up and wages up. Government money is going more towards jobs and less on food stamps, unemployment benefits and other programs that are "hand outs".
@RemyJuju2 you have to be an absolute moron NOT to understand the way the unemployment data is manipulated. You *really* think that in a country of 330 million people, we only have 2-4 million unemployed at a time? Stock markets are projections based on anticipated revenue and have *nothing* to do with OUR economy (since all of the main corporations are international). Of course GDP is up... it's called inflation. What's your supposed explanation for wages not keeping up with inflation? The growth of the homeless rate? The number of Americans unable to afford $500 emergency or the number holding multiple jobs to make ends meet?
@@RemyJuju2the only reason it may seem to be working is because foreign producing nations (China, Mexico etc) accept the USD. This woman is a gaslighter
@@RemyJuju2 Is it working? Inflation is killing us and causing the economy to fail. Lots of companies are increasing layoffs. GDP for 24Q1 was 1.4%, much weaker than the Administration expected. It had been 4.9% in 23Q3, more than a 70% reduction. The stock market is up because many corporations are still showing profits because they've been cuttings costs (layoffs). Go to your local car dealership and look what's happening -- they can't give them away. Americans are BROKE. High debt and inflation has killed the American family budget.
Sounds like you are missing the central distinction drawn in MMT: the difference between currency issuers and currency users. Sorry, but you are not a currency issuer.
@@ianfryer How dumb is that comment of yours? It denies the fact that most money in the economy is not produced by the Central bank or government but is created out of bank lending to their customers which is over 90% of it. That money like the money created by the Central bank (Federal Reserve in the U.S. ) is credit fiat money. There is no distinction between the money created by the Central banks and that created by private banks. It is all interchangeable and indistinguishable from one dollar to the next.
@@Rob-fx2dw There may be no difference between the dollars themselves, but that doesn't mean that there is no difference between the way those dollars are created. "One notable difference between the two types of money creation is that there is no external limit to the total amount of money the [central bank] may create through its asset purchases, other than the impact the additional money created has on inflation. In contrast, the amount of money that a private commercial bank is permitted to create depends on the amount of the bank’s equity relative to its assets. The limiting rules, known as capital constraints, are established by [a country's] banking regulator in a set of guidelines." What is the upshot? "Money creation by the [central bank] through purchases of government securities is essentially an internal government process; this means that external factors, such as financial market dysfunction, cannot cause the federal government to run out of money. Inflation is the main limit to the amount of money the [central bank] can create through asset purchases." "Another significant difference is that the key factor in a private commercial bank’s decision to give a loan to a private entity is the creditworthiness of the borrower, whereas the key factor in the [central bank's] decision to purchase assets is its ability to achieve its inflation target." Now I may be missing something, as I am clearly not as educated as you on the topic. I had to do a bit of reading, and I got this specific information from an online article titled "How the Bank of Canada Creates Money Through its Asset Purchases". But this strikes me as the main point that MMT economists are trying to make: Only the federal government is in the position of being unable to run out of money denominated in its own currency.
It all sounds so wonderful but printing money to pump it into the economy no matter how perceived beneficial it is, ramps up inflation and often leads to an increase to a widening gap between the rich and poor.
Actually the evidence for that is pretty shaky. The country that has run deficits the longest and has the highest debt is struggling with massive deflation.
What I took away from her speech is that things work better when the government is more involved. And things will work much better when government can exercise more control over not just creating money and allocating its use, but also control other resources such as raw materials, people, education and industry. Once that level of control is achieved we will live in a more perfect world. Why hasn’t someone thought of this before? Actually I think it may have been tried before - my memory is a bit hazy on this. Oh well, I’m sure *this* time our government will perfect the process unlike those in the past. Just trust all those in power.
Doesn't the US Treasury sell bonds ie borrow money from bond buyers? Aren't some of these lenders foreign countries? So we pay these countries interest right?
There was a good question asked but not answered. Who does the extra money go to? Usually it goes to friends of people in the government, or to things that buy government it's voted in the next election. Or to stock market to people who know inflation is coming and want to protect their capital (just look at s&p index in the last years). I would prefer the money to go through free market to whoever does the best job and provides the best service, rather than who knows the most influential people.
Maybe the additional money could go to care workers, social workers, teachers, nurses, paramedics the police and other service providers so that they can finally sustain a decent standard of living. Adam Smith's conception of capitalism doesn't exist anymore so stating that the free market simply rewards whoever "does the best job" or "provides the best service" is a nonsense.
@@MendicantBias1 No but the good part of the free market is only the people involved in the bad financial decisions are affected. They bear the full responsibility of their bad decisions. The people who make good financial decisions are not affected. This encourages people to make better financial decisions. This does not happen when government makes bad financial decisions because the people who make those decisions are not affected. The financial responsibly is shifted to people who had nothing to do with making those decisions. "Government is like a baby-it’s got an alimentary canal at one end and no sense of responsibility at the other."
I think everyone, including Kelton, would agree with that. Government spending should go either to all of us (like Covid checks, or maybe education - although that's complicated), or to volunteers (the military) or to the best contractor for the job we want done. I'm not sure what you mean by "go through free market" though. All money comes from the government, and then goes around free market, until possibly being removed by the government via taxes. But the government has to choose who to give it to initially. No way around that. Unless you're talking about a fixed money supply, which we used to have, which is now seen as a bad idea by almost all economists
@@Mooja12 "the good part of the free market is only the people involved in the bad financial decisions are affected. " where is God's name did you hear that? Just think about it for a minute. You'll realize it's obviously not true (unless by "involved" you mean "live on the same planet"). We are all connected. Someone pours money into an oil project that doesn't pan out, not only did they mess up a nice piece of land (there's an absolute loss right there), but they wasted people's labor and assets that could have been used to create profits that would have gone back into the economy, making everyone richer. Just think of the real economy: it's buildings, machines, the skills of people, etc. Those are the REAL assets of the nation (or world). If someone with financial power makes a bad decision, we end up with LESS of those real assets in total. If they make a good one, we end up with more. That's a NET total gain or loss, which
This doesn’t make sense! Creating more units of account in an economy of scarce assets then prices necessarily group. It is a tax. As more money is “created” my savings is diluted. This arguments need to be debated by Bitcoiners who take diametrically opposite position.
Hmm,, if what you're saying is true, then why collect taxes, to pay down the debt and fund programs? Why not let the people keep everything they work for, and the gov can print the money for everything it needs. If what you're saying is true, why isn't this the case?
The only reason we have a single currency is because we are given said currency , and then forced to pay taxes In said currency. Thus reinforcing it as the dominant currency. It also helps keep inflation in control. We tech could to some extent spend and since we know trickle up works, just tax at the top and take it out of circulation.
@@DaveE99 I hear you, but maybe you should Listen to time stamp 6:00-6:15 time stamp. She was very clear. She yes says that on one end, on the other end worries about inflation. So can they run out of money, or the value thereof?, and if that is the case, then it seems they don't have that unlimited, endless ability to create money to pay for things, looks like there's consequences. Sounds like she's talking out of both sides of her mouth. Now with that being said, she's a professional economist, so I fall way below her level of knowledge, I admit that, all I'm doing is listening to what she's saying, and it just seems that's what's being said. I could totally be misunderstanding. I'm no economist. 👍
@@toneg3768 What she said is that HOW to pay for programs aren't an issue, because the government pays for thing in a currency that they essentially gets to print. The real issue is whether, if you issue the currency and try to pay for it, will lead to inflation. And one source of that inflation is full employment. The US can do this much better than other countries can because it gets to print the global reserve currency that everyone trades with. Other countries are more hamstrung.
@@monitoradiation I guess the point I'm making that I may not be expressing clearly. What she said was, as the issuer of currency, the federal government can never run out of money, but they can run the currency out of value if they have to much in circulation. So there will be a point that the federal gov, will run out of currency, not because they can't print the paper, or create digitally,, but because it holds no value, which is possible if the claim is inflation needs to considered
@@toneg3768 The way I take it is that yes, there is a theoretical limit where you would run the risk of devaluing the currency (e.g. Venezuela with hyperinflation). But the US isn't currently anywhere near that point - today US inflation is a fraction of what it was in the 1980s, even after all the covid stimulus. And many times lower than it has been for the majority of the last 100 years. We've got much better at controlling inflation. So as long as the currency issuer keeps inflation in check, they can print and print and help the economy to be more productive than it otherwise would be. And adjusting taxes would be one mechanism to help lower inflation, should it start rising unsustainably, as it's a form of 'unprinting', essentially. (Important to note that in a high-inflationary environment, raising taxes would be incredibly unpopular in the short-term for any ruling government party. But the right thing to do in order to protect the currency and country. May be a reason more governments are reluctant to adopt an MMT approach)
Currency does not bear value by itself. It represents value because it bears people’s trust in it. Printing too much erodes the value and no one will accept it no matter how much the government print. So thatcher is fundamentally correct.
This is a really novel idea except when we invest money in students who receive college degrees in subjects that no one is hiring for. Or when we invest in roads and infrastructure like the I-95 project between Washington DC and Richmond that after 5 years of construction still isn't open. The problem is that we are spending our money on things are not yielding a good return on investment. Then the government is looking to cancel the college debt because the loan recipients can't earn enough money to pay off the debt. So we have unemployable college grads that never pay off the money invested in them, so the money is lost on all fronts. Those are not good investments. The problem with the federal government spending money is there is no oversight in how the money is spent, so her ideas are interesting but it is just a method of defending out of control spending.
Wow, there are so many straw men arguments for this presentation, she must be right. Some are accusing her of saying everyone can have everything they want, no strings attached and no consequences, but she never said that. In fact she pointed out that the productive capacity is a hard limit a government must be careful of, because spending past it creates a cascade of problems. But she’s saying with a fiat currency, where a government has a monopoly on issuing that currency and has its foreign debt held in that currency, money - not spending! - is limitless. So what we should be asking is, “Do we have the capacity to do X?” Where X is build a school, provide universal healthcare, etc. “How will we pay for it?” is a misleading question, because it presupposes that the government doesn’t have control of its own money supply, which it does.
This is nothing more than an articulate, educated professor explaining in terms most can't understand, how unfettered money printing is good. It IS good... if you're ok with the resulting devaluation of the money supply, and resulting inflation. Personally, I'd rather my nest egg NOT have it's buying power cut in half.
She conveniently left out the real underlying problem of US monetary system. The privately owned Central Bank charging "our" government intrest on the National Debt, which is estimated to be $659 billion for 2023. And that's where our tax go to. Good bye nest egg.
I figured out years ago that if consumption exceeds productive capacity, you get inflation. If consumption is less than productive capacity then you get deflation. Just the standard law of supply and demand really. Deficits and surpluses are pretty much meaningless in any modern well run economy - where consumption is balanced with a relativity high and easily expaned productive capacity. The current economy is "lazy" mostly because young people (the biggest consumers) have the least amount of money and the elderly (the lowest consumers) have the most. Productive capacity is rarely exceeded due to advances in automation. We can easily build it, but the young can't come because they don't have any cash. This, of course, is not the situation in some poor developing countries. This is a rich, industrial economy observation. Quite simply, there has never (NEVER) been a modern industrial economy fail in the last 250 years due to deficient spending. Even France during the Revolution didn't have a failed economy and it was an absolute mess. Germany in the 1920's deliberately destroyed their currency to avoid playing war reparations and it was done via hyper-inflation not via deficits. Japan has been deficient spending for over 30 years without ill effect. Japan's problems have to do with an aging population and a mismatch between consumption (too low) compared to productive capacity (very high). The focus by conservatives on deficits is just ignorance, AND deliberate avoidance of the facts of how modern economies work. For conservative it is an emotional issue with the concept that people may (just may) get something for nothing over powering their cognitive abilities and the evidence of their eyes. Running an economy is not the same as running a lemonade stand. The goal of running an economy is to meet the public good by making use of public policies (direction) and market forces (efficient, dynamic and energetic). Depending on the sector of the economy, the amount of government policy required changes. No on wants the military to be private. No one thinks government run corner stores or hair salons are a good idea. Every sector requires it's own solution. This may also change by country. A free market on air travel or cellular coverage works well in the US, not so well for Iceland. There is not, and never has been one size fits all for ANY serious problem, personal or public.
This is how I have always understood it, and though it is with kings, it scales to the modern world. Once, before machines and industry, wealth was exclusively land, because land grew food and the food drove the humans and animals that made everything. So to get wealthy, Kings had to conquer their neighbours and take their land. So they sent armies. The armies travelled to the neighbours and took their land. The soldiers were paid by what they stole from the neighbours (and the Lords who raised the armies got land). That works fine until you've conquered a few neighbours. Then the army needs to steal stuff along the way to get to the next nearest neighbours. But that's the King's land! No good will come of that. So, the king tells everyone that next year part of the annual tax will be not just food, but a coin that has a picture of the king on it. The king makes coins. Lots of coins. He doesn't actually want coins from the people. He literally just made them himself. Then he gives coins to the army and tells them that if they want food or other good on the way to battle, the villagers will swap coins for things. The villagers don't really want coins. You can't eat them. They're worthless... Except... They're going to need one for this year's tax. The tax is what gives the money value. Not this "proof of work" malarkey, or the "intrinsic value of gold". So the king makes coins, gives them away, then demands them back. Things get done. What she's taking about is just an extension of that. The "King" wants a new bridge/road/hospital or whatever. He creates money out of nothing and hands it to construction companies. They hand it to construction workers. Construction workers hand it to cafés, supermarkets, car dealers, they hand it to waiters, shop workers and salesmen. Each pays some tax, and over several transactions, the government gets it back. If there was no tax, that money would build up in the economy and eventually you'd need a wheelbarrow to carry the cash to the store to buy bread. The tax maintains the value of the money. So the limit isn't the supply of money, its the speed at which the money can circulate, with a little bit being removed each time it changes hands. But if the economy is going to grow, the government has to create money and give it way. That means more going out of the government than going in. That difference is deficit.
@@gasdive what if you could refuse to pay taxes to the king all together? What if the king's collector can't tell how many land, crops or coins you have. That's the crypto revolution. It's disrupting the government
MMT isn't a policy proposal, it's a descriptive economic model which aims to explain modern monetary systems in terms of how they actually work rather than the artificial concerns of orthodox economics.
@@johnb.1020 Yes, and Einstein's general theory of relativity is a model of gravity. It does not make it just as inaccurate or fallible as any other model.
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior justification for selfishness." John Kenneth Galbraith
She is dead wrong. If the US keeps running $2T deficits the entire part of the annual budget that is discretionary will be going to pay INTEREST on the debt. The numbers are easy to run.
Who owns that interest on the debt? Who owns treasures? Can they be traded? By whom? And how do money market funds exist without debt of some sort (if you understand the mechanism behind money market funds is that they are investments that turn I to loans to others who build assets out of the loan and the repay the loans. Then profit (cash flow) creates jobs and other income producing opportunities. It's a big expanding circle not much different than a galaxy. Did you know that SNAP payments yield more than a dollar's worth of economic activity for every dollar paid out? $1.00 paid out in SNAP benefits = $1.67 in economic activity. Look it up.
I get the reasoning. If the industry sector that will support the new government spending has the necessary excess capacity, then there shouldn't be inflation in that sector. However, the households employed in said sector, will have more money to spend. Wouldn't that in theory put pressure on the average household basket? I suppose there has to be a bet on where that money will ultimately flow, right? Maybe we just have to hope that the average household has healthy expenditure habits or something like that.
No. It does not work in the simple-minded linear proportions way you suggest. Macroeconomics (unlike micro-econ for a single firm) is fundamentally a nonlinear dynamical system. Households can choose to save rather than spend (and spend to to do what, eat more? buy more houses? you cannot spend on goods that are not for sale, and firms hate raising prices when there is demand pressure, they pressure to map up output, until they run out of resources, typically only then, and only if they have a near monopoly, will they put up prices). Thing is, in an uncertain world households do save a lot of surplus income annually. All such savings are a demand leakage from _circulation_ so are a huge deflationary bias. It is thus not the stock of currency in existence that puts pressure on prices, it's the rate of circulation, and even then there is no deterministic causal path to inflation. To get inflation from excess demand firms have to run short of labour or machines to hire, since they tend to increase capacity rather than raise prices. Provided resource slack exists then , the general price level will not change linearly with increased governemtn net spending.
@@Achrononmaster Very good and clear explanation, I hope many people read it and understand this simple fact you mention: ''It is thus not the stock of currency in existence that put pressure on prices, it's the rate of circulation, and even then there is no deterministic causal path to inflation.''
Question to everyone complaining about inflation . Please explain how all corporations are posting record profits . Highest ever bit yet we all call it inflation and not price gouging? The stock market is rising, yet we call it inflation and not price gouging . I suggest if congress did their job of regulation and put a cap on prices during economic hard time like a freaking pandemic when supply chains stoped running we would not be seeing corporations controlling our government
those profits are also inflated. taking purchasing power into account theyre actually recording below average profits. as for price caps imagine something say toilet paper had a massive increase in demand. if you put a price cap then supply wouldnt build up as buisnesses wouldnt come in to take advantage of the market.
So is she saying minting US dollar unlimited is OK?? That is totally against the capitalism system and only creates hyper-inflation. I think Basic Income would help us guarantee bare minimum essentials, but still that fund needs to come from tax, not just minting US dollars to help people. Government must monitor and control money supply very carefully, and make sure it goes to hard working people as a reward. Giving out free money to people is crazy
With rules. As long as the money is spend on idle labor or resources it grows the economy and is good. If the government were to, say, print up some money and then give it to a locality to be given out as grant payments for people who open up businesses growing crops in this area of the country with great soil but nobody farming it. And say people come along and open little farming businesses and they do this because they saw that there were enticing government grants to help start these businesses. This is the government spending money in a way that puts both labor and resources to use, expanding the economy. Now there are new goods - food, in this case, as well as possibly manufactured products from farmed goods such as maybe leather or hemp rope as examples - entering the market (could be either domestic or for exporting) and this only happened because the government, through creating new debt for itself, created the conditions that citizens found necessary to entice them to create this growth in the economy.
@@adamk1520 ...as a billionaire myself, who receives millions and millions from the gov't each year I like the way you think. I need uninformed, wannabe economists to watch fox news and keep my extravagant wealth in my pocket...I spend millions paying for media and gov't to do my bidding. Thanks for helping me by repeating the same stupid things over and over.
@@adamk1520 OK, I might have exaggerated my wealth, and I actually do agree with you that we need labor...but we have it. There are lots of people waiting for a decent job and there are many willing to switch. Before spending money we need to ask "will this benefit workers, citizens and the country?" and this one is a no brainer...then we need to do it. and sorry, my use of "stupid" in my comment was rude and pretentious...I apologize.
@@adamk1520 people could return to work, and the economy could go back to normal, if people took the pandemic seriously from the start and followed the rules
1) @ 5:50, we hear that Congress never has to check its bank account. Why not? 2) @ 6:05, it is stated as a fact that the government can never run out of money, because it issues the currency. Both are dangerous assertions. 3) @ 6:10, government can afford to buy what ever is available. At this point, she has ignored the idea of inflation three times. If you spend more than you have, you pay interest on the loan. This inflates the cost of whatever you spent in deficit. If the government prints its way out of debt, the money is worth less (Inflation) than it used to be, because we have more dollars in circulation. And if we assume that the government pool of money is limitless, then anything it wants to buy will increase in price because of its unlimited ability to pay. This again, is inflation. And we know all this to be true, because in the past two years, we've done 1), and we got whacked with huge inflation. Russia has done 2), and its economy is in shambles. And 3) happened to the government and the US population in 2022-23 when we had a lot of cash stored up and spent it on limited resources, and watch inflation soar, housing prices double, and fuel prices skyrocket. There is a reason Modern Monetary Theory is still just a theory: It hasn't solved the inflation/devaluation of currency problem it creates. And she then argues that exactly what has happened in 2023 is the hazard of the MMT. This hasn't aged well. LOL
Nobody doubts that this is a how fiat money works. The question is whether the supply of real goods increases when you simply spend more fiat money into existence. The answer to that question is obviously no the supply of real goods doesn't increase by simply increasing the quantity of currency units in existence.
Money doesn't just pay for goods. It pays for services and intangibles like security. The real problem is aging of the population and the elimination of low skill jobs. We need to figure out how we keep dragging the less capable members of society along in a future where few people will be able to contribute positively to society.
"supply of real goods increases" no one is saying that. You don't increase the supply by printing money and she never said that in the video.. so thats not really "the question" Instead the supply is usually much larger than the demand. There's plenty of builders but not enough home buyers. There's plenty of home buyers but not enough lumber. etc etc. You stimulate these things and get the benefit of the whole economy getting to work.
Actually, the evidence is unequivocally yes, which is why the Fed tries to maintain some inflation. The reason is that people are incentivized to invest and produce more. You can't just use your common sense folk wisdom to try and understand the macroeconomy
If WE followed this maxim normal folks would all be in debtors' prison. Aside from their control of the fiat currency, why should government not be bound by that same rule? The States are constitutionally bound to balance their budgets; only the _Federal_ government doesn't have to live by that requirement. Do you see the problem here.
Can we get an update Ted talk with her explaining inflation?
Inflation strikes poor people more that rich. She don't look poor, that why she promotes polisy that ingore inflation.
you already know that she will say her theory is sound and blame someone or something else.
10:30 Ignoring inflation is why she would say we should focus on keeping inflation in check?
She explained inflation and how it happens. An imbalance in demand creates an imbalance in supply, which drives up prices.
We didn’t cause inflation by keeping people employed, fed and housed; we caused inflation by refusing to tax excess capital out of the economy.
Inflation is caused when people with excess spendable income buy luxuries, not when people living paycheck-to-paycheck buy food.
Spending on infrastructure, for example, can increase economic growth, which then pays for the spending. Spending on another aircraft carrier doesn’t stimulate economic growth, in the long run, but does contribute to inflation by driving up demand for something that doesn’t equally drive growth.
@@Kazakor No, printing money drives inflation, as surplus of money in circulation diminishes its value. Her proposal will be detrimental do low and middle class. How that printed money gets in to economy is also very important.
The basic point that has been twisted is: just because we have a “deficit” against the government budget doesn’t mean we don’t have the economy to support the spend. That’s all fine and dandy if we could predict next years gdp, the reason we have the budget is to put some restraint on speculating against our future economy. I’d be all for basing the budget on last years gdp or similar, but we spend well beyond our industrial capacity and kill our ability to pull that trigger when a real crisis comes along. Also a 6 does not become a 9 when viewed from the top, it’s just a misunderstood 6, and ironically a good illustration of this talk.
How are we spending beyond capacity when we aren't even at full employment?
Not long after she spoke about government's need to control inflation, we had the highest rate of inflation in 40 years.
Due mainly to price gauging in the private sector and not government spending.
@@sotaquePrice gauging? Dumping billions in currency into the M1 is a large contributing factor in inflation.
@@ronobrien7187 no it wasn't. It was mainly price gouging and disrupted global logistics from the pandemic, which placed added pressure on the demand side. Her argument is completely correct.
@@sotaque So you're claiming that increasing M1 supply has no effect on inflation? You might want to look back in history, in particular Germany after WWI.
@@ronobrien7187 Not since we officially dropped the "gold standard" in 1973 (NIxon), which is what she mentioned in the TED talk at about the 4 minute mark.
If we can just print money why am I getting taxed?
Taxes are used to ensure we will USE the dollar and not some other means of trading. If you MUST pay taxes and you MUST pay your taxes in dollars you will NEED to find them. So you will insist that you're paid in dollars. And so will everyone else. Everyone using the same currency has HUGE advantages in an economy. Taxes are also used, albeit less often, to decrease the money supply and slow an over heated economy. There is disagreement about how well this works. Mostly because Congress has to increase taxes and we all know how Congress gets things done. So it isn't a "go to" solution we use.
@@mikec2582 Good response - taxation is mainly an incentive producer, but it also removes money from the economy, regulating the money supply and therefore inflation. To work really well, taxes need to be well targeted. On the other hand, in her book she is arguing that leaving it to the Fed (or other central banks) to exercise monetary policy alone (QE, interest rates, etc.) is not a "go to" solution either (although it is how things currently work). Even the heads of central banks are calling for a combination of both monetary and fiscal policy (the latter being government spending and taxation) in order to control inflation and unemployment. Taxation on really wealthy people is especially important, not because currency-issuing governments need tax revenue to fund their programs (according to MMT they don't), but because really wealthy people horde their money and don't circulate it as readily in the economy. They are effectively removing dollars from circulation...
Because we have to work, not the government employees.
To hedge inflation, as she explained
Because MMT is BS! Printing money does not magically produce wealth and has serious and dangerous economic consequences.
Sure is tough to buy a house or even pay rent nowadays. Driving up asset prices through inflation is a terribly regressive system, i guess we wont call it a tax though.
MMT is a pipe dream. A govt that prints money is a cog in the wheel of the global economy, not the basis of the global economy. Every time the treasury “prints” dollars, the value of the dollar drops. Then we all have to accumulate more of them to retain buying power. The theory that you can create currency without harming the economy relying on it is false. All you’re doing is decreasing the relative value. The economy hasn’t grown, it has merely been scaled up, relatively. An economy only grows when new products and services are added. This activity creates jobs and increases the value of resources. Printing money only masks the true value. Govt doesn’t create anything. It is only a drain on the economy.
BITCOIN
Inflation is a supply/demand issue, with too many people trying to buy the same goods and services. If the additional money printed by the central bank is only spent on investments in infrastructure, rather than consumerism style spending like the Covid cheques, then inflation wouldn't be affected much
@@sunnydisinfectant It's not just a supply/demand issue. It can also result from monopolization, such as with the food industry after the pandemic.
The inflation came from supply chain disruptions...shipping rates spiking, fuel spiking, wheat spiking, lithium shortage, lumber spiking, coffee spiking, basically all commodities spiking, supply reducing but demand remaining unchanged = inflation
There's some interesting ideas here (and in MMT) and I agree that inflation rather than deficit should be a better measure of an economy. However, the MMT idealogues are in my opinion missing two things that always happen in practice: 1. squirting fiat into the economy pretty much always ends up with _residual_ inflation even after government re-balancing measures (through taxation, interest rate hikes, etc.). 2. Governments spend a significant proportion of what she is defining deficit surplus not on the local population but quite often on foreign investments, foreign contracts that don't benefit the tax payers. So you have an open economy. So medium to long term money just leaks out the closed economy to make MMT work. I think it's important to not to be too ideological about MMT. Aspects of it do work but at the end of the day, if you squirt in excessive amounts of money into the system far and beyond what the country can produce then you're going to get inflation. At the end of the day, money (or wealth) is only a measure of the country's output and that's fundamental. And that is what Thatcher was really saying when she made her quote about there is no government money.
Great comments.
She didn’t mention that the UK and USA don’t produce the raw materials anymore, so a large portion of the money goes abroad, to China for example.
@@mymateian exactly
You are 100% correct and your comment is very intelligently written....cheers 😊
"if you squirt in excessive amounts of money into the system far and beyond what the country can produce then you're going to get inflation" This is fundamental to MMT. It consistently and explicitly places the real resource constraint at the front and centre of fiscal policy decision making. Mainstream macro obsesses over the red herring of arbitrary government balance sheet positions over an arbitrary time horizon when deciding on spending. THAT is the crazy one.
MMT is nothing new. Most people taking an economics 101 class can think up of something along the lines of "how about we don't tax people, and just print more money and tax them via inflation?" The real problem is who is doing the printing, and who they are giving that money to. Turns out people are corrupt, and they give that money to themselves and their buddies, and have everyone else pay for it via inflation.
Fiat money has always baffled me, banks create it out of thin air, and I (and the rest of us) spend practically the rest of our life, working away paying back with interest, a mortgage ...its basically an I.O.U system the whole world of money runs on.
Hit me on👆 I have something different and profitable to introduce you into.
That's how debt works, yep
It is fun to think about it for me, how the banks create money. Ironically banks create money when we borrow it. Oh the supply and demand curves of debt and money supply.
@@MrRichbc yeah we did that with the gold standard back in the day. Fiat money was a really important step in expansion and creation of our current economy
@@MrRichbc Nobody really forced their internal financial politics to hold on to them. They estimated that they would make a good deal for themselves holding bucks. Now, if you want a piece of the action with the big boys, you have to pay the price and take some risks.
I wish I could ask Dr. Kelton one big question about the interest payment on the government issued bonds and treasure notes. The bigger the national debt, the bigger the interest payment. Am I wrong to think that the federal government should reduce the amount of national debt so that the government would not allocate a large percent of its budget to this interest payment.
She would tell you that she wouldn't care. Ultimately, the Treasury could simply borrow from the Federal Reserve Bank (who can effortlessly create money to buy Treasury Bonds). So, even if interest payments grow, the Fed can finance it. The only worry that MMTers care about are the political consequences of inflation, which could get their advocates thrown out of political office. That's probably what they are most concerned about now.
@@logosao88 The myth that the Federal Reserve Bank is an independent Agency from Treasury, appears to reflect the reasoning that Fiat Currency creates.
When proposed the Currency change to the FED issuing Dollars, was presented as the value of the Federal Reserve Note, was supposed to be backed by the US Treasury selling equal value Notes to support the FED Dollars.
I studied Econ in 1970 as the proposals to solve the currency crisis of 1967 that could not appropriate funds for the War on Poverty, because the Colonial Conflict in Southeast Asia had used up all the profits.
We assumed Americans were too smart to fall for a system like we have today.
But here we are.....
If Treasury is incapable of demonstrating an equal value from their sales of Treasury Notes and Bonds, the Value of the FED Note falls.
We are foolish enough to throw Balls at Targets at a Carnival to win a Teddy Bear.
Even directing a Grenade Launcher at some Carnival targets will not dislodge them from their perch.
But our faith in our hormones or our strength keeps Fools paying a Buck to throw some more.
The Government or the Bankers, provide lovely Ladies like this one to assure us that the system is sound, the Dollar is secure.
The fact that a complex web of Government Agencies and Bankers now shift the support among a multitude of Players to offer the appearance of stability.
When Humans begin to doubt the stability of the Currency, the value plummets.
The US Economy has become a Carnival, and Pickpockets and Carnival Barkers just take the money as they see fit.
We have been too long at the Fair.
The economy is simply an illusion supported by smoke and mirrors, as bright lights distract us.
The Fact that the BRICS Trade group now has within their association around 70% of the available resources on the planet, and the US Threats of military power that can overcome any obstacle, are diminished by the appearance of Pentagon Audits, that indicate that corruption has stolen trillions from the money allocated to scare the Citizens of the World.
The Carnival of US Economic supremacy, is about to fold up the tents and split for another Town......
The illusion is over.
You are 100% right,
She lives in Lala land where the laws of physics & thermodynamics dont apply,
Just because they print money, doesnt mean that goods and services are produced,
An economy consists of goods and services, and a toilet paper they print is no longer valuable as they print more and more, buy Bitcoin or Gold, even stocks are issued by companies, the higher the price, the more stocks they issue, ridiculous, and We have to work for thay crap
@@logosao88 I think you underestimate the consequences. To paraphrase a quote, when the poor can no longer afford food, they will eat the rich ... too bad she's so thin
@@logosao88 I don't think this is right. The Fed is not the one that creates money - only Congress has "the power of the purse" and can spend money into existence. The Fed can apply monetary policy to try and add funds to the money supply and does this mainly in two ways: 1. changing the target fed funds rate with the goal of affecting other interest rates, and 2. buying Treasury securities on the open market to add funds to bank reserves.
MMT is arguing that monetary policy alone is not a good solution to the problem of inflation. In addition to monetary policy, it calls for fiscal policy (government spending and taxation) to play a larger role in controlling inflation, and many heads of central banks agree.
If the issuer of currency can never run out of money, why do we have taxes? Some of the largest growth the country has seen was before there was an income tax.
Great question, I assume taxes were a form of kick starting an economy because only a government could collect them. And if no one had any money how could you collect taxes, so governments must have been the the first investor and issuer of currency and taxes were used to keep money circulating and thus keeping the perpetual monetary system we know as an economy going. Really I think taxes are just training wheels and can now be removed to really accelerate prosperity.
@@seanwalsh999 Yeah this. Establishing a money system goes hand in hand with the creation of taxes. It creates the demand for the currency.
There's a difference between federal taxes and state taxes. The federal taxes could be removed. But the state gets it's budget from the fed and needs to manage it. Therefore States do rely on taxpayers money.
It's to keep the currency relevant. Without tax we could choose to trade in whatever currency the buyer and seller agree on. With tax reporting the government has control over ones transactions as they could ask to audit you and see receipts. Also tax has to be paid in the local currency thus adding to this. Tax is 100% not needed for spending by the government, but it does help with some wealth equality as tax bands get higher with income.
BITCOIN
Taxes play several roles, a few of which are: 1) They remove currency from circulation, canceling out the new currency issued, thus controlling inflation. 2) They force people to work for the currency that is demanded back as tax, thus incentivizing productive labour. 3) She explains in her book how FDR created payroll deductions for Social Security because otherwise people wouldn't feel entitled to these entitlements.
apparently money does grow on trees! or on computers.
Where else would it grow?
it might take a minute to understand her but she is 100% correct in her assessments. We're still thinking in terms of a gold standard currency when in fact we have (thank God) relieved ourselves of that limitation. It limited our growth and as evidence just look at a chart of our countries wealth over the last century and how it has sky rocketed since leaving the gold standard. And you might say "yea but only for the rich!" and you would be correct our govt. chose over and over to give tax breaks to the wealthy and huge subsidies to billion dollar corporations while spending less and less on us. Most of the new wealth generated by the working class was confiscated by the idle rich and the congress they made sure got elected. Our battles are in the primaries, vote for people like yourself that will spend money on improving the average Americans lives not give tax breaks to the idle rich.
Inflation is legal counterfeiting. Counterfeiting is criminal inflation.
Crypto currency is just that. And you use a debit or credit card, right?
@@AndyMorrisArt printing money to generate economic wealth is a fallacy. The issue of how tax burdens are distributed among society affects how economics are applied but doesn’t change the laws of economics themselves. She has conflated two different issues and created an illusion.
when you can't lose and only win, somewhere lies a fallacy😳
It's pretty simple to understand. The whole "We the people" who should be actually participating in this government make a plan to do stuff, fix things and help each other, then they open the Fed's cash hose for a bit, and things start happening.
Orrrrr... we don't do any of that. Then people start reverting to their animalistic selves, with people dying homeless on the street from easily curable waterborne illnesses in the middle of a giant famine-blackout where nothing works and nobody cares. The rich people who skipped out on their tax bills have enough to float around pointlessly on their golden parachutes for a while, but eventually even they will touch down and get thirsty.
I see a lot of room for Capitalism to produce the things that Capitalism is designed to produce, like poverty, pollution, corruption, resource overshoot, market externalities galore... but I don't see any fallacy. You can either hit the brake or the gas... which one do you want here?
Watch until the end. She discusses the circumstances in which increased spending can't fix a problem without excessive inflation.
It essentially is when the economy no longer has the extra capacity to produce goods and services with that money. We just went through a period of supply shocks, restricted immigration, and corporate price gouging that worked together to cause inflation. We simply didn't have enough goods and people to spend the money on, so prices rose. If we had just increased legal immigration and restricted M&A over the past few decades, there would have been very little inflation.
@@kyleolson9636 M&A?
@@mistercohaagen mergers and acquisitions
@@kyleolson9636 Ah, thanks... that makes a ton of sense now. Imagine how susceptible to inflation we're going to be when Amazon envelops every other business. Then again maybe their closed-loop ability to drive and anticipate customer demand, combined with the fact that they'll probably end up being the sole employer, educator and payroll for this nation's "governmental" regulators / legislators... maybe they can respond more quickly than any goofy notion of "The Free Market" ever could, since the only mechanism they ever had as feedback was pricing. Lol what a nightmare we made for ourselves, allowing Capitalism to continue long past it's obsolescence. I'm ready for NL/RBE at this point!
I always thought inflation was due to hoarding wealth when there isn't enough competition due to patent trolling. The inflated cost of something producible by only one vendor, is provably the individual unit-sized component of what we actually mean by the word "inflation". Now I can see how that's actually true, as it artificially creates the exact bottleneck Kelton described in the final section of this talk. Allowing all that dynastic wealth to stagnate and congeal in it's own little pocket of corruption simply due to all the "yes men" that are hoping for a piece of it, with their meddlesome outreaching tendrils that break good-faith systems we've always assumed reliable. I guess the patent system never anticipated people who would be morally willing to ransom something all of humanity actually needs, like vaccines, fertilizers for growing food and battery technologies. While MMT is more correct than older theories, it doesn't suggest any solution to the corruption problem. I think this is @robertgillespie6890's "fallacy" he was looking for.
This Ted Talk is insane. Theft is not theft if you look at it from a different angle.
Question: What happens when payments for interest on the debt become the biggest budget item? Does this crowd out other spending? As debt goes up and up will interest payments crowd out more and more? Or is this 6 really a 9?
Dave: that sounds like you're fundamentally (and fairly rudely and ignorantly) ignoring the core premise proposition (and factual reality empirically warranted by simply observing the actual extant data), that federal budgets aren't household budgets. Period.
The only way to cling with a death-grip to that fallacious myth, that somehow something as complex as an entire state's financing is magically the exact equivalent (or even just a bigger version of same) as some relatively small handful of people, is to ignore how systems of every kind work, in nature, in human context, always -- and how that fundamentally differs by scale, because emergent properties increase, when you have more factors involved, more elements, more components, just plain more.
Here the simplest debunking of the foolishness of the entire misplaced paradigm and ignorant way of thinking is this, inherent in your own off-base questioning's basis: as described clearly and hard to misunderstand in the vid (unless mired in a whole worldview that blocks even looking at the point and hearing any single word said), when the government spends money, and so increasing what is mis-named "debt" overall and each year's "deficit," it isn't borrowing from anybody, ever, not really, and certainly in no way whatsoever like when we individually do that, or as families, again, in households.
Simplest to see, because that money "spent" is actually going into the very same *revenue* sources that pour in money *to* the government, and *not* by "increasing taxes" as in raising a rate (even though that of course could and should be done for certain very small and resource-hoarding subsections, extremely rich individuals, and incessantly profiteering-to-insane-levels corporations). But rather, simply because when *people* have more money, they can actually spend it, as well as afford to do other things that cost more money, including set up businesses, move to where higher paying jobs are, buy houses and other owned homes, not to mention just live longer, and be more productive, etc. etc. etc -- all of which, at the *same* tax rates will nevertheless pour *more* money into the federal (and state/province/etc.-sub-federal governing levels, city and county and so on as well) funding coffers.
It's really as simple as understanding math, and knowing that the numbers mean nothing unless you correctly apply units, i.e. the names of whatever the numbers apply to, aka context.
Of course you'll probably intentionally perpetuate your own misunderstanding by misreading this, per the obsolete legacy "gold standard" etc. bs paradigms (such as scarcity model, chicago model or whatever of economics, aka racketeering imposed on you by perpetrators past, and which you become the perpetrator of as long as you buy and swallow that feces continually as a sewn-together human-centipede segment).
But hey, maybe you could become humanized again and stop pushing the lies and violence that protection rackets always peddle. Who knows? If so, welcome to the human race again!
@@avirichar4981 put the thesaurus down
@@avirichar4981 Your reply is just rubbish. You are ignorant of the fact that all of the money government spends is ultimately tax money.
That is because the majority is tax money to start with and the remainder is borrowed money they get from selling bonds to the Federal reserve or to the public or overseas entities .
All of this borrowed money has to be paid back when the bonds that were sold to get it actually mature with interest.
The bonds All mature in time so eventually all of the borrowed money becomes a burden for the taxpayer.
Ultimately there is no free money or non tax money.
You say "when the government spends money, and so increasing what is mis-named "debt" overall and each year's "deficit," it isn't borrowing from anybody, ever, not really, and certainly in no way whatsoever like when we individually do that, or as families, again, in households.".
This indicates you are also ignorant of the fact that since 1971 all the so called sovereign money is credit and your response displays this ignorance of the nature of sovereign money today .
@@avirichar4981 "understanding math". Yes, a negative number in your account means you've spent too much and the answer apparently is to steal the difference.
@@avirichar4981 Do you realize that you avoided answering the question with all that word salad you produced? Or was that your intention?
What actually does happen--take the time to explain in fundamental mechanics--when the interest on the government debt becomes the largest item in the government budget? Suppose interest rates run to 15% on our current roughly $30 trillion. Let us readers know your answer please.
inflation is an invisible tax on people who dont have enough money to invest. if you really "care" about inequality and minorities then stop printing money, stop bailing out banks, and start helping people understand what fiscal responsibility entails. its easy to claim MMT will work, but if people cant invest then your saving accnt interest will never keep up with inflation and thus the CPI will slowly outstrip their ability to live comfortably... this is why millennials like myself have a more difficult time affording housing than our parents. also its really easy to say printing money will fix things when you have a tenured position that safe and hermitically sealed off from the markets at large.. shaking my head sadly right now...
couldn't agree more!!!
On the contrary, high inflation generally leads to investors losing lots of money in the market. Just look at what's been happening to the markets since the Fed started talking about upwards of three interest rate hikes coming. Soon as the Fed changed their tune from transitory inflation to not transitory, the markets tanked.
@@maxmoser412sure that's true, but it still doesn't change the fact that people without disposable income are more heavily impacted by inflation than people who invest. Even with a downward trend in the market here and there your 401k will still outperform any sort of savings someone with no disposable income manages to build up.
@@jobegerlach87 totally agree, was just pointing out that inflation does impact every American, wealthy or not. Certainly not to an equal extent as you pointed out.
It depends where the money that cause the inflation went. (unless it's cost-push inflation, which is mostly what we are experiencing now, which sucks and has nothing to do with fiscal or monetary policy) If the money went to "people who don't have enough money to invest", then they win. If it went to someone else, they lose. Either way, it's just redistribution of wealth. Good for some, bad for others. Either way, wages will eventually catch up to inflation
How does MMT handle debt service? As the Federal Reserve raises interest rates to fight inflation, the US budget must accommodate higher spending for debt service in the yearly Federal budget. The debt service is currently 7% of the budget. Chairman Powell states the current spending is not supportable long term.
A lot of MMT economists advocate for permenant zero interest rate policy (ZIRP). They argue monetary policy is the wrong tool to combat inflationary pressures and much stronger automatic fiscal stabilisers are preferred (i.e. the Job Guarentee acting as an Employed Buffer Stock as opposed to the currently used Unemployed Buffer Stock which is far weaker a stabiliser).
Keynesian Economics versus Austrian/Free Market) Keyensine econovis always leads to boom and bust cycles. It was developed before and during WW2, and caused the Federal Reserve to be founded by the government, JP Morgan, and John Rockefellet at a hotel off GA’s Atlantic shore.
@@JGS2295 but if you set the interest rate to zero while you have high inflation who would buy the bonds. It doesnt make any sense, u less you force people to buy those bonds. But thats just taxation with extra steps
@gustavomendez2891 bond issuance is *literally* not a necessary fiscal operation. If the non-gov sector does not wish to store its net dollar saving in bond form, then it will just be stored as the only aggregate alternative (currency deposits). Neither form has any different impact on aggregate demand or inflation than the other.
There's actually a couple solutions. One is the Constitutionally prescribed path, the Platinum Coin; denominated in any amount we see fit. That's mostly ritual and what effectively occurs can be done the same by Debiting Securities Accounts of bond holders at the Federal Reserve and Credit their Reserve Accounts. Problem solved. Column A to Column B.
So after telling the public for decades that government debt is bad, now that it can never be repaid, corporate America is now selling it as though it’s not bad..
Debts tend be bad, because there is an impatient creditor with the ability to force you to pay it back on their onerous terms. That does not apply to the United States federal government. The one issue that must be respected and accounted for is the strength of the dollar internationally. And this is largely kept stable by America’s military, which is widely welcomed and invited into every 1st world country. All those foreign governments that want US troops to keep them safe also have an extreme bias in favor of the US dollar remaining stable, so they will circulate the dollar which fights inflation.
Two things, no? Strength of the dollar and inflation.
Little knowledge is a dangerous thing.
Did I miss the part of her talk which deals with the impact of a 6% terminal rate resulting in 40% of the federal budget going to service annual debt costs?
Yes, that would be the banksters from 1913.
Implied in her scenario would be higher taxation of the rich (including elimination of the Social Security and Medicare caps), and some form of wage and price controls to keep a lid on inflation, which is a result of creating as much profit as the system will bear. Retained profits and accumulated wealth are uncollected taxes paid by all of us. So to tax profits is simply the return of the people's money to be used for purposes other than allowing people and corporations to become morbidly rich. Deficits and national debt are offset by the enormous assets, resources, financial power, and military strength of the nation. All together, it's called the wealth of the nation.
I like the use of the term " morbidly rich " not sure if you coined it, but I have never heard the term before. I just heard another new one today, " Cryptopia " @@palladin331
@@palladin331 Higher taxation of the rich only works as long as they play the game along. Many rich people have the means to easily move to another country and take their business with them.
She says inflation is the real limit. I guess that limit got hit pretty fast…having this talk right before the biggest inflation period since the 70s 😂
Not to mention the highest debt-to-GDP ratio since the end of the Second World War! 😱
@newsoul.9 The very definition of inflation is too much currency chasing too few goods.....Physical resources. Your comment is a distinction without a difference.
@@dcj3831:
Inflation has very little to do with how much money is out there.
Inflation rises when supply is smaller than demand. Inflation shrinks when supply is bigger than demand.
That’s all there is to it.
If supply is limited and demand is bigger than supply the greed of the seller rises the prices.
Very simple.
Instead of raising interest rates the government could tax the greedy to reduce the inflation.
That would be the more intelligent way to keep inflation in check.
@newsoul.9no, literally she says inflation is the limit on spending. @10:30
@@dcj3831 :
„Newsoul“ is right!
And you are basically saying the same thing without realizing it.
Inflation is what needs to be held at around 2% . The available resources (human work force and materials) are the limitation of growth and therefore the amount of circulating money needs to be in balance with that. Even if the amount would be above that, as long as its parked on savings accounts inflation doesn’t get affected.
She completely glosses over the fact that our government deficit, or debt is borrowed money. People invest in government bonds, because they expect a return on their investment. If there is no return, there is no investment. You also can’t just print, or virtually create money out of nowhere, because it devalues the currency.
they don't care. I have never heard one of these modern economist explain how they are protecting anyone's actual worth. what hey are peddling is government control at the cost of independence and liberty from such nonsense.
your the one not understanding.....listen again
@@chev39rsh why would I want independence from free healthcare?
The FED adjusts the money supply as it is
@@ictia7036 Its not free. What they claim is free is you don't see the cost and there are no frictions you can apply to reduce it.
“I’m one of a handful of economists “
On the government pay roll.
BITCOIN OR GO DOWN WITH THE SHIP
*toilet roll
If you follow her logic why do we even pay taxes?
A fortiori, why does the government tax or borrow? According to this econo-nincompoop all it has to do is print funny money to pay for everything. Taxes and borrowing could be reduced to zero and inflation would be beyond Argentine. Zimbabwean!
You've asked a very good question. Modern Monetary Theory actually proposes that we have it backwards on why we pay taxes. In the past taxes were used to bring money into the government to pay for services. Now under FIAT currencies it's more accurate to say taxes are actually used to remove money from the economy to prevent inflation. The roles flipped around once we took currency off the gold standard.
@@jackbrons4904and that’s the problem now isn’t it
Taxes were originally designed by sovereigns to prevent wealth hoarding. A handful of wealth hoarders could become hegemons and stage coups. Once these aristocrats took power they hoarded natural resources and charged an arm and a leg for them. The people thus became rent-paying plebeians, serfs and peasants. Nowadays not paying taxes lands you in federal hoosegows, unless you own a platoon of treacherous intellectuals trained in tax and corporate law who via lobbyists wrote tax law and understand tax havens and off-shore accounts. Thus, these hegemons pay little if any taxes. So they can become bigger and bigger "influencers." (or "powerful"). Ain't finance capitalism grand?
Taxes should in theory only be paid to entities that can't print money such as states, counties and municipalities.
Be well.
@@jackbrons4904 They tax you via inflation, and then they take your money to "keep inflation down" while you don't have the money to pay for goods and services that they supposedly kept inflation down for you to afford.
The problem is that the United States does not have the physical resources she mentions. The US is issuing money to buy huge quantity of resources from foreign countries. How much federal debt would it take for foreigners to refuse to accept the US dollar any more? 80 trillion? Maybe 267 trillion is acceptable? Better not find out.
We are finding out!
Yeah, like dismantling your own light industry and shipping it all of to China. That was a pretty bad idea.
Our Interest payments is now bigger than our Military budget. We pay more for nothing than the largest and best military in the history of the world.
Just pay our bills and don’t spend more than you take in. It’s really quite simple.
This was painful. Deficits are only ok if the money spent had an net surplus to productivity. Paying for social services because ppl could only consume and not save is like throwing good money after bad.
This ! Deficits are only ok if the money spent had an net surplus to productivity !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
She kinda answered it at the end. You can’t have the government spur growth initiatives when there is full employment or a lack of resources cause that leads to inflation.
Except she's lying / completely out of touch with reality. Only one thing causes inflation, money printing. Without that, an increase in price of one thing would mean an equal and opposite decrease in price of another thing. Not in her world, we're getting increasing prices of almost everything, while paychecks aren't keeping up. So damaging.
@@pinewood6340 " Only one thing causes inflation". You don't think issues with supply lines cause inflation?
@@Mctazin Any increase in price of one thing causes a decrease in price of another, if money were real. Since our money is fake, prices for ALL things can go up. This is only due to money printing. No money printing, and any "inflation" is temporary and is with one sector / set of items, offset by decreases elsewhere.
@Pine Wood what are you talking about? Why would an increase in one price necessitate an equal and opposite decease in another price? Also the framing of this is bizarre. Obviously we are talking about the way inflation functions in the modern economy not whatever imaginary "real" money economy you are talking about. I feel like your first comment was wrong but almost made sense and now the wheels have come off and I'm just reading nonsense.
@@Mctazin Because if more dollars are being spent on one thing, less dollars would be being spent on other things, because of reality. The only way both things go up in price is if more and more fake dollars are printed out of thin air. Otherwise where would the dollars come from? The only thing that was nonsense was this TED talk. There's a reason it's called Modern Monetary 'Theory'.
This is why we have had such high inflation for the last few years and the environment and infrastructure are still degrading.
The environment and resources are limited, but they printed tons of money for PPP loans and to stop job losses during Covid.
You can spend / print money, but if production is the same, inflation goes up. People have more money to spend on what they want, but there's not more to buy.
If production increases, the environment suffers from increased energy and resource consumption.
Either way, through debt, environmental damage, and disinformation, we're screwed for generations.
Excellent! I never laughed so hard.
You laugh at what you don't understand. It's just an immature defense mechanism when your views are challenged.
No he's laughing because what she's saying is ridiculous@@Harbinger57
@@apollobabadeJust your inexpert opinion. It has no effect on the subject.
@@Harbinger57you're ridiculous and so is this clown of a lady
MMT is a very interesting theory (which has other authors at the frontline). Yet, the high inflation in US and around the globe (I’m writing this commentary 7 months after the video was posted) challenge some of her assumption and prove that it is not so simple.
Which assumption does it challenge? And what do you think has caused the current high inflation?
@@HistoritorJimaldus 10:20 they should keep inflation in check.
@@AlexScorpionVn doesn’t the current high inflation prove that she was right and that governments should have focused more on controlling inflation?
Straight up proves what anyone should have been able to easily see: she is flat out wrong
@@HistoritorJimaldus what caused inflation? I dunno maybe printing trillions of dollars in the past few years? And yet we should have printed and spent more???? 🙄 Hmm
I understand what she is talking about. Another POV.
Very good 👍
What is a TED talk? A forum where speakers are applauded for saying things that least represent reality.
Exactly. No mention of the privately owned Central Bank charging intrest on the National Debt which "our" government has to borrow on.
All the "free" money that was handed out during the pandemic is being paid back through a higher cost of living brought about by inflation.
Thanks to Quid Pro Joe.
@@michaelcap9550that was Taliban trump that gave the money away. He spent almost a trillion dollars to keep people employed and still lost 2.8 million jobs. Pay attention.
Nothing is "free," including money. The Fed is stuck with the task of putting the fire out, and it has to do that by raising the cost of money; and the more the Govt borrows the harder that task becomes. Her solution is the same Keynesian nonsense that was practiced in the 1930s -- demand-side economics, stimulated by government tinkering and their exclusive power over the nation's currency. The minute Bretton-Woods collapsed was the minute we went from a save-and-produce economy to a borrow-and-consume economy, and we haven't looked back. That can only last so long before the bill comes due; and then what?
Well, it's two years after her little Ted talk, and we've seen the answer -- which was as predictable as the day is long. Too many dollars chasing too few goods. What did they think was going to happen? What does the government care, frankly? All money is the government's anyway, don't ya know. And only by the benevolence of our comrades among the political elite are WE allowed to keep ANY of it.
This Keynesian gobbledy-gook is what got us where we are now. A national debt 50% larger than the entire economic output of America. You could liquidate the entire economy and only pay off 2/3 of what the government owes. What happens when the dollar is no longer the world's reserve currency? Which of course will be the end result if we stay on this road? What then? The answer is shared misery -- and those responsible will never be held accountable because most of them will no longer be in office.
What this lady is selling is snake oil. There's a limit to resources and labor, and if we're gonna have a fiat currency it needs to reflect the monetary balance between the two, otherwise the only beneficiary of this planned inflation is the government; the rest of the unwashed masses suffers for it.
NO, the inflation you see the US is the result of the food and oil supply problems due to the war in Ukraine. There was no inflation from the pandemic, that is simple data to see. The world inflation increased rapidly as Russion oil become restricted, that is trivial see in the data of inflation and cause and effect.
The inflation we see now is supply side inflation which is decreasing now as there is more oil available on the market eases as less people are dependent on Russian oil
There is high food inflation due to the lack of food from Ukraine that supplied most of the cooking oil and other food resources. That is why European inflation was much worse in food as much of the core food supplies comes from Ukraine.
Now we have a current lifting of wheat embargo from Ukraine started to ease the inflation.
I clicked on the comments to post exactly this. You are spot on.
By extension of the logic, there is no need to ever issue government debt, or impose any taxes to obtain revenue. You just print it. Seems like flying blind, using ‘inflation’ (whatever that is) as a sort of financial altimeter while adjusting speed based on the fuel gauge. Could be dangerous in the mountains.
100% right. We should all refuse to pay taxes and cite this retarded theory in court.
This is not what she's saying at all 🤦🏽♀️ taxation is necessary to take money out of the system to avoid inflation and to redistribute to those who don't have enough. Inflation is a fall in the purchasing power of money
Inflation is the only real limit to public spending however, if public spending of X amount leads to an increase in goods and services produced that is greater than X, then that spending was actually deflationary. The money circulating in the economy falls in comparison to goods and services produced, and costs fall making us all better off
You wouldn’t need to tax to take money out if you hadn’t printed too much previously, would you? But I appreciate your effort to tell us what she wasn’t able to say for herself.
@nadinefisher5871 you're an absolute moron if you believe any wealth is being 'redistributed' to people in need. Take a look at how much of our budget goes into social programs versus the amount awarded to DOD vis a vis "foreign aid" (like Ukraine and Israel) that is REQUIRED to be spent buying arms from our military industrial complex. Or how much is spent subsidizing "research" on behalf of big Pharma and "green energy." All of that crap winds up back in the hands of the Oligarchy and is exactly what is meant by the "upward transfer of wealth." *THAT* has become the purpose of taxation in our corrupt system.
With her logic, we should not need to pay taxes. Simply let the government create whatever money is needed to do whatever is necessary.
She writes a lot about taxes in her book.
They're needed to make money valuable, manage inflation, discourage and encourage certain behaviors, and manage inequality.
The fact that academics believe this tells you all you need to know about academia….and I say that as an academic myself!!
BITCOIN FIXES THIS
yes, and we would pay everything via inflation. no "tax" needed.
She says “We’ve all been *conditioned* to worry about deficits”, as if concern about spending more than you earn is simply some emotional blockage to move past. It is frightening to hear people actually believe this absolute absurdity.
Thanks boomer, we know how to balance a checkbook. The difference between personal finance and Federal funding that this actual economist was trying to explain to us cretins is that we can't have the central bank create money based on our good vibes.
You must have missed the part at the beginning where she explained why public sector debt is inherently different than private sector debt.
Please provide her the platform to update her perspectives on the current deficit, inflation, and how Congress could stop repeating their seemingly unending drama with keeping the Government "open".
“Are these things worth doing?” is the correct frame. The problem we face is the monetizers are almost exclusively the ones who are (for lack of a better word) allowed to ask and answer this. Waste water treatment is not and never has been a profit center. Yet it is indispensable. Just saying 🤷🏽♂️
Then why am I paying a water bill every month?
Because it’s a limited resource. So you don’t use 4 times the amount you could get by on because it’s free. There isn’t enough for everyone to water their lawns for 3 hours a day all summer. Y
"... finding the money to pay the things we need in a Country like USA or UK is never an issue..." The rest of the world must take note on "Contries like USA or UK". Because printing money have been the tomb to the economies of latinamerica for example.
You are wrong. Printing money is only a problem when your debt is in someone else's currency. If you print Yen to pay US debt you had to buy US dollars, which lower the price of Yen, which then increase the price of the debt. This cycle cause hyperinflation. But this does NOT happen if the debt is in local currency. If you print US dollars to pay debt in US dollars, the debt gets paid off because it gets devalued WITH the currency.
The key is to not have forign currency debt. Local Currency debt doesn't matter (at least not matter enough)
@@VallenChaosValiant Why am i wrong then? A lot of countries in south america have been printing money with disastrous consecuences.
@@jackprescott9652 Did you READ anything I wrote? The South Americans buy imports using US dollars, not their local currency. So the debt is in US dollars. And trying to print their way out doesn't work because the debt gets bigger that way. But if your debt is local currency like in Japan, or if you are the US of A, then it doesn't matter because the debt gets devalued by printing.
and if you don't understand this then you don't understand hyperinflation.
@@VallenChaosValiant OF Course. I mean, USA can do that. Sadly my country can`t.
@@VallenChaosValiant So why don't all countries simply only issue debt only in their local currency? Then they don't have to worry about deficits?
A wonderful example of academic idiocy.
I could destroy all her arguments. 💪
Her argument is pathetic- and anyone who has an IQ of over 85 and is not a gullible fool and is willing to actually think could also do it. But I guess her usual audience don't quite get to an IQ of 85.
Aaaaaaaaaaaaaaaand, its a whole year later. Plenty of time to have a video. radio interview, article, or fully researched paper showing off your "destroying" all her arguments ready to share by now, yes?
@@CaptFoster5you're completely lost.
Going with the "69" analogy during a public presentation was a bold choice.
If she's an expert in monetary policy we are all in big trouble.
She's wrong, but those that say the deficit falls on tax payers are also wrong. The deficit falls on *EVERYONE* holding US Dollars. Printing money with a computer is still printing money. That money is owed to the Federal Reserve, thus the deficit. It doesn't magically disappear. That money printing both causes the inflation that she says is the "real" problem *AND* devalues the currency on the global market.
The deficits are good for the politicians that hand them out to get bribes and power. The deficits are good the the big corporations and shareholders that end up with the money and quickly convert them to assets before the inflation and devaluation hits the rest of the 99%.
Want to flight inflation? Pay down the deficit to reinstate value in the Dollar. Cut the budgets going straight into the pockets of the 1%. Get the economy running efficiently without government interference.
Perfect! The most lucid commentary ever.
When you say cut the budgets that are going straight to the 1% - what do you mean? Cut all government spending or just cut the wasteful elements?
@@pauljarvis902 start with the money going directly corporations: bailouts, interest-free/low-interest loans, subsidies, military industrial complex, etc. Move on to wasteful spending. Eventually, get to indirect funding that destroys markets and raise prices like Medicare, student loans, etc. Basically undo what the government did to ruin things like health-care, insurance, education, etc.
It sounds like bullshit at first, but she actually makes a valuable statement.
-> The sum of money a government spends is not important, but the impact on inflation and how it is spent are.
Although the first half sounds like "the government can throw money around without consequences", that's not the point she's trying to making (I hope)
Correct, that is not her point. There are consequences, but she's arguing we're looking too strongly at the 'consequences' of deficits, instead of the more important consequences of inflation.
Agreed. Sadly, most comments show that getting the point is difficult for blinkered people.
Your hope is in the wrong place. That is in fact what she’s ultimately arguing. Essentially she’s claiming that we do not live in a world of finite resources. And that there are enough resources to ignore basic economic principles.
Indeed. Government spending is a soft limit, not a hard one. If we spend money on productive things then inflation won't happen as the economy will grow alongside the money. If the government makes profits from it's spending then government spending can even be deflationary.
@@l3ailey2 But also many seem to be working on the assumption that government spending just means givng money to people. What she's pushing is for the government to be more proactive. Inflation doesn't matter if you take away costs for people. Like for example nationalized healthcare would save the US economy hundreds of billions a year and massively reduce people's cost of living. Even if it would cause some minor inflation that is more than counteracted by the reduction in living costs.
Just finished the deficit myth, and watching finding the money. I am inspired.
I've read her book the deficit myth. The problem you have is Kelton talks about inflation as being the watchword.....now look at our our current position; the government in the US and UK have issued currency to prop up their ecconmies and as a result inflation is through the roof.
It's simply ignoring the problems of inflation and pittingbthe public and private sector against each other.
It's already been proven as a non starter as inflation is through the roof globally as a result of measures like this.
Yes, but look at where the government spends the money. Does it spend it to make Education free for all? Daycare guarantee for all parents? Comprehensive, full healthcare including vision, dental, hearing and MENTAL HEALTH? Does it use the money to make a Housing First guarantee? Basically, do single-payer for housing like it is done for healthcare. Government pays the developer or land owner directly the cost of the housing unit and because it is done 'in bulk' can also negotiate lower costs for housing and free people of one of the largest debts they have. People could still pay for and own a home, if the housing is heavily subsidized. Wouldn't that do a whole lot to reduce inflation?
Inflation, if you don't know is just when 'prices go up' and why do prices go up? Because corporations are encouraged to be greedy to raise prices as high as they can get away with. This isn't directly tied to taxes, social spending and Federal deficits.
Now, understanding MMT and how it can benefit the people more doesn't solve the structural instability of the monetary-market system. But it does give a lens for people to view it and advocate for policy that actually helps people live better lives, rather than hurts it.
I think we need community, grassroots alternative systems to rise up from people volunteering to do something better, more collaborative and cooperative to create sustainable abundance and prosperity where they live. Something like what has already started with the One Small Town movement.
a one-time money creation creates a one-time inflation (assuming we are already at productive capacity, otherwise it could cause no inflation). Now inflation has already come down. So the question is: is the change to higher prices (and higher wages) worth whatever we got for the money? It's a question about the real world, not just economics. If it saved enough lives from coronavirus, then it's be worth it. If it secures our freedom, it's worth it. If it vastly improves our economic outlook in the long term (infrastructure, education) it's worth it.
@coolioso808 ok so yes, I do know what inflation is and what drives it. Firstly inflation is a supply vs demand issue.
For example if the government subsidised the cost of property it would vastly increase the supply of houses and in the short term prices would come down.....but then the bill lands when the supply of labour is short, so suppliers raise wages, building supplies become harder to come by, causing an increase in demand and therefore price; this ultimately at one point or another ends up with hyperinflation at its most extreme or stagnant growth in the long term.
Germany in 1923 saw how bad goings can get when the government just printed more money to pay striking workers...
There are no easy answers and governments printing more money to ease temporary issues is not the answer.
@coolioso808 respectfully the UK funds healthcare...not perfect but then no-one dies in the gutter waiting for treatment or is left with a lifelong debt afterwards....but this has its limits.
The best way for people to thrive is to seek opportunities and start small businesses...the government printing money devalues currency and makes life harder for the man on the street...not easier.
It is not the job of any government to wholesale take care of those that can fend for themselves.
@@ChrisAddis You are going back 100 years to find a fear-mongering example of hyperinflation? That's not very relevant, I'm afraid. There was more to the hyperinflation incidents in Germany 1920s, in Zimbabwe, and other places that had it.
The real issue isn't even money printing, it is money itself. Combined with a market economy and private property used for maximizing profit, it's a totally unsustainable train ride off a cliff. Leave that big issue for a second ...
Go back to MMT and government 'printing money' which is mostly a misnomer, because very little money is actually printed. Governments create money out of thin air by the Central Banks, it is digitally created, going straight to the accounts of the parties involved in whatever legislation or funding bill was passed. Taxes come out later, deleting some money from the economy. The only limit in this case is the real resources to do something.
Subsidizing houses so nobody has to live homeless is extremely rational and has no indication it would lead to hyperinflation in and of itself. Just like Government Funded Universal Healthcare makes sense, so nobody dies in the gutter, or goes in debt or bankrupt due to medical treatments. I hesitate to even use "Universal" because in Canada, for example, it's really just basic treatment and doctor visits that are free (government paid) because dental, hearing, vision and mental health services are out of our own pockets or perhaps part of a work-related healthcare program that reduces some of those costs. All this does not magically make everything more expensive.
Most expensive cost of living items currently are food and shelter. Your concern about government subsidizing housing so people can access their first home and not live on the streets or in a crowded apartment or basement suite or whatever, is that costs will go down but then bounce back up to hyperinflation? Not necessarily. If private land owners continue to exist, especially foreign land owners and they still drive to maximize their profits, under the rules and incentives of capitalism, then yes, costs may go up. But that can be mitigated with regulation AND community co-operatives that also build housing and it is for the people, by the people for the NEEDS of the people, not for some maximum profit game.
Also, Japan has been in deflation for years, even though they have 'printed' so much money to activate projects. Why do you think they are in deflation and not hyperinflation?
Canada, USA, UK, etc. can all do better with a modern monetary theory in practice to reduce inequality and dignify people with basic needs being more easily met and also community-driven co-operative networks that localize the means of production as much as possible, reducing costs.
The FACTS are as follows:
"The U.S. will always be able to pay it's bills because we can just print money. HOWEVER we CAN'T GUARANTEE the purchasing power of those dollars ". - Alan Greenspan
(Former Chairman of the Federal Reserve)
I do not understand why she didn't address the principal concern about the national debt and deficit spending. That an increasing portion of the budget every year is paying interest on the debt and at some point people and organizations around the world will not be willing to keep buy our T-bills if it appears we can not pay the interest. When the budget becomes 90% interest on the debt and only 10% other things how does that make sense? Look I really want to believe what she's saying because it sounds great, but she completely avoided the reason most people worry about the national debt. It's most definitely NOT that the word "debt" and "deficit" sound bad. It's that IRS pie graph that shows that something like 30% of the budget goes to paying interest on the debt. That doesn't seem good to any tax payer. Please tell me why I shouldn't worry about that.
Inflation is taxation; I mean, come on, man!
"the government has infinite money guys, they don't need to tax you."
Meanwhile, when they double the money supply, you end up paying twice as much for everything. Then they hit you with the "we tax you to keep inflation under control lol."
@@TyrianHaze The causes of the recent inflation spike are well known: a spike in commodity prices (due to conflicts and crop failures), a surge in the global demand for goods and services post-pandemic, the post-pandemic labour shortage, impaired supply chains... Pretty much nothing to do with MMT or the money supply.
@@ianfryer Sounds like a bunch of bullshit made up by the government. Pro tip: printing trillions of dollars leads to massive inflation, regardless of your excuses.
She must have missed that econ class where they talked about inflation and how it decreases the value of our money. When you deficit spend you create money out of nowhere. More money chasing the same amount of products and services means the prices have to go up unless productivity expands. If the government spends all that productivity increase with deficit spending they are robbing everyone of a possible higher standard of living.
This is so basic that I'm flummoxed that I'm hearing this BS from a friggin' _economist!_ What makes her think that shrinking the value of the dollar makes ordinary people better off? It's pretty obvious that she sees government power as omnipotent, and they can call a dollar anything they want. They redefine it every single time it borrows from the Fed. Keep doing that and you've got the Wymar Republic -- Brazil. Argentina. This is snake oil. I'd like to hear her excuses today after what this profligate govt spending has done to the macro-economy today, two years later. Housing so overpriced people are literally out in the streets because they can't afford it. Gasoline at $6 a gallon, groceries 30% more expensive than two years ago because of those transportation costs. A blazing hot labor market that is continually putting inflationary pressure on businesses to pay the salaries demanded, at a time when inflation is just as hot. Her excuse is "Hey, we've got the Fed! The Fed controls employment! The Fed controls the currency!" This is madness.
This lady did not say the secret part out loud, she just whispered it “countries like the US and England”, Yep, those countries are the only ones that can borrow money from the rest of the world in their own currencies. What she is not saying is that the rest of the world is picking up the tab for “those countries“ deficits. That’s why “those countries” need to have the mightiest armies just in case some other country doesn’t want to take their currency.
It's not just other countries picking up the tab. The tab is picked up by anyone that doesn't drink directly from the teat of the US government.
If the government doesn’t run deficits, why is the government paying interest on government borrowing?
She’s just wrong.
Ideas like this are how governments collapse and countries fall into ruin.
Our interest on our debt will soon exceed $1 trillion per year. This is money that cannot be used to build infrastructure or improve healthcare. Where will it stop? Are we headed to a debt spiral? Is our debt sucking funds from economic growth leading to a stagnate business climate like Japan?
I'll have what she's smoking. That is the most insane thing I've ever heard. She would put us on the path of certain collapse.
Money printer go brrrrrrrrtt
Hit me on👆 I have something different and profitable to introduce you into.
@@MrRichbc Bitcoin was born as pure hate against the government. It is advocated by financial illiterates who ignores the fact that deflation is even worse than inflation. That doesn't prevent bitcoin from being attractive and it actually makes a great deal for some financial institutions. Simple business, easy money, the more anti-system idiots in the crypto game, the more profit for the big sharks 😁 Another great robbing tool 😁 ...fine, go ahead and buy bitcoin ! 😂
@@tudorioan5104 of course BTC was created for hate agains the government. Don't you hate those who rob 50% of your labor and destroy the currency you were forced to keep your saves in? I do. Bitcoin is only deflationary because dólar, euro and other fiat are inflationary. As long as it keeps decentralized and I remain vigilant on my private keys, no one can put the hands on the fruits of my work. And that is extraordinary, unprecedent and priceless
BITCOIN FIXES THIS
Tell me you’re an economist that dosn’t understand economics without telling me you’re an economist that doesn’t understand economics.
Self Annointed Expert. This presentation might fail High School Economics class. Does YT consider this TED talk misinformation.
So why does the government spend such a large portion of it's budget on "debt maintenance"?
Exactly. She fails to mention this inconvienent fact.
Is it possible that a day could come where the interest owed on the debt starts increasing at such a rapid rate that the computer software won't be able to calculate the number?
No reason at all. Since the government has infinite money they spend as much as they want to spend.
The thing is though that the US government is highly corrupt and usually capitalists don't want the government doing stuff. After all you can't sell people something they are getting for free. If the government were to create public healthcare that would cut into the profits of the insurance companies.
@@MrMarinus18 "government has infinite money." LOL
@@TyrianHaze They do. What would the limit be if you can print your own money?
The answer is the limit is the real economy and the means within the borders of the country.
Probably worth mentioning, for the uninitiated, that Modern Monetary Theory, which Kelton is a chief proponent of, is widely dismissed and even ridiculed by mainstream economists, both left and right. The logic presented in her book (The Deficit Myth) have been ripped to shreds by a whole host of economists who pointed out its lack of grounding in data, lack of empirical observations, and logical fallacies, circular reasoning, etc. The fantasy that deficits don't matter and massive debt-fueled expansions of government are wise is just as preposterous as it sounds.
When she says "I'm part of a handful of economists..." she is literally expressing the place she occupies in the discipline. She and a handful of people believe this nonsense, and basically no one else.
Her chief fallacy, incidentally, is the contention that fiat money is somehow "unlimited" because it can just be printed, given it is not backed by gold. She doesn't understand that money is a representation of community wealth, represented by paper. If it isn't gold, it is (as is the case with fiat) the gross-domestic product of the nation that backs the fiat currency. The circulation of money is representative of the wealth that exists. You can't create more wealth by printing more money, so if you were to do that you would be introducing hyper-inflation into the system because more money is now representing the same amount of wealth.
She is babbling utter nonsense here. But, given the fact that she is saying that you can have your cake and eat it too without suffering consequences, there is a contingent of people who WANT what she is saying to be true, and so advocate for this. But it is absolute garbage.
It should be noted that almost all of what you say are myths. Most 'mainstream economists' like Krugman etc... agree with 99% of what MMT economists talk about.
And MMT economists never say that all spending is good spending. Another mischaracterization, which you could easily find if you bothered to look
And MMT economists are often the only ones, it seems, that talk about the real resources of a country. They talk about the different constraints on different types of countries (look into Fadhel Kaboub's work specifically). This also isn't hard to find.
But yes, you absolutely can increase the real wealth of a country with govt spending. How do you think WWII happened? People weren't taxed of everything they had to 'pay for' all the tanks and guns needed to defeat the Nazi's.
And inflation is caused when the price setter raises the price. Most Fortune 500 companies made record profits the last few years. It's not hard logic to see who causes inflation.
@@nlewis-vg3kcMMT has been thoroughly examined by economists and has been rejected for good reasons. Of course the proponents are always rejecting the rejections, counter-arguing that everything has been misunderstood, etc. MMT cannot be understood because one isn't supposed to. You're supposed to accept the claimed superiority of the proponent's understanding of economy, then you understood "MMT".
@@nlewis-vg3kc Utter drivel.
@@belegarironhammer3200 ::slow clap::
What about the need for money in developing countries? When we issue fiat currency it does not need to be paid back/ What's the deal about "loans" to developing countries, in Africa for insance? I understand "we" have saddled them with the obligation to "pay us back".
The real problem is that most governments only think as far as the next election. The people need long term policy so we can invest in a better future for all of us and our children.
Some policies do end up long term. Just look at Obamacare. Something all Republican voters hated (for many odd reasons), but ended up wanting to keep it because getting rid of it would hurt them very much. When Trump tried to get rid of it, a federal judge shut him down knowing how much it would hurt the country. Obamacare was just a stepping stone towards universal health care. Obama knew there was no way he could get a universal healthcare bill to pass because there are way too many greedy people on both sides of the isle.
Long term economic policies depend upon sound economics, stability in markets, dependable energy, quality workers, low taxes etc...not MMT.
@@thomassenbart Low taxes my *ss. Tax the rich!
@@thomassenbart Your mistake is thinking MMT isn't already what is happening since the end of the gold standard. MMT doesn't CHANGE anything; MMT is just what real life is doing right now. You are already living in MMT even if you deny it. MMT is just describing the CURRENT monetary system. How money works NOW.
@@VallenChaosValiant No, I'm not. Gold has no more intrinsic value than paper, which has no more intrinsic value than trust in the federal govt... If the public loses confidence in any medium, currency crashes. MMT is something at another level because it asserts that there is no connection between public confidence and the value of money and that you can make as much as you want without consequence. You can't. The latest round of inflation is the tip of the proverbial iceberg. As govt. debt continues to increase, it crowds out all other expenditures and the only way to end this debacle is through inflation, which will destroy the debt but that only happens if govt. restrains spending, which it does not seem capable of doing.
Gold is not the answer either and any attempt to go back to this standard would destroy the economy as quickly as MMT.
What is needed is responsible governmental spending and taxation, roughly in balance. Such a formula allows for an ever more prosperous society, all things remaining equal.
There’s a problem with the video in which she’s assuming it’s a closed economy and lightly touches the inflationary aspect. G20 people earn 10-50x more than some of the poorest. When government does spend for products there is a gain, but when it gives out money for no purpose then asset holders get richer than “welfare” recipients.
Money spent by USA also goes outside the american economy as many goods are imported. So if USA prints money above the world rate, then inflation skyrockets.
Money spent carelessly, sends money from the poor to the asset holders. Think of a building owner which takes money from subsidies due to housing low income families. The building debt get paid off from the money given by tax payers. The holder of the building has a massive asset.
Lastly spending other people’s money has an enormous chance of corruption. When you spent your money you can only be foolish but not corrupt.
If Johnny can't read/write or do math due to equity, of what value is free college. But the good news is that the fed government charges 6% interest in all college loans. Counting on the government to distribute money will always be filled w waste and chronyism.
Nowhere does she address the mounting debt service costs created by annual deficit spending. How could an economist leave that out and talk only about the upside of government spending?
What is there to address?
There is no limit to federal spending so the idea that it would come at the cost of other programs is kind of explained already.
@@MrMarinus18 You missed the point. Borrowing to buy current wants results in bigger debt until debt service becomes so large it eats up all discretionary spending. This year the only budget item bigger than debt service is military spending. Inflation is the penalty we pay for borrowing from the future to fund current purchases, and total purchasing power is reduced further the more we borrow.
The solution is higher taxes especially on the 1% whose share of earnings and assets is double or triple what it was 50 years ago.
@@Johnhart1944 you missed the point. The government prints the money. They control the inflation by controlling markets. The government is not a house hold. They don't run out of money.
@@Johnhart1944but we want to borrow for NEEDS. Not wants. Healthcare, roads, housing. Not rocket ships and bombs yo 😭😭😭 why is this so hard to compute ????? Elon dug tunnels to NOWHERE under the false pretense of a mentally fabricated, untested technology that never came to fruition-and we still won’t tax him…We already know how to build infrastructure. Stop turning our country into a billionaire’s sandbox.
this woman is TOTALLY insane!
nothing more need be said about her talk.
That feeling you get when you see old footage of a 1950’s doctor recommending Unfiltered Camels to treat anxiety…..
The scary part is.she kept a straight face throughout. her presentation.
No, the scary part is that she and the others who developed MMT are the ones running our economy.
@@denniscarney5249No, the scary part is that it's actually working... Low unemployment, stock market up, GDP up and wages up.
Government money is going more towards jobs and less on food stamps, unemployment benefits and other programs that are "hand outs".
@RemyJuju2 you have to be an absolute moron NOT to understand the way the unemployment data is manipulated. You *really* think that in a country of 330 million people, we only have 2-4 million unemployed at a time? Stock markets are projections based on anticipated revenue and have *nothing* to do with OUR economy (since all of the main corporations are international). Of course GDP is up... it's called inflation. What's your supposed explanation for wages not keeping up with inflation? The growth of the homeless rate? The number of Americans unable to afford $500 emergency or the number holding multiple jobs to make ends meet?
@@RemyJuju2the only reason it may seem to be working is because foreign producing nations (China, Mexico etc) accept the USD. This woman is a gaslighter
@@RemyJuju2 Is it working? Inflation is killing us and causing the economy to fail. Lots of companies are increasing layoffs. GDP for 24Q1 was 1.4%, much weaker than the Administration expected. It had been 4.9% in 23Q3, more than a 70% reduction. The stock market is up because many corporations are still showing profits because they've been cuttings costs (layoffs). Go to your local car dealership and look what's happening -- they can't give them away. Americans are BROKE. High debt and inflation has killed the American family budget.
When do i get my government authorised printing press?
Sounds like you are missing the central distinction drawn in MMT: the difference between currency issuers and currency users.
Sorry, but you are not a currency issuer.
@@ianfryer How dumb is that comment of yours? It denies the fact that most money in the economy is not produced by the Central bank or government but is created out of bank lending to their customers which is over 90% of it. That money like the money created by the Central bank (Federal Reserve in the U.S. ) is credit fiat money. There is no distinction between the money created by the Central banks and that created by private banks. It is all interchangeable and indistinguishable from one dollar to the next.
@@Rob-fx2dw There may be no difference between the dollars themselves, but that doesn't mean that there is no difference between the way those dollars are created. "One notable difference between the two types of money creation is that there is no external limit to the total amount of money the [central bank] may create through its asset purchases, other than the impact the additional money created has on inflation. In contrast, the amount of money that a private commercial bank is permitted to create depends on the amount of the bank’s equity relative to its assets. The limiting rules, known as capital constraints, are established by [a country's] banking regulator in a set of guidelines."
What is the upshot? "Money creation by the [central bank] through purchases of government securities is essentially an internal government process; this means that external factors, such as financial market dysfunction, cannot cause the federal government to run out of money. Inflation is the main limit to the amount of money the [central bank] can create through asset purchases."
"Another significant difference is that the key factor in a private commercial bank’s decision to give a loan to a private entity is the creditworthiness of the borrower, whereas the key factor in the [central bank's] decision to purchase assets is its ability to achieve its inflation target."
Now I may be missing something, as I am clearly not as educated as you on the topic. I had to do a bit of reading, and I got this specific information from an online article titled "How the Bank of Canada Creates Money Through its Asset Purchases".
But this strikes me as the main point that MMT economists are trying to make: Only the federal government is in the position of being unable to run out of money denominated in its own currency.
It all sounds so wonderful but printing money to pump it into the economy no matter how perceived beneficial it is, ramps up inflation and often leads to an increase to a widening gap between the rich and poor.
Adding dollars to the economy has to be done where there are available resources. Too many dollars created at once could drive inflation. Simple.
that's MMT!
Actually the evidence for that is pretty shaky. The country that has run deficits the longest and has the highest debt is struggling with massive deflation.
Would that be Japan?@@MrMarinus18
What I took away from her speech is that things work better when the government is more involved. And things will work much better when government can exercise more control over not just creating money and allocating its use, but also control other resources such as raw materials, people, education and industry. Once that level of control is achieved we will live in a more perfect world.
Why hasn’t someone thought of this before? Actually I think it may have been tried before - my memory is a bit hazy on this. Oh well, I’m sure *this* time our government will perfect the process unlike those in the past. Just trust all those in power.
Doesn't the US Treasury sell bonds ie borrow money from bond buyers? Aren't some of these lenders foreign countries? So we pay these countries interest right?
There was a good question asked but not answered. Who does the extra money go to? Usually it goes to friends of people in the government, or to things that buy government it's voted in the next election. Or to stock market to people who know inflation is coming and want to protect their capital (just look at s&p index in the last years). I would prefer the money to go through free market to whoever does the best job and provides the best service, rather than who knows the most influential people.
Maybe the additional money could go to care workers, social workers, teachers, nurses, paramedics the police and other service providers so that they can finally sustain a decent standard of living. Adam Smith's conception of capitalism doesn't exist anymore so stating that the free market simply rewards whoever "does the best job" or "provides the best service" is a nonsense.
Does the free market always select the most deserving people? Is it immune to special interests and insider knowledge?
@@MendicantBias1 No but the good part of the free market is only the people involved in the bad financial decisions are affected. They bear the full responsibility of their bad decisions. The people who make good financial decisions are not affected. This encourages people to make better financial decisions. This does not happen when government makes bad financial decisions because the people who make those decisions are not affected. The financial responsibly is shifted to people who had nothing to do with making those decisions.
"Government is like a baby-it’s got an alimentary canal at one end and no sense of responsibility at the other."
I think everyone, including Kelton, would agree with that. Government spending should go either to all of us (like Covid checks, or maybe education - although that's complicated), or to volunteers (the military) or to the best contractor for the job we want done. I'm not sure what you mean by "go through free market" though. All money comes from the government, and then goes around free market, until possibly being removed by the government via taxes. But the government has to choose who to give it to initially. No way around that. Unless you're talking about a fixed money supply, which we used to have, which is now seen as a bad idea by almost all economists
@@Mooja12 "the good part of the free market is only the people involved in the bad financial decisions are affected. " where is God's name did you hear that? Just think about it for a minute. You'll realize it's obviously not true (unless by "involved" you mean "live on the same planet"). We are all connected. Someone pours money into an oil project that doesn't pan out, not only did they mess up a nice piece of land (there's an absolute loss right there), but they wasted people's labor and assets that could have been used to create profits that would have gone back into the economy, making everyone richer. Just think of the real economy: it's buildings, machines, the skills of people, etc. Those are the REAL assets of the nation (or world). If someone with financial power makes a bad decision, we end up with LESS of those real assets in total. If they make a good one, we end up with more. That's a NET total gain or loss, which
Monetary easing is evidence of the reality of government deficit and government debt.
It is not. See 'religion' for proof of people doing stuff confidently wrong.
This doesn’t make sense! Creating more units of account in an economy of scarce assets then prices necessarily group. It is a tax. As more money is “created” my savings is diluted.
This arguments need to be debated by Bitcoiners who take diametrically opposite position.
Hmm,, if what you're saying is true, then why collect taxes, to pay down the debt and fund programs? Why not let the people keep everything they work for, and the gov can print the money for everything it needs. If what you're saying is true, why isn't this the case?
The only reason we have a single currency is because we are given said currency , and then forced to pay taxes In said currency. Thus reinforcing it as the dominant currency. It also helps keep inflation in control. We tech could to some extent spend and since we know trickle up works, just tax at the top and take it out of circulation.
@@DaveE99 I hear you, but maybe you should Listen to time stamp 6:00-6:15 time stamp. She was very clear. She yes says that on one end, on the other end worries about inflation. So can they run out of money, or the value thereof?, and if that is the case, then it seems they don't have that unlimited, endless ability to create money to pay for things, looks like there's consequences. Sounds like she's talking out of both sides of her mouth. Now with that being said, she's a professional economist, so I fall way below her level of knowledge, I admit that, all I'm doing is listening to what she's saying, and it just seems that's what's being said. I could totally be misunderstanding. I'm no economist. 👍
@@toneg3768 What she said is that HOW to pay for programs aren't an issue, because the government pays for thing in a currency that they essentially gets to print. The real issue is whether, if you issue the currency and try to pay for it, will lead to inflation. And one source of that inflation is full employment.
The US can do this much better than other countries can because it gets to print the global reserve currency that everyone trades with. Other countries are more hamstrung.
@@monitoradiation I guess the point I'm making that I may not be expressing clearly. What she said was, as the issuer of currency, the federal government can never run out of money, but they can run the currency out of value if they have to much in circulation. So there will be a point that the federal gov, will run out of currency, not because they can't print the paper, or create digitally,, but because it holds no value, which is possible if the claim is inflation needs to considered
@@toneg3768 The way I take it is that yes, there is a theoretical limit where you would run the risk of devaluing the currency (e.g. Venezuela with hyperinflation). But the US isn't currently anywhere near that point - today US inflation is a fraction of what it was in the 1980s, even after all the covid stimulus. And many times lower than it has been for the majority of the last 100 years. We've got much better at controlling inflation. So as long as the currency issuer keeps inflation in check, they can print and print and help the economy to be more productive than it otherwise would be. And adjusting taxes would be one mechanism to help lower inflation, should it start rising unsustainably, as it's a form of 'unprinting', essentially.
(Important to note that in a high-inflationary environment, raising taxes would be incredibly unpopular in the short-term for any ruling government party. But the right thing to do in order to protect the currency and country. May be a reason more governments are reluctant to adopt an MMT approach)
MMT is to fiat currency what sub prime loans were to mortgages
BITCOIN
Lol no
I've been hearing about unsustainability of the budget deficit for more than 30 years now. Somehow we have survived. I am not worried.
Currency does not bear value by itself. It represents value because it bears people’s trust in it. Printing too much erodes the value and no one will accept it no matter how much the government print. So thatcher is fundamentally correct.
In four brief sentences you managed to show you do not understand MMT at all and that you also don't understand politics either.
This is a really novel idea except when we invest money in students who receive college degrees in subjects that no one is hiring for. Or when we invest in roads and infrastructure like the I-95 project between Washington DC and Richmond that after 5 years of construction still isn't open. The problem is that we are spending our money on things are not yielding a good return on investment. Then the government is looking to cancel the college debt because the loan recipients can't earn enough money to pay off the debt. So we have unemployable college grads that never pay off the money invested in them, so the money is lost on all fronts. Those are not good investments. The problem with the federal government spending money is there is no oversight in how the money is spent, so her ideas are interesting but it is just a method of defending out of control spending.
Wow, there are so many straw men arguments for this presentation, she must be right. Some are accusing her of saying everyone can have everything they want, no strings attached and no consequences, but she never said that. In fact she pointed out that the productive capacity is a hard limit a government must be careful of, because spending past it creates a cascade of problems. But she’s saying with a fiat currency, where a government has a monopoly on issuing that currency and has its foreign debt held in that currency, money - not spending! - is limitless. So what we should be asking is, “Do we have the capacity to do X?” Where X is build a school, provide universal healthcare, etc. “How will we pay for it?” is a misleading question, because it presupposes that the government doesn’t have control of its own money supply, which it does.
This aged like a bucket of prawns in the sun
Only if one's stupid.
This is nothing more than an articulate, educated professor explaining in terms most can't understand, how unfettered money printing is good. It IS good... if you're ok with the resulting devaluation of the money supply, and resulting inflation. Personally, I'd rather my nest egg NOT have it's buying power cut in half.
She conveniently left out the real underlying problem of US monetary system. The privately owned Central Bank charging "our" government intrest on the National Debt, which is estimated to be $659 billion for 2023.
And that's where our tax go to.
Good bye nest egg.
I figured out years ago that if consumption exceeds productive capacity, you get inflation. If consumption is less than productive capacity then you get deflation. Just the standard law of supply and demand really. Deficits and surpluses are pretty much meaningless in any modern well run economy - where consumption is balanced with a relativity high and easily expaned productive capacity. The current economy is "lazy" mostly because young people (the biggest consumers) have the least amount of money and the elderly (the lowest consumers) have the most. Productive capacity is rarely exceeded due to advances in automation. We can easily build it, but the young can't come because they don't have any cash.
This, of course, is not the situation in some poor developing countries. This is a rich, industrial economy observation.
Quite simply, there has never (NEVER) been a modern industrial economy fail in the last 250 years due to deficient spending. Even France during the Revolution didn't have a failed economy and it was an absolute mess. Germany in the 1920's deliberately destroyed their currency to avoid playing war reparations and it was done via hyper-inflation not via deficits. Japan has been deficient spending for over 30 years without ill effect. Japan's problems have to do with an aging population and a mismatch between consumption (too low) compared to productive capacity (very high).
The focus by conservatives on deficits is just ignorance, AND deliberate avoidance of the facts of how modern economies work. For conservative it is an emotional issue with the concept that people may (just may) get something for nothing over powering their cognitive abilities and the evidence of their eyes.
Running an economy is not the same as running a lemonade stand. The goal of running an economy is to meet the public good by making use of public policies (direction) and market forces (efficient, dynamic and energetic). Depending on the sector of the economy, the amount of government policy required changes. No on wants the military to be private. No one thinks government run corner stores or hair salons are a good idea. Every sector requires it's own solution. This may also change by country. A free market on air travel or cellular coverage works well in the US, not so well for Iceland.
There is not, and never has been one size fits all for ANY serious problem, personal or public.
Rational, grounded, and comprehensive. Congrats on succeeding where most commentators here are way off track.
I'm unable to follow a lot of this, however I do agree that using money as a measure of capability is inferior to using resources as a measure.
This is how I have always understood it, and though it is with kings, it scales to the modern world.
Once, before machines and industry, wealth was exclusively land, because land grew food and the food drove the humans and animals that made everything.
So to get wealthy, Kings had to conquer their neighbours and take their land.
So they sent armies. The armies travelled to the neighbours and took their land. The soldiers were paid by what they stole from the neighbours (and the Lords who raised the armies got land).
That works fine until you've conquered a few neighbours. Then the army needs to steal stuff along the way to get to the next nearest neighbours. But that's the King's land! No good will come of that.
So, the king tells everyone that next year part of the annual tax will be not just food, but a coin that has a picture of the king on it. The king makes coins. Lots of coins. He doesn't actually want coins from the people. He literally just made them himself.
Then he gives coins to the army and tells them that if they want food or other good on the way to battle, the villagers will swap coins for things.
The villagers don't really want coins. You can't eat them. They're worthless... Except... They're going to need one for this year's tax. The tax is what gives the money value. Not this "proof of work" malarkey, or the "intrinsic value of gold".
So the king makes coins, gives them away, then demands them back. Things get done.
What she's taking about is just an extension of that. The "King" wants a new bridge/road/hospital or whatever. He creates money out of nothing and hands it to construction companies. They hand it to construction workers. Construction workers hand it to cafés, supermarkets, car dealers, they hand it to waiters, shop workers and salesmen. Each pays some tax, and over several transactions, the government gets it back. If there was no tax, that money would build up in the economy and eventually you'd need a wheelbarrow to carry the cash to the store to buy bread. The tax maintains the value of the money. So the limit isn't the supply of money, its the speed at which the money can circulate, with a little bit being removed each time it changes hands.
But if the economy is going to grow, the government has to create money and give it way. That means more going out of the government than going in. That difference is deficit.
@@gasdive what if you could refuse to pay taxes to the king all together? What if the king's collector can't tell how many land, crops or coins you have. That's the crypto revolution. It's disrupting the government
@@rafaelborbacs then when the soldiers cross your land, and they're hungry, they kill you and take your stuff instead. Easy.
@@rafaelborbacs no, the crypto it's supported by speculation and it's not anonymous no more
Thanks fortaking the trouble to post that. I found it useful.@@gasdive
“We just had the shortest recession in U.S. history.” Well that didn’t age too well.
Why has the US GDP failed to grow for two consecutive quarters?
US is not in recession right now. Look at the numbers.
We're in a recession? Keep trying so desperately
Yes. Not how do you finance that but how do you RESOURCE that?
You will all feel the effects of implementing MMT- very soon.
MMT isn't a policy proposal, it's a descriptive economic model which aims to explain modern monetary systems in terms of how they actually work rather than the artificial concerns of orthodox economics.
@JGS2295 how's that inflation treating you?
@@JGS2295 It's a model, therefore it's every bit as fallible as those associated with "artificial concerns".
@@johnb.1020 Yes, and Einstein's general theory of relativity is a model of gravity. It does not make it just as inaccurate or fallible as any other model.
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior justification for selfishness."
John Kenneth Galbraith
Remember when Galbraith said that New York City could solve any problem by doubling its budget? Remember when he apologized?
She is dead wrong. If the US keeps running $2T deficits the entire part of the annual budget that is discretionary will be going to pay INTEREST on the debt. The numbers are easy to run.
Who owns that interest on the debt?
Who owns treasures? Can they be traded? By whom?
And how do money market funds exist without debt of some sort (if you understand the mechanism behind money market funds is that they are investments that turn I to loans to others who build assets out of the loan and the repay the loans. Then profit (cash flow) creates jobs and other income producing opportunities. It's a big expanding circle not much different than a galaxy.
Did you know that SNAP payments yield more than a dollar's worth of economic activity for every dollar paid out?
$1.00 paid out in SNAP benefits = $1.67 in economic activity. Look it up.
I get the reasoning. If the industry sector that will support the new government spending has the necessary excess capacity, then there shouldn't be inflation in that sector. However, the households employed in said sector, will have more money to spend. Wouldn't that in theory put pressure on the average household basket? I suppose there has to be a bet on where that money will ultimately flow, right? Maybe we just have to hope that the average household has healthy expenditure habits or something like that.
No. It does not work in the simple-minded linear proportions way you suggest. Macroeconomics (unlike micro-econ for a single firm) is fundamentally a nonlinear dynamical system. Households can choose to save rather than spend (and spend to to do what, eat more? buy more houses? you cannot spend on goods that are not for sale, and firms hate raising prices when there is demand pressure, they pressure to map up output, until they run out of resources, typically only then, and only if they have a near monopoly, will they put up prices). Thing is, in an uncertain world households do save a lot of surplus income annually. All such savings are a demand leakage from _circulation_ so are a huge deflationary bias.
It is thus not the stock of currency in existence that puts pressure on prices, it's the rate of circulation, and even then there is no deterministic causal path to inflation. To get inflation from excess demand firms have to run short of labour or machines to hire, since they tend to increase capacity rather than raise prices. Provided resource slack exists then , the general price level will not change linearly with increased governemtn net spending.
@@Achrononmaster Very good and clear explanation, I hope many people read it and understand this simple fact you mention: ''It is thus not the stock of currency in existence that put pressure on prices, it's the rate of circulation, and even then there is no deterministic causal path to inflation.''
@@Achrononmaster great breakdown, upvote
Yes, straight out of Milton’s memoirs.
No one cared when Emperors diluted the gold in coins.
And this theory is modern to boot.
@@clemfarley7257 🤌👍yes
Money is power, those with it don't want others to catch up
Wealth is power... money is just an IOU...
Nope, not at all. That is not how it works.
@thomassenbart that's exactly how it works
Question to everyone complaining about inflation . Please explain how all corporations are posting record profits . Highest ever bit yet we all call it inflation and not price gouging? The stock market is rising, yet we call it inflation and not price gouging . I suggest if congress did their job of regulation and put a cap on prices during economic hard time like a freaking pandemic when supply chains stoped running we would not be seeing corporations controlling our government
those profits are also inflated. taking purchasing power into account theyre actually recording below average profits. as for price caps imagine something say toilet paper had a massive increase in demand. if you put a price cap then supply wouldnt build up as buisnesses wouldnt come in to take advantage of the market.
So is she saying minting US dollar unlimited is OK?? That is totally against the capitalism system and only creates hyper-inflation. I think Basic Income would help us guarantee bare minimum essentials, but still that fund needs to come from tax, not just minting US dollars to help people. Government must monitor and control money supply very carefully, and make sure it goes to hard working people as a reward. Giving out free money to people is crazy
That’s not what she’s saying. Maybe you should see some of her other videos.
She's not talking about giving money to people. Did you even watch the video?
I agree with you! She sugar-coated "printing money is ok"
With rules. As long as the money is spend on idle labor or resources it grows the economy and is good. If the government were to, say, print up some money and then give it to a locality to be given out as grant payments for people who open up businesses growing crops in this area of the country with great soil but nobody farming it. And say people come along and open little farming businesses and they do this because they saw that there were enticing government grants to help start these businesses. This is the government spending money in a way that puts both labor and resources to use, expanding the economy. Now there are new goods - food, in this case, as well as possibly manufactured products from farmed goods such as maybe leather or hemp rope as examples - entering the market (could be either domestic or for exporting) and this only happened because the government, through creating new debt for itself, created the conditions that citizens found necessary to entice them to create this growth in the economy.
Printing money to pay for things that doesn't improve productivity = bad
Printing money to pay for things that does improve productivity = not bad
We need labor! Without labor, spending is pointless.
@@LegendLength Besides any point. People are being paid to stay home when we need some of these people to be at work.
@@adamk1520 ...as a billionaire myself, who receives millions and millions from the gov't each year I like the way you think. I need uninformed, wannabe economists to watch fox news and keep my extravagant wealth in my pocket...I spend millions paying for media and gov't to do my bidding. Thanks for helping me by repeating the same stupid things over and over.
@@7788Sambaboy Billionaires pay money to the government. Billionaires don’t spend time commenting on UA-cam.
@@adamk1520 OK, I might have exaggerated my wealth, and I actually do agree with you that we need labor...but we have it. There are lots of people waiting for a decent job and there are many willing to switch. Before spending money we need to ask "will this benefit workers, citizens and the country?" and this one is a no brainer...then we need to do it. and sorry, my use of "stupid" in my comment was rude and pretentious...I apologize.
@@adamk1520 people could return to work, and the economy could go back to normal, if people took the pandemic seriously from the start and followed the rules
1) @ 5:50, we hear that Congress never has to check its bank account. Why not? 2) @ 6:05, it is stated as a fact that the government can never run out of money, because it issues the currency. Both are dangerous assertions. 3) @ 6:10, government can afford to buy what ever is available. At this point, she has ignored the idea of inflation three times. If you spend more than you have, you pay interest on the loan. This inflates the cost of whatever you spent in deficit. If the government prints its way out of debt, the money is worth less (Inflation) than it used to be, because we have more dollars in circulation. And if we assume that the government pool of money is limitless, then anything it wants to buy will increase in price because of its unlimited ability to pay. This again, is inflation. And we know all this to be true, because in the past two years, we've done 1), and we got whacked with huge inflation. Russia has done 2), and its economy is in shambles. And 3) happened to the government and the US population in 2022-23 when we had a lot of cash stored up and spent it on limited resources, and watch inflation soar, housing prices double, and fuel prices skyrocket. There is a reason Modern Monetary Theory is still just a theory: It hasn't solved the inflation/devaluation of currency problem it creates.
And she then argues that exactly what has happened in 2023 is the hazard of the MMT. This hasn't aged well. LOL
Nobody doubts that this is a how fiat money works. The question is whether the supply of real goods increases when you simply spend more fiat money into existence. The answer to that question is obviously no the supply of real goods doesn't increase by simply increasing the quantity of currency units in existence.
Money doesn't just pay for goods. It pays for services and intangibles like security. The real problem is aging of the population and the elimination of low skill jobs. We need to figure out how we keep dragging the less capable members of society along in a future where few people will be able to contribute positively to society.
"supply of real goods increases" no one is saying that. You don't increase the supply by printing money and she never said that in the video.. so thats not really "the question" Instead the supply is usually much larger than the demand. There's plenty of builders but not enough home buyers. There's plenty of home buyers but not enough lumber. etc etc. You stimulate these things and get the benefit of the whole economy getting to work.
Nothing you said is wrong per se, which is refreshing. but the right sort of spending can encourage the increase of the supply of real goods
Actually, the evidence is unequivocally yes, which is why the Fed tries to maintain some inflation. The reason is that people are incentivized to invest and produce more. You can't just use your common sense folk wisdom to try and understand the macroeconomy
@@CosmicDamian "legitimate"? Is that some moral judgement? or are you saying "the only way real value is created"?
TLDR; Ignore the debt, but keep inflation in check.
If WE followed this maxim normal folks would all be in debtors' prison. Aside from their control of the fiat currency, why should government not be bound by that same rule? The States are constitutionally bound to balance their budgets; only the _Federal_ government doesn't have to live by that requirement. Do you see the problem here.
Printed money creates inflation. Maybe more thinking and a little less tldr in your life would help you.
Soon the interest costs on US government debt will hit $1trillion per year. Who is paying for that? More debt or the tax payer.
How to pay for it? Looks like we got our answer. Record 9.1% **cough cough really 20+ cough cough** inflation is how we pay