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.
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
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.
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.
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.
@@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.
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.
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...
When someone dismisses a question by saying, "It's the wrong question" (2:55) what that person is really saying is, "You are asking a question that I don't want to answer, therefore you are wrong for asking it." One of the first thing students will be told in an introductory economics class is that "There is no such thing as a free lunch." The notion of something for nothing is a fallacy, and deficits will ultimately have to be paid back in some way; therefore, questions as to how repayments will be made are legitimate and should be fully addressed.
Yes all deficits must be paid back as they are when the Treasury Bonds that are initially sold to fund borrowing that in turn fills the shortfall in the budget mature and are paid out. If they were not paid out nobody would have bought them in the first place.
This is the basic misunderstanding. The national debt and the deficits do not have to be paid back. It's more about increasing and decreasing the money supply when necessary. The national debt is really just a record of how much money we've created. Here's my little analogy. Say that you and I are on an island and we each have $100. That's the whole economy. Now I say I like your shoes and would you like to sell them. You say OK and sell them to me for $10. Then you say you'd like a coconut but your back hurts and can't climb the tree to get one so will I do it for you. You say you'll pay me $20. So I say OK and climb the tree and get you a coconut. That's all well and good. Now you decide that you don't need your car anymore and ask me would I like to buy it? I say OK I'd like it. How much? you say $2000. I say not only don't I have $2000 but there isn't $2000 in the whole economy so it's not possible. But I have an idea. On a piece of paper I'll write an IOU for $2000 and give it to you for the car. Then each time I climb the tree to get a coconut for you we'll scratch $20 off of the IOU. Obviously the IOU is the same thing as money and I just created it. But the real point is, there needs to be enough money in the economy to accommodate all the transactions that people need to do. And the size of the economy can grow for a number of reasons. For one, the population grows. Also if it's reported that the GDP has grown say 3% over last year then that means there's more productivity and more transactions. So the government (or FED, whatever) needs to increase the money supply perhaps permanently. The government is not so worried about the money it created. The government is primarily concerned with whether we're being as productive as we can be or whether there's not enough production causing inflation. It just adjusts the money supply to stay within inflationary or deflationary spirals or to get us out of a recession or to mitigate a crisis. So as long as productivity increases over time the money supply needs to increase to accommodate it. So we run a deficit to do this. And naturally we will run deficits more often than surpluses. (As Robert Reich likes to say, this is why deficits don't matter except as related to GDP.) The national debt is not really a debt that needs to be paid back. It's just a record of how much money we created and that we needed to create. Yes we pay interest on the debt, but again, we could just create more money to pay that. The concern would not be that we're in debt even further and have to pay back even more. The concern would be that we're increasing the money supply too much and causing inflation.
@@SolidAir54321 For many years I have heard the idea that "deficits don't matter" bandied about, but this notion doesn't survive scrutiny when some very obvious questions are asked. For example: Do we pay interest on this borrowed money? Given that several sources clearly indicate that we are now paying record amounts of interest on our national debt, then it is clear that Deficits Do Matter. If we had not been required to pay that interest on the country's debt, then could the money we are now paying in interest have instead been spent on other needs? If yes, then Deficits Do Matter. Would having little or no national debt send a message to our foes that we would be in a strong financial position to afford a lengthy war? If yes, then Deficits Do Matter. Does having little or no national debt contribute to the strength of the dollar against other currencies? If yes, then Deficits Do Matter. Are we not taught early on in the study of economics that "There is no free lunch."? If the perceived unimportance of a national debt is tacit to "something for nothing", then Deficits Do Matter. Very often the national debt is defended by the notion that the debt is compensated for by subsequent economic growth, and that we are simply borrowing against future prosperity. So long as any of our national expenditures are made for things that do not contribute to national economic growth, then Deficits Do Matter, Worse yet, the notion of debt-funded future prosperity is predicated upon the idea that the economy can grow infinitely. If this presupposition is a fallacy (and it is) then Deficits Do Matter. Until ALL of these questions are fully addressed, Deficits Do Matter. Those who think otherwise are simply not looking forward far enough to recognize that the butcher's bill will eventually come due, and at that point, it won't matter how big our GDP is.
@@SolidAir54321 Your first premiss is wrong. The national debt is not just record. You have not thought through your response well at all. The national debt is all borrowed money. Much of that money is the investment of pension funds (when they bought the Treasury securities) and those pension funds must be paid back to provide for people's retirement. Much of the other is money borrowed from overseas investors and they want their money back on maturity of the Treasury securities that were sold to them. Those Treasury securities all mature in time and must be paid of then. Your thinking about the car purchase is infantile because anyone with good enough income, record of financial competence and a low risk profile can get loan from a private bank. The bank will create new money as loan which people are forced to pay back with some interest. There is no need for an existing pool of money to be in the economy because all of the sovereign money today is created as credit and debt. Ther is no restriction of growth in the economy caused by a lack of money because new money created by private banks as credit is available and there is no fixed quantity of money for every purchase so the prices adjust according to how much money is avilable to people and how much they are prepared to pay. That is the adjusting mechanism.
@@Rob-fx2dw I don't think we are disagreeing. When we borrow money we do need to pay it back. But we can create money to pay the borrower. So borrowing and creating are kind of the same thing. But we need to increase our productivity to account for the creation of that money. If you like to say it this way: we need to work more to pay it back. But if we DO produce more by increasing GDP or population or just being more productive then we DO pay it back. This can extend to overseas investors who essentially "lend" money. We can create money to pay them back but the problem is that they may then spend that money in the U.S. economy causing inflation. The problem is not that we don't have enough money. The problem is whether we can produce enough. So if production always increases along with the money we create (i.e. borrow), and at the same amount, then that's OK. I like to think of money as a promise to do work later. In my analogy with the car I did create money myself by creating the IOU. It's is same in our current economy as the bank creating money and lending it to me. I do have to pay the bank back. But I do that by working and earning money and paying back the bank. On the island, I did it by doing work---climbing up the tree. Then my IOU was reduced just as if my bank loan was reduced. If there isn't enough money, then money becomes more valuable and this causes deflation.
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.
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.
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.
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.
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.
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.
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.
“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
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.
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.
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
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.
@@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.
6:33 "the government's bank, the federal reserve..." I don't think so. The "Federal Reserve" is a gross misnomer, it's a private institution, NOT a part of the government. So the national debt is owed to private concerns?!
Print up infinite amounts of worthless money and buy up real assets with it. Quite a scam, yeah? Ask Jefferson said, eventually they print up enough money to own the whole Earth. Somebody famously said "Robbing a bank is nothing compared to owning one"
"the government's bank" does not imply ownership, any more than "Gary's bank" implies that you own the bank you use. One of your premises is correct, in the US the government does not own the central reserve bank. The other - that her choice of words implied ownership, does not.
@gpdewitt ... and there is! The Federal Reserve IS NOT an American Entity, some refer to it as The London Connection. The book The Secrets of The Federal Reserve by Eustace Mullins delves into the point you made, which that IT IS NOT The Government's Bank. BTW that book was written in 1958 and by design was given a more boorish innocuous title to its name. In any event, the ingenious concept of The Federal Reserve in being able to print endless supplies of money, only works to control the global economy when that same currency is recognized as The World's Currency; also known as The Petro Dollar. In contrast to the USD being used as a global currency due to the arrangement the U.S. have with Saudi Arabia, there is now the BRICS new alliance and plan to establish their own currency. If Saudi Arabia jumps ship and aligns themselves with the nations of BRICS, we will be seeing an attempt to usurp the USD which WILL happen "if" the USD is no longer used as The Petro Dollar. Once that happens the paper that the USD is printed on will become worthless. In essence we may be witnessing in real time, the beginning of the end for America as we now know it, which will be inevitable, "barring a catalyst event such as WWIII". Hence the definition that "All Wars Are Based on Economics"
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.
@@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
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'.
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.
The best example was why rescue car companies who can’t produce free emission cars? Why rescued banks who knew it wasn’t sustainable(home loans)?why redo roads for fossil fuel cars rather then self driven cars? Why spend on electrical poles instead of looking into tunnels ??
"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.
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.
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.
Wonder what she thinks about modern monetary theory now…as the MMT proponents say, the only thing we have to worry about is inflation…you think? That’s like saying we can jump out of airplanes as much as we want, all we have to worry about is hitting the ground…
The difference is that MMT centers inflation as THE thing to avoid, whereas the CBO today tracks deficits which are unrelated to inflation. In other words, the CBO is saying "we can jump out of airplanes, as long as it's night time." If we can get Congress to focus on inflation, we would expose what spending contributes to inflation down the road, and what spending will not because we have the resources to provide the benefit we're spending on.
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.
I recall this speaker being interviewed on a morning show around 18 months ago. She said deficits don't matter in essence, I thought "you're right the don't matter until they do". Talk about short sighted - while the reason for our global inflation isn't entirely government debt spending it certainly was a major contributor. Now we are dealing with the results.
But that's not the case at all. The current global inflationary pressures are primarily due to energy and food price shocks (largely attributed to Russia's invasion of Ukraine and the associated wheat and other raw material supply interruptions) and the more general global supply chain issues post covid-lockdowns - particularly China's zero-covid policies having ripply effects around the world. In short, the increased rate at which average prices are rising this year compared with last year has very little to do with increased deficit spending by lots of governments during the pandemic.
@@JGS2295 what about the American invasion of the world? Oh no not Russia again. Keep printing so Zewlenskys wife can to shopping in Paris. How much $ have usa printed for Ukraine? USA most corrupt government
Bankers enjoy Debt, they charge Interest to remove it and then your Debt becomes their income. The Ponzi Scheme of Capital requires us to now believe in the Digital Dollars that we never see. Economists enjoy the concept, it pays them to discuss it. We the People can actually stop participating in their Fiat Dollar scheme that was implemented by Nixon at the request of the Rockefellers, who now have made the Family Bank into the Nations Biggest. The Wealthy seem to be the ones who use Money to manipulate the rest of the Population, by using money as leverage to buy Politicians. It seems pretty simple to promote an Oligarchy when they make us all play their Game......
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.
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.
Excellent talk Stephanie and great job in writing the book "The Deficit Myth"! One of the most stunning things I learned about modern economies is that money is created when someone takes out a loan and goes into debt. I was well into my forties when I learned this about modern money. At first I did not believe it and it is certainly not what I was taught about money in my younger days. Modern money is mostly about getting governments, corporations, businesses and people into debt and there is also quite a bit of smoke and mirrors involved. The idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. The cruel joke is that the money given out for the loans that make up this debt does not exist. The money is created by entering numbers into the borrowers account when the borrower takes out the loan. As the loan is paid back, the money that was created for the loan is eliminated and no longer exists, but the institutions that created the money get to keep the interest that was paid. So, the more debt there is, the more money there is and the more interest that is paid to these institutions. The other cruel joke is to get a loan like this, most of us have to put up some collateral, so if you default, they can take ownership of your collateral. So basically, they get your possessions of whatever collateral you put up for free and with no risk since the money they “lent” you did not exist. Supposedly, this has been determined to be a legitimate way to do business! If money really needs to be created by simply entering numbers into accounts or printing it into existence, remember I am saying “if”, then the government should be the only authority allowed to create this kind of money for the nation without “borrowing” any from the private banks since they don’t have it either and just simply create it the same way the government would. This way the government would not have a national debt and would not be paying interest on money that private banks did not have. On the international level, debt has been used as a tool to gain power, status and influence over other countries for centuries. In the past century, the US perfected this technique. In the 21st century, China and some other countries have also learned this trick. Again, the idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. So if the country defaults, the “lenders” can take ownership of the country’s resources that was used for collateral. They get whatever collateral the country put up for free and with no risk since the money they “lent” did not exist! This is how America and the US dollar has been able to be the dominant player in the world economy but is now being challenged by other countries that have learned the trick. The banks should only be allowed to lend a percentage of money that has been deposited by their customers. If the banks do not have enough money to lend to corporations and businesses so that they can expand or continue to innovate, then the government can create the money to lend them and the government can collect the interest for these loans. This would also reduce the amount of taxes that businesses, corporations and individuals would have to pay governments. For these ideas to work, governments would have to be democratic and elected in fair and free elections which does not always happen! The strategies used to keep the economy growing is by promoting and encouraging borrowing especially government borrowing which of course creates more government debt. The Gross Domestic Product (GDP) represents the size of the economy which is the amount of money the economy is worth. When the economy is continuously growing, the GDP is also continually growing. Similar to any addiction, more and more borrowing is needed to have the same effect on economic growth. When the government debt starts to become greater than the value of the Gross Domestic Product (GDP), technically it will no longer be possible to pay back the government debt. If it continues, the buying power of money will start to be significantly reduced and if the government debt starts to become several more times higher than the GDP, the money and financial systems will probably collapse. If this happens, the system is reset and the cycle is repeated. During the run up there will be some good times but, after the reset times will probably not be good and war is also a possibility. This cycle has been repeated continuously throughout history from the Chinese Dynasties to the Roman Empire to Germany after World War One and to Argentina, Venezuela and to many African, Asian and Middle Eastern nations in the 21st century. If America with the US Dollar can avoid this cycle, they would be the first. The thinking that the economy always has to grow for there to be innovation, progress and prosperity will eventually become a problem on a finite planet with limited resources. This may have worked well in the past when communities and societies did not know the scale of the planet and the environment. I think the focus know needs to be on sustainability not on growth! There needs to be flexibility in the system for the economy to be able to expand and contract and for a contraction to be considered normal and not a problem or a failure and for the contraction to be just as innovative and prosperous as the expansion. For this type of thinking to work, there needs to be some new economic models developed along with some new types of financial systems. If the academics along with the economist, engineers, politicians, corporations, capitalists and entrepreneurs can figure some new economic models that are based on sustainability instead of growth, I am sure there will be some noble prizes awarded. The way this can begin and at the same time improve peace and fairness, is when our business, government and academic leaders along with our wealthiest and brightest and smartest among us can learn to be much more truthful, honest and trustworthy and much less greedy and also learn to avoid being bribed and becoming criminals and with the rest of us start to understand that the wellbeing and happiness of others benefits everyone and is the bases for morality. Capitalism is the best system with the best ideas but some of the ideas of capitalism need to be amended with the primary focus and objective being sustainability not growth. If people are struggling to survive or risking their lives fighting wars, they will not care about anybody else or about the damage and devastation of towns, cities and communities including the planet’s environment. They will also be much more aggressive and willing to commit crimes and behave in violent ways with animosity and hatred toward others that don’t look like them or do not share the same believes and values. I do not agree with all the ideas in these books, such as a basic government income for everyone, but “Doughnut Economics” by Kate Raworth, “Prosperity without Growth” by Tim Jackson, “Confessions of an Economic Hit Man” by John Perkins and "The Deficit Myth" by Stephanie Kelton and organizations like “The Centre for Advancements of the Steady State Economy” are promising developments.
Your views are deeply flawed and seem to be based on lack of understanding. How are loans free of risk? Borrower can always default while collateral's value can always decrease and there is therefore always risk. Hence the interest. Also, countries regularly owe more than the value of their GDP and yet are still comfortably paying back their debt, nothing's collapsing - practically all of G7 has been in this position for decades. Economic growth is essential for this to work though. It is not how you survive without growth (you can't) but how you define its value components.
@@MartinHadek Thanks for your reply but, I think you need to review and do some homework on the current economic models and how modern money is created, controlled and managed. ”How are loans free of risk? Borrower can always default while collateral's value can always decrease and there is therefore always risk. Hence the interest” Please correct me if I am misunderstanding this. If the lender creates the money by entering numbers into the borrower’s account and then the money being paid back is eliminated from the lender's account, how can the lender have any risk if the lender did not have the money on the first place? And to add insult, the lender gets to keep the interest! And if the borrower defaults, regardless of what value it may have, the lender also gets the collateral! “Also, countries regularly owe more than the value of their GDP and yet are still comfortably paying back their debt, nothing's collapsing - practically all of G7 has been in this position for decades.” Not true. Why do you think one of the major reasons was for introducing the Euro back in 1999? Most of the currencies the Euro replaced were headed for a default and the Euro was a way to reset them. Also, when all was said and done, the cost of living relative to incomes was higher with the Euro than it was with the currencies it replaced. The cycle of debt increasing much more than the GDP resulting in money becoming worthless has been repeated continuously throughout history from the Chinese Dynasties to the Roman Empire to Germany after World War One and to Argentina, Venezuela and to many African, Asian and Middle Eastern nations in the 21st century. If America with the US Dollar can avoid this cycle, they would be the first”. ”Economic growth is essential for this to work though. It is not how you survive without growth (you can't) but how you define its value components” This may have worked well in the past when communities and societies did not know the scale of the planet and the environment. I think there needs to be some new economic models developed along with some new types of financial systems focused on sustainability not on growth! I also hope that you can understand that any type of biological life or ecological system here on earth cannot continue to keep growing. When life exists in a space that uses resources that cannot be renewed, when the space and the resources become contaminated and toxic, life will not be able to exist. This is how cancer cells eventually end up killing themselves in the human body. They use up all their resources for life and end up destroying the environment they live in which unfortunately also kills the human body that they were living in. I am sure that I still have a lot to learn and maybe it is not possible for humans to live sustainably on this planet and are destine to become extinct sooner without the time needed to possibly learn how to avoid this outcome. Maybe the advancements in technology such as artificial intelligence can figure out how the paradox of growth can be solved. Maybe the bigger challenge is for our leaders along with our wealthiest and brightest and smartest among us to start learning how to be much more truthful, honest and trustworthy so that the level of respect can rise to a point where humans will no longer be inspired to lie, commit crimes and make up stories about magical authorities that live in the sky and nations will no longer feel the need to spy on each other and to continue manufacturing weapons that can wipe out most of the life on this planet and from there start working towards reducing and eventually stopping the manufacturing of any weapons of war.
Let's end this here. If you think money to cover public debt are just numbers entered on keyboards then we don't have much to discuss (as any self-respecting Greek would tell you - Euro has little to do with it other than keeping a few macroindicators in check ;-). I agree with this TED lady that deficits may not necessarily be a bad thing if spent on good long-term investments that will generate treasury incomes as they're essentially covered with uncollected taxes (and thus correspondingly advantageously priced as bonds in money markets - they're low risk when issued by big economies) but stretching it into magical thinking is dangerous and this is where I'm afraid you've already ventured.
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.
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.
mmt is not a theory. it is straight up just how the us government works. if people are still doubting it, they are probably just forcing themselves to think that way just so they can rationalize the tax they paid last year.
Never have I heard codswallop so eloquently presented. The problem with that which many academics, or in this case an economist, propose, is that it is founded in abstraction, cloud cuckoo land if you will, and is often never tested in objective reality. In those cases when it is tested, and proven wrong, people such as this , especially in the professions,have eloquent explanations as to why it did not work as expected. I, as a carpenter, often propose to my academic friends, that they develop a model, or theory, as to what it feels like to hit one's thumb with a hammer, and then to test the validity of that theory by hitting one's thumb with a hammer. So, in this case, it matters little if the government arranges for vast sums of the abstraction called money to slosh around, if the production of physical goods does not keep pace. Another thing...... is that nobody, and especially economists, have noticed, seemingly, the rise in socio-economic parasites, notably the professions and it's effect on the economy. In short, these get to consume without producing.
Two years after the COVID spending she lauds so embarrassingly we have record inflation. Inflation has been the result of these policies in every economy that it has ever been tried. If you want to destroy a country, implement this ploicy.
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
This is what happens when basic human common sense and economic prudence is overridden by pseudo intellectualism and fundamentally leftist policy. I think the very learned economist forgot about the problem of inflation and how common people that she is referring to suffer because of it. In this global financial system, if a country is overleveraged, Sri Lanka showed us what would happen. So for god's sake don't let basic human common sense be forgotten while thinking about economics. Yes. The government must spend on infrastructure and other areas for the betterment of enterprise, people and society.. however.. everything must be paid for. There's no alternative
You could've made your comment shorter by just writing "I don't understand Modern Monetary Theory". Appealing to 'common sense' in a hyper-complex research discipline like macro-economics doesn't make any sense.
@@jackbrons4904 Modern monetary theory is bullshit. Keep letting them take money right out of your pocket with inflation year after year while they lie to your face telling you inflation is under control. It's really showing us how much you understand mmt.
There are lunatics in economics as well as any other discipline. And “experts” are constantly wrong. If in doubt look at how the “experts” handled COVID.
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.
@@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.
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.
She’s correct about one thing that’s for sure. There’s a finite amount of resources. Go get a job to support your family and then work forty years plus to do it during your best years. Then somehow manage to save a little meaning you’re driving a busted up truck, no vacations, lost weekends and birthdays, arthritis and a bad back. Then sit back and watch what little you’ve been able cobble together lose half it’s value and the life you wanted to leave your kids with is gone. Pissed off doesn’t cover it.
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.
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.
Good talk, if the goal is to enrichen the Banksters that we pay the interest to, for the deficits/debt we create. Asset-based currency prevents Bankstering.
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.
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
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.
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 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.
"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
If the surplus is good for one group of benefactors, then equally true is it was bad for another group. The "other group" is the deficit, that needs to be filled.
@@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
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.
MMT is like saying to someone with a 30 minute commute to work "You're the one driving. You can get to work in any amount of time you want. You just have to drive faster. If you really wanted to you could get there in 5 minutes. You are wasting way too much time commuting to work" When you point out that you would have to drive at 300 miles per hour and even if your car could go that fast it would be grossly unsafe the MMT proponent laughs and says "Unsafe? You're the one driving. You just need to apply the brakes at the right moment, steer around all those children getting on the bus, and avoid that really bad pothole at the end of your street all of which is super easy, barely an inconvenience. You're failure to drive to work in 5 minutes is really a failure of understanding how commuting works"
If you're talking about inflation, we do probably need to take on corporate power. As we've seen the last few years, the largest corporations are more than willing to cause inflation. It's not because there's 'too much money', it's because we refuse to take out the toll booths along the way.
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.
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.
Dude, if you have $100 and the gov just printed 5% more currency this year to pay their bills, your $100 just lost $5 in value because there's 5% more dollars now representing the same amount of goods in the economy. You still have $100 in your hand but you can buy 5% less goods with it that you could last year. If you don't think that's a form of taxation, you're just a sucker.
That is false. If we printed $20 trillion and then set it on fire or locked it in a room, would Walmart raise their prices the next day? Of course not. The largest corporations have been making record profits. They are obviously the ones in control and causing the inflation. People used to understand this basic fact.
@@nlewis-vg3kc except gov doesn't print money to set it on fire that would be pointless, it prints it to pay their bills which dilutes the monetary mass, i.e. more money now represent the same amount of goods and services produced which means the same dollar now has less purchasing power. this is econ 101 and this woman knows this she's not stupid, she's only betting that you are
@@UGPepe She is stupid enough for going on Ted talk because unlike the Ted audience her usual audience is financially challenged people who just believe what she says. But now they are few to be seen in the Ted audience and viewers.
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.
"... 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.
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.
Most economists don't agree with her position. They understand that deficits are sometime necessary but they don't believe they should be limitless. The more money you create the more inflationary pressures you will have down the road. This is empirical science.
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 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.''
I didn't hear any arguments for her position on government deficits. It was just assertions. It needs evidence, examples, and tie this with logical arguments.
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.
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.
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".
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
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.
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
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.
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.
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.
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.
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.
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.
When someone dismisses a question by saying, "It's the wrong question" (2:55) what that person is really saying is, "You are asking a question that I don't want to answer, therefore you are wrong for asking it." One of the first thing students will be told in an introductory economics class is that "There is no such thing as a free lunch." The notion of something for nothing is a fallacy, and deficits will ultimately have to be paid back in some way; therefore, questions as to how repayments will be made are legitimate and should be fully addressed.
Yes all deficits must be paid back as they are when the Treasury Bonds that are initially sold to fund borrowing that in turn fills the shortfall in the budget mature and are paid out. If they were not paid out nobody would have bought them in the first place.
This is the basic misunderstanding. The national debt and the deficits do not have to be paid back. It's more about increasing and decreasing the money supply when necessary. The national debt is really just a record of how much money we've created.
Here's my little analogy. Say that you and I are on an island and we each have $100. That's the whole economy. Now I say I like your shoes and would you like to sell them. You say OK and sell them to me for $10. Then you say you'd like a coconut but your back hurts and can't climb the tree to get one so will I do it for you. You say you'll pay me $20. So I say OK and climb the tree and get you a coconut. That's all well and good.
Now you decide that you don't need your car anymore and ask me would I like to buy it? I say OK I'd like it. How much? you say $2000. I say not only don't I have $2000 but there isn't $2000 in the whole economy so it's not possible. But I have an idea. On a piece of paper I'll write an IOU for $2000 and give it to you for the car. Then each time I climb the tree to get a coconut for you we'll scratch $20 off of the IOU.
Obviously the IOU is the same thing as money and I just created it. But the real point is, there needs to be enough money in the economy to accommodate all the transactions that people need to do. And the size of the economy can grow for a number of reasons. For one, the population grows. Also if it's reported that the GDP has grown say 3% over last year then that means there's more productivity and more transactions. So the government (or FED, whatever) needs to increase the money supply perhaps permanently. The government is not so worried about the money it created. The government is primarily concerned with whether we're being as productive as we can be or whether there's not enough production causing inflation. It just adjusts the money supply to stay within inflationary or deflationary spirals or to get us out of a recession or to mitigate a crisis.
So as long as productivity increases over time the money supply needs to increase to accommodate it. So we run a deficit to do this. And naturally we will run deficits more often than surpluses. (As Robert Reich likes to say, this is why deficits don't matter except as related to GDP.) The national debt is not really a debt that needs to be paid back. It's just a record of how much money we created and that we needed to create. Yes we pay interest on the debt, but again, we could just create more money to pay that. The concern would not be that we're in debt even further and have to pay back even more. The concern would be that we're increasing the money supply too much and causing inflation.
@@SolidAir54321 For many years I have heard the idea that "deficits don't matter" bandied about, but this notion doesn't survive scrutiny when some very obvious questions are asked. For example: Do we pay interest on this borrowed money? Given that several sources clearly indicate that we are now paying record amounts of interest on our national debt, then it is clear that Deficits Do Matter. If we had not been required to pay that interest on the country's debt, then could the money we are now paying in interest have instead been spent on other needs? If yes, then Deficits Do Matter. Would having little or no national debt send a message to our foes that we would be in a strong financial position to afford a lengthy war? If yes, then Deficits Do Matter. Does having little or no national debt contribute to the strength of the dollar against other currencies? If yes, then Deficits Do Matter. Are we not taught early on in the study of economics that "There is no free lunch."? If the perceived unimportance of a national debt is tacit to "something for nothing", then Deficits Do Matter. Very often the national debt is defended by the notion that the debt is compensated for by subsequent economic growth, and that we are simply borrowing against future prosperity. So long as any of our national expenditures are made for things that do not contribute to national economic growth, then Deficits Do Matter, Worse yet, the notion of debt-funded future prosperity is predicated upon the idea that the economy can grow infinitely. If this presupposition is a fallacy (and it is) then Deficits Do Matter. Until ALL of these questions are fully addressed, Deficits Do Matter. Those who think otherwise are simply not looking forward far enough to recognize that the butcher's bill will eventually come due, and at that point, it won't matter how big our GDP is.
@@SolidAir54321 Your first premiss is wrong. The national debt is not just record.
You have not thought through your response well at all.
The national debt is all borrowed money. Much of that money is the investment of pension funds (when they bought the Treasury securities) and those pension funds must be paid back to provide for people's retirement. Much of the other is money borrowed from overseas investors and they want their money back on maturity of the Treasury securities that were sold to them.
Those Treasury securities all mature in time and must be paid of then.
Your thinking about the car purchase is infantile because anyone with good enough income, record of financial competence and a low risk profile can get loan from a private bank. The bank will create new money as loan which people are forced to pay back with some interest.
There is no need for an existing pool of money to be in the economy because all of the sovereign money today is created as credit and debt.
Ther is no restriction of growth in the economy caused by a lack of money because new money created by private banks as credit is available and there is no fixed quantity of money for every purchase so the prices adjust according to how much money is avilable to people and how much they are prepared to pay. That is the adjusting mechanism.
@@Rob-fx2dw I don't think we are disagreeing. When we borrow money we do need to pay it back. But we can create money to pay the borrower. So borrowing and creating are kind of the same thing. But we need to increase our productivity to account for the creation of that money. If you like to say it this way: we need to work more to pay it back. But if we DO produce more by increasing GDP or population or just being more productive then we DO pay it back. This can extend to overseas investors who essentially "lend" money. We can create money to pay them back but the problem is that they may then spend that money in the U.S. economy causing inflation. The problem is not that we don't have enough money. The problem is whether we can produce enough. So if production always increases along with the money we create (i.e. borrow), and at the same amount, then that's OK. I like to think of money as a promise to do work later.
In my analogy with the car I did create money myself by creating the IOU. It's is same in our current economy as the bank creating money and lending it to me. I do have to pay the bank back. But I do that by working and earning money and paying back the bank. On the island, I did it by doing work---climbing up the tree. Then my IOU was reduced just as if my bank loan was reduced. If there isn't enough money, then money becomes more valuable and this causes deflation.
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.
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.
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.
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.
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.
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.
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.
“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
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.
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.
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
“I’m one of a handful of economists “
On the government pay roll.
BITCOIN OR GO DOWN WITH THE SHIP
*toilet roll
Little knowledge is a dangerous thing.
Going with the "69" analogy during a public presentation was a bold choice.
If deficit spending isn’t a problem in the US. Why tax the citizens at all? Why not create all the money for the budget.
This Ted Talk is insane. Theft is not theft if you look at it from a different angle.
MMT is to fiat currency what sub prime loans were to mortgages
BITCOIN
Lol no
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.
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.
6:33 "the government's bank, the federal reserve..." I don't think so. The "Federal Reserve" is a gross misnomer, it's a private institution, NOT a part of the government. So the national debt is owed to private concerns?!
Print up infinite amounts of worthless money and buy up real assets with it. Quite a scam, yeah? Ask Jefferson said, eventually they print up enough money to own the whole Earth.
Somebody famously said "Robbing a bank is nothing compared to owning one"
"the government's bank" does not imply ownership, any more than "Gary's bank" implies that you own the bank you use. One of your premises is correct, in the US the government does not own the central reserve bank. The other - that her choice of words implied ownership, does not.
Bingo, Stephanie Kelton believes the US govt can print money. it Cant
@gpdewitt ... and there is! The Federal Reserve IS NOT an American Entity, some refer to it as The London Connection. The book The Secrets of The Federal Reserve by Eustace Mullins delves into the point you made, which that IT IS NOT The Government's Bank. BTW that book was written in 1958 and by design was given a more boorish innocuous title to its name. In any event, the ingenious concept of The Federal Reserve in being able to print endless supplies of money, only works to control the global economy when that same currency is recognized as The World's Currency; also known as The Petro Dollar. In contrast to the USD being used as a global currency due to the arrangement the U.S. have with Saudi Arabia, there is now the BRICS new alliance and plan to establish their own currency. If Saudi Arabia jumps ship and aligns themselves with the nations of BRICS, we will be seeing an attempt to usurp the USD which WILL happen "if" the USD is no longer used as The Petro Dollar. Once that happens the paper that the USD is printed on will become worthless. In essence we may be witnessing in real time, the beginning of the end for America as we now know it, which will be inevitable, "barring a catalyst event such as WWIII". Hence the definition that "All Wars Are Based on Economics"
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.
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
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'.
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.
The best example was why rescue car companies who can’t produce free emission cars? Why rescued banks who knew it wasn’t sustainable(home loans)?why redo roads for fossil fuel cars rather then self driven cars? Why spend on electrical poles instead of looking into tunnels ??
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.
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
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.
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.
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.
Wonder what she thinks about modern monetary theory now…as the MMT proponents say, the only thing we have to worry about is inflation…you think? That’s like saying we can jump out of airplanes as much as we want, all we have to worry about is hitting the ground…
Exactly!😂
The difference is that MMT centers inflation as THE thing to avoid, whereas the CBO today tracks deficits which are unrelated to inflation. In other words, the CBO is saying "we can jump out of airplanes, as long as it's night time." If we can get Congress to focus on inflation, we would expose what spending contributes to inflation down the road, and what spending will not because we have the resources to provide the benefit we're spending on.
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.
I have been trying to understand the deficit for a long time. This is a solid start for me.
Dream on ! It's a total garbage fairytale defies historical and present reality.
I recall this speaker being interviewed on a morning show around 18 months ago. She said deficits don't matter in essence, I thought "you're right the don't matter until they do". Talk about short sighted - while the reason for our global inflation isn't entirely government debt spending it certainly was a major contributor. Now we are dealing with the results.
I would look to corporate greed, consolidation, and our lack of robust antitrust laws over the past 50 years as the main culprit.
But that's not the case at all. The current global inflationary pressures are primarily due to energy and food price shocks (largely attributed to Russia's invasion of Ukraine and the associated wheat and other raw material supply interruptions) and the more general global supply chain issues post covid-lockdowns - particularly China's zero-covid policies having ripply effects around the world.
In short, the increased rate at which average prices are rising this year compared with last year has very little to do with increased deficit spending by lots of governments during the pandemic.
@@JGS2295 what about the American invasion of the world? Oh no not Russia again. Keep printing so Zewlenskys wife can to shopping in Paris. How much $ have usa printed for Ukraine? USA most corrupt government
Bankers enjoy Debt, they charge Interest to remove it and then your Debt becomes their income.
The Ponzi Scheme of Capital requires us to now believe in the Digital Dollars that we never see.
Economists enjoy the concept, it pays them to discuss it.
We the People can actually stop participating in their Fiat Dollar scheme that was implemented by Nixon at the request of the Rockefellers, who now have made the Family Bank into the Nations Biggest.
The Wealthy seem to be the ones who use Money to manipulate the rest of the Population, by using money as leverage to buy Politicians.
It seems pretty simple to promote an Oligarchy when they make us all play their Game......
@@javierolguin2502 Was that reply to Janie Smith sufficient?
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.
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.
ARGENTINA
Excellent talk Stephanie and great job in writing the book "The Deficit Myth"!
One of the most stunning things I learned about modern economies is that money is created when someone takes out a loan and goes into debt. I was well into my forties when I learned this about modern money. At first I did not believe it and it is certainly not what I was taught about money in my younger days. Modern money is mostly about getting governments, corporations, businesses and people into debt and there is also quite a bit of smoke and mirrors involved. The idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. The cruel joke is that the money given out for the loans that make up this debt does not exist. The money is created by entering numbers into the borrowers account when the borrower takes out the loan. As the loan is paid back, the money that was created for the loan is eliminated and no longer exists, but the institutions that created the money get to keep the interest that was paid. So, the more debt there is, the more money there is and the more interest that is paid to these institutions. The other cruel joke is to get a loan like this, most of us have to put up some collateral, so if you default, they can take ownership of your collateral.
So basically, they get your possessions of whatever collateral you put up for free and with no risk since the money they “lent” you did not exist. Supposedly, this has been determined to be a legitimate way to do business! If money really needs to be created by simply entering numbers into accounts or printing it into existence, remember I am saying “if”, then the government should be the only authority allowed to create this kind of money for the nation without “borrowing” any from the private banks since they don’t have it either and just simply create it the same way the government would. This way the government would not have a national debt and would not be paying interest on money that private banks did not have.
On the international level, debt has been used as a tool to gain power, status and influence over other countries for centuries. In the past century, the US perfected this technique. In the 21st century, China and some other countries have also learned this trick. Again, the idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. So if the country defaults, the “lenders” can take ownership of the country’s resources that was used for collateral. They get whatever collateral the country put up for free and with no risk since the money they “lent” did not exist! This is how America and the US dollar has been able to be the dominant player in the world economy but is now being challenged by other countries that have learned the trick.
The banks should only be allowed to lend a percentage of money that has been deposited by their customers. If the banks do not have enough money to lend to corporations and businesses so that they can expand or continue to innovate, then the government can create the money to lend them and the government can collect the interest for these loans. This would also reduce the amount of taxes that businesses, corporations and individuals would have to pay governments. For these ideas to work, governments would have to be democratic and elected in fair and free elections which does not always happen!
The strategies used to keep the economy growing is by promoting and encouraging borrowing especially government borrowing which of course creates more government debt. The Gross Domestic Product (GDP) represents the size of the economy which is the amount of money the economy is worth. When the economy is continuously growing, the GDP is also continually growing. Similar to any addiction, more and more borrowing is needed to have the same effect on economic growth. When the government debt starts to become greater than the value of the Gross Domestic Product (GDP), technically it will no longer be possible to pay back the government debt. If it continues, the buying power of money will start to be significantly reduced and if the government debt starts to become several more times higher than the GDP, the money and financial systems will probably collapse. If this happens, the system is reset and the cycle is repeated. During the run up there will be some good times but, after the reset times will probably not be good and war is also a possibility. This cycle has been repeated continuously throughout history from the Chinese Dynasties to the Roman Empire to Germany after World War One and to Argentina, Venezuela and to many African, Asian and Middle Eastern nations in the 21st century. If America with the US Dollar can avoid this cycle, they would be the first.
The thinking that the economy always has to grow for there to be innovation, progress and prosperity will eventually become a problem on a finite planet with limited resources. This may have worked well in the past when communities and societies did not know the scale of the planet and the environment. I think the focus know needs to be on sustainability not on growth! There needs to be flexibility in the system for the economy to be able to expand and contract and for a contraction to be considered normal and not a problem or a failure and for the contraction to be just as innovative and prosperous as the expansion. For this type of thinking to work, there needs to be some new economic models developed along with some new types of financial systems.
If the academics along with the economist, engineers, politicians, corporations, capitalists and entrepreneurs can figure some new economic models that are based on sustainability instead of growth, I am sure there will be some noble prizes awarded.
The way this can begin and at the same time improve peace and fairness, is when our business, government and academic leaders along with our wealthiest and brightest and smartest among us can learn to be much more truthful, honest and trustworthy and much less greedy and also learn to avoid being bribed and becoming criminals and with the rest of us start to understand that the wellbeing and happiness of others benefits everyone and is the bases for morality. Capitalism is the best system with the best ideas but some of the ideas of capitalism need to be amended with the primary focus and objective being sustainability not growth.
If people are struggling to survive or risking their lives fighting wars, they will not care about anybody else or about the damage and devastation of towns, cities and communities including the planet’s environment. They will also be much more aggressive and willing to commit crimes and behave in violent ways with animosity and hatred toward others that don’t look like them or do not share the same believes and values.
I do not agree with all the ideas in these books, such as a basic government income for everyone, but “Doughnut Economics” by Kate Raworth, “Prosperity without Growth” by Tim Jackson, “Confessions of an Economic Hit Man” by John Perkins and "The Deficit Myth" by Stephanie Kelton and organizations like “The Centre for Advancements of the Steady State Economy” are promising developments.
This comment is it's own TEDTalk. 😊
Man, well put! So many of us simple folks are just starting to realise this... giant scam. Thanks for putting up your thoughts here
Your views are deeply flawed and seem to be based on lack of understanding. How are loans free of risk? Borrower can always default while collateral's value can always decrease and there is therefore always risk. Hence the interest. Also, countries regularly owe more than the value of their GDP and yet are still comfortably paying back their debt, nothing's collapsing - practically all of G7 has been in this position for decades. Economic growth is essential for this to work though. It is not how you survive without growth (you can't) but how you define its value components.
@@MartinHadek Thanks for your reply but, I think you need to review and do some homework on the current economic models and how modern money is created, controlled and managed.
”How are loans free of risk? Borrower can always default while collateral's value can always decrease and there is therefore always risk. Hence the interest”
Please correct me if I am misunderstanding this. If the lender creates the money by entering numbers into the borrower’s account and then the money being paid back is eliminated from the lender's account, how can the lender have any risk if the lender did not have the money on the first place? And to add insult, the lender gets to keep the interest! And if the borrower defaults, regardless of what value it may have, the lender also gets the collateral!
“Also, countries regularly owe more than the value of their GDP and yet are still comfortably paying back their debt, nothing's collapsing - practically all of G7 has been in this position for decades.”
Not true. Why do you think one of the major reasons was for introducing the Euro back in 1999? Most of the currencies the Euro replaced were headed for a default and the Euro was a way to reset them. Also, when all was said and done, the cost of living relative to incomes was higher with the Euro than it was with the currencies it replaced.
The cycle of debt increasing much more than the GDP resulting in money becoming worthless has been repeated continuously throughout history from the Chinese Dynasties to the Roman Empire to Germany after World War One and to Argentina, Venezuela and to many African, Asian and Middle Eastern nations in the 21st century. If America with the US Dollar can avoid this cycle, they would be the first”.
”Economic growth is essential for this to work though. It is not how you survive without growth (you can't) but how you define its value components”
This may have worked well in the past when communities and societies did not know the scale of the planet and the environment. I think there needs to be some new economic models developed along with some new types of financial systems focused on sustainability not on growth!
I also hope that you can understand that any type of biological life or ecological system here on earth cannot continue to keep growing. When life exists in a space that uses resources that cannot be renewed, when the space and the resources become contaminated and toxic, life will not be able to exist. This is how cancer cells eventually end up killing themselves in the human body. They use up all their resources for life and end up destroying the environment they live in which unfortunately also kills the human body that they were living in.
I am sure that I still have a lot to learn and maybe it is not possible for humans to live sustainably on this planet and are destine to become extinct sooner without the time needed to possibly learn how to avoid this outcome. Maybe the advancements in technology such as artificial intelligence can figure out how the paradox of growth can be solved.
Maybe the bigger challenge is for our leaders along with our wealthiest and brightest and smartest among us to start learning how to be much more truthful, honest and trustworthy so that the level of respect can rise to a point where humans will no longer be inspired to lie, commit crimes and make up stories about magical authorities that live in the sky and nations will no longer feel the need to spy on each other and to continue manufacturing weapons that can wipe out most of the life on this planet and from there start working towards reducing and eventually stopping the manufacturing of any weapons of war.
Let's end this here. If you think money to cover public debt are just numbers entered on keyboards then we don't have much to discuss (as any self-respecting Greek would tell you - Euro has little to do with it other than keeping a few macroindicators in check ;-). I agree with this TED lady that deficits may not necessarily be a bad thing if spent on good long-term investments that will generate treasury incomes as they're essentially covered with uncollected taxes (and thus correspondingly advantageously priced as bonds in money markets - they're low risk when issued by big economies) but stretching it into magical thinking is dangerous and this is where I'm afraid you've already ventured.
Perhaps the most unconvincing TED talk I have ever seen
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.
“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
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.
She is what is wrong with America. The party is great until someone has to pay the bar bill. Stunning.
Did you listen to the talk, sir?
mmt is not a theory. it is straight up just how the us government works. if people are still doubting it, they are probably just forcing themselves to think that way just so they can rationalize the tax they paid last year.
Never have I heard codswallop so eloquently presented. The problem with that which many academics, or in this case an economist, propose, is that it is founded in abstraction, cloud cuckoo land if you will, and is often never tested in objective reality. In those cases when it is tested, and proven wrong, people such as this , especially in the professions,have eloquent explanations as to why it did not work as expected. I, as a carpenter, often propose to my academic friends, that they develop a model, or theory, as to what it feels like to hit one's thumb with a hammer, and then to test the validity of that theory by hitting one's thumb with a hammer. So, in this case, it matters little if the government arranges for vast sums of the abstraction called money to slosh around, if the production of physical goods does not keep pace. Another thing...... is that nobody, and especially economists, have noticed, seemingly, the rise in socio-economic parasites, notably the professions and it's effect on the economy. In short, these get to consume without producing.
I'm a bricklayer, and I totally agree with Ms Skelton. Does that make me a bad tradesman?
@briskyoungploughboy how's that inflation treating you?
Two years after the COVID spending she lauds so embarrassingly we have record inflation. Inflation has been the result of these policies in every economy that it has ever been tried. If you want to destroy a country, implement this ploicy.
Ideas like this are how governments collapse and countries fall into ruin.
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"?
Is she an advisor for FED? Best TED talk so far. Let us see how government debt will be paid for in a few years? Hope debt will not be paid with bomb
This is what happens when basic human common sense and economic prudence is overridden by pseudo intellectualism and fundamentally leftist policy. I think the very learned economist forgot about the problem of inflation and how common people that she is referring to suffer because of it. In this global financial system, if a country is overleveraged, Sri Lanka showed us what would happen. So for god's sake don't let basic human common sense be forgotten while thinking about economics. Yes. The government must spend on infrastructure and other areas for the betterment of enterprise, people and society.. however.. everything must be paid for. There's no alternative
You have it right. She briefly mentions inflation then drops the subject. This is propaganda expounded by a fool to confuse morons.
You could've made your comment shorter by just writing "I don't understand Modern Monetary Theory". Appealing to 'common sense' in a hyper-complex research discipline like macro-economics doesn't make any sense.
Dear TINA-ist, Madam Thatcher coined that disingenuous phrase. Please re-read your geo-political economics boosk. Please read my comment above.
Be well.
@@jackbrons4904 Modern monetary theory is bullshit. Keep letting them take money right out of your pocket with inflation year after year while they lie to your face telling you inflation is under control. It's really showing us how much you understand mmt.
"Monetairy systems " are a fake man made construction, it's not a law of nature. 😊
Now we know why we have high inflation. Since when did economists teach that lunches are free?
There are lunatics in economics as well as any other discipline. And “experts” are constantly wrong. If in doubt look at how the “experts” handled COVID.
Yes. Not how do you finance that but how do you RESOURCE that?
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.
If she's an expert in monetary policy we are all in big trouble.
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.
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.
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
She’s correct about one thing that’s for sure. There’s a finite amount of resources.
Go get a job to support your family and then work forty years plus to do it during your best years. Then somehow manage to save a little meaning you’re driving a busted up truck, no vacations, lost weekends and birthdays, arthritis and a bad back. Then sit back and watch what little you’ve been able cobble together lose half it’s value and the life you wanted to leave your kids with is gone. Pissed off doesn’t cover it.
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.
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.
Good talk, if the goal is to enrichen the Banksters that we pay the interest to, for the deficits/debt we create. Asset-based currency prevents Bankstering.
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.
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
And what percentage of the wild government spending was lost to fraud? And how much damage did that do to the average taxpayer?
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.
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.
The mother of all gaslighting.
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.
"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?
If the surplus is good for one group of benefactors, then equally true is it was bad for another group. The "other group" is the deficit, that needs to be filled.
Economy in Imaginationland is beautiful.
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
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.
MMT is like saying to someone with a 30 minute commute to work "You're the one driving. You can get to work in any amount of time you want. You just have to drive faster. If you really wanted to you could get there in 5 minutes. You are wasting way too much time commuting to work" When you point out that you would have to drive at 300 miles per hour and even if your car could go that fast it would be grossly unsafe the MMT proponent laughs and says "Unsafe? You're the one driving. You just need to apply the brakes at the right moment, steer around all those children getting on the bus, and avoid that really bad pothole at the end of your street all of which is super easy, barely an inconvenience. You're failure to drive to work in 5 minutes is really a failure of understanding how commuting works"
If you're talking about inflation, we do probably need to take on corporate power. As we've seen the last few years, the largest corporations are more than willing to cause inflation. It's not because there's 'too much money', it's because we refuse to take out the toll booths along the way.
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.
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.
Dude, if you have $100 and the gov just printed 5% more currency this year to pay their bills, your $100 just lost $5 in value because there's 5% more dollars now representing the same amount of goods in the economy. You still have $100 in your hand but you can buy 5% less goods with it that you could last year. If you don't think that's a form of taxation, you're just a sucker.
That is false. If we printed $20 trillion and then set it on fire or locked it in a room, would Walmart raise their prices the next day? Of course not. The largest corporations have been making record profits. They are obviously the ones in control and causing the inflation. People used to understand this basic fact.
@@nlewis-vg3kc except gov doesn't print money to set it on fire that would be pointless, it prints it to pay their bills which dilutes the monetary mass, i.e. more money now represent the same amount of goods and services produced which means the same dollar now has less purchasing power. this is econ 101 and this woman knows this she's not stupid, she's only betting that you are
@@UGPepe She is stupid enough for going on Ted talk because unlike the Ted audience her usual audience is financially challenged people who just believe what she says. But now they are few to be seen in the Ted audience and viewers.
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.
Extremely dangerous theory and it is wrong. Inflation is taxation.
"... 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?
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.
Most economists don't agree with her position. They understand that deficits are sometime necessary but they don't believe they should be limitless. The more money you create the more inflationary pressures you will have down the road. This is empirical science.
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 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
I truly hope everyone understands the meaning of gaslighting.
I didn't hear any arguments for her position on government deficits. It was just assertions. It needs evidence, examples, and tie this with logical arguments.
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.
9:02, Lets just flip the graph upside down! Problem solved :)
Where does this stop?
Runaway inflation.
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.
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
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".
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