Mosler's not the only one describing a scenario where the feds actually cause inflation by raising rates. I would kill to hear Mosler and Jeff Snider debate each other to see where they might agree or disagree
Right. Exactly. I've also heard Gromen describe this situation as well. We should get em all around a table. These arguments all put together explain some of my observations in the markets over the years and they really changed my views on things.
Ya but listen to the wealthion channel or now adam taggart thoughtful money channel. He points out like 20% of corporations just pay the interest on their debt and now this year bankruptcy started tk pickup. Once you get enough bankruptcies going you’ll eventually get deflation as bad debt gets erased. That contracts money supply, but creative destruction also allows for better use of money tk be identified or for money tk be better utilized rather than nursing along bad ideas. That’s the big problem I see with the government picking winners and losers with green energy or now with high speed trains. It may cost society a ton of money if projects are wasted. Japan and France has fast trains and here cali struggles now for 15 years.
@@koltoncrane3099Japan's problems are demographic related, capitalism and paying private savers interest on their money requires a constant increasing population, Japan's working population is decreasing badly.
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One thing I felt was missing from the interview was the answer to where the source of funds is for the IOR paid while the fees balance sheet is somewhat shrinking. In that case funds have to come from the economy which is counter to his argument of stimulative IOR.
Mosler doesn't seem to address the fact that inflation is caused by a rapid increase in credit. Not interest rates. Higher rates compel saving, not borrowing.
He explains that when the government pays a $100,000 bond with 1% interest, they pay out $101,000 So if you increase interest rates to 20% suddenly the bond payout is $120,000 i.e. more dollars
@@Richest_Person_in_the_World Sure, but they only do that to compensate investors for very high inflation. That 20% isn't going to buy you much extra. The inflation is already occuring and if a government doesn't offer rates investors want they will struggle to sell debt. So perhaps Mosler advocates financial repression?
Retiring in 20 years? Due to inflation, you may need upwards of $2.6 million to maintain your existing lifestyle, with the ongoing effects of high inflation, lower forecasted stock market returns, and stagnant wages, achieving a secure early retirement could be more challenging than ever before.
While the resources are very important like having a sufficient nest egg, real estate, pensions social security, insurances, etc. It is also important to think about the burn rate = cost of living. You could live much much better if you live much of the time in a more affordable area - another state or country or in the rural areas. Either save more money with a basic life or live at a higher lifestyle for the same amount of money.
Pensions are indeed a big problem when the government guaranteeing them does not understand the monetary system. No one should or needs be forced to save a dime for retirement. The pension cheques can be paid when they are due and boosted to a living income. What "pays for" pensions *_in real terms_* is not the currency, it is the output of workers today. No amount of currency will purchase goods that are not for sale.
Most of the inflation though they didn't discuss is precisely why high rates will hurt u.s., because you're driving wealth inequality even further and the rich have been monopolizing virtually every industry through private equity groups. Monopolies don't participate in capitalism they instead charge rent to everyone a.k. inflation!
Only a modern monetary theorist would assume that increasing government expenditures is good for the economy. The exact opposite is true. Governments utilize resources far less productively than the free market.
Do you have any proof to back up your point? How exactly is the private sector more productive when it comes to use of any resource? Give actual examples or you're just spouting BS. The same should be said if someone is to argue that the public sector is more productive. This narrative that private good, public bad is so low IQ.
@@MC-oo4pk If government was more productive with resources than the private sector, then socialism and communism would be the dominant forces in the world...
@Penderyn Even using your definition of a "stateless, classless society"... without the State the free market would still control the means of production....
@@LegalAutomation Without the state there is no "free market" there will be oligopolies or monopolies in which those with the most resources dictate the means of the production and price level. All "free markets" are built on laws created by the state.
What's so sad about hearing Warren speak is his total lack of empathy for the people struggling with inflation but basically states printing money makes the rich richer and the poor poorer. Interesting but MMT is not a long term solution. These people are deranged.
@Penderyn AI is here to say hello. Tech has been exponential since we started sharpening rocks. I don't know why people are focused on a resource based economy except that we are making a massive transition that is dependant on overcoming previous perceptions of scarcity so that we can increase energy availability by at least 100x over the next thousand years.
@john: Is MMT some new policy to solve something? It's just a way to look at things. As we all know,none of the general public has no idea about economics and debt. Even private banks money creation through loan is not widely accepted. In the end it's just some game without any limit and MMT is a way to look at; like knowing God through a religion 😅
Jack - great interview on a VERY difficult topic. Warren addresses this from a purely domestic dollar perspective. Would have loved to hear a discussion of the impact of the offshore Eurodollar system. Not sure his US/Fed centric view tells the whole story.
💯 That's the only massive hole in the theory. Every thing he says is how money is created within the US but external creation of USD is probably larger so it has an impact that should be factored.
@@joythought I would love to hear Warren discuss the Eurodollar as well. However, my understanding is that the Eurodollar system cannot create dollars, they can only loan existing or newly created domestic dollars. All dollars, "Euro" or not, have to be accounted for on a domestic balance sheet.
From my understanding of Mosler's position on the Eurodollar it's a secondary factor. Domestic banks, foreign banks/CBs can only issue a liability against the new dollar financial assets loans create and these net to zero. Only Congress can create new dollars that do not have a real corresponding liability. So the effect fiscal spending has on the economy is non cyclical unlike other types of money creation which are credit based..
@@roanora7853 If you can point to any other sources on this it would be appreciated. My understanding is that unlike a domestic bank which can "create" dollars by entering the loan as an asset and the customers dollar account as a liability on their balance sheet; foreign entities can only loan dollars that were created domestically and then transferred to them. As in, if Foreign Bank Customer asks for a dollar loan, Foreign Bank cannot simply create a new asset on their balance sheet with Customer's new dollar account as a liability. I don't see how that would be anything other than counterfeiting. Rather, they typically already have some dollar account or the ability to request them. But every dollar, including Eurodollars, have to be accounted for on a domestic balance sheet.
MMT econ 101. There are x dollars chasing y number of goods. If we stimulate the economy by printing 2x dollars chasing the same y number of goods, we'll just cross our fingers inflation doesn't occur. If that yucky inflation term happens, we'll just 'tax' that money out of the system, which of course the inflation is the tax, but we'll pretend it isn't or that it's 'transitory'. Read Chapter 2 of Stephanie Kelton's book. She really does believe, like this guy, that 1+1=3
It’s not that 1+ 1 = 3 but that demand and supply curves are not static. If we are talking about a very finite resource, more demand will surely increase the price. However, if we are talking about resources for which the means of production has extra capacity for, then supply curve can move to meet demand which tempers the price increase. It’s induced supply. This is where the phrase “the cure for high prices is high prices”. Because people are going to want to fill that demand because there is profit to be made. Induced demand is similar but on the other side. For example, a lane to a highway may not fix traffic (reducing the cost of travel) because the increased capacity will be eventually filled with an increase in demand.
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Also, if interest rates are high, that makes it expensive for capitalists to secure financing to invest in business ventures to chase high prices. The best solution to high prices is high prices. If oil is high, that will spur investment in oil development. Higher interest rates won't help any shale oil plays in Texas.
This statement is frankly false & lacks understanding of commodity investing cycles. If oil goes up, it doesn’t lead to new investment opportunities, it breaks a lot of existing systems which have assumptions about oil prices baked into their business model, which then has knock on effects further down the line. The US economy cannot function at a true market price of oil frankly because it would drag the entire system to halt. It has to have a manipulated market price. The 2008 meltdown was actually more about oil than a credit crunch. Oil peaked at $140 in 2008, which was much higher in inflation adjusted terms because the USD was more dependent on imports. That then impacts the USD in turn which then impacts the banking sector.
Our government needs to deficit spend enough to provide the world with enough safe assets they want to hold. UK used to have world reserve currency. They survived the transition Anyway, sure, there’s FX implications, but it’s nearly impossible to predict. Otherwise FX traders would never suffer a loss
“MMT has emphasized that rising interest income can serve as a potential form of fiscal stimulus.” You don’t have to believe in a naive form of Say’s Law, but discussions of demand should start with the notion of production. Then…never reason from an interest rate change! Overall, I sense Mosler has one core model of the macroeconomy, with a whole host of variables held fixed (“well…higher interest rates means printing up more money to pay for them and thus greater stimulus…”), and then applies that model to a whole series of quite general problems and questions.
@@elliotthovanetz1945 No because it is about how you spend money not how much of it is in the system. Shift the demand high up via government deficit [10 k welfare check for everyone] to the level that amount of work and resource available is scarce and you have inflation. Make a step by step synthetic stimulus to the economy so it creates capacity in output gap and you have GDP growth, real wages raise [lets say 100$ welfare check for one child] - japan does it for long time. MMT is not about "printing" - it explains banking system and money simply. Government that has debt in its own currency cannot bankrupt - it only spends money into economy, so better for government to invest in something that will make the life of citizens better and country stronger in economical terms.
@karolb8924 'The Deficit Myth'. Only someone without a basic understanding of inflationary fiscal pressures can create a title like that. Who's going to buy up all those bonds the more and more that are issued? Guaranteed the Federal Reserve will need to jump into the rescue yet again. Then, full-blown MMT, yield curve control, etc. as the average citizen gets slowly poorer and poorer
@@elliotthovanetz1945 Treasury dealers will buy it and after that FED will buy them from secondary market. Not to mention that in some countries in Europe bonds are part of assets for public "pension funds" etc.
@karolb8924 Okay, that's what I said about the Fed monetizing the debt. All that QE was straight up monetizing. And I do realize it's technically illegal for the Fed to buy directly from the treasury, but please adding one step in between does not make it not straight up debt monetization. Interesting you brought up Europe and their pensions because they are in the middle of a straight-up pension crisis
I can see that some interviewers are frightfully ignorant about the process of money creation in economies today but this interviewer's blind acceptance Mosler's false MMT beliefs about how money is created shows how little research he has done into the article. Mosler takes advantage of that to put across false and misleading information that when he is questioned about either runs away or creates more myth to avoid answering why the historically correct facts do not support what he says. It is Mosler's regular assertion that the government must spend first before taxes can be paid that is another fallacy of MMT. Taxes are mostly paid from money created by private banks when they lend to their clients. The reality is government and the reserve banks do not create the majority of money in the economy because private bank lending is about 90% of all money in the economy. They do not get money from the government to lend it out and they are not government agents themslves . They are private enterprises who lend the money they create and rely on it being paid back with interest by the borrowers or holders of that obligation. This is clearly explained by reserve banks and government organisations themselves who release that information on their web sites. Take for instance the explanation of the Library of Parliament of Canada which explains what happens with money creation in Canada. The explanation by Mosler contradicts their explanation and also contradicts the official explanation of the bank of England. Those explanations are available on their sites. Bank of England's explanation is titled 'Money creation in the Modern economy.' - site:- www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf Bank of Canada document :- lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201551E
This guy Mosley doesn’t understand debits and credits. He thinks a debit is always a reduction. It depends on the account. His explanations sound so intelligent and impressive but they truly don’t make any sense.
2:19 you cant complain about using fraudulent accounting tactics to create "money" to spend. The fact they tax the money they spend that creates revenue for them to tax and spend is hilarious. Literally fraudulent accounting.
Hi Jack, super interview with Warren Mosler of MMT fame. Learned a lot about MMT in prior Warren UA-cam podcasts, but your questions were really good to draw out the details of MMT concepts that were explained by Warren Mosler.
Thank you for this interview. What you missed a.bit to mention is that raised interest rates affect both savings AND interest rates. So the net effect on inflation is a little damped. The sum of new credits might decrease as intended by higher interest rates, but there are still lots of active variable debts I wonder if it is really clever to toghtly bind together savings onterest rates and credit interest rates by the same key interest rate?
Interest payments on debt are now bigger than defence spending. No description on what to do with interest payments is given. Just because the US spent like a drunken sailor does not mean this will not come home to roost. Also, inflation is already on its way down after raising interest rates. This guy know some things about the plumbing of the financial system, but is really mistaken on other points.
Oil is another basic input. Interest channel is not the only one. Mosler acknowledges this and attributed the very recent plateauing of inflation to easing in energy.
Sounds like what he's trying to say is that the deficit spending from higher rates increases money to investors which helps keep asset prices aloft. I think he underestimates the effects of lending contraction in the private sector banks though, that should be netted out from the increased outlays from higher deficits.
Lending contraction has been a problem since 2008 due to bank regulations design to make the banking sector safer. Complex systems don't always turn out as humans expect.
Yeah, either he or I have a very wrong idea of what is cause and what is effect. I don't think he appreciates how the prices of bonds, houses, oil, and other assets go down when the money peruses bonds that have a higher yield.
I don't know if he underestimates or not, since he never even talks about. Just having to use a higher discount rate for NPV calculations of business investments theoretically has to decrease business investment and therefore loan growth. But the flip side is that less business investments should lead to less production and be an impulse to higher inflation. Seems like part of his point is that the current regime's way of thinking must assume rising rates will "break" the economy to a degree that results in higher unemployment and lower wage growth to actually be an impulse to lower inflation. To be fair, the Fed has openly stated they want higher unemployment so there doesn't seem to be disagreement there.
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I’m sorry if I’m misunderstanding here but Mosler argued that higher rates are inflationary. In our current scenario where the fed hikes rates from nothing to 5 points in a year really smacked asset prices. Isn’t this wealth effect real and doesn’t it have some impact on inflation? The cost of capital for small businesses has skyrocketed and will have a deflationary effect in my intuitive understanding but I would love to understand his point on this in more detail. Does anyone have some reading material on this?
Basically, The Fed raises interest rates to try reduce demand for bank credit. This hopefully impacts the housing market (most loans are made to buy housing) and the auto industry. So hopefully you get lay offs in these sectors. Which hopefully have knock off effects of more lay offs. As far as small/medium sized businesses, most rely on savings or private investors to get off the ground. Banks don’t like loaning money to Mom and Pop for a business venture. They want houses as collateral. But high interest rates affect Mom & Pop because hopefully you get lots of involuntarily unemployed folks who can’t afford to shop at Mom & Pop. On the other hand, wealthy bond holders get more 💵 to spend and bid up asset prices that the rest of the economy must pay It’s good to be rich. Sucks to be a serf
Basically high rates is a give away to rich people driving wealth inequality furthermore conversely high rates hurt poor people but the bigger scam is that rates themselves are a distraction to avoid real public policy addressing wealth inequality
One minute in and my ears already hurt: "Once you cut spending you've also reduced tax revenues" So we should spend 100% to get back a small fraction of it
@@Jesus-kt5dc Mosler struggles in the debate they had. But for a lot of the debate they were kind of arguing in circles. Part of that is because people like Mosler think their ideas are new. And while there may be some intricacies of the way things work because of limitations that Congress tried to put on The Federal Reserve, we've seen time and time again that they just sidestep the rules by putting an intermediary in place. And while that makes the system more complex, it doesn't ultimately change what's happening. We may be past the point of no return, but perhaps if we get people like Bob Murphy on podcasts like this, we can regain some sanity and lessen the pain we're going to go through by dealing with problems sooner rather than later. Economics is about tradeoffs. The neo-keynesians and modern monetary crowd think that we're able to have everything we want without ramifications. They always admit we have to make sure inflation doesn't happen, but now, when it happens, they argue we should quadruple down on spending even more money. It's so ridiculous. If only people would read Von Mises, Hayek, Rothbard, and Sowell; then maybe we'd get to place where citizens would demand more responsibility from our governments.
Thank you Jack! Your interview of Mosler has changed my perception of the economy and monetary theory. "The Federal Reserve raising rates is inflationary when the debt to GDP is high." Wow! I'm having severe cognitive dissonance.
Because there is more interest being paid by government = more money in the economy = inflationary If the more interest was only paid by consumers / was non governmental then it would be deflationary but now they are gonna have a spiral of inflation and keep raising rates like 70s and cause bad stuff is any of this bullish lol
But why does he act like the cost of capital going ⬆️ doesn’t affect consumers more than it affects the extra spending the government has And don’t the interest payments go to whoever holds the variable rate debt? And wtf are they gonna be buying or doing? Probably not consuming more stuff with it from american public businesses I’m just spitballing here (haven’t listened to the whole thing yet he may have evidence to support the view of the impact of the %) Also with low rates businesses can afford lower margins, higher rates = highers costs = pass the price hikes onto the consumer
Biggest elephant in the room was when Paul Volker did not raise rates to break the back of inflation but adjusted the amount of credit/money in the system which resulted in higher rates. We need to take money out of the system faster to lower inflation and we can either tax it out or stop giving commercial banks money/credit
Bingo, that's what higher rates do. Deleverage an overlevereged economy which takes money out of an overstimulaed system and voila, disinlationary pressure. I guess that's too much common sense for these MMT people.
This is a great interview. I've been following MMT for at least 5 years. This interview debunks many of the strawman arguments against MMT. There's a limit to everything and Mosler details not only the limits to spending but the limits to interest rates. Now when people say that, I can point to this interview and show where the founder himself details the limits.
I've been saying this since the Fed started raising rates. It's actually net inflationary to raise rates. He didn't even get into the fact that higher mortgage rates pushes up rent prices due to pricing out first time home buyers, he didn't get into the Lyn Alden point that rising interest rates makes cap ex for commodities like oil and copper more expensive, but the grand finale is the fact that the government has to SPEND more as interest rates rise which is what causes 70% of inflation in the first place. Then we've got criminally idiotic derpers at the Fed calling for more rate hikes even now.
No, it isn't. It's destructive in other ways. Mosely is an extreme socialist who believes that every time the government prints more money, we have more money to spend. He doesn't understand inflation at all. That's what Modern Monetary Theory believes. It's the flip side of Reagan's supplybside economics. This theory is one of the justifications for sleepy Joe printing record amounts of money. The idea that every dollar printed 😮 be a dollar spent and a dollar added to taxable income.
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I sent understand why spending on interest is inflationary. To whom is this money paid? Surely covid stimulus spending isn't the same as paying interest to creditors.
@@Robert-un3cf Right now there is trillions of dollars in the Fed's reverse repo and treasury bonds getting paid 4-5%. Those are mostly institutions and wealthy people. The Fed used to be a net receiver of interest payments by about 1/3rd trillion per year. Now they're a net payer of interest by about the same. So the Fed alone is printing 2/3rds of a trillion per year more than a year ago causing the very inflation they think they're fighting. In Volcker's era the debt was so small (like 33% of GDP) that raising interest rates wasn't as inflationary as it now that the debt is 120% of GDP. So at this point we're hurting the tax revenues by raising interest rates which means the government has to run higher deficits to pay for the debt causing inflation.
Despite what some economists think, the money supply isn't directly linked to inflation. inflation is when people spend their money, not save it. If you give people billions of dollars and they decide to save\invest it rather than spend it on goods and services, you will not get inflation.
@@sternof money supply is directly linked to spending thus its directly linked to inflation. If you open a dictionary made before the 80’s it will say that inflation is the expansion of the money supply.
@@imhopelesslyaddictedtofent4266 If you open Peter Lynch's dictionary from the 80's then you are right. If you ask others or google how inflation is defined today in the 2020s it wont be the money supply but an increase in the general price level of goods and services in an economy (over time). please see my simple example why the money supply case is invalid.The money supply is not directly linked to spending if you dont spend it.
Probably need to have mosler back on. He nailed his prediction that the economy wouldn’t slow down due to the interest expense on the debt. I think Michael Howell really hinges on the same argument but Howell never actually specifically calls out interest expense only increased fiscal spending - although I assume it’s the same argument since interest expense is what’s driving the debt increase
It's just wrong to say that higher interest rates (engineered by the Fed) put upward pressure on inflation..... everything else being equal. What MIGHT be true, however, is that if you compare "FF1" (a "first" Fed Funds rate) with FF2 (a second Fed Funds rate) such that FF2 is greater than FF1, then there'll be more inflation if the deficit is a lot higher when the Fed Funds rate is set to FF2 rather than FF1..... or in other words, if you change TWO variables simultaneously, then perhaps it's true that the conditions associated with FF2 will promote greater inflation. But even then, I'm skeptical.
What a dream it would be if the government would actually cut spending. If you think government is a unaccountable now, full on embracing MMT would be gasoline on a fire
While most socal security recipients don't have to pay taxes on ALL their soc sec they do pay on 50%. Which adds up. It's like they are double or 1.5 X taxed. Once from payroll taxes and again as 50% income tax
But the Fed can only increse the monetary base with higher interest rates. We have seem though during QE that the monetary base is not a useful instrument to manage M3 money demand. Money grows mainly because debt in commercial banks is increased. Therfore i would argue that interest rate very well decreases debt and money demand and the M3 money amount. Or am I missing something?
1:05 in he spills the beans. Government can't stop spending because it will decrease tax revenues. In other words you are being paid in part by your own income. Priceless.
Mosler by ignoring a sense of proportionality uses deception and failed sense of proportionality to try to put across an idea that welfare payment cuts result in less revenue for the government. The failure of Moslers idea about government cutting welfare and thus reducing the recipient's tax liability and therefore future government revenue is grossly inaccurate. This is simply understood because the full welfare payment is many times more than the tax liability which is only a small proportion of what the welfare payment would be if government retained it. e.g. government pays someone a gross amount of $8,000 per year. Their tax liability on that small income would be very low at most probably around 15% to qualify for the welfare to start with so government gets back only that 15% while saving the total amount if the welfare was cut. The net government saving would be 85% of the whole welfare payment or $7,800. (total payment less total 15% tax recovered).
Let's see if I can boil down this long video's content into a single or few paragraphs... The talk about higher interest rates causing inflation and other bad economic effects is only when you're talking about an unhealthy economy which isn't actually producing anything substantive. This brings to mind numerous failed and failing national economies around the world like Turkey, Pakistan, Sudan and yes... China. When an economy is not producing much but insists living beyond its means, the easy solution is to borrow, and with borrowing comes debt with interest terms. This is little different than a person living on their credit card living a lavish lifestyle that's not supported by wages. If interest rates were to increase, the effect would be to increase to finance old to maintain a lifestyle that's not justified by real productivity. Increased debt to pay for goods and services in short supply because you're not producing causes inflationary price pressures. Is it as simple as that? There are a lot of mini topics discussed in this video, but IMO that is how the core topic can be described in a few words. In any case, on a national or international scale, it's easy to mistaken GDP as a true measure of productivity. GDP was redefined back in the 1980's to include non-manufacturing activity like services to try to better reflect total economic activity, but in some ways that can be abused if spending becomes a dominating part of the basket of measurements that make up GDP. People should remember that despite the name "Gross Domestic Product" that "Product" doesn't necessarily mean the lay person's definition and can sometimes mean something quite different.
The whole idea of Powell's strategy was to tank the economy. Obviously, raising interest rates will only make inflation go up - unless the rate hikes cause a recession, the deeper, the better. The US economy has been resilient and hasn't slowed down yet due to the rate hikes. Therefore, inflation is worsened, at the moment, by the hikes. This was an odd strategy for Powell to take until you realize that Powell was appointed by Trump and, for some insane reason, was kept on by Biden. Powell would like nothing better than a deep recession that tanks Biden's re-election bid in 2024. Hasn't happened yet.
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Really great interview, although I felt Mosler sounded a bit too dogmatic. I'm just a dude wanting to know how the world works, but it's frustrating when there are so many compelling, yet conflicting theories.
The explanation (at 19.07) of Mosler's belief the government spending first before taxes can be paid is Illustrative of the failure of Mosler to correctly analyse the creation of money itself because it does not fit the time line of how money is created as well as not fitting with the creation of most of the money in the economy which is that created by private banks when they lend to their customers and that money is spent on goods and services including incomes on which tax is payable. So huge amounts of money paid in taxes comes from money created by private banks that government then collects before it has the chance to spend.
corporate profits record. workers can't afford groceries. this, of course, is not related. uh huh. employment may be high, but you are employed if you drive for uber at a loss, right?
Isn't the root of the problem ROI? I suppose the creation of money might work if there was a product or service made from its creation that would generate capital. Like when tech investors give money in hopes they are funding new innovation that brings in revenue.
The IMF is made up of member countries that donate to it. The notion that the USA would go on its knees to the IMF is laughable because the USA is the biggest donor nation to the IMF at over $118 billion. In Canada the opposition leader still pushes the paradigm that printing money is inflationary. Inflation and raising interest rates BOTH increase the transfer of assets from people and businesses to those with the power to increase liabilities on businesses and people. Thus inflation is a measure of the higher liabilities which is what most of the focus is on. That looks at only one part of the inflation balance sheet. It then extracts assets - the other side of the balance sheet - from people and businesses. Thus inequality increases. So both inflation and higher interest rates contribute to inequality. If the incomes go up then it won’t matter but that is not happening. When they first started to fight inflation with higher interest rates, I characterized it as throwing gasoline on a fire hoping it will go out.
Mosler talking NONSENSE when he says debiting accounts is not money moving. The reality is when money is debited from one's account it means you can no longer spend that money or use it to substantiate your financial situation to show you are capable of managing the money BUT the account that it was transferred to benefits from being able to spend it or pay off their own liabilities. If Mosler does not believe the money is moved than he could send a few thousand to my account, or everyone else's but I see he has not acted upon that or told me he will. I will wait until he does to ponder what I want to buy with the new money. Being sceptical I won't be sitting around anticipating that movement of money into my account !! i am not that easily fooled but some may swallow what he says without checking it's validity.
I've been tentatively long since December when interest payments on the national debt reached 60 billion a month. Now with spending increases on the way and interest payments hitting 100 billion a month there is no reason not to be all in. MMT making me rich..
@@roanora7853 except that Treasury is now replenishing its general account, the TGA, with $500B, which should decrease liquidity. New to MMT so I’m not sure if it has an alternative perspective on TGA.
The strategy, presumably, was to hike rates to throw the economy into a recession that would cause the money multiplier to go down which would counter inflation. The strategy obviously doesn't work if the economy isn't thrown into a recession. And, so far, it hasn't been. And, just as obviously, higher interest rates will accelerate inflation when the economy doesn't tank.
Very good point. In a recent Blockworks Macro interview with Robert Kaplan, he asserted that the fight against inflation is a joint effort between monetary and fiscal policy. I note that Argentina has comparable income and corporate tax rates to the west. That likely doesn't help.
Sounds like that among other things the fed acts as a clearing house for the whole system and they can balance the books however congress tells them to.
something the higher rates are great for is the rich got their ubi and the workers who were already short had their interest raised so they had less and so now they are borrowing more to get by. i think they are saying consumer debt is record high.
Would be great to see a review of the MMT in math terms. The terminology gets so convoluted that it’s hard to track in a free form conversation without some reference points in writing.
@ Ivelin In math terms MMT is an even more obvious nonsensically trash than in the pseudo economical and sociological phraseology in which it once was introduced
@@Jesus-kt5dc except that Keen has his focus on a debt jubilee and on environmentalist issues. These things might be important but they crowd out the economic theory work that he used to be good at.
That's because MMT has never been formalized into a proper academic model - it's pushed by cranks and socialists who want unlimited government spending.
After just a few minutes I can see this guy is clueless, When the government pays SS,.. that is not taxed unless you're under 67 and you are working at a job receiving a salary. And then only a portion is counted toward the AGI. Rental income, capital gains, interest. dividends,.. don't count as having a job or a salary. Once you're over the full benefit age for recieving SS, 67, you don't pay taxes regardless of whetehr you have a job and a salary or not. From the title,.. If higher interest rates cause inflation, ie increases demand rather than reduces it, how did we get inflation before the Fed raised rates? How did Volcker end inflation when he raised rates to near 20%?
Higher interest don't increase demand, but they can reduce supply.. When demand is constant, but supply decreases, prices go up, not down.. Housing market is a different example.. Demand has decreased, but supply has also decreased enough to keep prices elevated. Supply is decreasing because higher rates means it costs more for developers to finance building new houses.. Supply is also decreasing because instead of building newer, more expensive houses due to higher rates... People are looking for older bargain houses. Basically, higher interest rates ONLY decrease demand in things that aren't necessities for life.
@@wjj7411 First, these rates aren't extraordinary. What was extraordinary was the 3% rates. Those were the exception to the rule over the last 30 or 40 years. High interest rates would be above 15%. Second,.. what you're saying is that higher interest rates only impact the supply side. Nowhere in the supply-demand curve does it show interest rates weighing only on the supply side. The whole curve adjusts to the ecomomic environment. Higher interest rates don't impact the supply side any more than the demand side. Anyone who doesn't have to move would be wise to NOT sell now just because the price of their home has gone up,.. when after they sell, they'll have to pay more for the equivalent home at an even higher interest rate. (Not to mention their property taxes would go up.) That reduces both supply and demand. Or equally impacts supply and demand. For those that have to move,.. new home builders have been taking up the supply slack. Interest rates haven't stopped them. Their stock prices are at record highs. If you look at new homes and multi-unit completions in Q1 of '23, it was the highest in most areas of the US for the last 3 years. New housing starts have dropped off,.. but I suspect that's due to the economy starting to slow down. New home builders don't build too many homes in advance/spec homes.. They generally wait for a buyer to pick a lot and a floor plan, sign a contract and put down a deposit and then start building. But to say rate hikes are the cause of inflation is just insane. Higher rates and reducing the money supply (or liquidity) are the cure for inflation.
@JCGoogle It's not insane.. Especially when supply chains were shut down and businesses need debt to rebuild and rehire. More expensive debt = more expense passed on to the consumer. If the consumer absolutely needs the good/service, they will have to pay more. Demand in this case is inelastic, but the supply decreases because of lack of production. Watch how this plays out over the next year. Then come back and tell me I'm wrong.
@@wjj7411 I'll tell you right now you're wrong. "More expensive debt" doesn't just get applied to the supply side. The "more expensive debt get's applied to supply and demand". More expensive debt,.. reduces demand whish reduces supply. That's just economic fact. To say higher rates is inflationary is batpoopinsane. Retuning to ZIRP would be inflationary.
Because MMT people are totally full of s***. Yes, it is a very good question to ask this 'economist'. My theory is MMT proponents have nefarious ulterior motives and use 'economics' to enforce it. Also, that 'flooding' of dollars into fixed income money market funds through short-term debt and reverse reop is money taken out of inflationary spending for goods and services. This guy, like Kelton, has an agenda.
If Mosler is so much smarter than mainstream, why isn’t he a Billionaire? Surely if his analysis is accurate then he could out trade Buffet in his sleep with his knowledge edge, weird that he doesn’t ehhh
I’ll give him credit he understands the plumbing & mechanics but that’s the extent of it. To trade is entering a market dynamics & psychology element, which someone like him has no concept of.
@penderyn8794 it means their “theories” have holes. Mosler isn’t a macro analyst either, all he knows is internal US banking plumbing, he has no concept of how any of this will be impacted with global currency / bond movements, or how a sudden loss of foreign purchases / sales of Treasuries would impact US inflation if the dollar suddenly was subject to a currency crisis if its debt lost value abroad. Nor does he focus on commodities which is critical to understand in how it impacts all decisions made to underwrite private sector loans / securities. This is why he’s just another huckster in the end, I respect his knowledge of plumbing but it doesn’t explain the world at all, because at the end of the day you can’t. Economics is very much subjective, largely BS way for elites to provide a justification for their decisions.
Problem is that governments will never uphold to the theory. Same with Keynesianism. According the theory, governments should generate deficits only when economy is not doing well, but they just accumulate debt non stop. If they just can print whatever they want, they will. Maybe crypto will help.
Thank you Jack, this interview was superb, but it needs a part 2. Not enough said about the cost of potentially unlimited balance sheet expansion. I hope we all agree that there has to be a cost somewhere. The system of central bank and treasury operations that is described cannot be without any downside vis a vis the dollar, in the context of a global system in which it is still the main currency of transaction and reserve, (even though reserve status is gradually diminishing from a lack of trust).
I thought it was just me Jack but if you were a little confused I feel a bit better, I couldn't help feeling that what he was describing was basically a Ponzi scheme and that's the reason why several countries are looking for alternatives to the US $ ! - thanks to you both 👍
@@imhopelesslyaddictedtofent4266 This is just the nature of any monopolized currency, which the Dollar is.. Good luck not holding the only thing you can pay taxes in. You libertarians are too paralyzed by your own moral preening to deal with the reality of hegemony.
Honest to God not trolling you... but were you too chicken to ask Mosler about crypto? Or is that for a follow-up interview too? And thanks for doing this, I always enjoy hearing Mosler issue these "intellectual invoices" for the mainstream economists to pick up. They rarely do.
"Too chicken"? That's a revelation. Do you mean "too chicken" like you are in being unable to address the MMT idea that taxes create value in and acceptance of money when they failed to do so in very country where inflation made the money worthless. Examples are :- Zimbabwe, Weimar Republic, Brazil, Chile, Hungary, presently in Venezuela.
With the way the market is moving, we'll mostly hold for longer than 2030 to realize profit gain, I think a video on "How to profit from the present market" will be more effective, I mean I've heard of people making upto 250K within few months and I'd like to know how.
I'm working in the housing sector right now and the landlords we're managing properties for are hiking rents by big amounts in response to rising rates that they're paying for mortgages. This means that the hiking in rates is driving inflation in rents and in turn, labour prices and item prices at the front end. This is a very direct example of exactly what Warren spoke about here.
@@roanora7853 They are doing something, people give there live force to make the money they put into the back. The bank then loans the money out to other people who need the money and the bank makes interest. The person putting the money in the bank takes risk doing that, they should get interest on that money. If you are gonna tell me the banks are safe do some research and you will find bank failures where the FDIC settled with people for pennies on the dollar under the 250k thresh hold. This is why people are going to Bitcoin and metals.
@@roanora7853 If banks didn't have deposit they could not get money from the fed. They are not required to keep any money that you deposit, where does it go? Back to the fed? Why would there be a reserve requirement then? They can't loan the money out without deposits
@@t.a.b. Loans create the deposits, most are kept as bank reserves, some get transformed to bonds per SLR requirements. All dollar assets that don't have a corresponding liability were the dollars spent into existence by Congress that haven't been taxed back out.
I'm confused how money works. In Australia there is only $4,000 in cash for every person in our country. Roughly 104 billion dollars, our economy is trillions. Residential housing is worth $10trillion. If people wanted to be paid in actual money, there is none.
It's all actual money no matter what form it is in. The official sovereign money in Australia is all fiat credit money be it in digital or any other form. Most people pay their debts and earn their income in digital dollars not cash because cash only represents about 2% of the money in the economy. If you go the grocery store you pay in digital dollars or buy new refrigerator you pay in digital dollars on your bankcard. You could pay by cheque but that is still digital dollars written on a piece of paper. Nobody cares if they pay in either form.
Mosler's not the only one describing a scenario where the feds actually cause inflation by raising rates. I would kill to hear Mosler and Jeff Snider debate each other to see where they might agree or disagree
Right. Exactly. I've also heard Gromen describe this situation as well. We should get em all around a table. These arguments all put together explain some of my observations in the markets over the years and they really changed my views on things.
Ya but listen to the wealthion channel or now adam taggart thoughtful money channel.
He points out like 20% of corporations just pay the interest on their debt and now this year bankruptcy started tk pickup. Once you get enough bankruptcies going you’ll eventually get deflation as bad debt gets erased. That contracts money supply, but creative destruction also allows for better use of money tk be identified or for money tk be better utilized rather than nursing along bad ideas.
That’s the big problem I see with the government picking winners and losers with green energy or now with high speed trains. It may cost society a ton of money if projects are wasted. Japan and France has fast trains and here cali struggles now for 15 years.
@@koltoncrane3099Japan's problems are demographic related, capitalism and paying private savers interest on their money requires a constant increasing population, Japan's working population is decreasing badly.
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One thing I felt was missing from the interview was the answer to where the source of funds is for the IOR paid while the fees balance sheet is somewhat shrinking.
In that case funds have to come from the economy which is counter to his argument of stimulative IOR.
Mosler doesn't seem to address the fact that inflation is caused by a rapid increase in credit. Not interest rates.
Higher rates compel saving, not borrowing.
He explains that when the government pays a $100,000 bond with 1% interest, they pay out $101,000
So if you increase interest rates to 20% suddenly the bond payout is $120,000 i.e. more dollars
@@Richest_Person_in_the_World Sure, but they only do that to compensate investors for very high inflation. That 20% isn't going to buy you much extra.
The inflation is already occuring and if a government doesn't offer rates investors want they will struggle to sell debt. So perhaps Mosler advocates financial repression?
Retiring in 20 years? Due to inflation, you may need upwards of $2.6 million to maintain your existing lifestyle, with the ongoing effects of high inflation, lower forecasted stock market returns, and stagnant wages, achieving a secure early retirement could be more challenging than ever before.
While the resources are very important like having a sufficient nest egg, real estate, pensions social security, insurances, etc.
It is also important to think about the burn rate = cost of living. You could live much much better if you live much of the time in a more affordable area - another state or country or in the rural areas.
Either save more money with a basic life or live at a higher lifestyle for the same amount of money.
Pensions are indeed a big problem when the government guaranteeing them does not understand the monetary system. No one should or needs be forced to save a dime for retirement. The pension cheques can be paid when they are due and boosted to a living income. What "pays for" pensions *_in real terms_* is not the currency, it is the output of workers today. No amount of currency will purchase goods that are not for sale.
Most of the inflation though they didn't discuss is precisely why high rates will hurt u.s., because you're driving wealth inequality even further and the rich have been monopolizing virtually every industry through private equity groups. Monopolies don't participate in capitalism they instead charge rent to everyone a.k. inflation!
Only a modern monetary theorist would assume that increasing government expenditures is good for the economy. The exact opposite is true. Governments utilize resources far less productively than the free market.
Do you have any proof to back up your point? How exactly is the private sector more productive when it comes to use of any resource? Give actual examples or you're just spouting BS. The same should be said if someone is to argue that the public sector is more productive. This narrative that private good, public bad is so low IQ.
@@MC-oo4pk If government was more productive with resources than the private sector, then socialism and communism would be the dominant forces in the world...
@Penderyn Even using your definition of a "stateless, classless society"... without the State the free market would still control the means of production....
@@LegalAutomation Without the state there is no "free market" there will be oligopolies or monopolies in which those with the most resources dictate the means of the production and price level. All "free markets" are built on laws created by the state.
@penderyn8794 couldn't have put it better myself
What's so sad about hearing Warren speak is his total lack of empathy for the people struggling with inflation but basically states printing money makes the rich richer and the poor poorer. Interesting but MMT is not a long term solution. These people are deranged.
He is just stating facts. Not giving his opinion on the morality of it. Grow a pair
Mosler is a sophist. Don't engage with these dishonest actors: they don't care about the truth
@Penderyn AI is here to say hello. Tech has been exponential since we started sharpening rocks. I don't know why people are focused on a resource based economy except that we are making a massive transition that is dependant on overcoming previous perceptions of scarcity so that we can increase energy availability by at least 100x over the next thousand years.
@john: Is MMT some new policy to solve something?
It's just a way to look at things.
As we all know,none of the general public has no idea about economics and debt. Even private banks money creation through loan is not widely accepted.
In the end it's just some game without any limit and MMT is a way to look at; like knowing God through a religion 😅
Mosler has socialist leanings, because he hangs out with such crowds. If you ask me, I don't care about Full Employment for example
Jack - great interview on a VERY difficult topic. Warren addresses this from a purely domestic dollar perspective. Would have loved to hear a discussion of the impact of the offshore Eurodollar system. Not sure his US/Fed centric view tells the whole story.
💯 That's the only massive hole in the theory. Every thing he says is how money is created within the US but external creation of USD is probably larger so it has an impact that should be factored.
Good point
@@joythought I would love to hear Warren discuss the Eurodollar as well. However, my understanding is that the Eurodollar system cannot create dollars, they can only loan existing or newly created domestic dollars. All dollars, "Euro" or not, have to be accounted for on a domestic balance sheet.
From my understanding of Mosler's position on the Eurodollar it's a secondary factor. Domestic banks, foreign banks/CBs can only issue a liability against the new dollar financial assets loans create and these net to zero. Only Congress can create new dollars that do not have a real corresponding liability. So the effect fiscal spending has on the economy is non cyclical unlike other types of money creation which are credit based..
@@roanora7853 If you can point to any other sources on this it would be appreciated. My understanding is that unlike a domestic bank which can "create" dollars by entering the loan as an asset and the customers dollar account as a liability on their balance sheet; foreign entities can only loan dollars that were created domestically and then transferred to them. As in, if Foreign Bank Customer asks for a dollar loan, Foreign Bank cannot simply create a new asset on their balance sheet with Customer's new dollar account as a liability. I don't see how that would be anything other than counterfeiting. Rather, they typically already have some dollar account or the ability to request them. But every dollar, including Eurodollars, have to be accounted for on a domestic balance sheet.
MMT econ 101. There are x dollars chasing y number of goods. If we stimulate the economy by printing 2x dollars chasing the same y number of goods, we'll just cross our fingers inflation doesn't occur. If that yucky inflation term happens, we'll just 'tax' that money out of the system, which of course the inflation is the tax, but we'll pretend it isn't or that it's 'transitory'. Read Chapter 2 of Stephanie Kelton's book. She really does believe, like this guy, that 1+1=3
It’s not that 1+ 1 = 3 but that demand and supply curves are not static. If we are talking about a very finite resource, more demand will surely increase the price.
However, if we are talking about resources for which the means of production has extra capacity for, then supply curve can move to meet demand which tempers the price increase.
It’s induced supply. This is where the phrase “the cure for high prices is high prices”. Because people are going to want to fill that demand because there is profit to be made.
Induced demand is similar but on the other side. For example, a lane to a highway may not fix traffic (reducing the cost of travel) because the increased capacity will be eventually filled with an increase in demand.
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Also, if interest rates are high, that makes it expensive for capitalists to secure financing to invest in business ventures to chase high prices. The best solution to high prices is high prices. If oil is high, that will spur investment in oil development. Higher interest rates won't help any shale oil plays in Texas.
This statement is frankly false & lacks understanding of commodity investing cycles. If oil goes up, it doesn’t lead to new investment opportunities, it breaks a lot of existing systems which have assumptions about oil prices baked into their business model, which then has knock on effects further down the line. The US economy cannot function at a true market price of oil frankly because it would drag the entire system to halt. It has to have a manipulated market price.
The 2008 meltdown was actually more about oil than a credit crunch. Oil peaked at $140 in 2008, which was much higher in inflation adjusted terms because the USD was more dependent on imports. That then impacts the USD in turn which then impacts the banking sector.
Our government needs to deficit spend enough to provide the world with enough safe assets they want to hold.
UK used to have world reserve currency. They survived the transition
Anyway, sure, there’s FX implications, but it’s nearly impossible to predict. Otherwise FX traders would never suffer a loss
“MMT has emphasized that rising interest income can serve as a potential form of fiscal stimulus.” You don’t have to believe in a naive form of Say’s Law, but discussions of demand should start with the notion of production. Then…never reason from an interest rate change! Overall, I sense Mosler has one core model of the macroeconomy, with a whole host of variables held fixed (“well…higher interest rates means printing up more money to pay for them and thus greater stimulus…”), and then applies that model to a whole series of quite general problems and questions.
Sounds like a good old inflationary spiral
Yep, that's what MMT is. Just money printing. Nothing 'modern' or 'theoretical' about it.
@@elliotthovanetz1945 No because it is about how you spend money not how much of it is in the system. Shift the demand high up via government deficit [10 k welfare check for everyone] to the level that amount of work and resource available is scarce and you have inflation.
Make a step by step synthetic stimulus to the economy so it creates capacity in output gap and you have GDP growth, real wages raise [lets say 100$ welfare check for one child] - japan does it for long time.
MMT is not about "printing" - it explains banking system and money simply.
Government that has debt in its own currency cannot bankrupt - it only spends money into economy, so better for government to invest in something that will make the life of citizens better and country stronger in economical terms.
@karolb8924 'The Deficit Myth'. Only someone without a basic understanding of inflationary fiscal pressures can create a title like that. Who's going to buy up all those bonds the more and more that are issued? Guaranteed the Federal Reserve will need to jump into the rescue yet again. Then, full-blown MMT, yield curve control, etc. as the average citizen gets slowly poorer and poorer
@@elliotthovanetz1945 Treasury dealers will buy it and after that FED will buy them from secondary market. Not to mention that in some countries in Europe bonds are part of assets for public "pension funds" etc.
@karolb8924 Okay, that's what I said about the Fed monetizing the debt. All that QE was straight up monetizing. And I do realize it's technically illegal for the Fed to buy directly from the treasury, but please adding one step in between does not make it not straight up debt monetization. Interesting you brought up Europe and their pensions because they are in the middle of a straight-up pension crisis
I can see that some interviewers are frightfully ignorant about the process of money creation in economies today but this interviewer's blind acceptance Mosler's false MMT beliefs about how money is created shows how little research he has done into the article.
Mosler takes advantage of that to put across false and misleading information that when he is questioned about either runs away or creates more myth to avoid answering why the historically correct facts do not support what he says.
It is Mosler's regular assertion that the government must spend first before taxes can be paid that is another fallacy of MMT. Taxes are mostly paid from money created by private banks when they lend to their clients.
The reality is government and the reserve banks do not create the majority of money in the economy because private bank lending is about 90% of all money in the economy. They do not get money from the government to lend it out and they are not government agents themslves . They are private enterprises who lend the money they create and rely on it being paid back with interest by the borrowers or holders of that obligation.
This is clearly explained by reserve banks and government organisations themselves who release that information on their web sites.
Take for instance the explanation of the Library of Parliament of Canada which explains what happens with money creation in Canada. The explanation by Mosler contradicts their explanation and also contradicts the official explanation of the bank of England. Those explanations are available on their sites.
Bank of England's explanation is titled 'Money creation in the Modern economy.' - site:- www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
Bank of Canada document :- lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201551E
I disagree, tax is cents on the dollar. Also the majority of people on social security aren’t paying tax on their income, and if they do it’s minimal.
How many time is the same dollar taxed as it flows through the economy.
This man speaks nonsense... diminishing marginal return on debt theory is in full play now. That's why we see the debt exploding exponentially...
I will never buy US treasuries. And it's all thanks to Mosler and Kelton. Anyone buying long term US debt now is in for a huge loss.
This guy Mosley doesn’t understand debits and credits. He thinks a debit is always a reduction. It depends on the account. His explanations sound so intelligent and impressive but they truly don’t make any sense.
2:19 you cant complain about using fraudulent accounting tactics to create "money" to spend.
The fact they tax the money they spend that creates revenue for them to tax and spend is hilarious. Literally fraudulent accounting.
Hi Jack, super interview with Warren Mosler of MMT fame. Learned a lot about MMT in prior Warren UA-cam podcasts, but your questions were really good to draw out the details of MMT concepts that were explained by Warren Mosler.
FICA payroll tax taken from every "honest" paycheck pays social security benefits... bye...
😂😂😂 You're a clown.
7:11 now youre complaining about a proped up economy needing to be propped up in perpetuity.
Thank you for this interview.
What you missed a.bit to mention is that raised interest rates affect both savings AND interest rates.
So the net effect on inflation is a little damped. The sum of new credits might decrease as intended by higher interest rates, but there are still lots of active variable debts
I wonder if it is really clever to toghtly bind together savings onterest rates and credit interest rates by the same key interest rate?
Interest payments on debt are now bigger than defence spending. No description on what to do with interest payments is given. Just because the US spent like a drunken sailor does not mean this will not come home to roost.
Also, inflation is already on its way down after raising interest rates.
This guy know some things about the plumbing of the financial system, but is really mistaken on other points.
Oil is another basic input. Interest channel is not the only one. Mosler acknowledges this and attributed the very recent plateauing of inflation to easing in energy.
Thank you for the interview!
We need to see a debate between Warren Mosler, Jeff Snydner, Line aldman and sultan poszer.
Now you’re advocating MMT?
Yours is the only site with a guest who actually has an answer to the question "Why are we not yet in recession ?" Congrads ! BLOCKWORKS RULES !
Mega confusing but thanks for trying 😂
Sounds like what he's trying to say is that the deficit spending from higher rates increases money to investors which helps keep asset prices aloft.
I think he underestimates the effects of lending contraction in the private sector banks though, that should be netted out from the increased outlays from higher deficits.
Lending contraction has been a problem since 2008 due to bank regulations design to make the banking sector safer. Complex systems don't always turn out as humans expect.
Yeah, either he or I have a very wrong idea of what is cause and what is effect. I don't think he appreciates how the prices of bonds, houses, oil, and other assets go down when the money peruses bonds that have a higher yield.
I don't know if he underestimates or not, since he never even talks about. Just having to use a higher discount rate for NPV calculations of business investments theoretically has to decrease business investment and therefore loan growth. But the flip side is that less business investments should lead to less production and be an impulse to higher inflation. Seems like part of his point is that the current regime's way of thinking must assume rising rates will "break" the economy to a degree that results in higher unemployment and lower wage growth to actually be an impulse to lower inflation. To be fair, the Fed has openly stated they want higher unemployment so there doesn't seem to be disagreement there.
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Demanding that 🇺🇸 federal 💸 taxes be paid only in 💵 Dollars, insures the validity of the 💵 Dollar as the means of exchange.
Unlike States and municipalities, only 🇺🇸 federal government created 💵 Dollars, not 🇺🇸 federal 💸 taxes, nor auctioned interest bearing 🏛️ Treasury Securities, pays for entitlement/discretionary spending and interest on the debt.
The 🇺🇸 National Debt is the amount of interest bearing 🏛️ Treasury Securities that the 🏛️ Federal Reserve has exchanged for excess 💵 Dollars circulating in the economy. Essentially having transferred excess 🪙 change from checking to savings.
The 🇺🇸 National Deficit is when the total amount of 💵 Dollars created into the economy by the 🇺🇸 federal government, exceeds the total 🇺🇸 federal revenues 💸 taxed.
Eliminating excessive concentrations of 💵 Dollars through 🇺🇸 federal capital gains, dividend, interest, corporate, estate and inheritance 💸 taxes are essential for restraining excessive concentrations of private power.
Inflation is a devaluation of the 💵 Dollar throughout the economy due to a shortage of resources and/or productive capacity.
Hyperinflation is a catastrophic devaluation of the 💵 Dollar throughout the economy due to a collapse in resources and/or productive capacity.
Recessions are cyclical decelerations of the 💵 Dollar throughout the economy that in time cause corresponding declines in economic activity.
Stagflation is a devaluation of the 💵 Dollar compounded by a decline in economic activity throughout the economy due to the scarcity of an essential resource.
Deflation is a revaluation of the 💵 Dollar compounded by a decline in economic activity throughout the economy due to an escalation in excessive inventory.
A Depression occurs when the 🇺🇸 federal government runs a surplus that 💸 taxes out the 💵 Dollars essential for the functioning of the economy, causing an unsustainable escalation in private debt and inevitable collapse in economic activity.
I’m sorry if I’m misunderstanding here but Mosler argued that higher rates are inflationary. In our current scenario where the fed hikes rates from nothing to 5 points in a year really smacked asset prices. Isn’t this wealth effect real and doesn’t it have some impact on inflation? The cost of capital for small businesses has skyrocketed and will have a deflationary effect in my intuitive understanding but I would love to understand his point on this in more detail. Does anyone have some reading material on this?
Basically, The Fed raises interest rates to try reduce demand for bank credit.
This hopefully impacts the housing market (most loans are made to buy housing) and the auto industry.
So hopefully you get lay offs in these sectors. Which hopefully have knock off effects of more lay offs.
As far as small/medium sized businesses, most rely on savings or private investors to get off the ground. Banks don’t like loaning money to Mom and Pop for a business venture. They want houses as collateral.
But high interest rates affect Mom & Pop because hopefully you get lots of involuntarily unemployed folks who can’t afford to shop at Mom & Pop.
On the other hand, wealthy bond holders get more 💵 to spend and bid up asset prices that the rest of the economy must pay
It’s good to be rich. Sucks to be a serf
Basically high rates is a give away to rich people driving wealth inequality furthermore conversely high rates hurt poor people but the bigger scam is that rates themselves are a distraction to avoid real public policy addressing wealth inequality
One minute in and my ears already hurt:
"Once you cut spending you've also reduced tax revenues"
So we should spend 100% to get back a small fraction of it
I'm glad to read that someone else sees how nutty that thinking is.
"Shovel ready jobs" because they'll be paying taxes?!?
You don't need it back. You haven't understood MMT
Depends on where the government spends the money❗️
Jack! Please get Bob Murphy on next to talk about Economics and why he thinks Mosler is wrong on some things.
😂😂😂 I'm sure the debate they had never happened.
@@Jesus-kt5dc Mosler struggles in the debate they had. But for a lot of the debate they were kind of arguing in circles. Part of that is because people like Mosler think their ideas are new. And while there may be some intricacies of the way things work because of limitations that Congress tried to put on The Federal Reserve, we've seen time and time again that they just sidestep the rules by putting an intermediary in place. And while that makes the system more complex, it doesn't ultimately change what's happening. We may be past the point of no return, but perhaps if we get people like Bob Murphy on podcasts like this, we can regain some sanity and lessen the pain we're going to go through by dealing with problems sooner rather than later. Economics is about tradeoffs. The neo-keynesians and modern monetary crowd think that we're able to have everything we want without ramifications. They always admit we have to make sure inflation doesn't happen, but now, when it happens, they argue we should quadruple down on spending even more money. It's so ridiculous. If only people would read Von Mises, Hayek, Rothbard, and Sowell; then maybe we'd get to place where citizens would demand more responsibility from our governments.
Thank you Jack! Your interview of Mosler has changed my perception of the economy and monetary theory. "The Federal Reserve raising rates is inflationary when the debt to GDP is high." Wow! I'm having severe cognitive dissonance.
Because there is more interest being paid by government = more money in the economy = inflationary
If the more interest was only paid by consumers / was non governmental then it would be deflationary
but now they are gonna have a spiral of inflation and keep raising rates like 70s and cause bad stuff
is any of this bullish lol
But why does he act like the cost of capital going ⬆️ doesn’t affect consumers more than it affects the extra spending the government has
And don’t the interest payments go to whoever holds the variable rate debt? And wtf are they gonna be buying or doing? Probably not consuming more stuff with it from american public businesses
I’m just spitballing here (haven’t listened to the whole thing yet he may have evidence to support the view of the impact of the %)
Also with low rates businesses can afford lower margins, higher rates = highers costs = pass the price hikes onto the consumer
Biggest elephant in the room was when Paul Volker did not raise rates to break the back of inflation but adjusted the amount of credit/money in the system which resulted in higher rates. We need to take money out of the system faster to lower inflation and we can either tax it out or stop giving commercial banks money/credit
Probably Jimmy Carter deregulation of natural gas maybe the key.
Bingo, that's what higher rates do. Deleverage an overlevereged economy which takes money out of an overstimulaed system and voila, disinlationary pressure. I guess that's too much common sense for these MMT people.
This is a great interview. I've been following MMT for at least 5 years. This interview debunks many of the strawman arguments against MMT. There's a limit to everything and Mosler details not only the limits to spending but the limits to interest rates. Now when people say that, I can point to this interview and show where the founder himself details the limits.
I've been saying this since the Fed started raising rates. It's actually net inflationary to raise rates. He didn't even get into the fact that higher mortgage rates pushes up rent prices due to pricing out first time home buyers, he didn't get into the Lyn Alden point that rising interest rates makes cap ex for commodities like oil and copper more expensive, but the grand finale is the fact that the government has to SPEND more as interest rates rise which is what causes 70% of inflation in the first place. Then we've got criminally idiotic derpers at the Fed calling for more rate hikes even now.
No, it isn't. It's destructive in other ways. Mosely is an extreme socialist who believes that every time the government prints more money, we have more money to spend. He doesn't understand inflation at all.
That's what Modern Monetary Theory believes. It's the flip side of Reagan's supplybside economics. This theory is one of the justifications for sleepy Joe printing record amounts of money. The idea that every dollar printed 😮 be a dollar spent and a dollar added to taxable income.
Blockworks is an agent of misinformation. They tricked me by having some capable people like Diane Dimartino, but guys like thisceje out a modest living by managing money for people who don't know better. They call themselves a hedge fun. I guess if a guy in a dress can be a woman, then an apple cart can be a hedge fund.
I sent understand why spending on interest is inflationary. To whom is this money paid? Surely covid stimulus spending isn't the same as paying interest to creditors.
Good points. Something to chew on for sure.
@@Robert-un3cf Right now there is trillions of dollars in the Fed's reverse repo and treasury bonds getting paid 4-5%. Those are mostly institutions and wealthy people. The Fed used to be a net receiver of interest payments by about 1/3rd trillion per year. Now they're a net payer of interest by about the same. So the Fed alone is printing 2/3rds of a trillion per year more than a year ago causing the very inflation they think they're fighting.
In Volcker's era the debt was so small (like 33% of GDP) that raising interest rates wasn't as inflationary as it now that the debt is 120% of GDP. So at this point we're hurting the tax revenues by raising interest rates which means the government has to run higher deficits to pay for the debt causing inflation.
If the interest rates are making the government print more money and are causing inflation then why is the money supply rapidly falling right now?
Despite what some economists think, the money supply isn't directly linked to inflation. inflation is when people spend their money, not save it. If you give people billions of dollars and they decide to save\invest it rather than spend it on goods and services, you will not get inflation.
@@sternof money supply is directly linked to spending thus its directly linked to inflation. If you open a dictionary made before the 80’s it will say that inflation is the expansion of the money supply.
@@imhopelesslyaddictedtofent4266
If you open Peter Lynch's dictionary from the 80's then you are right. If you ask others or google how inflation is defined today in the 2020s it wont be the money supply but an increase in the general price level of goods and services in an economy (over time). please see my simple example why the money supply case is invalid.The money supply is not directly linked to spending if you dont spend it.
Probably need to have mosler back on. He nailed his prediction that the economy wouldn’t slow down due to the interest expense on the debt. I think Michael Howell really hinges on the same argument but Howell never actually specifically calls out interest expense only increased fiscal spending - although I assume it’s the same argument since interest expense is what’s driving the debt increase
It's just wrong to say that higher interest rates (engineered by the Fed) put upward pressure on inflation..... everything else being equal. What MIGHT be true, however, is that if you compare "FF1" (a "first" Fed Funds rate) with FF2 (a second Fed Funds rate) such that FF2 is greater than FF1, then there'll be more inflation if the deficit is a lot higher when the Fed Funds rate is set to FF2 rather than FF1..... or in other words, if you change TWO variables simultaneously, then perhaps it's true that the conditions associated with FF2 will promote greater inflation. But even then, I'm skeptical.
What a dream it would be if the government would actually cut spending. If you think government is a unaccountable now, full on embracing MMT would be gasoline on a fire
While most socal security recipients don't have to pay taxes on ALL their soc sec they do pay on 50%. Which adds up. It's like they are double or 1.5 X taxed. Once from payroll taxes and again as 50% income tax
But the Fed can only increse the monetary base with higher interest rates. We have seem though during QE that the monetary base is not a useful instrument to manage M3 money demand. Money grows mainly because debt in commercial banks is increased. Therfore i would argue that interest rate very well decreases debt and money demand and the M3 money amount. Or am I missing something?
1:05 in he spills the beans. Government can't stop spending because it will decrease tax revenues. In other words you are being paid in part by your own income. Priceless.
Mosler by ignoring a sense of proportionality uses deception and failed sense of proportionality to try to put across an idea that welfare payment cuts result in less revenue for the government.
The failure of Moslers idea about government cutting welfare and thus reducing the recipient's tax liability and therefore future government revenue is grossly inaccurate.
This is simply understood because the full welfare payment is many times more than the tax liability which is only a small proportion of what the welfare payment would be if government retained it. e.g. government pays someone a gross amount of $8,000 per year. Their tax liability on that small income would be very low at most probably around
15% to qualify for the welfare to start with so government gets back only that 15% while saving the total amount if the welfare was cut. The net government saving would be 85% of the whole welfare payment or $7,800. (total payment less total 15% tax recovered).
Let's see if I can boil down this long video's content into a single or few paragraphs...
The talk about higher interest rates causing inflation and other bad economic effects is only when you're talking about an unhealthy economy which isn't actually producing anything substantive. This brings to mind numerous failed and failing national economies around the world like Turkey, Pakistan, Sudan and yes... China. When an economy is not producing much but insists living beyond its means, the easy solution is to borrow, and with borrowing comes debt with interest terms. This is little different than a person living on their credit card living a lavish lifestyle that's not supported by wages. If interest rates were to increase, the effect would be to increase to finance old to maintain a lifestyle that's not justified by real productivity. Increased debt to pay for goods and services in short supply because you're not producing causes inflationary price pressures.
Is it as simple as that?
There are a lot of mini topics discussed in this video, but IMO that is how the core topic can be described in a few words.
In any case, on a national or international scale, it's easy to mistaken GDP as a true measure of productivity. GDP was redefined back in the 1980's to include non-manufacturing activity like services to try to better reflect total economic activity, but in some ways that can be abused if spending becomes a dominating part of the basket of measurements that make up GDP. People should remember that despite the name "Gross Domestic Product" that "Product" doesn't necessarily mean the lay person's definition and can sometimes mean something quite different.
The whole idea of Powell's strategy was to tank the economy.
Obviously, raising interest rates will only make inflation go up - unless the rate hikes cause a recession, the deeper, the better.
The US economy has been resilient and hasn't slowed down yet due to the rate hikes. Therefore, inflation is worsened, at the moment, by the hikes.
This was an odd strategy for Powell to take until you realize that Powell was appointed by Trump and, for some insane reason, was kept on by Biden. Powell would like nothing better than a deep recession that tanks Biden's re-election bid in 2024. Hasn't happened yet.
👍👍.I was at a retirement seminar and the speaker spoke on how he quit his job after he made well over $950,000 PROFIT within 3months he invested $120,000. I need guidance on what investments to make.
@Gray Thompson Pls do you mind sharing any means of reaching out to him easily? I'm really interested.
Really great interview, although I felt Mosler sounded a bit too dogmatic. I'm just a dude wanting to know how the world works, but it's frustrating when there are so many compelling, yet conflicting theories.
The explanation (at 19.07) of Mosler's belief the government spending first before taxes can be paid is Illustrative of the failure of Mosler to correctly analyse the creation of money itself because it does not fit the time line of how money is created as well as not fitting with the creation of most of the money in the economy which is that created by private banks when they lend to their customers and that money is spent on goods and services including incomes on which tax is payable.
So huge amounts of money paid in taxes comes from money created by private banks that government then collects before it has the chance to spend.
corporate profits record. workers can't afford groceries. this, of course, is not related. uh huh.
employment may be high, but you are employed if you drive for uber at a loss, right?
Isn't the root of the problem ROI? I suppose the creation of money might work if there was a product or service made from its creation that would generate capital. Like when tech investors give money in hopes they are funding new innovation that brings in revenue.
The IMF is made up of member countries that donate to it. The notion that the USA would go on its knees to the IMF is laughable because the USA is the biggest donor nation to the IMF at over $118 billion. In Canada the opposition leader still pushes the paradigm that printing money is inflationary.
Inflation and raising interest rates BOTH increase the transfer of assets from people and businesses to those with the power to increase liabilities on businesses and people. Thus inflation is a measure of the higher liabilities which is what most of the focus is on. That looks at only one part of the inflation balance sheet. It then extracts assets - the other side of the balance sheet - from people and businesses. Thus inequality increases. So both inflation and higher interest rates contribute to inequality. If the incomes go up then it won’t matter but that is not happening.
When they first started to fight inflation with higher interest rates, I characterized it as throwing gasoline on a fire hoping it will go out.
Mosler talking NONSENSE when he says debiting accounts is not money moving. The reality is when money is debited from one's account it means you can no longer spend that money or use it to substantiate your financial situation to show you are capable of managing the money BUT the account that it was transferred to benefits from being able to spend it or pay off their own liabilities.
If Mosler does not believe the money is moved than he could send a few thousand to my account, or everyone else's but I see he has not acted upon that or told me he will.
I will wait until he does to ponder what I want to buy with the new money.
Being sceptical I won't be sitting around anticipating that movement of money into my account !!
i am not that easily fooled but some may swallow what he says without checking it's validity.
How come Erdogan hasn't hired him as Turkey's central bank president?
MMT is crap. Gotta wonder where the net benefits are - they never bother to list them - and I'm talking REAL net benefits - not fakery.
I really like Warren Mosler in all the interviews I've seen of him, but...
Must be something mighty tasty on the roof of his mouth...
Worried I need to recalibrate my entire portfolio after hearing his perspective on rising int rates.
I've been tentatively long since December when interest payments on the national debt reached 60 billion a month. Now with spending increases on the way and interest payments hitting 100 billion a month there is no reason not to be all in. MMT making me rich..
@@roanora7853 except that Treasury is now replenishing its general account, the TGA, with $500B, which should decrease liquidity.
New to MMT so I’m not sure if it has an alternative perspective on TGA.
The Fed can put their Scientist hat on and do small experiments. If they lower rates, see what happens. If it’s bad then just raise them back up. Duh.
Mosler wasn't very impressive. He didn't seem to know what he was talking about. MMT is interesting, but need a better representative to discuss it.
That is absolutely wild to hear that they include the Fed's profits into corporate profits
The strategy, presumably, was to hike rates to throw the economy into a recession that would cause the money multiplier to go down which would counter inflation.
The strategy obviously doesn't work if the economy isn't thrown into a recession. And, so far, it hasn't been. And, just as obviously, higher interest rates will accelerate inflation when the economy doesn't tank.
It's coming. Best to prepare even if you're early.
Very good point.
In a recent Blockworks Macro interview with Robert Kaplan, he asserted that the fight against inflation is a joint effort between monetary and fiscal policy.
I note that Argentina has comparable income and corporate tax rates to the west. That likely doesn't help.
The Payroll taxes re not 'funding' anything. It's jut another tax on the accounting ledger
Sounds like that among other things the fed acts as a clearing house for the whole system and they can balance the books however congress tells them to.
Is he saying we're not going into recession because we're flooded with 5% interest on all of our large bond accounts?
Is Turkey’s Erdogan right then when he says high interest causes inflation?
surprised a great interviewer like Jack would have this kook as a guest...
Hahaaa when you get social security. Oh thats a good one. Not for us Im afraid, no money left.
Definitely have this guy back for more interviews.
something the higher rates are great for is the rich got their ubi and the workers who were already short had their interest raised so they had less and so now they are borrowing more to get by. i think they are saying consumer debt is record high.
Would be great to see a review of the MMT in math terms. The terminology gets so convoluted that it’s hard to track in a free form conversation without some reference points in writing.
@ Ivelin In math terms MMT is an even more obvious nonsensically trash than in the pseudo economical and sociological phraseology in which it once was introduced
Look up Steve Keen Minsky Model, that might help.
@@Jesus-kt5dc except that Keen has his focus on a debt jubilee and on environmentalist issues. These things might be important but they crowd out the economic theory work that he used to be good at.
@@joythought I understand it might not be your cup of tea, but I'm more focus on the math. But I understand what you mean.
That's because MMT has never been formalized into a proper academic model - it's pushed by cranks and socialists who want unlimited government spending.
Does not all the fancy footwork of extreme deficit spending dance on to the taxpayers front door ?
Wow! This guy is impressively ignorant.
What do you mean Powell says economy will be ok ? I heard that he set will pain ?
Excellent thank you
How do you explain the Eurodollar market?
After just a few minutes I can see this guy is clueless,
When the government pays SS,.. that is not taxed unless you're under 67 and you are working at a job receiving a salary. And then only a portion is counted toward the AGI.
Rental income, capital gains, interest. dividends,.. don't count as having a job or a salary.
Once you're over the full benefit age for recieving SS, 67, you don't pay taxes regardless of whetehr you have a job and a salary or not.
From the title,..
If higher interest rates cause inflation, ie increases demand rather than reduces it, how did we get inflation before the Fed raised rates?
How did Volcker end inflation when he raised rates to near 20%?
Higher interest don't increase demand, but they can reduce supply.. When demand is constant, but supply decreases, prices go up, not down..
Housing market is a different example.. Demand has decreased, but supply has also decreased enough to keep prices elevated. Supply is decreasing because higher rates means it costs more for developers to finance building new houses.. Supply is also decreasing because instead of building newer, more expensive houses due to higher rates... People are looking for older bargain houses.
Basically, higher interest rates ONLY decrease demand in things that aren't necessities for life.
@@wjj7411
First, these rates aren't extraordinary. What was extraordinary was the 3% rates. Those were the exception to the rule over the last 30 or 40 years. High interest rates would be above 15%.
Second,.. what you're saying is that higher interest rates only impact the supply side.
Nowhere in the supply-demand curve does it show interest rates weighing only on the supply side. The whole curve adjusts to the ecomomic environment. Higher interest rates don't impact the supply side any more than the demand side.
Anyone who doesn't have to move would be wise to NOT sell now just because the price of their home has gone up,.. when after they sell, they'll have to pay more for the equivalent home at an even higher interest rate. (Not to mention their property taxes would go up.)
That reduces both supply and demand. Or equally impacts supply and demand.
For those that have to move,.. new home builders have been taking up the supply slack. Interest rates haven't stopped them. Their stock prices are at record highs.
If you look at new homes and multi-unit completions in Q1 of '23, it was the highest in most areas of the US for the last 3 years.
New housing starts have dropped off,.. but I suspect that's due to the economy starting to slow down.
New home builders don't build too many homes in advance/spec homes.. They generally wait for a buyer to pick a lot and a floor plan, sign a contract and put down a deposit and then start building.
But to say rate hikes are the cause of inflation is just insane.
Higher rates and reducing the money supply (or liquidity) are the cure for inflation.
@JCGoogle It's not insane.. Especially when supply chains were shut down and businesses need debt to rebuild and rehire. More expensive debt = more expense passed on to the consumer. If the consumer absolutely needs the good/service, they will have to pay more. Demand in this case is inelastic, but the supply decreases because of lack of production.
Watch how this plays out over the next year. Then come back and tell me I'm wrong.
@@wjj7411
I'll tell you right now you're wrong.
"More expensive debt" doesn't just get applied to the supply side.
The "more expensive debt get's applied to supply and demand".
More expensive debt,.. reduces demand whish reduces supply.
That's just economic fact.
To say higher rates is inflationary is batpoopinsane.
Retuning to ZIRP would be inflationary.
Because MMT people are totally full of s***. Yes, it is a very good question to ask this 'economist'. My theory is MMT proponents have nefarious ulterior motives and use 'economics' to enforce it. Also, that 'flooding' of dollars into fixed income money market funds through short-term debt and reverse reop is money taken out of inflationary spending for goods and services. This guy, like Kelton, has an agenda.
If Mosler is so much smarter than mainstream, why isn’t he a Billionaire? Surely if his analysis is accurate then he could out trade Buffet in his sleep with his knowledge edge, weird that he doesn’t ehhh
I’ll give him credit he understands the plumbing & mechanics but that’s the extent of it. To trade is entering a market dynamics & psychology element, which someone like him has no concept of.
@penderyn8794 it means their “theories” have holes. Mosler isn’t a macro analyst either, all he knows is internal US banking plumbing, he has no concept of how any of this will be impacted with global currency / bond movements, or how a sudden loss of foreign purchases / sales of Treasuries would impact US inflation if the dollar suddenly was subject to a currency crisis if its debt lost value abroad. Nor does he focus on commodities which is critical to understand in how it impacts all decisions made to underwrite private sector loans / securities. This is why he’s just another huckster in the end, I respect his knowledge of plumbing but it doesn’t explain the world at all, because at the end of the day you can’t. Economics is very much subjective, largely BS way for elites to provide a justification for their decisions.
@@danielrobinson3432 Wtf are you talking about? MMT is too long term to be able to trade it on 5 min candles like a crackhead.
He made his money and then retired early and now lives in a tax haven. That's pretty smart to me.
Problem is that governments will never uphold to the theory. Same with Keynesianism. According the theory, governments should generate deficits only when economy is not doing well, but they just accumulate debt non stop. If they just can print whatever they want, they will. Maybe crypto will help.
Thank you Jack, this interview was superb, but it needs a part 2. Not enough said about the cost of potentially unlimited balance sheet expansion. I hope we all agree that there has to be a cost somewhere. The system of central bank and treasury operations that is described cannot be without any downside vis a vis the dollar, in the context of a global system in which it is still the main currency of transaction and reserve, (even though reserve status is gradually diminishing from a lack of trust).
Did you not watch the video, the two dangers pointed out are inflation and artificial limits set by fear mongering politicians
So he is saying Erdagon is fighting inflation in Turkey with MMT? Oh wait ... Turkey's inflation is at 80% as Erdagon is decreasing interest rate.
lol it's been falling month over month as he's been lowering rates. Cope harder.
look at M2 and tell me high rates are inflationary again
I thought it was just me Jack but if you were a little confused I feel a bit better, I couldn't help feeling that what he was describing was basically a Ponzi scheme and that's the reason why several countries are looking for alternatives to the US $ ! - thanks to you both 👍
cope harder
@@roanora7853 explain how printing money and giving it to money to raise tax revenue to fund spending isn’t a ponzi scheme
@@imhopelesslyaddictedtofent4266 This is just the nature of any monopolized currency, which the Dollar is.. Good luck not holding the only thing you can pay taxes in. You libertarians are too paralyzed by your own moral preening to deal with the reality of hegemony.
@@roanora7853 in order for this to work the money supply would have to be infinitely expanding which will always lead to hyperinflation
Explain how it is. Its just a favt that all money is created.@imhopelesslyaddictedtofent4266
Honest to God not trolling you... but were you too chicken to ask Mosler about crypto? Or is that for a follow-up interview too? And thanks for doing this, I always enjoy hearing Mosler issue these "intellectual invoices" for the mainstream economists to pick up. They rarely do.
"Too chicken"? That's a revelation. Do you mean "too chicken" like you are in being unable to address the MMT idea that taxes create value in and acceptance of money when they failed to do so in very country where inflation made the money worthless. Examples are :- Zimbabwe, Weimar Republic, Brazil, Chile, Hungary, presently in Venezuela.
Wow. My head is spinning right now.
His explanation of the benefits of MMT was a mouthful of mush.
not an argument
With the way the market is moving, we'll mostly hold for longer than 2030 to realize profit gain, I think a video on "How to profit from the present market" will be more effective, I mean I've heard of people making upto 250K within few months and I'd like to know how.
Economic investigator Frank G Melbourne Australia is still watching this very informative content cheers Frank ❤
Just lol at being into crypto and MMT at the same time. MMT explains why the dollar has value (and crypto doesn't)
Smoke and mirrors
I have no words....
I'm working in the housing sector right now and the landlords we're managing properties for are hiking rents by big amounts in response to rising rates that they're paying for mortgages. This means that the hiking in rates is driving inflation in rents and in turn, labour prices and item prices at the front end. This is a very direct example of exactly what Warren spoke about here.
Exactly
They pay interest because we deposit money and the bank uses it to make money. So people who deposit money shouldn't get interest?
Please tell me you don't call yourself a conservative. Why should anyone get money for doing nothing?
@@roanora7853 They are doing something, people give there live force to make the money they put into the back. The bank then loans the money out to other people who need the money and the bank makes interest. The person putting the money in the bank takes risk doing that, they should get interest on that money. If you are gonna tell me the banks are safe do some research and you will find bank failures where the FDIC settled with people for pennies on the dollar under the 250k thresh hold. This is why people are going to Bitcoin and metals.
@@t.a.b. Banks don't lend out your deposits, full stop. The loans create the deposits. It's just double entry book keeping.
@@roanora7853 If banks didn't have deposit they could not get money from the fed. They are not required to keep any money that you deposit, where does it go? Back to the fed? Why would there be a reserve requirement then? They can't loan the money out without deposits
@@t.a.b. Loans create the deposits, most are kept as bank reserves, some get transformed to bonds per SLR requirements. All dollar assets that don't have a corresponding liability were the dollars spent into existence by Congress that haven't been taxed back out.
I'm confused how money works. In Australia there is only $4,000 in cash for every person in our country. Roughly 104 billion dollars, our economy is trillions. Residential housing is worth $10trillion. If people wanted to be paid in actual money, there is none.
It's all actual money no matter what form it is in. The official sovereign money in Australia is all fiat credit money be it in digital or any other form. Most people pay their debts and earn their income in digital dollars not cash because cash only represents about 2% of the money in the economy. If you go the grocery store you pay in digital dollars or buy new refrigerator you pay in digital dollars on your bankcard. You could pay by cheque but that is still digital dollars written on a piece of paper. Nobody cares if they pay in either form.
You can read this comment or you can print it out and read from a paper. That's a way to think about cash vs e-banking money
Default is the best solution.