The economic crisis and downturn are all the signs of 2008 market crash 2.0, so my question is do I still save in the US dollar or is it okay to move all emergency and savings to precious metals?
Gold is often seen as a safe-haven asset that can protect against inflation and economic uncertainty. But like any investment, it carries risks. To determine if gold is the right investment option for you, an investment advisor can help you weigh the potential benefits and risks of investing in gold. They can also help you create a well-diversified portfolio that includes gold as part of a broader investment strategy. An investment advisor can help you decide how much of your portfolio should be allocated to gold and select other investments that can complement your gold holdings.
Investing in gold is a reliable choice, and I plan to keep buying more to make up for my losses. While silver is also a good investment, my collectibles are not as similar. It's important to have clear investment goals and educate yourself on the type of investment that interests you. I work with a financial consultant regulated by the SEC, and started small, but eventually accumulated over $800,000.
I will like to ask, How did you achieve it? I been trying to stick with index funds. I feel this new interest rates decrease could crash this economy. I'm looking out for a better investing strategy, I have a lump sum that inflation is steady eating up.
‘’Marisa Michelle Litwinsky’’ is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for this tip , I must say Marisa, appears to be quite knowledgeable. After coming across her webpage, I thoroughly went through her resume, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.
When I was younger, I read "hard" science fiction to be stimulated by novel alternate realities. Now finding out more and more about how economics truly works fulfills that goal. It's as if "money" is from another universe than everyday life as we think we know it.
Go and find the 1hr vdo by Professor RICHARD WERNER. people like Randal Wray, Bill Mitchel, Stephanie Kelton, Mike Hudson are all pple trying to enlighten our citizens.you my friend are absolutely right about the fascinating topic of economics. Its fascinating because we have to unravel the absolute and utter bullshit being peddled by NEOCON/NEOLIBERAL/NEO-classical so called economists.
Fiat Currency was proposed as a definition of Value that provides some support for the Currency. The support in the USA ended 20 years ago. The US Currency is Valuable as long as the USA can provide a Military threat, to back the currency. The US Military Industrial Complex has run low on Cash. The corruption has taken the ability to produce weapons , and used it for other purposes. The USA is not a superpower militarily. The money that was supporting the MIC, has been eroded by corruption.
@@danielhutchinson6604 You write, _"The US Currency is Valuable as long as the USA can provide a Military threat, to back the currency."_ Agree. As a general rule, a sovereign's fiat currency holds value only _within_ the sovereign's domain. The sovereign uses taxation power and other coercive measures to assure its circulation. But when the sovereign attempts to expand its coercive/fiat beyond its borders it must rely on 800 bases world-wide, nuke-armed subs under the oceans, 24 hour in-flight nuclear bombers, siloed ICBM's etc., not to mention a CIA and other spectral agencies at the ready to destabilize any external sovereign that dares defy the power of the _reserve_ fiat. The entire function of regional wars thus appears obvious--to "assure" the planet that _any_ global resource can and should be exchanged for the fiat currency, which now has international coercive "reach." "Bankers wars?" You tell me. BTW, the Carthaginians started their own BRICS-like system defying the Roman fiat currency. The second Punic war ensued. In a nuclear age, humanity can't afford this type of confrontation. Empire had better go the carrot route. The alternative is too tragic to contemplate. For the moment, seriously infantilized types sit in the corridors of power on Wall Street and on the Beltway... Be well.
I stopped the video at minute 39 when your guest spoke about 'inflation was lower in the USA in the late 60's and 70's than in Europe' - the inflation problem for the USA came with the OPEC oil embargo of 1973. Actually I'll remind your guest that inflation remained lower in the USA back when he mentioned it being so and lower in the USA than in Europe because - with the status of the US dollar being the reserve currency and the most widely used to settle international trade transactions, the US was basically exporting it's inflation to the rest of the world - which included Europe - big time - and that's one reason why DeGaulle said he no longer wanted to accept US dollars for trade - he wanted the equivalent in gold - at $35 per ounce. The US' reckless spending under LBJ - a real criminal in both the economic area as well as in his war against the Vietnamese people, flys under your guest's radar. The big problems for the US economy began with LBJ and the Vietnam war - and it didn't take many more years before Nixon took the US off the gold standard in 1971. Your guest seems to think there is no linkage between all these events but I can assure you his analysis is faulty when he skims over these facts and basically ignores them.
The people elected Nixon resoundingly twice because he was better at debt spending than even LBJ. The Vietnam War was morally horrible and expensive, but in reality, it was a Republican driven event promoted by the anticommunist wing.
How much of the Comments is dedicated to Economic education, How much to disinformation? LBJ owed the Brown Bros of Houston for supporting His ascent to Power. They were rewarded with Contracts. The USA was still projecting the same Policy of Blowing up the World, the cost seemed secondary. The Bill for Nam was not paid until the Nixon Administration promoted the Saudi deal that backed the new Fiat Dollar. That did work for a while, 30 years. Then the apparent support fell off for the US Dollar. For 20 years the US Currency has been backed by military threats. How are they doing now?
@@danielhutchinson6604What are the necessary and sufficient conditions for any asset, physical/real or merely financial, to "retain" its exchange-value? What determines the exchange value of a "physical (sic) currency"?
@@Buf-g6m World Financial realities that prompted the Bretton Woods Conference, appear to once again be evident. The desire for a more secure form of Financial Currency Values, has been a problem as World Trade increased. The ability to control Exchange Rates by adjusting the US Fiat Currency Valuation, does impose problems on many Nations Currency to estimate costs. Since the USA adopted the Fiat Currency of the Federal Reserve Bank, the ability to manipulate values and improve the economic position of Commodity Brokers inside the USA and other G-7 Nations do imply an economic advantage. Next Month 159 Nations appear prepared to join the BRICS Trade association to find some stability in the exchange rates. That seems to imply a major shift of the power to regulate Exchange Rates with Currency that is not fixed at a certain rate.
@@danielhutchinson6604 agreed i myself wish there would be a new bretton woods-esque conference. The last one only came after decades of arm's races trade wars and ultimately trade wars. Sadly i don't think the biggest benefactors of this fast becoming bunk arrangement will relent without a huge war .
The nature of money is an important subject. Still breaks my brain when I try to think it all through. My current stance: 1. MMT is the most accurate model to describe how the US dollar functions in reality today and provides important background knowledge regarding incentives in US national policy decisions (biggest perpetual honeypot in the world - everyone wants access) 2. Long-term outcomes for US society and the world would be better if the dollar and all national currencies were as close to a "hard currency" as possible. 3. But I don't see how this kind of hard-currency "self-limitation" could ever occur let alone remain in place for long. The genie is out of the bottle. The temptations are too great and too frequent. What the youtube world really needs next is to honestly investigate the macro longterm implications of this monetary system and its implications for economical development, societal development, domestic policy, foreign policy, war & peace, … leading also to a normative discussion on MMT: i.e. are we happy with this system of money? Are we content we have zero say over this? Thanks for diving into the subject!
I am impressed! You got a real true blue credible economist. This is why I watch your shows. You’re not an ideologue but a truth seeker who is interested in informing the public. God Bless your work and efforts!
Actually the war being treated as a business venture goes back even further. Even a decorated military man General Butler has been saying this since the 1930's, "War is a racket."
Maj-Gen. Butler spoke from experience. It's not that it's run like a business, but it serves the interests of buisness directly - he spoke of "making Nicaragua safe" for the Banana Trust and other countries "safe" for Banksters and such. He was speking not of "business" but of mafia practices. He literally compares the Marines to mafia or gang enforcers who use violence to intimidate those it exploits.
What's more worrying potentially , is it seems like we're entering an age where the wars aren't seemingly about making places safe for particular US multinationals but making energy affordable for middle east settler colony(see gary vogler) And keeping the world invested in , if you will the dollars privileged status in the overall international trade system.
@@Buf-g6m Yes, because US "defense" contractors certainly aren't making money from arms sales to "middle east settler colony" at all, and must be losing money! /s US imperialism serves US interests.
Yes, and it's funny how little Smedley Butler is ever mentioned nowadays, let alone the Business Plot that involved JP Morgan, Bush and many others. Sad to think all the genuine people fighting for the good fight like them, and this channel, will be wiped out from history if those in power succeed.
Pascal, I have followed most of the MMT economists (R Wray, Stephanie Kelton, Bill Mitchel, M Hudson, for 5yrs and sat through days of lectures to understand it. Now! The economist who did the real ( actual recorded research) empirical research in money creation and interest and inflation is German, Professor Richard Werner. R Werner's work lines up with MMT. In fact QE issuance (Quantitative Easing) was invented by Prof Werner. If he is willing to be a guest he would be another big piece in undoing the FRAUDULENT NEOCON ECONOMIC PRACTISE puzzle. ALSO Prof Werner has explained in more and clear historical detail about the 1973 oil crisis and American debt problem. It is fascinating. Its on UA-cam. I have followed Prof Werner for about 5yrs also.
A lot of People have defined Capital and the application of different forms of the use of Capital. The basic concept of US Fiat Currency has lost support. That is the essence of modern Western Economic philosophy. MMT is simply one more form of Fiat Currency, that defines Power as Capital. The power is gone in US Currency.
Okay, but servicing the debt is taking an ever larger share of federal appropriations. What happens when all new federal debt goes to servicing existing debt?? Also if federal debt since 1789 has increased on average 2% faster than GDP, on that trajectory eventually it WILL overtake GDP. And eventually service on existing debt WILL overtake GDP. What happens then, Professor?????? 😮
Go over to any professor Michael Hudson discussion on UA-cam or read one of his explanatory books. "Debts that can't be paid, _won't_ be paid." End of story. Be well.
good question is to ask, who holds that debt and enjoys interest. if it is US citizens, it benefits economy in long run. 100% GDP level loan makes things tougher but doesnt end economy. If US has used that money to assets, lets say warships, they can start using those and hope those "pay themselves" that loans dont have to be paid and can be renegotiated.
@@danielhutchinson6604 The US govt doesn't "need" to sell bonds at all in order to spend. The bond sales drain excess bank reserves-since 2008 an optional operation. But-the private sector loves & needs govt securities-they are the foundation of the financial system.
Eventually there will be no amount of money big enough to pay the workers who print the money and then everyone will throw up their hands and stop. The following generation, if it survives the zombie apocalypse, will start out with primitive bartering until some a-hole start talking about "organizing" for the betterment of man. A new constitution is written and Bingo, another spin of the wheel.
They could do both if it was about money. Your tax payer dollar does not finance the state because the state - especially USA - can pay for anything they want on this planet
@@rli8594 you are right. But it is the amount of resources that poses a limit. The state and banks play an important role in the allocation of resources. Money is the way to allocate resources (labor, energy, raw materials etc.)Individuals cannot loan beyond their means. But for states the sky isn't even the limit.
Aha! And now, just as the curtain falls on empire, we can understand the _true_ nature of the inverted totalitarian system the US empire has become and how it's ruled by 1% of its denizens... Be well.
@@hansverbeek822 You come awfully close to the facts. The US military and armed allies, along with the US's nearly 800 military bases strategically located worldwide, _enforce_ the will of the banking class, who determines _how_ world-wide resources get allocated... Please read General Smedley Butler's slender classic, _War is a Racket_ . Be well.
Every paper dollar is U.S. debt -- every digital dollar is U.S. debt -- the 'Fed' is not a central bank, but a group of private individuals and banks/corps. Does this guest ever get that far into his explanations?
Sure, but they are not _interest-bearing_ debt (zero 'coupon'), have no 'collateral', and have zero or instant maturity. The same Govt entities and agents which issue zero-coupon, zero collateral, zero maturity, at par, bearer, monetary instrument can (and sometimes do) issue positive-coupon, positive collateral, positive maturity, monetary instruments. Quite a few CBs in the world are authorized to issue bills and bonds (positive coupon and maturity) and a few Treasuries issue coins and notes (zero maturity, zero coupon).
@@stavroskarageorgis4804 The Treasury assured us in 1970 that they would sell T-Notes, equal to what FED Printed. That surprisingly lasted for 30 years. The Contemporary Federal Reserve Note appears to offer less value than Wiemar Deutschmarks. For twenty years the Treasury has not been able to support the Dollar. No amount of economic bullshit can erase that fact.
The fed member banks are the usual wall street banks and they own government debt / finance government spending by creating "money" out of thin air for profit.
The Fed is a central bank, an agency of the US goverment created & governed by Congress-not private. The 12 regional Fed banks are nominally private but their functions are mundane and they don't make monetary policy. Prof. Wray teaches accurate information about the Fed.
Love your channel Pascal and constantly recommend it to others. This is the only video of yours that left me feeling disappointed. Part of the problem was that you seemed to agree with the guest and hence never challenged him properly. Despite quite a bit of time devoted to the question, the video left me with no idea how MMT functions, beyond some airy description that governments with sovereign currencies can never run out of money. The description given early on seemed to say that MMT worked for all such governments, but the subsequent discussion focused on the US, which is a special case. I would have liked you to discuss other countries and why your guest believes MMT would succeed in them. I would also have liked an in-depth consideration of the effect of money printing on inflation (yes, the government can keep printing, but the value of what they print may decline). In regard to the US, you brushed past with a laugh the idea of MMT for military spending but austerity for social spending. But if money can just be printed, why not spend another trillion or three on homelessness, infrastructure, crime prevention etc? And why are taxes even needed if the government can never run out of money? Indeed, why work at all?
Covid money printing created significant inflation. Inflation makes the cash holder ordinary person poorer while assets hold their true value and asset holders become richer- of course when demand is reduced enough there will be impact on some assets which were being bough many cash holders. It’s called the Cantilon effect.
@@consciousexplorer8118 Inflation was becoming evident in 2015, as Commodity Prices climbed. Covid may have been introduced to distract us. Consider the revolving door Cabinet as the Plague was noticed?
I think it's accurate to say that MMT exists for the oligarchy and not for the plebes. Since US debt is denominated in $'s, it could be paid off tomorrow. There might be benefits to this and detriments - a worthwhile discussion that should occur. Money won't be printed for the pipsqueaks (like me) because oligarchs won't do this until the pitch forks are inches away. But they are more than willing to accept it for themselves. The ideas of MMT are worth consideration, but probably don't have universal application. Instead, they are a tool that may be helpful in some situations. I believe that Stephanie Kelton makes exactly this point in her book.
@@DeanNataro You may be missing some of the effects of Fiat Currency? If the Dollar gets no visible support it loses Value. The current Import shutdowns illustrate the fragility of resource purchase from outside sources. If Fiat Currency demonstrates no outside support as it did when Treasury was selling T-Notes as fast as the FED printed their Notes, the value diminished. So your comment about the Debt being easily Paid, does lack some support. Ms Kelton appears to be selling some method of preserving Capitalism. I await the demise of Capital as a measure of Value.
To be fair, Randy Wray, despite being in the upper echelon of MMT thinkers, is probably not the best person to go to for a clear introduction to MMT. Richard J Murphy is the most clear for those new to MMT ideas IMO. Agree with you that USA is a 'special case'- All the US MMT big-shots, Mosler, Wray, Kelton, seem to have a blind-spot there. It's detail differences mostly though.
Thank you very much for the very informative talk. But still I was waiting for reflection on the recent developments, I really would loved to hear something about the effect of de-dollarizition due to BRICS and other developments. Doesn’t that mean that the American bond market will collapse ? And than what happens to the ever raising debts? And how are the chances for a more peaceful world and MMT ?
Question is what does the US do to stop dedollarisation? And thats why I think we live in uncertain times. But I guess it cant be stopped any longer. The worlds tired of US dominance and hypocracy. One thing though in case you meant it: you cannot apply MMT. MMT just explains how things are (or at least tries) But its not like doing capitalism or communism. Its not a system...
That indeed is the blind spot with MMT it seems like its mostly only the US in the current global trade arrangement that steers countries toward us bonds and indeed they seem to be accumulating more grievances with the system. Disappointingly wray says himself in this interview. 'I don't really do international' The system as a whole is inherently international.
@@Buf-g6m no blind spot there. MMT says in your own currency you can pay any bill you want. As a consequence, in forgeign currency thats not the case. Side note: Germany was allowed to pay gas in USD or EUR so international isnt automatically foreign currency.
@@rli8594 michael hudson says debt and money and trade has a considerable political aspect to it. That means powerful states have means to retain certain privileges for themselves which inherently puts downward pressure on the ability of other countries to accumulate wealth. Currency exchange markets, imf loans, sanctions and currency valuations. These are all largely reflective of political realities. And don't forget governments capacity to spend are only constrained by available resources labor costs etc. America has the most valuable currency and commands resources and labor added value from around the globe. MMT has shortcomings regarding the international scope and political realities IMO.
@@Buf-g6m I agree with literally everything you said there. And yes MMT seems to focus on domestic spending as it always talks about spending in own currency. But think of a country whose policy it is to not make any additional debt, yet it is strongly depending on oil imports, to be paid in USD. Why should such a country not invest big money into EVs and infrastructure for it to decrease such a dependency? (This is only an example, there are lots of them) The rules we applied to ourselfes - e.g. the 60% max. debt for EU countries - a total random number - is a big nonsense as we still do not understand that a state (a currency creator) and the private sector (currency users) are not the same. The state spends money first and then asks taxes back. Private sector receives money first and then spends whats possible.
I was hoping you guys will get into how the BRICS is undermining dollar interest which is why the US is dead set in suppressing China's rise. And yes hyper inflation is the down side of MMT
Actually the US dont want anyone else to rise, China in particular. Which is why other countries are fed up and introduced an alternative. If the US had a different policy they could have kept the current system for another couple of decades. Ps. MMT is not something you can do / use / apply to anyone. Its an explanation system - a theory
BRICS Is not the threat. The overdependence on imported necessities proportionate to home based suppliers is the threat. Investment capital is a poor way to insure provisioning, because extortion is not something the nation needs more of. Yet, its nothing a few public options for any and all products and services of necessity wouldn't mitigate. Inflation is cause from shorting supply with regressive public policy that affords trust conflicts of interests, by public and private actors, sometimes RICO level, to go unchecked .
@@CommunistConsensus I tend to agree with that observation. I would consider the US is its own main threat. It's the end stage of imperialism and military and financial hegemoney of world entirely caused by the US uniparty adminstration over decades that have fueled the fire. BRICS participants want out of the hegemony of military and austerity means.
MMT is a description of how money systems work; hyperinflation is the downside of resource shocks and/or bad policy. MMT can't 'cause' any inflation, it;'s just an analysis.
Government can prohibit private individuals to own gold, aka "make owning gold illegal". It happened in the USA during the 1930s. Back then, citizens were forced to sell their privately owned gold for a fixed price.
LOL When the Euros were waging war on China in order to establish their "right" to peddle Opium in those lands, their reason for doing so was the fact that there was a trade imbalance due to the fact that the Europeons had nothing to trade of any worth to the Chinese except *silver* - not "gold" - silver.
@@ralphbernhard1757 Yeah, but the main gold hoarders are central banks. Have fun stopping those. Yellen tried to threaten the Chinese, they sent her to go pound sand in a very polite manner. The global majority ain't gonna eat the inflation the US is generating for much longer.
@@Polit_Burro Oh really. Gold was 27 usd when the gold standard was abolished. Now it's 2.7k. But if it isn't rising in a straight line it doesn't count...
There was a topic not mention in this video. "Money printing" vs money purchasing power. The impact of Government Central Bank issuing new money to pay for government deficits. There is a statistical link between Central Banks issuing large amount of money in many situations and the purchasing power of that money going down because of inflation afterward. This means for ordinary people that they cannot use the deposit in their bank accounts (or keeping it in a jar by the door) to save for the rainy days anymore.
Incorrect. Again, name-calling and dismissing do not amount to rational discourse. One wonders whether you understand Pascal's actual model of neutrality, given your comment about MMT. You seem to skip the logical. syllogism and evaluate arguments based on whether you find their conclusions (not) to your liking.
If everything is working just as intended, why is the middle class shrinking every year? It’s also well known that it’s an indicator of the prosperity of a country. We’ve been baffled by BS, long enough. If this is an intended result the majority of Western people clearly would benefit from from a new system. Then we can all prosper instead of a very small minority.
EVEN A 15 YEAR OLD KNOWS THAT GOVT CAN PRINT CURRENCY TO SPEND IF NEEDED, THIS ELECTRONIC DEPOSIT IS MERELY ANOTHER FORM OF MOVING THE MONEY..ONLY AN ECONOMIST CAN MAKE IT SOUND AS IF IT IS E = M C-squared LIKE DISCOVERY.
I'd like Professor Michael Hudson to get into any discussion about MMT and its' defects. Hudson wrote a great book titled 'Killing the Host'. He'd be my first choice to debate Wray as I feel MMT is not really gonna deliver us out of the chaos that we have now with endless wars of empire.
@@TheBandFiles what this guest was invited on this program to discuss was about economic theories as they apply to needless and endless wars of empire - which we've been seeing now for more than a century. How does MMT address this problem - Pascal and his guest NEVER got into that part of MMT to break that question down. His guest was far from convincing me or most likely most watchers of this video of how we can stop this endless pursuit of wars for the profit streams of international bankers.
The stocks you buy at $100 each can lose value and become worth only $50. This is not so with Treasury securities, which always hold their nominal value, plus pay a premium. That is precisely what is wrong with your analysis.
Involuntary, exogenous, default is impossible for those whose obligations are denominated in an unpegged fiat currency which it exclusively issues and net supplies. Hyperinflation has nothing to do with an apodeictically true statement.
@@stavroskarageorgis4804 Hyperinflation is just another way to default. The end result is pretty much the same. When a govt prints money for spending it cannot afford it steals the purchasing power of your bonds instead of refusing to pay them up. End result, you can use the dollars for an extravagant wallpaper.
@@solaroid4442 -- "spending it cannot afford" is a meaningless phrase. Governments issuing ther own floating exchange currency can afford anything priced in their currency. The govt doesn't spend the dollars in a Treasury bond---they remain in the bond accounts at the Fed. Hyperinflation has always been caused by resource shocks, natural or artifical. "Money printing" is the response to hyperinflation-not the cause.
@@TheBandFiles So when prices skyrocket govt prints money do do what, reduce inflation? Money printing doesn't cause inflation, is that your point? If that was true just print money and make everyone trillionaires. See where that gets you.
One problem with MMT is that we will run out of resources before running out of money making which could cause massive inflation. The world unlike the economy isn't infinite. Economics isn't a science it's a board game rule system to have winners and loosers. That's it.
No-one proposed spending beyond real resources. These production limits are a result of business running as close to the minimum investment line as possible. You saw this after the pandemic. Very easily decimated because so many things were running on a shoestring.
Very interesting. So many questions! How does a gold/silver standard work and why does it break down? Debt doesn’t have to be repaid if you roll bonds over, but inflation (or hyperinflation) are a risk, how can this me managed? Why did Germany go I to hyperinflation and how did they resolve it? (Currency backed by land?) And big +1 for post office banks!
From the point of view of the main "Neutrality" thread of this channel, it would be interesting to see an analysis of the intersection between those countries that hold large amounts of USA interest-bearing debt and the countries that are aligning themselves with the USA in threatening war against multipolar-trading countries that are trying to reduce dependence on USD as a trading currency & central bank asset.
43:30 Always liked the Bancor idea. Sounds like BRICS might be working towards (finally) implementing something like Bancor for international settlements.
Yes, we are all depressed about the Economics around the world. Professor Larry Randall Ray could find a way to make it fun and at the same time expose the clever nuances in the theories by having a cheerful mind and a cheerful face. This will make the interviewer enjoy his function on hand. Perhaps he uses a pair reading glasses that he could wear to hide the absence of his cheer?!?
Good video. What a shame you didn't ask the professor about the world economic future in relation to the "dollar vs. Briks" confrontation. I would have liked to hear your opinion, even if it only lasted a couple of minutes...
Wray makes good points about CBDCs. Privacy is a major concern as well as the ability to punish or reward specific groups or even individuals for political reasons. A CDBC would kill small banks which is probably why the power brokers are not hostile towards CBDCs.
Pascal, Btw Prof Werner actually worked in Japan in the 1990s and has a lot to say about the debt situation Japan is in and the role The Japan Reserve Bank and USA plays in it.
So, at Breton Woods, there was meant to be an implementation of a global currency system, with no single country having dominance. But, somehow, the USA managed to inveigle the USD as the global reserve country instead. We now know when and why all the US global military backed domination started. We need another episode telling us exactly what happened at Breton Woods that enabled the US to pull off their global financial coup? How did the USA do it?
It is a part of the computation of Exchange rates. The power to convince the Participants it was fair, came along in the Marshall Plan. The conversion to Fiat Currency in 1971, did create some fluctuation issues for the US Dollar.
They had all the Gold from Russia and the UK paid for war materiel. (France had Gold too, stored in Canada, but refused to hand it over). UK£ being the reserve currency before WW2 meant many countries that had used £ as reserve before were unable to trade, as UK was essentially bankrupt. J.M.Keynes proposed a reserve currency (Bancor) based on a basket of currencies but USA wanted dominance cos 'manifest destiny' to lead the world. Literally the US was in a position to say 'my way or the highway' to everyone.
@@briskyoungploughboy If that is the Case, and I do not disagree with you, what is the US capability to create a Marshall Plan today? This is not Your Daddy's Oldsmobile.
@@briskyoungploughboyThank you for that. Has the true history of this coup by the USA ever been told - books, documentaries, etc? Then the US linked the dollar to oil - the petrodollar - and its dominance was completely sealed.
Well, if youve read some of the WW2 history, the Americans supported the UK and European war effort and afyer the war America was literally the last country standing. The Europeans and Russia wete all smashed. So USA had the upperhand in every way. Militarily, economically, industrially and manpower was not severily affected like EU & Russia. Btw Russia lost 27,000,000 pple to the war.
The real question should be is why international bankers are in charge of our money supply and why do they take interest on money they create from nothing, imagine we use that interest for the benefit of an actual nation instead of the 0.0001 percent!!
While apocryphal, there is this insight: The quote, "Permit me to issue and control the money of a nation, and I care not who makes its laws," is often attributed to Mayer Amschel Rothschild, the founder of the Rothschild banking dynasty. However, there is no evidence that Rothschild actually said this, and the quote first appeared in print long after his death
next year the fed will have some very large refundings on top of major new issuance. the carry trade has gone away and several large traditional buyers of our bonds have backed off. if we cant sell the new bonds they end up on the fed s balance sheet and into m2. this is in essence a debaement of the dollar, a decline in its intrinsic value which spells more inflation. think he left that out. btw much of those extra dollars end up in the stock mkt, leading to stock inflation.
The Eurodollar market out of London is an elephant in the room of this conversation. As is the Fed being a _private_ institution, owned by the big US banks, in turn owned by the unholy trifecta.
@@BanzoUnchained you could Google it, the Fed system, org structure of its 3 components, only the BoD is partly Federal. An owner makes decisions and keeps profits. Its employees are not federal employees by law. It does not have the same FOIA obligations. Lots of things.
It is not just in war that government spending without raising funds creates inflation. Any discussion of this subject that omits to address that has failed to properly cover the subject, and that includes this one.
The criticism about poorly named concepts is spot on and the main issue people don't understand what banks do or how money is created. The fact that "deposits" are actually just numbers typed into an account created out of thin air without any actual "reserve" backing it up probably sounds like some insane ramblings of a madman for most people.
While I disagree with many MMT contemporary policies I do really respect the guest and the school of analysis thanks for bringing him on. Macro econ must also be studied from the macro level not just bottom up because emergent properties exist. There's no sacred economy to return to that "just works". MMT gets this, post-keynesian/MMT adjacent Professor Steve Keen with his modelling makes this point in a lightweight fashion as well. Now to watch the interview!
the job guarantee is the only policy within MMT - yes individual MMT economists may have prescriptions, informed by MMT, and disagree between themselves but that's not part of their MMT description.
As the Port Workers Strike illustrates the importance of Imports, it is vital to understand how much of the Industrial Commodities, needed for Industrial Production come from other Nations? If we are unable to obtain the Cheap Goods, does Inflation increase? If those former Colonies stop delivering at the price set by US Commodity Brokers to insure Investor Profits, does that mean we get to pay more for things? If the Military does not scare anybody anymore, do other Nations stop delivering? That seems to be the implied threat....
When President Portillo of Mexico announced Mexico would use its resources to advance the Mexican people, he had an economic plan that never had a chance to work because the BIS reduced the exchange rate it would credit the Peso against the US Dollar, the BIS acting as a central bank for central bankers. It had been set up as the agency collecting the reparations from Germany, but it continued operating during WW2, serving industry fighting the war. There were apparently industrialists and scientists sponsored all through the war, some of whom entered the US through Paperclip. I've tried to find explicit treaty definitions of its operations, but no success yet. The IMF, World Bank, the Fed have been running the dollar system since WW2 even after Bretton Woods gold/dollar regime was ended in '71. It has cost people around the world prosperity and even freedom
I’m old enough to remember the Vietnam War and the War on Poverty. As I recall, the US surrendered to Poverty much soon than it gave up its ambitions for Vietnam.
This is quite infuriating listening to this tripe. Money represents buying power and as anyone can see the dollar has lost 97%+ of it's value since the federal reserve came about. How long does it take for intelligent people to recognize this and start getting rid of the 'currency' fairly quickly. Gold is sitting around $2660 right now which leads me to believe that people are already figuring this out.
The idea that Capitalism will endure the discussion of Fiat Currency as opposed to Gold Standard Currency, does challenge the though process, as two of the largest Communist Nations appear about to corner the Markets of Economic control? If they do abandon Capital as a measure of Value, your efforts to accumulate Gold will leave you with a lot of metal, and no measure of value to provide it's worth. That is another economic variable that could change the Picture.
@@David-ki5ff I am just a Punk. I was born i 1951, and studied ECON in 1970. I have seen how business operates as I attempted to do business since 1971, and the Fiat Currency dictated how it was done. I do not attempt to find any economic gains any longer, I simply attempt to assist others who seem mor confused than me.....
In the end, it is just about perception. IMF “Strikingly, the reduced role of the US dollar over the last two decades has not been matched by increases in the shares of the other “big four” currencies-the euro, yen, and pound. Rather, it has been accompanied by a rise in the share of what we have called non-traditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies.” As long as that trend the IMF points out won't grow and there won't be any big bubbles, the Dept will be no problem.
I have issues on some of Mr. Wray's statements. He states that countries never run out of money without stating what money is. Niall Fergusson's statement of currency is most accurate in my opinion. The value of a sovereign currency is based on societies confidence in that sovereign nation. That is why the US dollar is worth more than the Bolivar dollar of Venezuela. The wealth of a sovereign is static and bound by that perception. Printing more money just increases the number of units that define that wealth. Increase the money supply by two fold, and the unit increases by half. The sovereign can print money to make more money available to the government verses raising taxes. But it could do the same thing with taxes. In the end the government has a greater share of the national wealth be it because it printed and spent or taxed and spent. The citizen saw the value of their savings decrease. The second issue is discussion about the military industrial complex. US budget debt is driven by Social Security, Medicade, and Medicare. Even defense spending is small in comparison. why not talk about a real life example like Russia, where we can observe a real case study of the impact of military spending on an economy. Putin has been spending gazillions of rubles on the military and not a flicker of discussion. What disappointed me was there was no discussion on why are interest rates so low despite deficit spending by governments for example Japan. It was only the COVID situation that even introduced inflation.
Get revenue->spend income is a inherent economic balance mechanism. Yes you could print money (or create it digitally) but then you would be spending money that has no basis. In turn this dilutes the value of the money aka inflation. The USA has a special ability due to its reserve currency status (which was backed up by a concrete monopoly in oil payments, aka petrodollar and the monopoly of the financial system aka SWIFT). This allows it to send a large part of its inflation to those who use its us dollars by expanding the base of the pyramid You can see this by thinking about the USA national debt. If the population of the USA suddenly included the rest of the world, the USA debt is divided by 7 billion instead of 330 million (USA population) This is the kicker. What if oil payments no longer is monopolized by the USD? What if SWIFT is no longer the only system in town for interbank payments across border? Then the USA debt is no longer divided by 7 billion but divided by 400+ million (USA population + countries that use the USD as their national currency) This has a inflation backlash and not just normal inflation but hyper inflation. This is also why MMT people never talk about the day after when they keep talking about how they cannot default on the debt because they will just print money. This is because the day after = hyper inflation
Nope. Because all you focus on is debt. But global debt is zero because ones asset is the other ones liability. Says the guy avove, says MMT, says my neighbour the booky, says logic. The points you mentioned are true. Just they dont matter ciz debt is the most natural thing. Its just unevenly distributed mainly because of US hegemony. That seems to be changing now and MMTwill deliver the explanation, and not the debt clowns
@@eymaslacker your argument seems to be that state debt leads to inflation, just in case of US they use a different form of dividing it. And if they didnt to that debt would be bigger and lead to hyperinflatio. Did I summarize your point / original post?
Please try to get someone who can explain more about how MMT works on an international level. My fumbling-in-the-dark questions are, What is the basis of value between nations if currency valuation is subject to voluntary change? How many countries actually have truly sovereign currencies? And, What does a dollar dominated MMT model mean for non-sovereign currency states?
@@briskyoungploughboy Most of the Planets Producing Nations are seeking price stability for their Resources. They are looking for something that does not change to serve Investors.
No, if there was a fixed exchange rate system established, then MMT would include it in their description. MMT is a description of the current system, not a set of policies
It’s quite hard to comprehend, since tangible economic entities (like State of California) is unable to “print” its own money except for voter approved bond measures, as can’t towns and cities (and other 49 States) and they must balance their “budgets” and fiercely collect tax returns, then the question that begs to be asked is who at the federal level decides to allow the debt to balloon to an extraordinary levels? ??
Never been good at maths or economics, but I appreciate Pascal looking at these issues (specially in this time of the proposed alternate financial system offered by Brics). However, I think I understand enough to say there surely must be a concrete basis -gdp? a solid foundation underlying money transactions, as security for paper or digital transactions. Not putting it clearly, but what happens when a government collapses, what happened in the 30's Depression, and in the more recent banking losses and failures of the 1980's?
JP Morgan said: “gold is money, everything else is credit.” Only gold has no counter-party risk. Good luck with those little pieces of paper that are debased at 6-8% per year.
The MMT was a great mechanism for the US to get rid of debt in the “currency” that they had no control over (=gold) and simultaneously impose hegemony - both internationally (loans in USD, T-bonds, the petrodollar and pegging all/most intl trade in USD) AND internally (mandating regional banks and pension funds to buy Tbonds; most handy in the absence of a proper Central Bank). The MMT seems also to come handy for countries wishing to stave off the US’s hegemony by issuing local currency-denominated debt instead of borrowing in USD. But it’s a dangerous path if a government has no such local and/or international “minions” (which the US has an abundance still). So many important loopholes in Prof.Wray’s version of reality (econ. history) that are a crucial proof-of-concept (the MMT, that is) - or a lack thereof. Need an interview with an opposing economist!
I found this interview very frustrating and not the quality I expect from this channel. The guest takes his time to go over very obvious things again and again, and skim right through where detailed explanation is needed. And there are many questionable points left unexplained. Eg, he says that countries can’t involuntarily default. This might apply to the US, but surely other countries will default if they can’t repay their debt denominated in foreign currency? Sure US can print more money to pay its debt, but what happens when foreigners no longer willing to lend to the US? I guess it will be hyperinflation, but would appreciate the analysis from a real expert.
What do you mean by lend to the US? Most common is US lends to country 2 with payments in USD obviously. So since country 2 cant create USD it will give them something else until credit is settled. If thats not happening the biggest military power has some options left. One could say US credits aim to not being paid as the alternative resource is what they were interested in the first place. US is a big source of the inequality we see today. If only they decided for a less aggressive policy....
Any gold standard is just an example of government price setting whereby the government sets the price of gold, by fiat, and promises to convert government money to gold on demand at the set price.
The decline of the two Roman Empires at different times (and of the Empire created by Charlemagne at a later time as well) was accelerated because clever and scoundrel rulers imagined that they could solve economic problems by minting more coins with the same value designation and lower precious metal content, thus creating cycles of inflation and demoralization of money. Something similar happens in the USA, but Americans believe that they live in a modern country predestined to create its own reality with the power to rewrite the basic foundations of the economic phenomenon. Poor things...
Economics 101: Whoever has the biggest gun makes the rules. Economics 102: The Bankers extract wealth via inflation, currency manipulation, and social engineering. Economics 103: There is nothing you can do about it.
Curious to know what Michael Hudson (President of The Institute for the Study of Long-Term Economic Trends) and Richard David Wolff (American Marxian economist) have to say.
The host Pascal says “MMT makes sense because it is how stuff functions” - I would agree but it is not how things SHOULD function. Irresponsible government spending and reckless “money printing” is indeed the source of so much injustice, disparity and corruption we are witnessing in the world today.
Why do all MMT people have so many blinders on? Many of their points clearly are very helpful to understand current reality, but it's always mixed up with gaslighting, suggestivity, political ideology and shrugging off some very important considerations as irrelevant. Annoying af.
@@solaroid4442 Actually the main government employees: politicians, central bankers etc are the ones with the levers of public spending and they keep advocating the opposite. So,...
MMT economists cant give all the details about how economics works. Its not really possible to explain everything in 1 hour. The best person to do that, he is not an MMT type economist, but the information Richard Werner provides is fascinating, empirically proven research and he does it in one hr. But i can listen to him about his research for a good deal longer.
@@mariohatz3317 So a 50 minute video with Wray means all the 20 years of MMT literature is no good, but a 1 hour video with Werner doesn't? The questions in this video aren't about all the details of how an economy works, there are others for that. And in any case anyone claiming to do all this in an hour is selling you short.
Great interview! I don't see the links you said you were going to provide though... Also, to the commenters who seem confused at what "inflation" is, this is a transcript of Mark Blyth's description. The link to the interview will be at the bottom. "Can you generate inflation? Yeah. I mean, dead easy. Imagine your Turkey. Why not be a kind of Turkish pseudo dictator? Why not fire the head of your central bank in an economy that’s basically dependent on other people valuing your assets and giving you money through capital flows? And then why don’t you fire the central bank head and put in charge your brother-in-law? I think it was his brother-in-law. And then insist that low interest rates cure inflation. And then watch as the value of your currency, the lira collapses, which means all the stuff you import is massively expensive, which means that people will pay more, and the general level of all prices will go up, which is an inflation. So, can you generate an inflation in the modern world? Sure, yeah. Easy. Just be an idiot, right? Now, does this apply to the United States? No. That’s where it gets entirely different. So, a couple of things to think about (first). So, you mentioned that huge number of 20 trillion dollars. Well, that’s more or less about two thirds of what we threw into the global economy after the global financial crisis, and inflation singularly failed to show up. All those people in 2010 screaming about inflation and China dumping bonds and all that. Totally wrong. Completely wrong. No central bank that’s got a brass nameplate worth a damn has managed to hit its inflation target of two percent in over a decade. All that would imply that there is a huge amount of what we call ‘slack’ in the economy. (Also) think about the fact that we’ve had, since the 1990s, across the OECD, by any measure, full employment. That is to say, most people who want a job can actually find one, and at the same time, despite that, there has been almost no price pressure coming from wages, pushing on into prices, to push up inflation. So rather than the so-called vertical Phillips curve, which most of modern macro is based upon, whereby there’s a kind of speed bump for the economy, and if the government spends money, it can’t push this curve out, all it can do is push it up in terms of prices. What we seem to actually have is one whereby you can have a constant level of inflation, which is very low, and any amount of unemployment you want from 2 percent to 12 percent, depending on where you look and in which time-period. All of which suggests that at least for big developed, open, globalized economies, where you’ve destroyed trade unions, busted up national product cartels, globally integrated your markets, and added 600 million people to the global labor supply, you just can’t generate inflation very easily. Now, we’re running, depending on how much actually passes, a two to five trillion-dollar experiment on which theory of inflation is right. This one, or is it this one? That’s basically what we’re doing just now. Larry’s given it one in three that it’s his one. I’d give it one in ten his one’s right. Now, if I may just go on just for a seconds longer. This is where the politics of this gets interesting. Most people don’t understand what inflation is. You get all this stuff talked by economists and central bankers about inflation and expectations and all that, but you go out and survey people and they have no idea what the damn thing is. Think about the fact that most people talk about house price inflation. There is no such thing as house price inflation. Inflation is a general rise in the level of all prices. A sustained rise in the level of prices. The fact that house prices in Toronto have gone up is because Canada stopped building public housing in the 1980s and turned it into an asset class and let the 10 percent top earners buy it all and swap it with each other. That is singularly not an inflation. So, what’s going to happen coming out of Covid is there will be a big pickup in spending, a pickup in employment. I think it’s (going to be) less than people expect because the people with the money are not going to go out and spend it because they have all they want already. There are only so many Sub-Zero fridges you can buy. Meanwhile, the bottom 60 percent of the income distribution are too busy paying back debt from the past year to go on a spending spree, but there definitely will be a pickup. Now, does that mean that there’s going to be what we used to call bottlenecks? Yeah, because basically firms run down inventory because they’re in the middle of a bloody recession. Does it mean that there are going to be supply chain problems? Yes, we see this with computer chips. So, what’s going to happen is that computer chips are going to go up in price. So, lots of individual things are going to go up in price, and what’s going to happen is people are going to go “there’s the inflation, there’s that terrible inflation,” and it’s not. It’s just basically short-term factors that will dissipate after 18 months. That is my bet. For Larry to be right what would have to be true? That we would have to have the institutions, agreements, labor markets and product markets of the 1970s. We don’t. So, I just don’t actually see what the generator of inflation would be. We are not Turkey dependent on capital imports for our survival with a currency that’s falling off a cliff. That is entirely different. That import mechanism, which is the way that most countries these days get a bit of inflation. That simply doesn’t apply in the U.S. So, with my money on it, if I had to bet, it’s one in 10 Larry’s right, rather one in 3." www.nakedcapitalism.com/2021/05/mark-blyth-an-inflated-fear-of-inflation.html
I’m a lay person that would like to think that MMT would explain how the US treasury is able to request the printing of dollars but there are so many holes in this theory. How come the US is not able to print money for strategic federal projects within the US. How come so many cities are bankrupt. Why did it need to confiscate foreign reserves say of Russia for funding Ukraine. How badly it is able to present soft power by showing a system that benefits its citizens that could be seen abroad. MMT appears to be another theory that holds a small truth to a much bigger picture.
The idea of Military Keynesianism was mentioned. What would prevent MMT from being used to put Military Keynesianism on steroids? Note that the Bank of England was created to get around Parliament’s reluctance to raise taxes for military spending.
remember in 2014 Germany asked the US & France to help them repatriate billions of their gold reserves - interesting it took years before we agreed but more so that they asked after when we stole Ukraine’s sovereignty
It was never addressed how MMT would avoid inflation. It was pointed out during WW2 that bonds were sold to reduce consumer demand and there were also labor agreements to freeze wage hikes as well as price controls and rationing. Are these measure going to be permanently necessary under MMT? I have heard of taxation being used to control inflation under MMT. How likely are politicians likely to raise taxes during periods of elevated inflation?
It was. Tax is the main release valve, but you need to be pretty close to the real resource limit to start worrying about 'inflation'. The point is about providing productivity so you don't run up against a demand ceiling. Such as occurred after the pandemic, which showed up the real lack of productivity.
Esteemed colleague, allow me to elucidate the profound paradox at the core of Modern Monetary Theory (MMT). This theory audaciously suggests that governments can effortlessly create currency. However, a closer examination reveals the dominant role of central banks-entities that, despite their governmental origins, operate with significant autonomy, focusing on controlling inflation and managing the money supply. This situation presents a fascinating contradiction: MMT's bold assertions clash with the stringent realities of economic operations. Consider the MMT proposition that a currency-issuing government need not fret over borrowing or taxation, as it can freely issue money, seemingly holding dominion over wealth creation. This assumption implies direct governmental control over monetary mechanisms. Yet, in reality, it is the central bank, often insulated from political influence and cloaked in technocratic authority, that wields monetary control. How, then, can MMT naively claim governmental money creation when the central bank firmly holds the monetary levers? Modern Monetary Theory (MMT) and Modern Money Mechanics are two distinct concepts. MMT is a macroeconomic framework that suggests that governments that control their own currency, like the U.S., can spend freely as they are not constrained by revenue when it comes to federal spending. On the other hand, Modern Money Mechanics is a publication by the Federal Reserve that describes the process of money creation in a fractional reserve banking system. While MMT deals with the broader economic theory of government spending and currency, Modern Money Mechanics focuses on the operational specifics of money supply within the banking system. When examining the distinction between Modern Monetary Theory (MMT) and Modern Monetary Mechanics (MMM), we find two distinct yet interrelated frameworks. MMT asserts that sovereign governments, which issue their own currency, possess the capacity to create money to finance public spending without the constraints typically imposed by borrowing or taxation. This perspective emphasizes the government's role in leveraging its monetary sovereignty to achieve economic goals such as full employment and price stability. Conversely, MMM focuses on the operational aspects of monetary systems, detailing how money is created, distributed, and managed within the economy. It examines the mechanisms by which central banks implement monetary policy, such as interest rate adjustments, quantitative easing, and reserve requirements. MMT primarily applies to sovereign nations that issue their own currency-such as the United States, the United Kingdom, and South Africa-enabling them to utilize monetary policy do not actively address economic challenges. MMM, while applicable to these same countries, also has broader relevance across different contexts, providing a technical framework that elucidates the mechanics of monetary systems and their operations, regardless of the specific theoretical approach guiding fiscal policy. Together, MMT and MMM offer complementary insights into the complexities of economic governance and the ongoing quest for effective policy solutions. There are numerous other paradoxes relating to the dynamics of wealth distribution, inflation control, and public debt. For instance, while central banks aim to stabilize economies through interest rate adjustments, their actions lead to unintended or intended. consequences, depending on how you look at it. Such as asset bubbles or increased inequality, complicating the efficacy of their measures. Moreover, the tension between short-term economic stimulus and long-term fiscal responsibility further exemplifies the myriad contradictions that permeate contemporary economic discourse.
Fascinating discussion for sure thanks for having this very important topic on the channel, the historic background to it and for touching CBDCs in the end, even if you didnt dive too deep there. Much more of this would be very much appreciated! Cheers
Can someone who's more familiar with MMT answer these two questions I have: a) If the government can just print money, why does it need to borrow - or even tax? b) If the government keeps printing money, doesn't that eventually lead to (hyper)inflation?
a) It needs to tax to redeem spent money or it would be spending on top of spending. Also it taxes to drive the acceptance of that currency. b) It doesn't 'print' anything. But yes, if it was simply spending without any tax redemption and beyond the level of productive capacity there would be a problem. This is not just MMT it's standard economics.
@@baronmeduse Thanks for the reply. But the part about "printing" - isn't this the whole point of MMT? That the government can just print without any repercussions?
@@cpc9563 No 'printing' happens. It's a terminology thing. They are issued by spending and just accounted for. The point isn't that the government can just issue without repercussions. It has to take into account what the real resource position is. The financial point is that the common claim that a such a government is 'financially constrained' or can 'go broke' is a falsehood.
@@baronmeduse I understand about there not being any printing. It's just a figure of speech. I also get the point about a government that borrows in its own currency can never go broke - because it can just "print" its way out of debt. But, like you said, that will eventually lead to (hyper) inflation. If that's the case, then what's so special about MMT? I've heard the term thrown around for the last few years, and I've read up on it, but I just can't figure out what's so revolutionary about it. Am I missing something?
Debt may not be a problem if there is a demand for your currency. But BRICS is undermining the relevance of the dollar. In addition, the attached interest on the debt is gobbling up an increasingly large portion of the cake, leading to the necessity to issue more debt in order to pay off old loans. It is a vicious cycle and wars, pandemics and climate are used as a scapegoat for debt expansion. My 2 cents.
There is only ONE true money mechanics witch is that money is a product as everything else, in a market. So the value of money depends from it's availability, as milk bread, food, lemons, etc. And obviously money should be kept non available for the majority, because it's the condition of it's value. This makes the force of the capital (Keynes). Without concentration (illegalities) money has no value.
Pascal, what he's saying isn't wrong, but it's incomplete. Economies are basically models of the real world. Governments can create infinite money, true, but they can't magically create more goods for people to buy with the newly created money. So if the money starts circulating - if people spend it and expect to receive goods in return - it creates inflation. (If it goes to a few rich billionaires who put it in the stock market then it bids up share prices instead of effecting real goods. But the risk of creating more money - more IOUs, as he correctly says - is that at some point people may try to buy things with it.)
36:07 What a bizarre thing to say. Followed by "except on a gold standard". The US operated on some form of a gold (and silver) standard through the majority of its history. "governments never behaved that way." 🤔 -- Edit: they go into the gold standard in more detail at 40:02
I wish that you had asked Prof. Wray more questions regarding the relationship between inflation and the government paying its debts with borrowed money, as proposed by Prof. Richard Wolff. Or is it borrowed or just digitally produced?
Randy explained that - its not borrowed just digitally produced by the central bank when the government wants to spend. The government does not have debts like a household, they are completely different entities. I love Richard Wolff who is great on many things, but he doesn't seem to understand MMT, and I don't understand why he and the other leading Marxist economists such as Yanis Veroufakis don't use it to back up their usually excellent analyses
The economic crisis and downturn are all the signs of 2008 market crash 2.0, so my question is do I still save in the US dollar or is it okay to move all emergency and savings to precious metals?
Gold is often seen as a safe-haven asset that can protect against inflation and economic uncertainty. But like any investment, it carries risks. To determine if gold is the right investment option for you, an investment advisor can help you weigh the potential benefits and risks of investing in gold. They can also help you create a well-diversified portfolio that includes gold as part of a broader investment strategy. An investment advisor can help you decide how much of your portfolio should be allocated to gold and select other investments that can complement your gold holdings.
Investing in gold is a reliable choice, and I plan to keep buying more to make up for my losses. While silver is also a good investment, my collectibles are not as similar. It's important to have clear investment goals and educate yourself on the type of investment that interests you. I work with a financial consultant regulated by the SEC, and started small, but eventually accumulated over $800,000.
I will like to ask, How did you achieve it? I been trying to stick with index funds. I feel this new interest rates decrease could crash this economy. I'm looking out for a better investing strategy, I have a lump sum that inflation is steady eating up.
‘’Marisa Michelle Litwinsky’’ is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for this tip , I must say Marisa, appears to be quite knowledgeable. After coming across her webpage, I thoroughly went through her resume, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.
Wooow... As an absolute neophyte in economics who wants to learn, this was an absolutely captivating interview. Thank you so much 🙏.
Money is only the "grease".
It's the resources and strategic locations on the map, that the powerful wish control over.
The Strategic locations appear to be in other Nations.
Those nations are attending the BRICS Summit this Month.
Fiat Currency now faces a direct challenge.
That is what the G-7 Guys now employ.
in less than 2 weeks the business of
World Trade will change.
When I was younger, I read "hard" science fiction to be stimulated by novel alternate realities.
Now finding out more and more about how economics truly works fulfills that goal.
It's as if "money" is from another universe than everyday life as we think we know it.
Go and find the 1hr vdo by Professor RICHARD WERNER. people like Randal Wray, Bill Mitchel, Stephanie Kelton, Mike Hudson are all pple trying to enlighten our citizens.you my friend are absolutely right about the fascinating topic of economics. Its fascinating because we have to unravel the absolute and utter bullshit being peddled by NEOCON/NEOLIBERAL/NEO-classical so called economists.
Fiat Currency was proposed as a definition of Value that provides some support for the Currency.
The support in the USA ended 20 years ago.
The US Currency is Valuable as long as the USA can provide a Military threat,
to back the currency.
The US Military Industrial Complex has run low on Cash.
The corruption has taken the ability to produce weapons ,
and used it for other purposes.
The USA is not a superpower militarily.
The money that was supporting the MIC,
has been eroded by corruption.
@@danielhutchinson6604 You write, _"The US Currency is Valuable as long as the USA can provide a Military threat,
to back the currency."_ Agree. As a general rule, a sovereign's fiat currency holds value only _within_ the sovereign's domain. The sovereign uses taxation power and other coercive measures to assure its circulation. But when the sovereign attempts to expand its coercive/fiat beyond its borders it must rely on 800 bases world-wide, nuke-armed subs under the oceans, 24 hour in-flight nuclear bombers, siloed ICBM's etc., not to mention a CIA and other spectral agencies at the ready to destabilize any external sovereign that dares defy the power of the _reserve_ fiat. The entire function of regional wars thus appears obvious--to "assure" the planet that _any_ global resource can and should be exchanged for the fiat currency, which now has international coercive "reach." "Bankers wars?" You tell me.
BTW, the Carthaginians started their own BRICS-like system defying the Roman fiat currency. The second Punic war ensued. In a nuclear age, humanity can't afford this type of confrontation. Empire had better go the carrot route. The alternative is too tragic to contemplate. For the moment, seriously infantilized types sit in the corridors of power on Wall Street and on the Beltway...
Be well.
I stopped the video at minute 39 when your guest spoke about 'inflation was lower in the USA in the late 60's and 70's than in Europe' - the inflation problem for the USA came with the OPEC oil embargo of 1973. Actually I'll remind your guest that inflation remained lower in the USA back when he mentioned it being so and lower in the USA than in Europe because - with the status of the US dollar being the reserve currency and the most widely used to settle international trade transactions, the US was basically exporting it's inflation to the rest of the world - which included Europe - big time - and that's one reason why DeGaulle said he no longer wanted to accept US dollars for trade - he wanted the equivalent in gold - at $35 per ounce. The US' reckless spending under LBJ - a real criminal in both the economic area as well as in his war against the Vietnamese people, flys under your guest's radar. The big problems for the US economy began with LBJ and the Vietnam war - and it didn't take many more years before Nixon took the US off the gold standard in 1971. Your guest seems to think there is no linkage between all these events but I can assure you his analysis is faulty when he skims over these facts and basically ignores them.
And now we have learned the 73 oil shock was engineered by the US to as you say export inflation, and control oil consumers.
bravo. i stopped at ~min 12.
The people elected Nixon resoundingly twice because he was better at debt spending than even LBJ. The Vietnam War was morally horrible and expensive, but in reality, it was a Republican driven event promoted by the anticommunist wing.
How much of the Comments is dedicated to Economic education,
How much to disinformation?
LBJ owed the Brown Bros of Houston for supporting His ascent to Power.
They were rewarded with Contracts.
The USA was still projecting the same Policy of Blowing up the World,
the cost seemed secondary.
The Bill for Nam was not paid until the Nixon Administration
promoted the Saudi deal that backed the new Fiat Dollar.
That did work for a while, 30 years.
Then the apparent support fell off for the US Dollar.
For 20 years the US Currency has been backed by military threats.
How are they doing now?
@@thomashenry1327😅
Can we have another one please, on if and what happens when people don’t want to buy US bonds any more….
The Nations who now appear to desire a return to Physical Currency,
that retains value for more than 5 minutes, is apparently growing.
@@danielhutchinson6604What are the necessary and sufficient conditions for any asset, physical/real or merely financial, to "retain" its exchange-value? What determines the exchange value of a "physical (sic) currency"?
Yes, the international realities of MMT seems neglected in these kinds of discourse.
@@Buf-g6m World Financial realities that prompted the Bretton Woods Conference,
appear to once again be evident.
The desire for a more secure form of Financial Currency Values,
has been a problem as World Trade increased.
The ability to control Exchange Rates by adjusting the US Fiat Currency Valuation,
does impose problems on many Nations Currency to estimate costs.
Since the USA adopted the Fiat Currency of the Federal Reserve Bank,
the ability to manipulate values and improve the economic position of Commodity Brokers
inside the USA and other G-7 Nations do imply an economic advantage.
Next Month 159 Nations appear prepared to join the BRICS Trade association to find some stability in the exchange rates.
That seems to imply a major shift of the power to regulate Exchange Rates with Currency that is not fixed at a certain rate.
@@danielhutchinson6604 agreed i myself wish there would be a new bretton woods-esque conference.
The last one only came after decades of arm's races trade wars and ultimately trade wars.
Sadly i don't think the biggest benefactors of this fast becoming bunk arrangement will relent without a huge war .
The nature of money is an important subject. Still breaks my brain when I try to think it all through.
My current stance:
1. MMT is the most accurate model to describe how the US dollar functions in reality today and provides important background knowledge regarding incentives in US national policy decisions (biggest perpetual honeypot in the world - everyone wants access)
2. Long-term outcomes for US society and the world would be better if the dollar and all national currencies were as close to a "hard currency" as possible.
3. But I don't see how this kind of hard-currency "self-limitation" could ever occur let alone remain in place for long. The genie is out of the bottle. The temptations are too great and too frequent.
What the youtube world really needs next is to honestly investigate the macro longterm implications of this monetary system and its implications for economical development, societal development, domestic policy, foreign policy, war & peace, … leading also to a normative discussion on MMT: i.e. are we happy with this system of money? Are we content we have zero say over this?
Thanks for diving into the subject!
Exactly the sort of "thoughtful conclusions" we would expect from the Cult of Lyndon LaRouche
LOL
Banzo
Upticked you, but what do you mean by 'hard currency'?
Everyone should watch this. Excellent. Thank you for having Prof. Wray on your program, Pascal.
I am impressed! You got a real true blue credible economist. This is why I watch your shows. You’re not an ideologue but a truth seeker who is interested in informing the public. God Bless your work and efforts!
Actually the war being treated as a business venture goes back even further. Even a decorated military man General Butler has been saying this since the 1930's, "War is a racket."
Maj-Gen. Butler spoke from experience. It's not that it's run like a business, but it serves the interests of buisness directly - he spoke of "making Nicaragua safe" for the Banana Trust and other countries "safe" for Banksters and such. He was speking not of "business" but of mafia practices. He literally compares the Marines to mafia or gang enforcers who use violence to intimidate those it exploits.
What's more worrying potentially , is it seems like we're entering an age where the wars aren't seemingly about making places safe for particular US multinationals but making energy affordable for middle east settler colony(see gary vogler)
And keeping the world invested in , if you will the dollars privileged status in the overall international trade system.
@@Buf-g6m Yes, because US "defense" contractors certainly aren't making money from arms sales to "middle east settler colony" at all, and must be losing money!
/s
US imperialism serves US interests.
@@Polit_Burro Still works the same way nowadays.
Yes, and it's funny how little Smedley Butler is ever mentioned nowadays, let alone the Business Plot that involved JP Morgan, Bush and many others. Sad to think all the genuine people fighting for the good fight like them, and this channel, will be wiped out from history if those in power succeed.
Pascal, I have followed most of the MMT economists (R Wray, Stephanie Kelton, Bill Mitchel, M Hudson, for 5yrs and sat through days of lectures to understand it. Now! The economist who did the real ( actual recorded research) empirical research in money creation and interest and inflation is German, Professor Richard Werner. R Werner's work lines up with MMT. In fact QE issuance (Quantitative Easing) was invented by Prof Werner. If he is willing to be a guest he would be another big piece in undoing the FRAUDULENT NEOCON ECONOMIC PRACTISE puzzle. ALSO Prof Werner has explained in more and clear historical detail about the 1973 oil crisis and American debt problem. It is fascinating. Its on UA-cam. I have followed Prof Werner for about 5yrs also.
A lot of People have defined Capital and the application of different forms of the use of Capital.
The basic concept of US Fiat Currency has lost support.
That is the essence of modern Western Economic philosophy.
MMT is simply one more form of Fiat Currency,
that defines Power as Capital.
The power is gone in US Currency.
Okay, but servicing the debt is taking an ever larger share of federal appropriations. What happens when all new federal debt goes to servicing existing debt?? Also if federal debt since 1789 has increased on average 2% faster than GDP, on that trajectory eventually it WILL overtake GDP. And eventually service on existing debt WILL overtake GDP. What happens then, Professor?????? 😮
Go over to any professor Michael Hudson discussion on UA-cam or read one of his explanatory books. "Debts that can't be paid, _won't_ be paid." End of story.
Be well.
good question is to ask, who holds that debt and enjoys interest. if it is US citizens, it benefits economy in long run. 100% GDP level loan makes things tougher but doesnt end economy. If US has used that money to assets, lets say warships, they can start using those and hope those "pay themselves" that loans dont have to be paid and can be renegotiated.
@@effexon To provide any real value to US Currency,
they need to sell debt to Foreign Investors.....
IS China now negotiating?
@@danielhutchinson6604 The US govt doesn't "need" to sell bonds at all in order to spend. The bond sales drain excess bank reserves-since 2008 an optional operation. But-the private sector loves & needs govt securities-they are the foundation of the financial system.
Eventually there will be no amount of money big enough to pay the workers who print the money and then everyone will throw up their hands and stop. The following generation, if it survives the zombie apocalypse, will start out with primitive bartering until some a-hole start talking about "organizing" for the betterment of man. A new constitution is written and Bingo, another spin of the wheel.
Instead of arming Ukraine, Israel and Taiwan; US tax payer money should be spent on infrastructure, healthcare, education, homelessness...
They could do both if it was about money. Your tax payer dollar does not finance the state because the state - especially USA - can pay for anything they want on this planet
@@rli8594 you are right. But it is the amount of resources that poses a limit.
The state and banks play an important role in the allocation of resources. Money is the way to allocate resources (labor, energy, raw materials etc.)Individuals cannot loan beyond their means. But for states the sky isn't even the limit.
@@hansverbeek822 exactly. Thats what MMT says. My post addressed the tax payers point, not the one you made about resources. Yet both are true
Aha! And now, just as the curtain falls on empire, we can understand the _true_ nature of the inverted totalitarian system the US empire has become and how it's ruled by 1% of its denizens...
Be well.
@@hansverbeek822 You come awfully close to the facts. The US military and armed allies, along with the US's nearly 800 military bases strategically located worldwide, _enforce_ the will of the banking class, who determines _how_ world-wide resources get allocated... Please read General Smedley Butler's slender classic, _War is a Racket_ .
Be well.
Every paper dollar is U.S. debt -- every digital dollar is U.S. debt -- the 'Fed' is not a central bank, but a group of private individuals and banks/corps. Does this guest ever get that far into his explanations?
debt: yes.
fed: no.
Sure, but they are not _interest-bearing_ debt (zero 'coupon'), have no 'collateral', and have zero or instant maturity. The same Govt entities and agents which issue zero-coupon, zero collateral, zero maturity, at par, bearer, monetary instrument can (and sometimes do) issue positive-coupon, positive collateral, positive maturity, monetary instruments. Quite a few CBs in the world are authorized to issue bills and bonds (positive coupon and maturity) and a few Treasuries issue coins and notes (zero maturity, zero coupon).
@@stavroskarageorgis4804 The Treasury assured us in 1970 that they would sell T-Notes,
equal to what FED Printed.
That surprisingly lasted for 30 years.
The Contemporary Federal Reserve Note appears to offer less value than Wiemar Deutschmarks.
For twenty years the Treasury has not been able to support the Dollar.
No amount of economic bullshit can erase that fact.
The fed member banks are the usual wall street banks and they own government debt / finance government spending by creating "money" out of thin air for profit.
The Fed is a central bank, an agency of the US goverment created & governed by Congress-not private. The 12 regional Fed banks are nominally private but their functions are mundane and they don't make monetary policy. Prof. Wray teaches accurate information about the Fed.
Love your channel Pascal and constantly recommend it to others. This is the only video of yours that left me feeling disappointed. Part of the problem was that you seemed to agree with the guest and hence never challenged him properly. Despite quite a bit of time devoted to the question, the video left me with no idea how MMT functions, beyond some airy description that governments with sovereign currencies can never run out of money. The description given early on seemed to say that MMT worked for all such governments, but the subsequent discussion focused on the US, which is a special case. I would have liked you to discuss other countries and why your guest believes MMT would succeed in them. I would also have liked an in-depth consideration of the effect of money printing on inflation (yes, the government can keep printing, but the value of what they print may decline). In regard to the US, you brushed past with a laugh the idea of MMT for military spending but austerity for social spending. But if money can just be printed, why not spend another trillion or three on homelessness, infrastructure, crime prevention etc? And why are taxes even needed if the government can never run out of money? Indeed, why work at all?
Covid money printing created significant inflation. Inflation makes the cash holder ordinary person poorer while assets hold their true value and asset holders become richer- of course when demand is reduced enough there will be impact on some assets which were being bough many cash holders. It’s called the Cantilon effect.
@@consciousexplorer8118 Inflation was becoming evident in 2015,
as Commodity Prices climbed.
Covid may have been introduced to distract us.
Consider the revolving door Cabinet as the Plague was noticed?
I think it's accurate to say that MMT exists for the oligarchy and not for the plebes. Since US debt is denominated in $'s, it could be paid off tomorrow. There might be benefits to this and detriments - a worthwhile discussion that should occur. Money won't be printed for the pipsqueaks (like me) because oligarchs won't do this until the pitch forks are inches away. But they are more than willing to accept it for themselves. The ideas of MMT are worth consideration, but probably don't have universal application. Instead, they are a tool that may be helpful in some situations. I believe that Stephanie Kelton makes exactly this point in her book.
@@DeanNataro You may be missing some of the effects of Fiat Currency?
If the Dollar gets no visible support it loses Value.
The current Import shutdowns illustrate the fragility of resource purchase from outside sources.
If Fiat Currency demonstrates no outside support as it did when Treasury was selling T-Notes as fast as the FED printed their Notes, the value diminished.
So your comment about the Debt being easily Paid,
does lack some support.
Ms Kelton appears to be selling some method of preserving Capitalism.
I await the demise of Capital as a measure of Value.
To be fair, Randy Wray, despite being in the upper echelon of MMT thinkers, is probably not the best person to go to for a clear introduction to MMT. Richard J Murphy is the most clear for those new to MMT ideas IMO. Agree with you that USA is a 'special case'- All the US MMT big-shots, Mosler, Wray, Kelton, seem to have a blind-spot there. It's detail differences mostly though.
Thank you very much for the very informative talk. But still I was waiting for reflection on the recent developments, I really would loved to hear something about the effect of de-dollarizition due to BRICS and other developments. Doesn’t that mean that the American bond market will collapse ? And than what happens to the ever raising debts? And how are the chances for a more peaceful world and MMT ?
Question is what does the US do to stop dedollarisation? And thats why I think we live in uncertain times. But I guess it cant be stopped any longer. The worlds tired of US dominance and hypocracy.
One thing though in case you meant it: you cannot apply MMT. MMT just explains how things are (or at least tries)
But its not like doing capitalism or communism. Its not a system...
That indeed is the blind spot with MMT it seems like its mostly only the US in the current global trade arrangement that steers countries toward us bonds and indeed they seem to be accumulating more grievances with the system.
Disappointingly wray says himself in this interview.
'I don't really do international'
The system as a whole is inherently international.
@@Buf-g6m no blind spot there. MMT says in your own currency you can pay any bill you want. As a consequence, in forgeign currency thats not the case.
Side note: Germany was allowed to pay gas in USD or EUR so international isnt automatically foreign currency.
@@rli8594 michael hudson says debt and money and trade has a considerable political aspect to it.
That means powerful states have means to retain certain privileges for themselves which inherently puts downward pressure on the ability of other countries to accumulate wealth.
Currency exchange markets, imf loans, sanctions and currency valuations. These are all largely reflective of political realities.
And don't forget governments capacity to spend are only constrained by available resources labor costs etc.
America has the most valuable currency and commands resources and labor added value from around the globe.
MMT has shortcomings regarding the international scope and political realities IMO.
@@Buf-g6m I agree with literally everything you said there.
And yes MMT seems to focus on domestic spending as it always talks about spending in own currency.
But think of a country whose policy it is to not make any additional debt, yet it is strongly depending on oil imports, to be paid in USD.
Why should such a country not invest big money into EVs and infrastructure for it to decrease such a dependency? (This is only an example, there are lots of them)
The rules we applied to ourselfes - e.g. the 60% max. debt for EU countries - a total random number - is a big nonsense as we still do not understand that a state (a currency creator) and the private sector (currency users) are not the same.
The state spends money first and then asks taxes back.
Private sector receives money first and then spends whats possible.
L. Randall Wray is one of the world's greatest economists.
Getting People to understand and believe in Monetary Theory,
appears to be the current problem?
I was hoping you guys will get into how the BRICS is undermining dollar interest which is why the US is dead set in suppressing China's rise.
And yes hyper inflation is the down side of MMT
Actually the US dont want anyone else to rise, China in particular. Which is why other countries are fed up and introduced an alternative. If the US had a different policy they could have kept the current system for another couple of decades.
Ps. MMT is not something you can do / use / apply to anyone. Its an explanation system - a theory
BRICS Is not the threat. The overdependence on imported necessities proportionate to home based suppliers is the threat. Investment capital is a poor way to insure provisioning, because extortion is not something the nation needs more of. Yet, its nothing a few public options for any and all products and services of necessity wouldn't mitigate. Inflation is cause from shorting supply with regressive public policy that affords trust conflicts of interests, by public and private actors, sometimes RICO level, to go unchecked .
@@CommunistConsensus I tend to agree with that observation. I would consider the US is its own main threat. It's the end stage of imperialism and military and financial hegemoney of world entirely caused by the US uniparty adminstration over decades that have fueled the fire. BRICS participants want out of the hegemony of military and austerity means.
MMT is a description of how money systems work; hyperinflation is the downside of resource shocks and/or bad policy. MMT can't 'cause' any inflation, it;'s just an analysis.
Started a proxy war against Russia for the same reason.
"Gold goes up, goes down"
It mostly goes up, never down. Have fun with govt bonds paying 5% when inflation is in double digits.
Government can prohibit private individuals to own gold, aka "make owning gold illegal".
It happened in the USA during the 1930s. Back then, citizens were forced to sell their privately owned gold for a fixed price.
LOL When the Euros were waging war on China in order to establish their "right" to peddle Opium in those lands, their reason for doing so was the fact that there was a trade imbalance due to the fact that the Europeons had nothing to trade of any worth to the Chinese except *silver* - not "gold" - silver.
LOL OH and you might want to check your "facts" against the inconvenient fact that gold dropped in price in 2013 in a very significant way.
@@ralphbernhard1757 Yeah, but the main gold hoarders are central banks. Have fun stopping those. Yellen tried to threaten the Chinese, they sent her to go pound sand in a very polite manner. The global majority ain't gonna eat the inflation the US is generating for much longer.
@@Polit_Burro Oh really. Gold was 27 usd when the gold standard was abolished. Now it's 2.7k. But if it isn't rising in a straight line it doesn't count...
There was a topic not mention in this video. "Money printing" vs money purchasing power. The impact of Government Central Bank issuing new money to pay for government deficits. There is a statistical link between Central Banks issuing large amount of money in many situations and the purchasing power of that money going down because of inflation afterward. This means for ordinary people that they cannot use the deposit in their bank accounts (or keeping it in a jar by the door) to save for the rainy days anymore.
MMT= Magic Money Tree
Big Rock Candy Mountain for those at the levers of the printing press.
That ones old
No. Why are you like this?
Incorrect. Again, name-calling and dismissing do not amount to rational discourse. One wonders whether you understand Pascal's actual model of neutrality, given your comment about MMT. You seem to skip the logical. syllogism and evaluate arguments based on whether you find their conclusions (not) to your liking.
@@BanzoUnchainedWhat "printing press"? You did not listen to L. Randall Wray, did you?
There is no profit in peace
If everything is working just as intended, why is the middle class shrinking every year? It’s also well known that it’s an indicator of the prosperity of a country. We’ve been baffled by BS, long enough. If this is an intended result the majority of Western people clearly would benefit from from a new system. Then we can all prosper instead of a very small minority.
Who says we should be governed by a middle class majority? The plan is to be governed by few. And that IS working perfectly fine
@@rli8594 For whom. By the people for the people?
Mostly globalization
Gov bonds are safer than gold... Holy moly, this "academia" is the reason BTC is 65k. Unbelievable stupidity.
Great interview.
EVEN A 15 YEAR OLD KNOWS THAT GOVT CAN PRINT CURRENCY TO SPEND IF NEEDED, THIS ELECTRONIC DEPOSIT IS MERELY ANOTHER FORM OF MOVING THE MONEY..ONLY AN ECONOMIST CAN MAKE IT SOUND AS IF IT IS E = M C-squared LIKE DISCOVERY.
Pascal, great guest!!! Maybe next shd be Prof Wolff, and Prof Sachs???
I'd like to see Wolff and Wray discuss these topics together
I'd like Professor Michael Hudson to get into any discussion about MMT and its' defects. Hudson wrote a great book titled 'Killing the Host'. He'd be my first choice to debate Wray as I feel MMT is not really gonna deliver us out of the chaos that we have now with endless wars of empire.
@@tomstoob - Hudson and Wray were MMT colleagues at UMKC-Hudson *is* an MMT economist!
@@tomstoob MMT is just a description of how the money system works---what we do with the money system is up to us!
@@TheBandFiles what this guest was invited on this program to discuss was about economic theories as they apply to needless and endless wars of empire - which we've been seeing now for more than a century. How does MMT address this problem - Pascal and his guest NEVER got into that part of MMT to break that question down. His guest was far from convincing me or most likely most watchers of this video of how we can stop this endless pursuit of wars for the profit streams of international bankers.
For 40% of US history, the US had no central bank.
it was time of fastest growh
@@Adam6t And largest amount of U.S. poverty.
"If you hold a bond to maturity it never goes down in value." That sentence alone tells us precisely what is wrong with MMT.
It never goes down in nominal value.
@@rocketpig1914 Don't expect these critics to know things.
The stocks you buy at $100 each can lose value and become worth only $50. This is not so with Treasury securities, which always hold their nominal value, plus pay a premium. That is precisely what is wrong with your analysis.
What we can learn is that economists don’t know whats going on and speaking slowly doesnt help.
They say what they are paid to say.
"Involuntary default is impossible"
And that's where hyperinflation comes in.
That's only happened with massive foreign currency debts. Point me to one that didn't involve forex debt.
Involuntary, exogenous, default is impossible for those whose obligations are denominated in an unpegged fiat currency which it exclusively issues and net supplies.
Hyperinflation has nothing to do with an apodeictically true statement.
@@stavroskarageorgis4804 Hyperinflation is just another way to default. The end result is pretty much the same. When a govt prints money for spending it cannot afford it steals the purchasing power of your bonds instead of refusing to pay them up. End result, you can use the dollars for an extravagant wallpaper.
@@solaroid4442 -- "spending it cannot afford" is a meaningless phrase. Governments issuing ther own floating exchange currency can afford anything priced in their currency. The govt doesn't spend the dollars in a Treasury bond---they remain in the bond accounts at the Fed.
Hyperinflation has always been caused by resource shocks, natural or artifical. "Money printing" is the response to hyperinflation-not the cause.
@@TheBandFiles So when prices skyrocket govt prints money do do what, reduce inflation? Money printing doesn't cause inflation, is that your point? If that was true just print money and make everyone trillionaires. See where that gets you.
GREAT WORK PASCAL!!💪
AUSTRALIA!!🤍💙❤️💥👊
One problem with MMT is that we will run out of resources before running out of money making which could cause massive inflation. The world unlike the economy isn't infinite. Economics isn't a science it's a board game rule system to have winners and loosers. That's it.
No-one proposed spending beyond real resources. These production limits are a result of business running as close to the minimum investment line as possible. You saw this after the pandemic. Very easily decimated because so many things were running on a shoestring.
Very interesting. So many questions!
How does a gold/silver standard work and why does it break down?
Debt doesn’t have to be repaid if you roll bonds over, but inflation (or hyperinflation) are a risk, how can this me managed?
Why did Germany go I to hyperinflation and how did they resolve it? (Currency backed by land?)
And big +1 for post office banks!
This was great! Thanks so much Pascal and Larry.
From the point of view of the main "Neutrality" thread of this channel, it would be interesting to see an analysis of the intersection between those countries that hold large amounts of USA interest-bearing debt and the countries that are aligning themselves with the USA in threatening war against multipolar-trading countries that are trying to reduce dependence on USD as a trading currency & central bank asset.
43:30 Always liked the Bancor idea.
Sounds like BRICS might be working towards (finally) implementing something like Bancor for international settlements.
Yes, we are all depressed about the Economics around the world. Professor Larry Randall Ray could find a way to make it fun and at the same time expose the clever nuances in the theories by having a cheerful mind and a cheerful face. This will make the interviewer enjoy his function on hand. Perhaps he uses a pair reading glasses that he could wear to hide the absence of his cheer?!?
My understanding is that bonds don't have the intrinsic value they once did hence the WW sell off
Good video. What a shame you didn't ask the professor about the world economic future in relation to the "dollar vs. Briks" confrontation. I would have liked to hear your opinion, even if it only lasted a couple of minutes...
Thanks Pascal for a great interview
Wray makes good points about CBDCs. Privacy is a major concern as well as the ability to punish or reward specific groups or even individuals for political reasons. A CDBC would kill small banks which is probably why the power brokers are not hostile towards CBDCs.
Pascal, Btw Prof Werner actually worked in Japan in the 1990s and has a lot to say about the debt situation Japan is in and the role The Japan Reserve Bank and USA plays in it.
So, at Breton Woods, there was meant to be an implementation of a global currency system, with no single country having dominance. But, somehow, the USA managed to inveigle the USD as the global reserve country instead. We now know when and why all the US global military backed domination started. We need another episode telling us exactly what happened at Breton Woods that enabled the US to pull off their global financial coup? How did the USA do it?
It is a part of the computation of Exchange rates.
The power to convince the Participants it was fair,
came along in the Marshall Plan.
The conversion to Fiat Currency in 1971,
did create some fluctuation issues for the US Dollar.
They had all the Gold from Russia and the UK paid for war materiel. (France had Gold too, stored in Canada, but refused to hand it over). UK£ being the reserve currency before WW2 meant many countries that had used £ as reserve before were unable to trade, as UK was essentially bankrupt. J.M.Keynes proposed a reserve currency (Bancor) based on a basket of currencies but USA wanted dominance cos 'manifest destiny' to lead the world. Literally the US was in a position to say 'my way or the highway' to everyone.
@@briskyoungploughboy If that is the Case, and I do not disagree with you,
what is the US capability to create a Marshall Plan today?
This is not Your Daddy's Oldsmobile.
@@briskyoungploughboyThank you for that. Has the true history of this coup by the USA ever been told - books, documentaries, etc? Then the US linked the dollar to oil - the petrodollar - and its dominance was completely sealed.
Well, if youve read some of the WW2 history, the Americans supported the UK and European war effort and afyer the war America was literally the last country standing. The Europeans and Russia wete all smashed. So USA had the upperhand in every way. Militarily, economically, industrially and manpower was not severily affected like EU & Russia. Btw Russia lost 27,000,000 pple to the war.
The real question should be is why international bankers are in charge of our money supply and why do they take interest on money they create from nothing, imagine we use that interest for the benefit of an actual nation instead of the 0.0001 percent!!
"Put a smile on your face.
Don't bring everybody down like this.
Look at me: I'm happy!"
While apocryphal, there is this insight:
The quote, "Permit me to issue and control the money of a nation, and I care not who makes its laws," is often attributed to Mayer Amschel Rothschild, the founder of the Rothschild banking dynasty. However, there is no evidence that Rothschild actually said this, and the quote first appeared in print long after his death
next year the fed will have some very large refundings on top of major new issuance. the carry trade has gone away and several large traditional buyers of our bonds have backed off. if we cant sell the new bonds they end up on the fed s balance sheet and into m2. this is in essence a debaement of the dollar, a decline in its intrinsic value which spells more inflation.
think he left that out. btw much of those extra dollars end up in the stock mkt, leading to stock inflation.
@@golanheights9000 bingo. they have started sending back by selling bonds.
The Eurodollar market out of London is an elephant in the room of this conversation. As is the Fed being a _private_ institution, owned by the big US banks, in turn owned by the unholy trifecta.
I'm not clear on what "ownership" denotes exactly in this context.
What about the Federal Reserve Bank System is and can be owned?
@@BanzoUnchained you could Google it, the Fed system, org structure of its 3 components, only the BoD is partly Federal. An owner makes decisions and keeps profits. Its employees are not federal employees by law. It does not have the same FOIA obligations. Lots of things.
@@BanzoUnchained my long reply to you vanished?
@@BanzoUnchained member banks elect 6/9 board members in each of the 12 regional banks.
Wray says it was understood by the founding fathers that it was good for the government to be in debt to the private sector. Why?
It is not just in war that government spending without raising funds creates inflation. Any discussion of this subject that omits to address that has failed to properly cover the subject, and that includes this one.
The criticism about poorly named concepts is spot on and the main issue people don't understand what banks do or how money is created.
The fact that "deposits" are actually just numbers typed into an account created out of thin air without any actual "reserve" backing it up probably sounds like some insane ramblings of a madman for most people.
While I disagree with many MMT contemporary policies I do really respect the guest and the school of analysis thanks for bringing him on. Macro econ must also be studied from the macro level not just bottom up because emergent properties exist. There's no sacred economy to return to that "just works". MMT gets this, post-keynesian/MMT adjacent Professor Steve Keen with his modelling makes this point in a lightweight fashion as well. Now to watch the interview!
What policies - MMT s a description, not a set of policies?
@@patrickokeeffe-i7i Like the job guarantee. MMT may be a description but sometimes MMTers have prescriptions.
the job guarantee is the only policy within MMT - yes individual MMT economists may have prescriptions, informed by MMT, and disagree between themselves but that's not part of their MMT description.
@@patrickokeeffe-i7i Indeed. E.g. Mosler would do well to expand his theory of why income tax is bad to a whole range of industries.
seems to be clickbait , i am skimming this video to find this and i dont see it
"How Economists HIDE True Mechanics Of MONEY To Help MIC Sell Wars"
💯
As the Port Workers Strike illustrates the importance of Imports,
it is vital to understand how much of the Industrial Commodities,
needed for Industrial Production come from other Nations?
If we are unable to obtain the Cheap Goods,
does Inflation increase?
If those former Colonies stop delivering at the price
set by US Commodity Brokers to insure Investor Profits,
does that mean we get to pay more for things?
If the Military does not scare anybody anymore,
do other Nations stop delivering?
That seems to be the implied threat....
Thanks for inviting Prof. Wray on the Neutrality Studies, Pascal. HE is one of my favorite economists. 👍
MMT only works in the context of the present system in which excess liquidity is suctioned up into asset markets (where the inflation occurs).
When President Portillo of Mexico announced Mexico would use its resources to advance the Mexican people, he had an economic plan that never had a chance to work because the BIS reduced the exchange rate it would credit the Peso against the US Dollar, the BIS acting as a central bank for central bankers. It had been set up as the agency collecting the reparations from Germany, but it continued operating during WW2, serving industry fighting the war. There were apparently industrialists and scientists sponsored all through the war, some of whom entered the US through Paperclip. I've tried to find explicit treaty definitions of its operations, but no success yet. The IMF, World Bank, the Fed have been running the dollar system since WW2 even after Bretton Woods gold/dollar regime was ended in '71. It has cost people around the world prosperity and even freedom
I’m old enough to remember the Vietnam War and the War on Poverty. As I recall, the US surrendered to Poverty much soon than it gave up its ambitions for Vietnam.
Interesting discussion . Quite difficult to get my head around some of the concepts . I clearly need more knowledge to really understand it .
Very normal. Keep thinking and it will come
Without this, every other battle against the warmongering class is pointless. Never use "my taxes" as an argument against war.
In Ireland 2500 years ago an once of gold would buy a cow. Today an ounce of gold would buy a cow. No change.
This is quite infuriating listening to this tripe.
Money represents buying power and as anyone can see the dollar has lost 97%+ of it's value since the federal reserve came about.
How long does it take for intelligent people to recognize this and start getting rid of the 'currency' fairly quickly. Gold is sitting around $2660 right now which leads me to believe that people are already figuring this out.
We have a war economy. What you claim can be true at the same time.
The idea that Capitalism will endure the discussion of Fiat Currency as opposed to Gold Standard Currency,
does challenge the though process,
as two of the largest Communist Nations appear about to corner the Markets of Economic control?
If they do abandon Capital as a measure of Value,
your efforts to accumulate Gold will leave you with a lot of metal,
and no measure of value to provide it's worth.
That is another economic variable that could change the Picture.
I’m 77 years old. I figured it out years ago. Although, I wish I had figured it out back when African Krugerrands were around $25.00.
@@David-ki5ff I am just a Punk.
I was born i 1951, and studied ECON in 1970.
I have seen how business operates as I attempted to do business since 1971, and the Fiat Currency dictated how it was done.
I do not attempt to find any economic gains any longer, I simply attempt to assist others who seem mor confused than me.....
@@petercottier1376 Oh, I get it. SCAM ☝️
In the end, it is just about perception. IMF “Strikingly, the reduced role of the US dollar over the last two decades has not been matched by increases in the shares of the other “big four” currencies-the euro, yen, and pound. Rather, it has been accompanied by a rise in the share of what we have called non-traditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies.”
As long as that trend the IMF points out won't grow and there won't be any big bubbles, the Dept will be no problem.
"Over time whoever controls the money system controls the nation." Stephen Zarlenga
I have issues on some of Mr. Wray's statements. He states that countries never run out of money without stating what money is. Niall Fergusson's statement of currency is most accurate in my opinion. The value of a sovereign currency is based on societies confidence in that sovereign nation. That is why the US dollar is worth more than the Bolivar dollar of Venezuela. The wealth of a sovereign is static and bound by that perception. Printing more money just increases the number of units that define that wealth. Increase the money supply by two fold, and the unit increases by half. The sovereign can print money to make more money available to the government verses raising taxes. But it could do the same thing with taxes. In the end the government has a greater share of the national wealth be it because it printed and spent or taxed and spent. The citizen saw the value of their savings decrease.
The second issue is discussion about the military industrial complex. US budget debt is driven by Social Security, Medicade, and Medicare. Even defense spending is small in comparison. why not talk about a real life example like Russia, where we can observe a real case study of the impact of military spending on an economy. Putin has been spending gazillions of rubles on the military and not a flicker of discussion.
What disappointed me was there was no discussion on why are interest rates so low despite deficit spending by governments for example Japan. It was only the COVID situation that even introduced inflation.
Get revenue->spend income is a inherent economic balance mechanism.
Yes you could print money (or create it digitally) but then you would be spending money that has no basis. In turn this dilutes the value of the money aka inflation.
The USA has a special ability due to its reserve currency status (which was backed up by a concrete monopoly in oil payments, aka petrodollar and the monopoly of the financial system aka SWIFT). This allows it to send a large part of its inflation to those who use its us dollars by expanding the base of the pyramid
You can see this by thinking about the USA national debt. If the population of the USA suddenly included the rest of the world, the USA debt is divided by 7 billion instead of 330 million (USA population)
This is the kicker. What if oil payments no longer is monopolized by the USD? What if SWIFT is no longer the only system in town for interbank payments across border?
Then the USA debt is no longer divided by 7 billion but divided by 400+ million (USA population + countries that use the USD as their national currency)
This has a inflation backlash and not just normal inflation but hyper inflation. This is also why MMT people never talk about the day after when they keep talking about how they cannot default on the debt because they will just print money. This is because the day after = hyper inflation
Nope. Because all you focus on is debt. But global debt is zero because ones asset is the other ones liability. Says the guy avove, says MMT, says my neighbour the booky, says logic.
The points you mentioned are true. Just they dont matter ciz debt is the most natural thing.
Its just unevenly distributed mainly because of US hegemony. That seems to be changing now and MMTwill deliver the explanation, and not the debt clowns
@@rli8594 Sure sure, everything is true but doesn't matter. Beautifully classic "trust me bro". Enjoy your hyperinflation
@@eymaslacker your argument seems to be that state debt leads to inflation, just in case of US they use a different form of dividing it. And if they didnt to that debt would be bigger and lead to hyperinflatio. Did I summarize your point / original post?
@@rli8594 Read it again. Your comprehension is extremely lacking
@@eymaslacker no argument? Thought so
Please try to get someone who can explain more about how MMT works on an international level. My fumbling-in-the-dark questions are, What is the basis of value between nations if currency valuation is subject to voluntary change? How many countries actually have truly sovereign currencies? And, What does a dollar dominated MMT model mean for non-sovereign currency states?
If an organization the size of US Treasury can not support the Currency,
what business will?
Who can support Bitcoin if it loses value?
Free floating exchange rate. It's a pre-requisite of MMT.
@@briskyoungploughboy Most of the Planets Producing Nations are seeking price stability for their Resources.
They are looking for something that does not change to serve Investors.
No, if there was a fixed exchange rate system established, then MMT would include it in their description. MMT is a description of the current system, not a set of policies
It’s quite hard to comprehend, since tangible economic entities (like State of California) is unable to “print” its own money except for voter approved bond measures, as can’t towns and cities (and other 49 States) and they must balance their “budgets” and fiercely collect tax returns, then the question that begs to be asked is who at the federal level decides to allow the debt to balloon to an extraordinary levels? ??
He's talking about the federal government. In any case though allowing a state to go bankrupt is a choice.
Never been good at maths or economics, but I appreciate Pascal looking at these issues (specially in this time of the proposed alternate financial system offered by Brics). However, I think I understand enough to say there surely must be a concrete basis -gdp? a solid foundation underlying money transactions, as security for paper or digital transactions. Not putting it clearly, but what happens when a government collapses, what happened in the 30's Depression, and in the more recent banking losses and failures of the 1980's?
JP Morgan said: “gold is money, everything else is credit.” Only gold has no counter-party risk.
Good luck with those little pieces of paper that are debased at 6-8% per year.
The MMT was a great mechanism for the US to get rid of debt in the “currency” that they had no control over (=gold) and simultaneously impose hegemony - both internationally (loans in USD, T-bonds, the petrodollar and pegging all/most intl trade in USD) AND internally (mandating regional banks and pension funds to buy Tbonds; most handy in the absence of a proper Central Bank). The MMT seems also to come handy for countries wishing to stave off the US’s hegemony by issuing local currency-denominated debt instead of borrowing in USD. But it’s a dangerous path if a government has no such local and/or international “minions” (which the US has an abundance still).
So many important loopholes in Prof.Wray’s version of reality (econ. history) that are a crucial proof-of-concept (the MMT, that is) - or a lack thereof. Need an interview with an opposing economist!
you simply have no clue about the MMT description of monetary operations in a state with its own fiat currency
I found this interview very frustrating and not the quality I expect from this channel. The guest takes his time to go over very obvious things again and again, and skim right through where detailed explanation is needed. And there are many questionable points left unexplained. Eg, he says that countries can’t involuntarily default. This might apply to the US, but surely other countries will default if they can’t repay their debt denominated in foreign currency? Sure US can print more money to pay its debt, but what happens when foreigners no longer willing to lend to the US? I guess it will be hyperinflation, but would appreciate the analysis from a real expert.
we will see next year when large refundings seek buyers. no carry trade, reluctant foreigners. welcome back inflation.
and yes, very simple minded. but we must give pascal a pass.
What do you mean by lend to the US? Most common is US lends to country 2 with payments in USD obviously. So since country 2 cant create USD it will give them something else until credit is settled. If thats not happening the biggest military power has some options left. One could say US credits aim to not being paid as the alternative resource is what they were interested in the first place. US is a big source of the inequality we see today. If only they decided for a less aggressive policy....
A major problem with MMT is that the equation system is not specified, and thus no statistical (econometric) parameters are estimated.
Good stuff! Keep em coming ❤
Any gold standard is just an example of government price setting whereby the government sets the price of gold, by fiat, and promises to convert government money to gold on demand at the set price.
The decline of the two Roman Empires at different times (and of the Empire created by Charlemagne at a later time as well) was accelerated because clever and scoundrel rulers imagined that they could solve economic problems by minting more coins with the same value designation and lower precious metal content, thus creating cycles of inflation and demoralization of money. Something similar happens in the USA, but Americans believe that they live in a modern country predestined to create its own reality with the power to rewrite the basic foundations of the economic phenomenon. Poor things...
Economics 101:
Whoever has the biggest gun makes the rules.
Economics 102: The Bankers extract wealth via inflation, currency manipulation, and social engineering.
Economics 103: There is nothing you can do about it.
Curious to know what Michael Hudson (President of The Institute for the Study of Long-Term Economic Trends) and
Richard David Wolff (American Marxian economist) have to say.
Maybe Wray knows, they're colleagues in the same university.
The host Pascal says “MMT makes sense because it is how stuff functions” - I would agree but it is not how things SHOULD function. Irresponsible government spending and reckless “money printing” is indeed the source of so much injustice, disparity and corruption we are witnessing in the world today.
MMT seems to be just explaining the governments overspending and how it helicopters freshly printed money in through social security and aid packages.
But if only those at the levers of the printing press did so in your interest!
great insights
Why do all MMT people have so many blinders on?
Many of their points clearly are very helpful to understand current reality, but it's always mixed up with gaslighting, suggestivity, political ideology and shrugging off some very important considerations as irrelevant.
Annoying af.
more proper name "a communist central planned economy" it always end in the same way...
They're mostly govt employees. And govt loves to print and spend money. So they run circles for govt to keep their money coming.
@@solaroid4442 Actually the main government employees: politicians, central bankers etc are the ones with the levers of public spending and they keep advocating the opposite. So,...
MMT economists cant give all the details about how economics works. Its not really possible to explain everything in 1 hour. The best person to do that, he is not an MMT type economist, but the information Richard Werner provides is fascinating, empirically proven research and he does it in one hr. But i can listen to him about his research for a good deal longer.
@@mariohatz3317 So a 50 minute video with Wray means all the 20 years of MMT literature is no good, but a 1 hour video with Werner doesn't? The questions in this video aren't about all the details of how an economy works, there are others for that. And in any case anyone claiming to do all this in an hour is selling you short.
Great interview! I don't see the links you said you were going to provide though...
Also, to the commenters who seem confused at what "inflation" is, this is a transcript of Mark Blyth's description. The link to the interview will be at the bottom.
"Can you generate inflation? Yeah. I mean, dead easy. Imagine your Turkey. Why not be a kind of Turkish pseudo dictator? Why not fire the head of your central bank in an economy that’s basically dependent on other people valuing your assets and giving you money through capital flows? And then why don’t you fire the central bank head and put in charge your brother-in-law? I think it was his brother-in-law. And then insist that low interest rates cure inflation. And then watch as the value of your currency, the lira collapses, which means all the stuff you import is massively expensive, which means that people will pay more, and the general level of all prices will go up, which is an inflation. So, can you generate an inflation in the modern world? Sure, yeah. Easy. Just be an idiot, right? Now, does this apply to the United States? No. That’s where it gets entirely different.
So, a couple of things to think about (first). So, you mentioned that huge number of 20 trillion dollars. Well, that’s more or less about two thirds of what we threw into the global economy after the global financial crisis, and inflation singularly failed to show up. All those people in 2010 screaming about inflation and China dumping bonds and all that. Totally wrong. Completely wrong. No central bank that’s got a brass nameplate worth a damn has managed to hit its inflation target of two percent in over a decade. All that would imply that there is a huge amount of what we call ‘slack’ in the economy. (Also) think about the fact that we’ve had, since the 1990s, across the OECD, by any measure, full employment. That is to say, most people who want a job can actually find one, and at the same time, despite that, there has been almost no price pressure coming from wages, pushing on into prices, to push up inflation.
So rather than the so-called vertical Phillips curve, which most of modern macro is based upon, whereby there’s a kind of speed bump for the economy, and if the government spends money, it can’t push this curve out, all it can do is push it up in terms of prices. What we seem to actually have is one whereby you can have a constant level of inflation, which is very low, and any amount of unemployment you want from 2 percent to 12 percent, depending on where you look and in which time-period. All of which suggests that at least for big developed, open, globalized economies, where you’ve destroyed trade unions, busted up national product cartels, globally integrated your markets, and added 600 million people to the global labor supply, you just can’t generate inflation very easily.
Now, we’re running, depending on how much actually passes, a two to five trillion-dollar experiment on which theory of inflation is right. This one, or is it this one? That’s basically what we’re doing just now. Larry’s given it one in three that it’s his one. I’d give it one in ten his one’s right. Now, if I may just go on just for a seconds longer. This is where the politics of this gets interesting.
Most people don’t understand what inflation is. You get all this stuff talked by economists and central bankers about inflation and expectations and all that, but you go out and survey people and they have no idea what the damn thing is. Think about the fact that most people talk about house price inflation. There is no such thing as house price inflation. Inflation is a general rise in the level of all prices. A sustained rise in the level of prices. The fact that house prices in Toronto have gone up is because Canada stopped building public housing in the 1980s and turned it into an asset class and let the 10 percent top earners buy it all and swap it with each other. That is singularly not an inflation.
So, what’s going to happen coming out of Covid is there will be a big pickup in spending, a pickup in employment. I think it’s (going to be) less than people expect because the people with the money are not going to go out and spend it because they have all they want already. There are only so many Sub-Zero fridges you can buy. Meanwhile, the bottom 60 percent of the income distribution are too busy paying back debt from the past year to go on a spending spree, but there definitely will be a pickup. Now, does that mean that there’s going to be what we used to call bottlenecks? Yeah, because basically firms run down inventory because they’re in the middle of a bloody recession. Does it mean that there are going to be supply chain problems? Yes, we see this with computer chips. So, what’s going to happen is that computer chips are going to go up in price. So, lots of individual things are going to go up in price, and what’s going to happen is people are going to go “there’s the inflation, there’s that terrible inflation,” and it’s not. It’s just basically short-term factors that will dissipate after 18 months.
That is my bet. For Larry to be right what would have to be true? That we would have to have the institutions, agreements, labor markets and product markets of the 1970s. We don’t. So, I just don’t actually see what the generator of inflation would be. We are not Turkey dependent on capital imports for our survival with a currency that’s falling off a cliff. That is entirely different. That import mechanism, which is the way that most countries these days get a bit of inflation. That simply doesn’t apply in the U.S. So, with my money on it, if I had to bet, it’s one in 10 Larry’s right, rather one in 3."
www.nakedcapitalism.com/2021/05/mark-blyth-an-inflated-fear-of-inflation.html
I’m a lay person that would like to think that MMT would explain how the US treasury is able to request the printing of dollars but there are so many holes in this theory. How come the US is not able to print money for strategic federal projects within the US. How come so many cities are bankrupt. Why did it need to confiscate foreign reserves say of Russia for funding Ukraine. How badly it is able to present soft power by showing a system that benefits its citizens that could be seen abroad. MMT appears to be another theory that holds a small truth to a much bigger picture.
The idea of Military Keynesianism was mentioned. What would prevent MMT from being used to put Military Keynesianism on steroids? Note that the Bank of England was created to get around Parliament’s reluctance to raise taxes for military spending.
Consumption side of the economy. What about production? Where is an investment system after CAPITAL function is destroyed?
It's an hour video. You want the bigger picture, buy his book.
Hurray! I always hoped that if I could just live long enough someone would invent a free lunch!
remember in 2014 Germany asked the US & France to help them repatriate billions of their gold reserves - interesting it took years before we agreed but more so that they asked after when we stole Ukraine’s sovereignty
It was never addressed how MMT would avoid inflation. It was pointed out during WW2 that bonds were sold to reduce consumer demand and there were also labor agreements to freeze wage hikes as well as price controls and rationing. Are these measure going to be permanently necessary under MMT? I have heard of taxation being used to control inflation under MMT. How likely are politicians likely to raise taxes during periods of elevated inflation?
It was. Tax is the main release valve, but you need to be pretty close to the real resource limit to start worrying about 'inflation'. The point is about providing productivity so you don't run up against a demand ceiling. Such as occurred after the pandemic, which showed up the real lack of productivity.
Poor Larry.
Why does Governemnt have to issue bonds at all? Why not just create the money?
we cann issue as much debt as we want as long as there is someone to buy it but no buyers, look out..
If you can get someone else to pay for the printing ink and paper, why not take advantage and exploit that savings.
Perhaps to make the magic look legit to the average man?
32:15 pretty good explanation?
@@siamcharm7904but theres always a buyer because as mentioned its the safest asset in the world
Would be god to have Prof. Michael Hudson
Legalized counterfeiting. That's what he is talking about. He is an "intellectual bodyguard" for crime syndicate governments.
Esteemed colleague, allow me to elucidate the profound paradox at the core of Modern Monetary Theory (MMT). This theory audaciously suggests that governments can effortlessly create currency. However, a closer examination reveals the dominant role of central banks-entities that, despite their governmental origins, operate with significant autonomy, focusing on controlling inflation and managing the money supply. This situation presents a fascinating contradiction: MMT's bold assertions clash with the stringent realities of economic operations. Consider the MMT proposition that a currency-issuing government need not fret over borrowing or taxation, as it can freely issue money, seemingly holding dominion over wealth creation. This assumption implies direct governmental control over monetary mechanisms. Yet, in reality, it is the central bank, often insulated from political influence and cloaked in technocratic authority, that wields monetary control. How, then, can MMT naively claim governmental money creation when the central bank firmly holds the monetary levers? Modern Monetary Theory (MMT) and Modern Money Mechanics are two distinct concepts. MMT is a macroeconomic framework that suggests that governments that control their own currency, like the U.S., can spend freely as they are not constrained by revenue when it comes to federal spending. On the other hand, Modern Money Mechanics is a publication by the Federal Reserve that describes the process of money creation in a fractional reserve banking system. While MMT deals with the broader economic theory of government spending and currency, Modern Money Mechanics focuses on the operational specifics of money supply within the banking system. When examining the distinction between Modern Monetary Theory (MMT) and Modern Monetary Mechanics (MMM), we find two distinct yet interrelated frameworks. MMT asserts that sovereign governments, which issue their own currency, possess the capacity to create money to finance public spending without the constraints typically imposed by borrowing or taxation. This perspective emphasizes the government's role in leveraging its monetary sovereignty to achieve economic goals such as full employment and price stability. Conversely, MMM focuses on the operational aspects of monetary systems, detailing how money is created, distributed, and managed within the economy. It examines the mechanisms by which central banks implement monetary policy, such as interest rate adjustments, quantitative easing, and reserve requirements. MMT primarily applies to sovereign nations that issue their own currency-such as the United States, the United Kingdom, and South Africa-enabling them to utilize monetary policy do not actively address economic challenges. MMM, while applicable to these same countries, also has broader relevance across different contexts, providing a technical framework that elucidates the mechanics of monetary systems and their operations, regardless of the specific theoretical approach guiding fiscal policy. Together, MMT and MMM offer complementary insights into the complexities of economic governance and the ongoing quest for effective policy solutions. There are numerous other paradoxes relating to the dynamics of wealth distribution, inflation control, and public debt. For instance, while central banks aim to stabilize economies through interest rate adjustments, their actions lead to unintended or intended. consequences, depending on how you look at it. Such as asset bubbles or increased inequality, complicating the efficacy of their measures. Moreover, the tension between short-term economic stimulus and long-term fiscal responsibility further exemplifies the myriad contradictions that permeate contemporary economic discourse.
Fascinating discussion for sure thanks for having this very important topic on the channel, the historic background to it and for touching CBDCs in the end, even if you didnt dive too deep there. Much more of this would be very much appreciated! Cheers
Can someone who's more familiar with MMT answer these two questions I have:
a) If the government can just print money, why does it need to borrow - or even tax?
b) If the government keeps printing money, doesn't that eventually lead to (hyper)inflation?
a) It needs to tax to redeem spent money or it would be spending on top of spending. Also it taxes to drive the acceptance of that currency.
b) It doesn't 'print' anything. But yes, if it was simply spending without any tax redemption and beyond the level of productive capacity there would be a problem. This is not just MMT it's standard economics.
@@baronmeduse Thanks for the reply. But the part about "printing" - isn't this the whole point of MMT? That the government can just print without any repercussions?
@@cpc9563 No 'printing' happens. It's a terminology thing. They are issued by spending and just accounted for. The point isn't that the government can just issue without repercussions. It has to take into account what the real resource position is. The financial point is that the common claim that a such a government is 'financially constrained' or can 'go broke' is a falsehood.
@@baronmeduse I understand about there not being any printing. It's just a figure of speech.
I also get the point about a government that borrows in its own currency can never go broke - because it can just "print" its way out of debt.
But, like you said, that will eventually lead to (hyper) inflation. If that's the case, then what's so special about MMT?
I've heard the term thrown around for the last few years, and I've read up on it, but I just can't figure out what's so revolutionary about it. Am I missing something?
Debt may not be a problem if there is a demand for your currency. But BRICS is undermining the relevance of the dollar. In addition, the attached interest on the debt is gobbling up an increasingly large portion of the cake, leading to the necessity to issue more debt in order to pay off old loans.
It is a vicious cycle and wars, pandemics and climate are used as a scapegoat for debt expansion.
My 2 cents.
There is only ONE true money mechanics witch is that money is a product as everything else, in a market. So the value of money depends from it's availability, as milk bread, food, lemons, etc. And obviously money should be kept non available for the majority, because it's the condition of it's value. This makes the force of the capital (Keynes). Without concentration (illegalities) money has no value.
MMT: Modern Modern Theory
or
Big Rock Candy Mountain for those in charge of the printing press.
Pascal, what he's saying isn't wrong, but it's incomplete. Economies are basically models of the real world. Governments can create infinite money, true, but they can't magically create more goods for people to buy with the newly created money. So if the money starts circulating - if people spend it and expect to receive goods in return - it creates inflation. (If it goes to a few rich billionaires who put it in the stock market then it bids up share prices instead of effecting real goods. But the risk of creating more money - more IOUs, as he correctly says - is that at some point people may try to buy things with it.)
36:07 What a bizarre thing to say.
Followed by "except on a gold standard".
The US operated on some form of a gold (and silver) standard through the majority of its history.
"governments never behaved that way." 🤔
--
Edit:
they go into the gold standard in more detail at 40:02
Need to have this guy on with Peter Schiff.
I wish that you had asked Prof. Wray more questions regarding the relationship between inflation and the government paying its debts with borrowed money, as proposed by Prof. Richard Wolff. Or is it borrowed or just digitally produced?
Randy explained that - its not borrowed just digitally produced by the central bank when the government wants to spend. The government does not have debts like a household, they are completely different entities. I love Richard Wolff who is great on many things, but he doesn't seem to understand MMT, and I don't understand why he and the other leading Marxist economists such as Yanis Veroufakis don't use it to back up their usually excellent analyses