Larry Summers: Modern Monetary Theory is a recipe for a disaster

Former Treasury Secretary Larry Summers expands on the argument he made in his Washington Post op-ed on modern monetary theory.
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[@AustralianLeprechaun]

is this the same larry summers who said we dont need to regulate derivatives?

[@Newlinjim]

AustralianLeprechaun I guess the old saying “With age comes wisdom” has some merit.

[@dannywindham3295]

The very same Larry Summers. The same Larry Summers who pushed to remove glass-steagall

[@dannywindham3295]

BLAIR M Schirmer Larry Summers is a fraud. Not only Larry Summers but Bob Rubin Alan Greenspan they are frauds. And to take it one step further they are firm believers in laws against fraud. I wish more people would pay attention to these types of things.

[@joeblow3990]

Yes, this is the same Larry Summers that opposed the Head of the Commodity Futures Trading Commission (CFTC). The chairperson of the CFTC was Brooksley Born and she wanted authority to regulate derivatives and other crazy Wall Street financial engineering time bombs. Summers, Greenspan and Rubin opposed her and ridiculed her. The three stooges (Summers, Greenspan and Rubin) were proven to be catastrophically wrong.

[@dannywindham3295]

joe blow in an interview on real news Bill Black said he could make a case against Robert Rubin. And Angelo mozilo and make it stick. Given the proper resources I'm sure he could make a case against Summers and Greenspan for fraud. Brooksley born try to do the right thing but these criminals in suits stopped her. Somehow or another more people need to become aware all these things. Be well

[@xvrar1]

I prefer critics of an idea to actually talk about the idea. Like to see him and Stephanie Kelton do a head to head debate.

[@xvrar1]

@@kylem7365 the awful truth is that I havnt got around to reading her book cover to cover. What basic questions about MMT does she need to answer?

[@BridgeTheRetirementGap]

@@kylem7365, The Deficit Myth is not a detailed explanation of all the details of MMT. So you are faulting it for being the introduction it is, just because you are too lazy to look at all the citations and references she has. Don't be a joke yourself.

[@Sinleqeunnini]

@@kylem7365 Study David Graeber and know the depth of your faulty assumptions about what the debate should even be in the first place.

[@kylem7365]

@@Sinleqeunnini David Graeber 😂😂😂

[@thomasd2444]

@@xvrar1 kzbin.info/www/bejne/iXqsY4mKj7iSe80

[@razisiddiqui7506]

Is he still relevant? Good thing he wasn’t in Iceland, he would have been locked up along with bankers. People forget that he was one of the architects of 2008 crash.

[@kylem7365]

@Wilson he doesn’t have any. He just parrots talking points that are false.

[@henrykaspar3634]

Do you have substantive argument as well?

[@theodorecurtis4709]

Larry Summers played an important role in causing the last two global financial crises (1997 and 2008). Listening to him lecture other people on financial disasters makes as much sense as fielding advice from El Chapo on criminal justice reform.

[@poetrypassionpleasure]

With all due respect, when you describe a theory incompletely and incorrectly, the fact that you are against it seems beside the point. MMT from my understanding, does not describe a world without limits where money can be "printed" without limit. The limit is productive capacity. Plus, we always seem to find the resources for defense spending and corporate tax cuts.

[@thomasd2444]

kzbin.info/www/bejne/iXqsY4mKj7iSe80

[@stuffjunk5959]

Excuse me but Larry Summers doesn't deserve any respect

[@EkonRekon]

The economy was reverse engineered and they can't stand for it! You must remain confused and angry so that you shadow box specters your entire life

[@jeremyblank8590]

The global desire to keep the dollar as reserve currency is eroding

[@consciouscrypto3090]

True, but they have to use some currency for trade, and as the saying goes, we're still the cleanest dirty shirt. You think they'd rather trust the Ruble, Yuan or Euro that's on the verge of breaking up? Maybe after a Euro collapse the Mark might replace USD as the global reserve currency. Until then, we've got a lot of leeway.

[@smallbluemachine]

I don't see the desire changing. As the U.S picks fights within the Western Bloc, it's only a matter of time. And then what? War?

[@Donovaan]

Well functioning MMT doesn't require your currency to have reserve currency status. Other countries like the UK or Japan are also doing some form of MMT successfully.

[@themsuicjunkies]

Is this really because Fiscal expenditure by America or because the United State seems more like a failed state with nukes everyday? Leading in AI by chance but otherwise has no coherent plan for itself or the future of the institutions that allow the dollar to be the global reserve currency. If a demagogue like Trump can come and change any agreement commercial or otherwise then why would you want to put all your bets in a cannibal country, with its citizens and to ther countries.

[@khalilmohammadmirza4070]

USA just tried MMT ecnomics for 2 years with stimulus checks. They already have massive inflation. Usa has been raising interest rates to fix inflation. If they tried MMT for everything. The economy would be to hot to handle. Most people won't be able to afford anything.

[@HellCatLeMaudit]

His statement that a country does need fiscal stimulus when it is in the doldrums is exactly what MMT is saying. Fiscal stimulus is printing money.

[@michaelvanryzin4592]

"The laws of Arithmetic"?? How about the laws of accounting, where one person's debt is another person's income?

[@hapahilo]

How about the law of reality where debt is created/issued, bundled, sold, re-bundled and re-sold over and over again? Debt ends up living on multiple accounting books which means multiple parties lay claim to the underlying debt. MMT just legitimizes what is already going on with out current banking system. Do you really think there is a debit for every credit? The only way out of this financial mess is to go back to a sound monetary system backed by audit-able assets.

[@tsuba14]

@@hapahilo who doesn't love paper gold!

[@dempseys3]

Michael, the laws of double-entry bookkeeping say one person's asset is another's liability. So if you have a bank account (your asset), it's the bank's liability (they owe you the money). Deficit "hawks" like the despicable Summers are like demagogues who stir up a mob of depositors to march down to the bank and demand it reduce its liabilities. An honest bank manager says "You know that will reduce the size of your accounts"...and an insane mob would say "We know...we just don't like the word 'debt'!" ... not very sensible.

[@programking655]

How about a basic understanding of the equation of exchange, which would suggest that printing massive amounts of new money quickly would cause hyperinflation.

[@thomasd2444]

@@programking655 kzbin.info/www/bejne/iXqsY4mKj7iSe80

[@rexstout8177]

Larry Summers sounds like the sort of person who would argue to the death about the virtues of multi level marketing schemes, and take it as a personal insult if someone used math to tell him he was mistaken. Just to be clear MMT has never been implemented. Unlike Mr Summers regulatory regime regarding convoluted financial instruments.

[@RussCR5187]

The core of MMT simply describes the way government spending actually works today.

[@BridgeTheRetirementGap]

Actually, since MMT is the DESCRIPTION of how Sovereign countries use their Fiat currency, it IS implemented. The problem is how few people understand that, even (and especially) economists and the politicians in charge. Paul Ryan was a perfect example. Had he understood what MMT explains, he would not have been made a fool of by Alan Greenspan in 2005. Perhaps what you are referring to is the Federal Jobs Guarantee program that is a prescriptive part of MMT.

[@felroberto]

This comment show how little some people understand about MMT, godness how many times it has to be repeated MMT is a description of workings of money and banking in an economy and not a Policy Prescription?

[@dudewaldo4]

Extremely wealthy man tells peasants not to look behind the curtain, money works exactly as I say it does!

[@ANTEGEIASASRE]

money is not magic. its pretty simple: the more of it is printed, the less it is worth

[@dudewaldo4]

@@ANTEGEIASASRE Since the fed printed 3.7 Trillion over 2020, we should expect to see huge inflation in 2021? Still waiting...maybe by December?

[@ANTEGEIASASRE]

@@dudewaldo4 its not a ups delivery. dont be surprised when u start seeing it though. and dont be surprised when the us starts sliding into chaos. u have been warned

[@thomasd2444]

@@ANTEGEIASASRE kzbin.info/www/bejne/iXqsY4mKj7iSe80

[@ANTEGEIASASRE]

@@dudewaldo4 hey how have u been?

[@benjaminhiller448]

It would have been so much easier for him to say "I have no idea what MMT is"

[@victorfolayan4729]

According to Larry, MMT asserts that: 1). The govt can just print money to finance itself & therefore never needs to worry about paying its bills..... 2). All government debt can be repaid by printing money..... Since even a cursory reading of its underlying axioms would quickly reveal that MMT doesn't come remotely close to making either of these two assertions, one has to conclude that Larry is either intellectually sloppy or just telling bold faced lies. His policy making record would suggest that the former is most likely the case.

[@Achrononmaster]

This is a great reason to trust the MMT'ers. Summers was one of the gang who brought you the worst global financial crisis since the Great Depression. He does not understand how money works. If inflation is your fear, rather than unemployment and permanent indebted lower class, then there is nothing to fear from MMT. Moderate demand-pull inflation can ALWAYS be controlled by taxation and other fiscal contraction measures, and inflation of this sort is healthy and wholesome, it reduces the value of rich folks wealth and reduces the burden of debts. That's why the Austrian School hate inflation, because they recognise it as an indirect tax. Government deficits are private (non-government) savings. Gov deficits cannot cause inflation, savings have no inflationary pressure, it is spending on real goods which causes inflation, and even then, only if the demand exceeds the capacity of suppliers to raise their production levels. If Summers knew all this he would disown all his past advice and deficit hawk cheap talk. He is a world class anti-intellectual. In fact, I suspect by judgement of future historians, Larry Summers, Tim Geitner, Robert Rubin, Greenspan, Kudlow, and the rest, they will all be judged as virtual criminals, or at best as professionally incompetent and grossly negligent.

[@wheresthepudding946]

he has ties with Jeffrey Epstein, which checks out to me.

[@robertbrandywine]

Trying to slow down the economy by raising taxes is a non-starter. Congress is slow and always opposed to raising taxes. MMT better have a better way of slowing the economy that works automatically or that is insulated from politics.

[@BridgeTheRetirementGap]

@@robertbrandywine, yes, there are other ways. One is the use of the Federal Job Guarantee, which is a prescriptive part of MMT. Here's more information on that: kzbin.info/www/bejne/j3bck2h3bKyBsMk

[@jefflawrence5835]

you're too kind!

[@programking655]

Except that taxation didn’t work too well in the 1960s to control inflation.

[@scabbycatcat4202]

As a sovereign nation Britain produces its own currency. So how is it possible for a sovereign nation to run out of money and need to go to the IMF for a bailout like Britain did in 1976 ?

[@alros1212]

Imagine thinking that printing money is the solution, lmao. My child says shit like that.

[@iamned5717]

no money printing, no money, no capitalism, no job.

[@MilwaukeeF40C]

@@iamned5717 Capitalism is nothing but voluntary interaction. It does not require government money.

[@tooperupsutin69]

@@MilwaukeeF40C yeah keep buying Bitcoin you Nerd

[@BarrySlisk]

@@TheTazzietiger Gold used to be money. Try to print that.

[@BarrySlisk]

@@tooperupsutin69 If you don't have anything intelligent to say......

[@ransom182]

What a joke. MMT is already in practice, though the politicians won’t acknowledge it.

[@jsimonlarochelle]

He cites examples of country that do not meet the "prerequisite" of MMT as examples of situation where MMT did not work so right there he is discredited. Also, MMT does not say that government can print arbitrary amounts of money. They state very clearly that the government is constrained by available resources among them the level of employment.

[@wierdjared]

We already are using MMT. That is where we are. This guy is a liar. The DOD overspends by over 1 trillion per year.

[@Creshex8]

Jared Kaiser I was wondering if anyone else noticed that same point.

[@gorthorki]

And therefore it is a proof that MMT is a disaster.

[@adamzielinski9077]

And the dollar is experiencing devaluation as a result

[@lyni50]

Summers is full of neoliberal crap. MMT is simply a description of how the monetary system actually functions. It’s not a policy issue.

[@Creshex8]

lyni50 its a voodoo theory that involves sacrificing your children to false god-demons. An excellent way to destroy your country and make other countries despise and avoid your currency like the plague.

[@RussCR5187]

@@Creshex8 Do your homework.

[@Creshex8]

@RussCR5187 , Great response, full of details. It’s witty retorts like that which will push MMT into the mainstream.

[@Jone952]

This really makes me lose respect for titles like "Harvard President Emeritus"

[@BridgeTheRetirementGap]

And well you should. he's one of the chalk-pushers who never learned how the US Treasury actually works, even when he was working there.

[@thomasd2444]

kzbin.info/www/bejne/iXqsY4mKj7iSe80

[@wierdjared]

Hyperinflation in countries has to do with availability of goods and services in countries not money per say. These sanctions are the cruel tools of destroying currency. This guy is a bought and paid for talking head.

[@henrykaspar3634]

Nonsense. Hyperinflation is caused by a drop in demand for money.

[@malcolm4273]

Larry Summers is a disaster

[@coryhinman5134]

disaster CAPITALIST--fixed.

[@ozgal606]

We will see how Australia pulls out of this I guess 🤷‍♀️

[@OakhillSailor]

Where is the person from the other side?

[@medusaskull9625]

Larry sounds very logical and fair. I don't know why such an idea isn't welcome into our fiscal policy, instead they are keeping on chasing wild geese.

[@Vurtcone]

The only criticisms of MMT that seem logical are that corporations get access to higher interest on treasury bonds (because they buy larger amounts of them) that the average American who buys those same bonds doesn't. Also, the interest on these bonds is a passive profit flow into these corporations that the average American cannot enjoy in the same amounts.

[@BarrySlisk]

What about inflation destroying the middle class savings?

[@grrr228]

I’m looking into this much further. This is interesting

[@jefflawrence5835]

come on down the rabbit hole

[@charliethecockatoo2159]

Look into Stephenie Kelton. She's the one to read.

[@toddymcgann4921]

I highly suggest when reading about MMT also read about the how increases in M2 and the velocity of money leads to inflation. Which leads to much more human suffering then any other economic event

[@armelfrancois7009]

@Toddy McGann capitalism?

[@toddymcgann4921]

@@armelfrancois7009 really has nothing to do with with capitalism. Monetary theory more broadly can be applied across economic theory. As we are seeing now, increase in money supply = inflation

[@benhendricks260]

MMT is about balance also... taking money out of the system is an important tool just as much as putting money into the system.

[@khalilmohammadmirza4070]

USA just tried MMT ecnomics for 2 years with stimulus checks. You already have massive inflation. Usa has been raising interest rates to fix inflation. If you tried MMT for everything. The economy would be to hot to handle. Most people won't be able to afford anything.

[@elliotthovanetz1945]

Yeah, the Biden administration understands the taking money out of the system part of this 'theory' with its massive deficit spending into oblivion 😮

[@gg_rider]

So not "money printing" ... That means the United States is going to source dollars from somewhere else?? From where? The United States government is the sole source of dollars that except for taxes , that can be possibly used to pay taxes. Dollars don't grow on trees. Ordinary people don't make dollars. Only Uncle Sam has the monopoly on USA brand dollars.

[@hamzah.7317]

lol you call that a taxes cut ? :sips_martini_in_dubai:

[@The_General_Zubas]

Dwight Eisenhower begs to differ.

[@dempseys3]

Setting aside the questionable provenance of any information from Summers, MMT is simply a description of how money works for issuers of currency vs. users of currency. We're all familiar with what a currency user must do to pay the bills, but it's different if you can print the means to repay those bills in the back bedroom...or down at the central bank. For currency users "Tax & Spend" is an accurate description. Revenue must precede spending. But for currency issuers, where would people get the dollars to pay those taxes if government didn't spend them out into the economy first? The accurate description of the procedure is "Spend first, then retrieve some dollars in taxes." And what do we call the dollars not retrieved, left out in the economy. Answer #1: the dollar financial assets of the population. Answer #2: National 'debt' Both answers describe *exactly* the same thing. This mirrors the situation of bank depositors. Their accounts are their asset, but to the bank, they are a liability (the bank owes depositors the money). Now imagine a mob stirred up by a demagogue like Summers marching down to the bank to demand it reduce its liabilities. An honest bank manager might say "But that would reduce the size of your accounts." A truly mad mob would respond "We don't care. We just don't like the word 'debt' because we can only understand the situation of currency users!" ...Not very sensible, even if Larry Summers has a string of honors and initials after his name.

[@MilwaukeeF40C]

The government's spending creates even less economic value than banks loans do, though. I do not need the government to spend anything in order for me to find some trade worth making.

[@5ynthesizerpatel]

@@MilwaukeeF40C - where would you get the surplus money from if the government doesn't create a surplus for the private sector to use?

[@MilwaukeeF40C]

@@5ynthesizerpatel The inflationary monetary system is not desirable at all. Back to commodities.

[@5ynthesizerpatel]

@@MilwaukeeF40C - which is basically what the MMT people are saying

[@robertbrandywine]

@@5ynthesizerpatel How are the MMT people saying we should go to trading commodities?

[@augmenautus]

3 years later, inflation proved him right. MMT sounds great until a dozen eggs cost $8.

[@theworldthroughmymind5772]

More tax equals less economic activity..Fiscal responsibility is constantly ignored by our government and yet it is the ONLY cure.

[@mrfuzztone]

Larry Summers has said that the 2017 tax cuts leading to over $1 trillion of stock buybacks was the wrong thing to do. He said the money should have been spent on fiscal stimulus to repair and build infrastructure. That should have been the headline instead of the bogus MMT is a recipe for disaster. The Right's 2017 tax cuts are a recipe for disaster. Larry is funny. He may not approve of MMT but he does say a lot of things that rich business leaders and politicians don't want to hear.

[@HellCatLeMaudit]

CNBC is trying to attract watchers of Fox News.

[@vandertuber]

Larry Summers wants more tax and spend, economic stagnation and deficits at the same time, and also wants weak trade for the US.

[@hamzariazuddin424]

is there any books explaining these examples he gives of printing deficts and how its conistently gone wrong with france, britain and latin america?

[@The_Real_Devil]

This strawman argument is pointless without getting Stephanie Kelton or Warren Mosler on to debate him and provide the other side of the argument.

[@TheOldngrumpy1]

If we actually "borrowed" money he would be correct, so it's a good thing we don't do that. Treasury bonds "reduce reserves" by offering interest to agree to trade liquidity for gain. Bonds are simply a liquidity swap, the opposite of QE. Why would the monopoly issuer of currency ever "borrow" its own currency to fund spending when it can, and does create as much as it wants to via appropriations? There is no debt except what the government owes in tax credit, which is $1 for every dollar of currency it spends. When a bond matures it is simply moved back to the reserve account of its owner with a small interest payment. Bond holders don't set the interest rate and can never "call in" their debt holdings. Is $22 Trillion too much currency to have in circulation? Remember that bank reserves created by credit cannot retire the debt that created them or be net saved as a store of value. Only money created by Congress can do either. The Fed and Treasury have a combined balance sheet that always equals the national debt. This is obscured as long as GDP growth is sufficient to roll over private debt, but it becomes very apparent as soon as the private sector economy hiccups if the actual net money supply is insufficient. Paying the debt is no more complex than moving bonds back to reserves and could be done tomorrow before noon if Congress wanted. However, paying it by reducing spending and collecting taxes will leave nothing in the economy, as taxes are destroyed, as is revenue from bonds, upon entry to the government sector, not recycled to spending.

[@xtra-oi9xb]

.... thanks Grumpy ... you really helped me understand the process

[@testblustacks5799]

Micro finance money is lent to two unemployed land owners; farmers A and B. They buy seed and tend to their farms. After a few months they sell the crops in the market and pay back the loan. Farmer A is lent money from a bank according to Fractional Reserve Banking Farmer B is lent newly created money directly from the central bank which increases the national debt (which is all denominated in the country's own currency). It just printed money as according to MMT. Is the effect on inflation for farmer A different to farmer B?

[@mahaishraja5449]

prof summers wouldnt know a sectoral balance if he tripped over one. the accounting reality is that if the private sector runs a financial deficit against the rest of the world, the government has to cover the financing gap minus the direct capital inflow to prevent a deflationary liquidity crunch. if summers et al were correct, rising government debt should have seen taxes, interest rates and inflation rise over the last two decades. instead the 10 year bond rates have collapsed, inflation threatens to turn into deflation , and the governments doling out tax cuts, and every dark dingy corner of the planet you go to, you have people who will gladly take an american dollar off you. try do that with yuan. furthermore i dont see anyone putting there hand up to run a trade deficit against the americans. to take trumps idea to the extreme , if the americans were to achieve a trade surplus over a prolonged period of time, the rest of the world runs out of american dollars , and then it gets really tricky as to whether you accept other peoples currency. summers is talking accounting nonsense

[@jimb5421]

Hmm, partially right however, that deficit reguires something they can buy with the trade I'n balance so real estate, natural resources, farm products, corporations are sold to foreign investors with trade deficit capital. Creating inflation and price hikes in the us. Add the fed printing money and banks levering, investors chur.ning in market inflation can then be blamed on non existing wage increases.

[@raybod1775]

Jim B True, when we run out of stuff to sell, the dollar will collapse with nothing to prop us up. We started out the greatest creditor nation in the world with great paying jobs and pensions before Reagan and the Republicans took over, now we're the greatest in debtor nation in the world with few pensions and less great paying jobs with our economic size dropping from #1 to #3 after Europe and China.

[@vasilymelnikov7346]

Completely wrong

[@The_General_Zubas]

1:40 Idea? Since 1970 it's been practice. I think thats the year we got off the gold standard. MMT isn't actually a theory. Its common practice.

[@ajx9747]

He is talking about scale

[@ajx9747]

U can't run 6 trillion dollar deficits every year

[@The_General_Zubas]

@@ajx9747 Not without Taxing properly, No. Things like the Bush/Trump tax cuts just create the issue of too much money in the system. Too much money = Deflation Deflation = loss of purchasing power, which in turn devalues the dollar. As long as we keep the Taxes at the right percentage points for both buisness and Personal, we can spend money on everything. I mean, we JUST did that with the Military. We can do that eith Domestic programs too.

[@The_General_Zubas]

@@ajx9747 to me, the Defecit is the amount of money actually lended out into the system. At least from my studies anyways.

[@The_General_Zubas]

@@ajx9747 I agree though. The amount of money being taxed and the money being spent is completely non concurrent, and one of the big reasons why the slowdown happened. No one spent the money from the tax cuts. So technically, it didn't work. Unless you count stock buybacks.

[@patakainstitute346]

If its 'Bills' are in its currency, who else is allowed to pay it? only the currency issuer...simple Larry.

[@Rob-fx2dw]

Wrong. - Government does NOT issue currency. Government gets it's money from the Reserve bank by selling bonds to the Reserve bank and to private entities. Those bonds mature in time and have to be paid out with taxpayer money since there is No other source of money that government has access to. You don't know how to follow a financial money trail because if you did you would realise this.

[@HeritageWealthPlanning]

So France has the worlds currency in the 70s? Wow, Who knew?

[@Bonescratcher]

The big difference is that those countries had debt in someone else’s currency. The US debt is in its own currency. So they can print as much as they like

[@Rob-fx2dw]

"Political Actors " good description of them at teh 20 second mark of this article. That's it. "actors" .

[@Milton_Friedmanite]

Tax revenue literally increased every single time taxes were cut aside from the Trump tax cut. Laffer always said there was a peak in the curve, the Laffer curve was never, “cutting taxes always = more tax revenue”. Economists did a study to show the peak is at 33%, so the Laffer curve has always been correct.

[@Mirghanii]

2:30 is the important part of the video. In which Sara asked Summers if the US government (Federal Reserve + DoT) is already using MMT; which is partially ture when it comes to "fiscal" policy in certain times to finance deficit or to stimulate the slow economy(QE), but it would be dangerous to use it as a "monetary" policy.

[@shpensive]

MMT isn't "a theory that all debts can be paid for by printing money". It's the observation that a state that issues its own currency can technically spend as much as it likes, but the effects of spending create soft economic constraints: spend too little (/ tax too much) and you get unemployment, spent too much (/ tax too little) and you get inflation.

[@dewaldt8104]

Except there is very little that taxes have much effect on inflation.

[@Guizambaldi]

This is just a change in perspective, but it does not make any qualitative difference from regular economics.

[@tuckerbugeater]

We're not going to do MMT, we're just going to print a bunch of money.

[@thomasd2444]

kzbin.info/www/bejne/iXqsY4mKj7iSe80

[@elliotthovanetz1945]

15 years of MMT got us to this mess today. High inflation, bloated fiscal deficit off a cliff, the average person's purchasing powere being destroyed, etc.

[@robgoren8628]

How about falling for Mossad honeypot traps, Larry? Would that be a disaster?

[@davidjacobson3529]

Discussions about monetary policy need more focus on the problems that are being addressed. One kind of problem comes when the dynamics of an economy and financial system get caught in some kind of cycle that takes the system away from any kind of desirable equilibrium. The disappearance of the financial liquidity needed even for short term transactions during the 2008 financial crisis is one example. The wage price spiral of inflation in the 1970s is another. There is no doubt that monetary policy is a critical tool in dealing with that kind of problem and bringing the economy back into dynamics that financial markets can control. A second kind of problem is the tendency even for good economies to display some amount of cyclical behavior. The claim that monetary policy can improve that behavior is highly questionable. The large oscillations in boom and bust cycles over the last twenty five years suggest that monetary policy does more harm than good. The severe financial crisis of 2008 cast large doubt on any claim to effective government economic policies. A normal monetary policy that tried to avoid large oscillations in economic activity and let variations in interest rates be controlled by the balance between supply and demand appears likely to work much better than an interventionist monetary policy from a few experts who have a limited real idea of what they are doing. The third kind of problem is the more significant one. It is the consequences of major technological change. The idea that monetary policy can manage that problem is ridiculous. The big challenge for the United States is more effective use of technology across a wide spectrum of activities that includes manufacturing, healthcare, and education. Success with that effort would dramatically increase the quantity and quality of the products and services available to all Americans without penalizing anybody. Part of the process certainly needs to be directed at a larger portion of the results for less affluent Americans. No doubt private enterprise has to play a large part in this effort. It is doubtful that government jobs of last resort would make much of an effective contribution. But, government does certainly have to play a large role. Doing a better job providing the infrastructure and public education required for the effort is certainly part of that job. Possibly more direct forms of government subsidies to less well off Americans could be required if the kinds of deflationary pressures on working class wages observed during much of the last 18 years proves to be the long term reality. Private enterprise is a major requirement. But, the idea that the only path to progress is a stimulus to a frenzy of low quality or repetitive private initiatives is nonsense. A balance has to be built up between private enterprise and government. The spending that government can afford will be determined by what the American economy is able to produce. The amount of that potential product will be determined by how effective the American economy is in exploiting the potential of emerging technologies.

[@bargdaffy1535]

Larry Summers is the Scientologist of Socio Economic theory.

[@michaelbond781]

It's going to end in disaster.

[@matthewdelaney3466]

Modern Monetary Theory isn’t a recipe- it’s the ingredients.

[@sevilnatas]

The age of the amoral economist must come to an end. They need to expand their expertise from merely the mechanics of the economy and start taking into consideration the people that are at the mercy of that machine. They consider the corporations in their calculations but rarely consider the first order element of our society, people. We are not a nation of corporations, we are a nation of people, and the corporations are here to serve the people of this nation, not the other way around.

[@fredschwarz3334]

Actually we are a nation of individuals, who should interact with each other freely and voluntarily as they wish. Persons. Not "people."

[@sevilnatas]

@@fredschwarz3334 I completely agree. We are a nation of individuals, who should interact with each other freely and voluntarily as they wish, based on the laws put in place locally and federally via our elected representatives. And I would like to add a thank you Fred on the constitutional lesson you have given me. Up until now I was under the impression that the Constitution started with "We the People..." but I am glad you let me know that it starts "We the Persons..."

[@blakelewison9872]

Why do we take these old fools serious?

[@Rob-fx2dw]

agreed - I don't.

[@Creshex8]

I can’t believe she said that, why can we just print money since we have the world’s reserve currency? Are you insane, lady???? If you were a resident of another country, and you were to hear that country was going to implement what you just said... would you want to store your value in that currency? That is absolutely nuts. You might as well preach that you are going to abuse your lenders’ trust and destroy their savings.

[@robertasirgutz8800]

It's been in place for a while. Countries he mentioned, aren't the reserve currency. Our power has degraded their economies. Taxes don't pay debts, are in place to stimulate foreign investment. Budgets are a myth. There's always money for bailouts and the military.

[@amabdall]

what people like Larry summers dont understand is MMT is not telling us we should do this or that. MMT explains what is already happening. Literally, the government just printed between 3-6 Trillion for COVID stimulus and buying corporate bonds. So ya you may hate MMT but it is exactly what is happening now

[@MarlonWeems]

This certainly hasn’t aged well

[@Ella-zh9iu]

Print a bunch of money and you get inflation maybe even hyperinflation especially if most of the output stays the same. Right now we are experiencing supply shock and how do you bolster the demand side when millions of people are under shelter in place and social distancing orders? I would think a stimulus package would need to pay people’s rent for as long as shelter in place is under effect,1200 dollars won’t pay the rent for one month. If you give airlines billions of dollars that still doesn’t increase the demand for airline tickets people are afraid of being exposed to coronavirus in airline terminals and airplanes so how does that work?

[@angelaj8958]

there is no amount of debt the banks and gov't won't agree to when they profit from it, but suggest it for people to live on, and that is claimed to be just wrong. would like some links to support his claims that he supported more help for the middle class than the billionaire class

[@Rob-fx2dw]

The essence of MMt's economic argument that federal government politicians should have "Policy Space" to spend in excess of it's income for what it considers is better for the economy. The same in their minds a great theory that talks about the evil of inequality but when it comes to the reality only politicians should have "Policy Space" when everyone else like the average person and those on less than average incomes should be restrained and have no "Policy Space" to spend more than it's income. Not you, not anyone else but politicians because the MMT pushers are telling everyone else that they are all too stupid and the irony of it all is some are stupid enough to believe them.

[@ChannelMath]

Summers' life and work has been to promote neoliberal economic policies for the dominant "centrist" elites. He opposes MMT only because MMT is seen by economic progressives as a way to argue for the policies they want. He proves this here by only arguing against those progressive policies. But MMT being seen as an argument for those policies over the current, dominant monetary and fiscal policies is contingent on the current situation, actors, and ideologies. That's why the originators of MMT don't argue for either policy (you don't see biologists arguing for "more evolution"), and that's why Summers (apparently) doesn't even have to know what it is to argue against it. (this seems to be a uniquely unfortunate property of the "science" of economics)

[@zeus6662]

Larry Summer: countries in South American don't control their own currencies and their debts were all in foreign currency amounts. America's debt are all in US dollars. Learn how to read Larry.

[@Prophet308]

Summers makes a fool of himself again. After losing billions $ for Harvard, he doesn't even realise QE is a version of MMT.

[@milesromine9960]

MMT IS A DESCRIPTION OF HOW THE FEDERAL GOVERNMENT CREATES AND USES MONEY! MMT is not a policy. MMT is not something we need to do. MMT is what we are doing alread:

[@RealKingkong9888]

I am being devil’s advocate here, but the US dollar is the only world reserve currency right now. In theory, as long as the world continues to use the US dollar as their preferred medium of exchange, MMT will work. Basically Americans will buy all the goods from foreign countries all over the world using the excess printed US dollars and export inflation to countries such as China (by paying them with watered down US dollars). Since the world is not yet ready to switch to another reserve currency/money (IMF SDR or gold standard) MMT May actually work for a while.

[@theodusmcnair3820]

How do you write for papers, but don’t read what your writing about!?! The plan is a tax that covers you medical needs with a co-pay. No more insurance companies making decisions with the excess money yearly. So a tax to replace the payment coming out of your check. So medical isn’t profit driven. Hope you get Donkey of the day!

[@themsuicjunkies]

Can anyone explain this to me: I currently live in Argentina. And I'm also venezuelan. I understand MMT to be true to an extend, meaning that trade balance its the most difficult concept to engrane into the theory. I understand Venezuelan inflation beause what the venezuelan regime whats de facto nationalizing all industries, specially the food industry, and running then into the ground while selling the pieces. When the oil prices went south automatically we became a net importer of everything, including oil. Can anyone explain to me why Argentina has constantly run into inflationary problems, seeing its a self sufficient country at least in the alimentary security sense and they have their own electronics manufacturing, albeit not very good ones in the Tierra del Fuego. If anyone would be so kind to explain this, in the context of MMT, to me I would be very grateful.

[@Account.for.Comment]

Basically MMT might only be sufficient enough to explain the US dollars and not every money at large. For Argentina, as I understand it, were being gambled by Forex traders. These guys made a living betting on country' s currency. Soros is the most well-known example for taking a billion dollars from the Bank of England. The same things that happened to Argentina around the time they are trading Turkish and South African currency. In my home country, the central bank only print money whenever the US print money. This retain the currency value but that could changed on the whim of the leader. Similarly, the worth of countries currency are at the hands of traders evaluating how much they can make a profit of it. I do not know much about venezuela and argentina but I can give a guess based on my understanding on corrupted third world nation. Fundementally, money are governmental debts. The dollars had values because they expect the US and other nations to maintain its values. There are those who even believed that the US dollars can even survive the " fall" of the US government or even if China rose to be the stronger power. In many nations of strongman dictatorships like Venezuela or Zimbabwe, no one expect the regime to be there forever or honour their legal agreements. International trade especially oil is traded with the US dollars. Resources of ruling elites in third-world are not going to be measure in that countries currency but in the US dollars. They cannot print the US dollars, therefore all money printing these people do is simply a support system. Let' s have an example, To compare it to the US, let' s say the US government print money to build a spaceship manufacturing plants. The money will be given to the workers, scientists, etc. And they will spent it in the real economy. The profits they sell to foreign nations, would count as revenues and kept the inflation in check. But if an autocratic governments made the plant, the profit( dollars ) and will go to the people controlling the government. The currency they print to build that can only be used by the people living under the regime.

[@Guizambaldi]

The thing about Venezuela is not so much about the collapse in oil prices, but how the collapse sent government revenues down, and the government chose to keep the spending through money "printing", instead of reducing spending or raising taxes. As for Argentina, they ended up with high inflation (but not hyperinflation) because the government ran an unsound monetary policy for many years during the Kirchner years, so inflation went up. Once it is up, it propagates inertially through expectations, and it is really hard to bring it down. Macri tried but failed. I cannot explain it from the point of view of MMT because MMT makes no sense at all.

[@stevencrane9259]

If you do not understand how interest works with saturation, be still. We WILL soon have a high inflation rate and it will cost jobs all over the world. The harm will be to vari interest home loans and credit markets. It will be 2 or more times as bad as 2005 till 2015.

[@johnsuder7671]

What YOU think it not fact !! It's greed the quest for power .

[@volta2aire]

Giving power back to the people is so dangerous. A strong middle class can stand against the new style aristocracy. Larry wants to keep you on a leash.

[@His.Lordship]

I think he's just slandering modern monetary theory. We can't just do anything, but we can print money if more wealth has been created in the economy and we just match that to what we print, or if we're willing to eat inflation, but MMT is correct. You can print money if you control your currency, you just have to accept the consequences.

[@iFreeThink]

I think it's Encarta and Kindles. Because Germany couldn't keep up.

[@u235u235u235]

we need people in jobs working and paying taxes pursuing the rat race. suppose MMT is real and accurate, it's not a good idea to key in the masses to destroy their illusions that they need to get up early and get to work and struggle to pay bills. i want people working and studying hard to get that job and be productive working 40 hours a week. that's how stuff is done and made. workers working to pursue the dreams of entrepreneurs makes the country great. keep working hard and paying your taxes and bills. this is what gives value to money, and yes taxes give value to money, of course because you give it up against your will, something you worked hard to get. it's all about creating confidence in the US dollar, and our GDP/GNP, and demand for the US dollar internationally, which is created through our products and services, and other things like the international requirement to buy OIL with dollars. protect the US petro dollar and destroy any nation that seeks to erode US access to cheap raw materials and labor markets. secure favorable terms of trade for US companies, punish nations seeking to tax our companies or fine them, threaten nations trying to rise up with competing international systems that seek to erode US dominance. e.g. belt and road must be destroyed. ideally, china is broken up into five different nations.

[@pakpala1]

Larry Summers Theory was the recipe for the 2008 crash and the growing inequality.

[@Achrononmaster]

And you trust this guy? Summers was the epitome of banality of evil, telling Varoufakis to step in line with neoliberalism or be thrown out of the big boys play pen. Larry Summers is perhaps in the top 100 evil people this century. He has no idea about monetary dynamics modelling, Steve Keen would obliterate Summers in an economics literacy challenge like he devasted Krugman, like frickin Hulk destroying Loki - and yeah, I know Loki got up and shrugged his ass whooping off, and that's part of the point, neoliberals are doing Zombie economics, they rise from the dead every time logic and reality own them

[@thefarmersdaughter8235]

The tax cuts help middle class families that are self employed. However, they were stripped of their wealth in the 2008 housing crisis. We don't have money to invest anymore.

[@anniealexander9616]

Middle class living beyond their means lost their butts in 08. Middle class savers got some good deals in the down market.

[@thefarmersdaughter8235]

@@anniealexander9616 , they will lose that in the next downturn...just watch.

[@anniealexander9616]

Im middle class. I bought real estate in the last downturn. Ill have it paid off by the end of the year. The property losing value during a downturn won't effect me because im not selling. But I am looking to buy more during the next downturn. Living below your means is the key to success.

[@thefarmersdaughter8235]

@@anniealexander9616 , the next downturn will involve stocks, companys etc. that will affect realestate. But frankly it sickens me that Americans have developed into vultures....waiting for misfortune to befall others so they can profit. We'll see how that goes this time.

[@anniealexander9616]

Stocks and companies were affect last time. Me and my husband worked for the same company that closed. He took a job making half what he used to make and i became a stay at home mom. My daughter was about 14 weeks old when i was offered a layoff. He was already working a $10 an hour job somewhere else. The older kids were 10 and 13. The difference between us vultures and the ones who lost their butts are our spending habits. I cleaned up a ton of name brand clothes, shoes, purses that had been thrown in a pile in the yard and half burned. A couple years later i rented it to a family who had been foreclosed. Ive been filling the garbage can for a couple months now trying to get rid of clothes they piled in the out building. The home had 6 closets. Americans have a spending problem.

[@hannsjurgenhodann6268]

Larry Summers says that he likes fiscal policy, but doesn’t seem to understand that MMT is all about sound fiscal policy! His objection to MMT is either based on a lack of understanding of MMT or more likely on ideological bias.

[@mikewatson2270]

Sanders 2020. Let's print money for the people (guaranteed employment) instead of printing money for the banks (quantitative easing). Right now the banks have got more new money in quantitative easing than the total for the rest of the economy, including foreign governments that use US dollars and including petrodollars.

[@nickchikago]

Did he really say "Balance".

[@paulsommerhalder9049]

Ben and his $4.5 TRILLION. Voodoo at it's best.

[@JinKee]

If we have enough fear we won't have main street price inflation even with infinite quantitative easing, and we can produce fear in industrial quantities.

[@timn5008]

Summers doesn't seem to understand the subject. Or he is simply pretending to not understand. I'm going to go with the former. Summers, whilst working years ago at some investment house, was described as being a coatrack. His reputation precedes him, but he's listened to. He, like so many of the Meritocratic types swarming Washington, continues to fail upwards, and make a fortune doing it.

[@sakthitharan632]

yeah he is just some crank who accidentally got phd in economics

[@avonsternen6034]

What if the monetary economy has achieved peak amazing progress? Which is not to say that progress has necessarily reached a threshhold, but perhaps economic drives could be redesigned for better impact and less harm? #Whynot resource-based demurrage consciously designed currencies for abundance and progress beyond greed? Given the conflict between health and the economy, how about providing an unconditional basic income #ubi with minimal cost and without taxes while meeting carbon targets by design? For example, a demurrage resource-based currency like #teqs would support progress and freedom without incentivizing greed, given that currency represents ecological impact rather than exclusion. flemingpolicycentre.org.uk/teqs/ A healthcare currency could also be based on this, dividing community costs by the population and equitably distributing; since it expires, generosity and sharing as well as free trade would be encouraged and could be promoted by recognizing acts of kindness. Measures such as #GNH and #GPI vs GDP could focus direction on well-being.

[@williamwilson6499]

Would like to see a debate with Summers and Stephanie Kelton. Got a feeling she would mop the floor with him.

[@Creshex8]

William Wilson when you are on the wrong side of truth, such as promoting such an insanely stupid idea like MMT, a failure whenever it was tried... even a good debater can get trounced badly.

[@ericanderson3534]

working-as-inteded. As the worlds currency we simply print our debt to GDP to 250% like Japan. We deflate the dollar causing devastation in the third world with our increased depreciation. People flock to the US.

[@The_General_Zubas]

3:35 agree whole heartingly on both points. We needed new roads when Obama was in office. And now Trump wans to privatize them?

[@DrChill2]

What BS. MMT doesn't say "you don't have to worry." MMT-ers say "Worry about Real Limits and Inflation, not running out of -YOUR OWN MONEY."

[@thebreadtable4880]

Lmao typical corporate goon misrepresenting MMT

[@Peter-tg9zv]

Modern monetary theory simply explains what already IS. It would be like saying “evolutionary theory would be a disaster”. Larry has been wrong about everything before anyways.

[@Rob-fx2dw]

More rubbish - You need to get some legitimate understanding of finances. You d also need to stop denying facts. MMT has policies including a job guarantee and those are POLICIES advocating how it should be done not descriptions of system . Your reference to evolutionary theory is interesting. It is backed by real and historically verfiable facts. MMT is in denial of many historical facts for instence like believing taxes don't fund government spending when without revenue from taxes ther never could have been a budget surplus or budget balance which was often the case or a even a small deficit which also was the case in many years. When MMT was put to the test of explaining historical facts it will fail.

[@OWENLN]

Summers is totally misrepresenting MMT, it's alway ok to bailout the private banks with MMT but for the serfs not so much.

[@rafaelluna2529]

TAARP wasn't MMT, the US then received the bailout money with interest, so the people ended up gaining from the bailout

[@TheJohnmmullin]

He hasn’t been proven right. Yet.

[@oterenceo]

The US is the reserve currency of the world. Larry is comparing apples with oranges. I disagree with him on that point. The US can keep on printing because no one can replace the US and the world has too much US dollars. The US holds the world hostage with their debts, not the other way around.

[@MrAndre1592]

you forgot inflation, QE just creates inflation like crazy

[@RealKingkong9888]

King Petro US dollar baby. Just export the inflation to countries like China.

[@TomSmith-gw6fn]

Eric Yeung Are you kidding me? Please tell me you're not this thick.

[@RealKingkong9888]

@@TomSmith-gw6fn I guess you didn't catch the sarcasm.

[@TomSmith-gw6fn]

Eric Yeung What was sarcastic about your OP? Just sounded like MMT ideologue talking points to me.

[@sherdayton8153]

This guy knows nothing about economics.

[@ianperfitt]

MMT is already in practice dude...stop lying...

[@octaviotapatio2026]

He’s actually correct.