Modern Monetary Theory Explained - Is MMT Right or Wrong?

In Modern Monetary Theory Explained, I simply lay out the key principles of MMT and look at what some of the arguments are for and against it.
Modern Monetary Theory (MMT) may have been around for many years but it has recently gained in popularity with the advent of Stephanie Kelton's book, The Deficit Myth, and the way in which it accounts more elegantly for debt dynamics and inflation over the last decade.
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[@Pensioncraft]

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[@pawegraczyk6050]

I would suggest to you, that MMT is in a way like communism. You can deliver rational arguments for it, but two or three tiny key components are always missing in that rationalization. And those in reality grow in time, then lead to other issues, so actual implementations end up more or less the same, all over the world. It is kind of funny to see guy with gray hair writing in a comment: "MMT ensures that young people are having their jobs", those people do not want "jobs", they want "stuff", that will not be there with misallocations of limited resources. And whatever you achieved in life, it did not happen since some MMT genius assured that, in contrary you personally enjoyed environment that happened due to conservative approach of central banks. Compassion may be as destructive as hate, and emotions should not be used as arguments anyway.

[@pawegraczyk6050]

@Danger Zone "MMT has nothing to do with Central Banks being conservatives or not.". :D Communism had nothing to do with central banks! Yet it had plenty to do with them, at the end, when implemented. MMT actually has lots to do with central banks, you just read those people. Even if in fact, I do not "understand MMT" (whatever it means), there was nothing in my comment above that would let you make that assumption, other than to bring cohesion to your own fragmental understanding of the topic.

[@web2yt488]

I didn't find your argument to be complete. I think it's lacking depth.

[@pawegraczyk6050]

​@Danger Zone As you wish.​

[@henrygustav7948]

@@pawegraczyk6050"I would suggest to you, that MMT is in a way like communism" "Even if in fact, I do not "understand MMT" (whatever it means)" 😲 Astonishing.

[@richardcope8102]

A most excellent tutorial. Seems very accurate to me. My concerns about the Uncoventional measures taken by leading central banks are - 1) BoE has admitted to distributional impacts of QE most of the benefits of it have gone to the already rich. 2) Are we measuring inflation properly? 3) Why do we partially or completely disregard asset price inflation e.g. cost of houses, bonds etc? 4) Ultra-low interest rates distort markets and will cause widespread havoc if they ever revert to norm. The long-term consequences of ever more personal debt increases risk to debtor if their income folds in the future. The risk long-term that people are "willingly" taking on is scary. 5) What if ALL expanding Central Bank balance sheets prove wrong in the long term? What if all their unconventional measures prove misguided ? 6) The illusion of money being scarce, even if it isn't, can be a positive. Otherwise people might ask the question why do I work so hard for silly bits of paper or numbers on a computer? 7) What if foreigners no longer wish to hold your national currency or your Sovereign debt ? 8) MMT & QE look like great short term fixes despite the downsides but what of their unproven long term consequences ?

[@mattwarrilow]

Understanding “fiat currencies” does seem to be a pre-requisite for understanding anything to do with politics and economics today as we look to answer the most basic question of our time here in the U.K. and elsewhere “is the lockdown period actually affordable?”.

[@remlatzargonix1329]

Love Life ....MMT does work and, indeed, it seems that corporations and the wealthy (not to mention the military, particularly in countries like to USA where money is simply showered upon its military with no limits) get defacto MMT since governments always bail them out with taxpayers' money, when their (often ill-advised) bets go wrong. Also, the idea behind the alternative, austerity, is patently ridiculous; That is, we will grow the economy by shrinking it!.....see it's stupid!

[@richardcope8102]

@@remlatzargonix1329 Yes. Money can be created at will. Key point though is how it is to be used and who will benefit from it. Your examples show its current use in filling black holes caused by prior stupidity and lunacy and/or funding marginal, non-productive or inherently wasting usages such as military !

[@nachannachle2706]

MMT is an APPROACH, a PERSPECTIVE on the current/existing system. Instead of focusing on debt as a "bad thing", we need to embrace debt as an asset/tool for building more long-lasting (future) prosperity. When governments out of the sudden throw austerity at their citizens so that they can win elections, they are destroying the fabric of their nations/societies for their private interests. This is crony capitalism and self-serving politics, nothing sustainable in the long term. MMT says: look at it from a different angle and you will be thinking out of the box and finally charting a new path that has the potential to bear more positive results. As far as I know, there is nothing else on offer that is worth consideration at the moment. Austrianics and Keynestons keep wanting to bring back the old mantras so that their thirst for nostalgia can finally be quenched. A 30-something like me would like to move FORWARD, not to masterbate on some dusty old books full or irrelevant and backwards ideologies.

[@g0ld3nb]

very good questions, now more than ever perhaps. I'd love to hear what Ramin thinks on these points? @Pensioncraft

[@nthperson]

One problem for those who seek to manage the economy and maintain a steady but low rate of inflation is that not enough attention is paid to the nation's land markets. For not very convincing reasons, neoclassical economics has simply removed land as a distinct factor of production, despite the fact that land (i.e., nature) has a zero cost of production in terms of labor and capital. Every parcel or tract of land of whatever potential use has some annual rental value based on actual and perceived locational advantages. This rental value Henry George and many others have argued rightfully belongs to the community, to society. If the full renal value of locations was captured by government to pay for needed and desired public goods and services, there would be no actual or imputed income stream to be capitalized into a selling price for locations (or for other natural assets, such as frequencies on the radio and television broadcasting spectrum). Under current conditions, however, rents are significantly privatized. Speculation in nature can is often is quite profitable because of the under-taxation of nature. Land speculation is a major cause of inflation, a cause largely ignored by those who calculate inflation and the CPI.

[@rolyars]

One major hole in the argumentation about inflation is that it is viewed only in terms of the CPI. Money printing using QE did in fact cause a lot of inflation, but only in assets (stocks, real estate etc.). This is because that huge amount of liquidity technically couldn't go to other places much the way QE was used during the first rounds after 2008. In other words, all that money simply didn't get into the real economy boosting demand and salaries. This is why we have unaffordable housing, for example, and I think it might cause big problems down the road.

[@lukebowers536]

A most educational video thank you, ime in my 40's now & up till this last few years have not invested in my future, ime now pouring everything i get into hard assets such as vaulted gold & silver because it looks like i might actually live long enough to see pension age, your video's are most informative & enjoyable & pleasantly presented. Keep up the good work

[@Gman290a]

Have you looked into the new digital financial system that is coming? Look into crypto currencies like XRP, XLM. You won't regret it.

[@pattty847]

This was the top video when searching "mmt explained", thought that would be useful as your channel is doing something right

[@brightnbreezyfelix1003]

I found this overview very reassuring. I’m feeling more comfortable about investing after viewing. Thank you Ramin.

[@Pensioncraft]

Hi BrightnBreezy Felix I'm glad to hear that! Thanks, Ramin.

[@surreal6643]

How do you feel now?

[@crawkn]

One of the first inklings I had about what I eventually learned was called MMT was the realization that a great many activities which can be easily classified as productive and profitable to society aren't getting done, while readily available resources aren't being employed. This means that availability of money is an artificial constraint on wealth production. This condition exists even at times of supposedly low unemployment, because a very significant portion of the literally unemployed aren't counted among those available for employment. This too is a false constraint. It is nakedly irrational to contend that greater wealth can be achieved by intentionally keeping resources idle than by employing them productively. Reduced wealth results when resources are misallocated to activities which are unproductive or consumptive. This can happen when too much money accumulates in the hands of those who don't need it, and aren't inclined to produce anything new of real value with it.

[@katiecannon8186]

Exactly. Which is why our government should fund broad public purpose when it issues our currency. And tax the snot out of the super wealthy so they don’t use our national currency to buy our politicians

[@coonhound_pharoah]

There are no such things as idle resources in economics. There are resources in varying states of being moved toward a different use. Being unused is just one state in the chain of change from use to repurposing materials. These things will exist in all economies and shortages of money do not cause them. Indeed, there is no such thing as a money shortage either. As the medium of exchange, any amount of money suffices for the purpose and prices change to accomodate the supply.

[@crawkn]

@@coonhound_pharoah Nonsense. The chronically unemployed homeless are not being "moved toward a different use," their labor potential is stagnant and wasted. Lithium deposits which haven't yet been discovered aren't being moved anywhere for any purpose. Recessions are a diminishment of overall resource use, not a "repurposing," and asset bubbles are very simply a massive misdirection of resources which could be producing to an utterly unproductive game of existing resource hot-potato. It is abundantly obvious that the "invisible hand" belongs to a blithering idiot. Resources need to be wisely guided in productive directions because the markets often behave irrationally and inefficiently.

[@katiecannon8186]

@@coonhound_pharoah lol. Tell that to someone who can’t find a job.

[@coonhound_pharoah]

@@katiecannon8186 As long as they are looking they are not idle. They are moving toward the new equilibrium.

[@vaclavmiller8032]

These videos on marco are just fantastic - I'm taking MMT much more seriously having seen this one. Thanks so much!

[@Pensioncraft]

Hi Vaclav Miller that's very kind thank you! Ramin.

[@a2comuk]

Vaclav - for a full view of the benefits of MMT - check out my response to Jesus here in the comments & think again.

[@fennadikketetten1990]

Who's Marco?

[@Jesus-kt5dc]

@@fennadikketetten1990 *Polo, LOLZ.* 🤪

[@davidsummit9851]

Give a child a silver coin today

[@jank3441]

A couple of things you have to ask yourselves is why MMT may not be practical for us, since if no answer can be found, it is a sound path to embark on. MMT's core fundamentals derive in part from Keynes' theories, which many would argue were an ideal set of monetary & fiscal policies that could help revive economies that collapsed due to a decrease in aggregate demand. However, Keynes himself argued that his theories where to be applied only under specific circumstances where AD fell and AS (aggregate supply remained constant) in which case the Government should increase their spending and create a fiscal deficit to consume the extra surplus in supply that would remain available in the economy in order to cut the bottom & later on the top from the business cycle. In order to do this, Keynes argued that governments should run a fiscal surplus during the boom years, reducing the monetary supply in the economy that had been introduced during the bust period. This is of course a huge oversimplification of his theories, however, few economists outside of the classical schools of economic thought found much issue in these recommendations, for which they were implemented by governments all over the world. The issue of course was that economic assumes that people are rational, at least to some extent, and that politicians want the best for their country, but as we all know, it is not from the goodness of the butcher's heart that we get meat to eat for dinner, it is due to their own self-interest. This meant that nations all over the world took Keynes idea's and kept only the part that was politically profitable, at the end of the day, who cared about the business cycle when elections creeped up in the corner, right? This has led nations all over the world to create huge fiscal deficits that they will never pay off. This has created different consequences for different nations since each situation is different. For those that borrowed in other country's currencies, the risk of default grew exponentially, causing many economical collapse along the years. For others, welfare states where implemented with the best of intentions to ensure that the people found themselves better off regardless of their faith, & slowly but surely these nation's cultures and motivations to continue innovating, continue growing (in terms of REAL GDP) and continue prioritizing their liberties over their paper money has subsided. Now, where could MMT fail in the US? Let me start off by being clear, I am not sure whether it would work or not work, I am not sure whether it is desireable or not desireable, frankly, each individual's morality & ideology will lead them to a different conclusion, but I am sure that it is essential to question any theory or economical current that one seeks to adopt BEFORE doing so. Firstly, for MMT to work the Federal Reserve would need to be politically independent in order to act in response to the levels of inflation and not to the demands of a president or congress seeking re-election. We know that on paper they indeed find themselves in this position, however, just a quick look at present times and at what has been historically done to Keynes' ideas can tell you that this is largely an idealistic utopian belief. Secondly, The Federal reserve would need to have real time, exactly precise data on what the current monetary supply IN CIRCULATION is, the actual rate of price inflation in EACH AND EVERY INDUSTRY AND REGION since bubbles can form in all asset classes as well as all cities in the country, and one number reflecting all states and cities would not accurately do justice to the real situation on the ground. It would also have to find a way to inject or retrieve money from certain sectors of the economy and certain regions of the country without necessarily impacting all others, which would prove excruciatingly difficult in this era of special interests. Thirdly, the individuals at the federal reserve would not only have to have even more power than they currently do, they should be expected to exercise this power absolutely perfectly, making all the right decisions at the exact right time with no margin of error whatsoever. Fourthly, the currency value of the currency in foreign exchange markets would be expected to be analysed and controlled heavily to ensure that the country's exports remain competitive in the global outlook to ensure that more productive, supply generating companies and jobs are not lost as a result of government intervention, which would be considerably difficult since our currency follows the laws of supply and demand similarly to all other goods and services. Even more points: Unelected officials will be given the remote control to our economy not only with the ability to create money like they currently do, but with the ability to decide or directly guide the taxation imposed upon the population regardless of the will of the people, since imposing taxes is vital in MMT's regulation of Inflation. - In the event of that a given good's supply is reduced substantially, say Cars, the Fed would have to ensure that none of the money being introduced in the economy be directed towards the purchase of cars, since doing so would inherently become inflationary quite rapidly, for which they would have to greatly reduce the freedom independent adults have on what they want to do with the product of their work, going far beyond what we now consider the role of a government that believes in democracy and the will of the people. - In the event that a mistake is made and inflation arises, taxation will have to be increased to levels much higher than what we currently consider reasonable, which will decrease motivation of production in the private sector thereby reducing aggregate supply of goods and reducing the amounts of goods available in the economy for money to purchase, creating more unemployment and either worsening inflation if people are subsequently employed by the job guarantee that MMT's superstars prescribe only to bid up the prices of these goods which are collapsing in supply, or creating mass suffering amongst people who have no job, have no money, have high demand for money since their tax obligations are high and are forced to see prices rise around them. Many more things can be said about the theory but I've gotten quite tired as is. Again, I do not claim that these points are inherently valid or that MMTers cannot provide me an answer for them, as a matter of fact, that is exactly what I hope will happen as the reason I post this comment is to get some insight as to how you would combat these issues if MMT were to be implemented. Personally I find many elements of MMT really insightful and extremely useful, whereas I struggle to grasp other elements of the theory like any other theory out there. Apart from the Job Guarrantee, I attempted to leave out policy prescriptions since they are for the most part absolutely appalling from my point of view, and it serves no purpose discussing them until we have reached a consensus on how MMT would actually work. Whoever you are, & I plan to comment this on multiple videos to get more insight, I highly encourage to write your thoughts and comments on what I have just laid out, as well as any concern or alternative you have for the theory, please keep comments civil so we can learn and grow together, thank you! -

[@muhammadazam7141]

Very smart

[@themsuicjunkies]

Did any govertment ever actually try to run a govertment surplus is a boom year I wonder I think that is politically unfeasible to cut govertment jobs and raise taxes when the economy is doing great

[@smc340uni6]

Thoroughly engrossing and detailed response to the video; thanks. Your rationale is embedded within the US Govt/financial infrastructure that is far more complex of say my own country's: UK. From a basic observation the US could adopt a state by state fiscal approach, within the MMT philosophy, given the scale and breadth of your economy; I believe some taxation controls are de-regulated to states at present, so this would be adding to the controls. However, and the one major aspect of MMT is to remove the politisised mythology around Govt debt and reveal to the public exactly how the money world works in reality, not how politicians want to tell us.....look at what JFK thought!! First Point: in the UK the Bank of England is independant of Govt, and whilst it tow's the traditional monetary line unfortunately, it does 'appear' to make it's own decisions but the reality of NEVER being influenced by politics is but a dream. Second: If de-regulation is given to US states for MMT fiscal policy then it would only be a matter of each state pinging a spreadsheet to the Fed with a real-time detailed breakdown of their own micro-economy; is that not should be happening anyway? Third: Deregulation would reduce fiscal influence from the Fed Fourth: Don't really see this as a problem; there is a constant analysis of currencies within trading markets 24/7 and if an economy becomes more stable because of better inflationary management that has to be good thing. Generally, your post reads as a sceptic to change, in fear of change and that is natural; but what I will finish with saying is that the present system of capitalist democratic monetary system(s) do not deliver for the majority of citizens.....but only the few. bw

[@bloodjam30050]

It is honestly so laughable that anyone can possibly say that the QE policies haven't had inflationary effects (typing zeros). The CPI is just an index of consumers goods that go into your basket at the shop. It doesn't account for house prices and pension schemes. If anyone looks at the s&p 500 you can see the annualised 10 year return at 13.6% when the GDP hasn't risen nearly as much. Same story for median house prices. If you are a lower middle income worker you have effectively been taxed by the fed & banks for holding cash at roughly 1.5 - 2% per year ( because you can only afford to buy a supposed emergency fund) because banks are incentivised to have low savings account interest rates.Then people with higher incomes and net worths have moved away from holding cash which is reason behind the aformentioned increase in equity and house pricing. So the reason we havent't seen CPI increases is that public companies just fired or didnt raise there staff salaries ( again the wage suppression is a another fallout of QE) and the Landlords have to increase rents as a byproduct of increased house prices to pay off the cheap mortgages they bought to justify returns on a high capital investment the inflated house cost. The whole current economic climate is a result of making cash as an asset a massive hot potato. What MMT proposes is more of the same. Low interest rates and giving poor people a pile of cash which they spend 100% of raising the price of basic neccesities. So in the end lower middle income workers end up being screwed on their savings/rents/basic necessities.

[@manoloborja388]

Exactly, then these economic experts blame the system breakdown on external factors, never the system itself.

[@severeddaff]

Oh Ramin, no, seriously? So much outstanding content on your channel, it's sad to see you hawk this insane theory. I urge people to watch George Gammon's video on mmt to see it placed in the full context of the real economy rather than a few narrow points on monetary policy and nods to causation, where it might appear momentarily to work in theory.

[@Rob-fx2dw]

Capacity utilization may be theoretically easier to measure than the present NAIRU option but that is purely dependent on the accuracy of capacity utilization which itself is a very imprecise idea that does not know what to take into consideration in respect of associated prices and costs of increases in the use of unused capacity.

[@FlywheelAcademy]

Awesome analysis!

[@Pensioncraft]

Thank you

[@infinitedonuts]

Good video, it was very informative.

[@Pensioncraft]

Glad it was helpful!

[@DrBenVincent]

Great video

[@johnyjsl9219]

Thanks I needed this to understand what is going on.

[@Pensioncraft]

Glad it helped

[@KN-ml2gp]

Amazing video, many thanks!

[@Pensioncraft]

Glad you liked it!

[@Dr.RiccoMastermind]

Broadly a pretty good video, thank you! 🙏 2 major hints from my side: (1) the QE program was/is not able to directly influence conventional inflation, since no orivate persons really got money from it to spend. But i did cause "inflation" in real estate and stock markets. (2) You might have more pronouced that that inflation-free spending, according to MMT is not limited by issued money as such but by the available ressources such as still available materials and menpower, including machines and the industrial capcities. At least, as long as targets of government spendings are not too much in concurrence for the same ressources as the pr8vate sextor seeks out.

[@555salt]

1) bubbles in assets will always become consumer inflation eventually because, at least with stocks, people buy them in order to cash in on their increase in value to buy themselves consumers goods. The rate this happens depends on the avg lifespan of a person and not anything MMT people can control. QE lead to instant bubbles which will eventually meet consumers goods as people cash in on assets. 2) even if the government doesn't use deficit spending it will cause inflation because it doesn't have the same decision making restrictions that a private person does. For instance if I have a car budget, I would lower the budget knowing that the extra money could be used for rent, or on food, or other goods all bidding for my dollars. When the government has a car budget those downward pressures on how much they are willing to spend don't exist. The government always sets higher than natural Bid prices and inflates industries it spends in even w/o using deficit spending.

[@Dr.RiccoMastermind]

@555salt that is maybe why in an ideal world there should be no QE, specifically not buying the stuff on the secondary market. It's just stupid. Fiscal policy should be leading the actions against inflation, targeting the specific causes of the present kind of inflation - no dumb increase of interest rates (potentially leading to more not less inflation as net effect) or QE. However QE did not show any midterm consumer price inflation effects (what is cared about), neither in Europe or Japan, bit right, indirect consequences could hardly be controlled. And obviously prices of stocks and houses around the world rose partly dramatically

[@RuinDweller]

19:35, this is a common mischaracterization of MMT - one that honestly never applied, in reality. MMT has never stated that deficits should be ignored. MMT argues that deficits can be too small, or too big. It states that if you want to avoid inflation, you must only spend into an economy that which can be "absorbed" by its markets. It recognizes the importance of the ratio between currency and real resources - where the real value lies.

[@Alessandro-gy7kg]

Great video! Thanks

[@Pensioncraft]

Your very welcome.

[@theninga_legendspro]

Another great video. Could you explain (maybe in a video) if there's any relation between Fed interest rates and Treasuries interest rate ?

[@mynameisosca]

Great vid, huge fan

[@Pensioncraft]

Hi Oscar, thank you! Ramin.

[@rautanen81]

Great video!

[@Pensioncraft]

Glad you enjoyed it @Jeve Rautanen

[@Phil_D_Waller]

Brilliant, thanks very much for putting this togther. I think MMT is misunderstood, it isnt a policy , its a description of govt and central banking mechanics. It explains what happens when a govt spends and taxes. The only policy is a job guarantee which is a buffer stock of employed people as opposed a buffer stock of unemployed people, which helps with price stability is a better automatic stabiliser and also is just generally a better policy !

[@dannyarias8786]

Interesting - it helps with price stability? Isn’t labor part of prices? And if so, wouldn’t we end up with hyperinflation when there is no labor buffer?

[@thinkitthru2754]

Very helpful tutorial and much appreciated. Curious how MMT relates to consumerism? Specifically, if the US govt were to go to a MMP, would this drive us to consume more, and how would that impact our levels of pollution, resource consumption, habitat destruction, etc?

[@clashclues370]

Well the US would consume more because it can now use the flexibility of money to reach full employment as long as the growth it is creates through increasing the real GDP is enough to stop rampant inflation

[@homewall744]

No matter what, you cannot consume any more than you produce, and nearly all that is produced is consumed in some way.

[@Lobos222]

Nice review. You actually explained some aspect of the book better than the actual book (09:00). :D Anyway, I some times wonder if we in the future will view unemployment was a huge waste (fiscal policy to manage inflation) and instead of having people fired. They would from the get go have an A occupation and a B occupation. The A being the private sector one just like now, but instead of getting fired via downsizing. These folks would just swap over to their B occupation that they were also trained for at public mandatory school, but that was a governmental role. Ideally one could argue that one would utilized 100% of the workforce all the time and during times of recession people would get all their governmental queue removed because a slump in demand would mean more governmental workers when lines of productions were slowed down. Sure booking numbers in the debt might increase in those times, but if it just an accounting thing. Who cares if the debt is 5 or 10 if it is stable and long term the business cycle going up will in turn reduce the deficit.

[@gerry2345]

I like this vid. Good insight.

[@Pensioncraft]

Thank you GerrysPlace

[@orihoola]

Valiant effort at explaining MMT.

[@ricoman7981]

It’s now December 2021 and inflation is rising and relatively quickly. I trust that Milton Friedman was correct, inflation is always and everywhere a monetary phenomenon. His graphs of the rate of money supply growth vrs the rate of economic growth per unit of output for numerous countries showed lag, that is the increase in money supply boosted the economy in the short term but always lead to higher inflation starting as early as a year or two out. We’re just starting to see the printing press issues now. Even the Fed is just now backtracking on their claim that this inflation is ‘transitory’.

[@KeithWhittingham]

I don't fully agree with Friedmann in everything but in this case he's right. The west is engaging in MMT tacitly now out of desperation. They won't come out and admit it outright because MMT is just to crazy to rational people but they're doing it. It's staring to go wrong now but they'll blame it on CV or Putin or Trump or whatever comes next, but never on themselves and MMT. What's interesting with hyperinflation is that wealth is not significantly destroyed, it is simply redistributed from the working class to the elites. We easily confuse money with wealth.

[@markcollins3445]

Are you sure that inflationary drive is not nothing to do with excessive profit chasing by large monopolies

[@ricoman7981]

@@markcollins3445 Wow, a reply to an ancient comment. Marxists would think so and say so but they would be wrong. Name the large monopolies you are thinking about, there really are very few companies that have true monopolistic control of supply and price. Define excessive profit, 1% above cost, 10%, 100%? How do you determine what level is a ‘non excessive return’ per unit of investment risk taken. Usually government causes issues not cures them.

[@impex500]

Thank you

[@Pensioncraft]

You're welcome

[@desmondknox]

Zimbabwe and Venezuela need some mmt then. Lots left off the table with this theory.

[@autom8ed]

MMT is not applicable to all sovereign nations. Poorer countries cannot issue new debt in their own currency because there are not enough lenders within their borders. So they are forced to issue debt in a stable foreign currency such as the USD to entice foreign lenders. The theory goes that MMT applies mainly to wealthier countries with a stable economy who are able to issue debt in their own sovereign currency. Important to remember that MMT is still considered a fringe theory

[@Jesus-kt5dc]

*The problem with Zimbabwe was that Mugabe wanted to reward the soldiers with farm land, that was previously owned by white owners that knew how to farm it. The soldiers when given the land didn't know how to farm it. So food wasn't being produced. So if the real resources don't exist it doesn't matter how much money you print. As for Venezuela they pegged their currency to the dollar, so it isn't a free floating currency. Also the US has been creating political instability with siege warfare, they aren't letting the real things get to Venezuela. Mainly because the Koch company wants to privatize that oil.*

[@Dee-Ell]

Zimbabwe and Venezuela could, IF they have the necessary resources (available qualified labor force, raw resources, equipment, technology, etc) to support this. They could "print" one trillion of local currency to start mega infrastruture projects, for example. But do they have the resources necessary to turn that one trillion into valuable assets (e.g. roads, schools, subway, etc), through projects? THAT IS THE QUESTION. The currency is simply a (unlimited) lubricant for economic activity. But the lubricant is useless if you do not have the necessary elements to make the economic activity happen.

[@pedroalmeidasantos8918]

Another excellent video Ramin. The balance sheet of CBs have been increasing since 2008 along with countries debts. I haven't seen any debt reduction. Besides that is there any study on bubbles creation from MMT? Real estate is a classic, but about now when fixed income is so low and the slack from real economy to stock market is abysmal.

[@katiecannon8186]

Banks largely determine the price of real estate because most real estate is paid for by bank credit.

[@Charles-pf7zy]

Federal Debt interest payments as a percentage of federal tax revenues are not growing over the last 5 years. Shocking to hear that. But go look it up yourself. Our system is enough to bear the load of increasing interest payments. Hyperinflation would be the result of a global economic black swan, but not the cause.

[@katiecannon8186]

@@Charles-pf7zy Our government just “prints” money. It does not rely on taxes in order to turn on the money printing machine. Our government issues the dollars you use to pay tax. You do not issue our national currency. Our government issues our national currency. You use the dollars it issues to shop, pay your bank back, pay tax & buy treasury bonds. Also, there’s never been a hyperinflation event in a country that’s monetarily sovereign & has decent productive capacity. Monetary sovereignty defined as: Issue own currency. No debts denominated in foreign currency. Float your currency (versus pegging to a foreign currency).

[@Charles-pf7zy]

​@@katiecannon8186 the federal government pays for it's deficit through borrowing bro. the treasury does not print money out of thin air. you're thinking about the federal reserve, and even they don't print money to cover the deficit, the government still has to borrow and tax to fund itself

[@katiecannon8186]

@@Charles-pf7zy Our government issues our national currency when Congress votes to pay for something. The Fed is Treasury’s fiscal agent & is authorized to make electronic payments on Treasury’s behalf. If Congress votes to pay you $10 to build a road & the President approves, then the Fed uses a computer keyboard to mark up your bank’s account it has with the Fed. Your bank marks up your account by $10 worth of bank credit. Now your bank has $10 worth of reserves & you have $10 worth of bank credit Now your bank can buy a treasury bond. If you decide to buy a treasury bond, your bank makes that payment for you when you tell it to. Your bank’s account is marked down by $10 worth of reserves & your bank account is marked down by $10 worth of bank credit Anyway, you gotta ask yourself: Where do the dollars come from that both the private sector and foreign sector use to buy a U.S. Treasury? Neither you nor China issue dollars Only our government does

[@mutton_man]

Great video. I think mmt does accurately describe how the money system works, it's hard to get your head around it at first it took me a while. Judging by these comments I think alot of people don't understand it or misrepresent it. I can see why politicians don't bring it up as general public will struggle to get their heads around it.

[@Pensioncraft]

Hi Jon I am also surprised more politicians don't at least discuss it. But it seems that austerity is a much easier "sell" to voters and has been historically because the household fallacy is so deeply ingrained. Thanks, Ramin.

[@mutton_man]

@@Pensioncraft I don't think alot of politicians if any would see the money system the same way mmt does. I think maybe the word for government debt should be changed. When you hear debt you think it's something bad, a burden that has to be paid off because that is what we are brought to do. If governments are able to create as much debt as they like but people should keep their own debt low, it's like sending mixed messages because both are called debt. Or maybe just more education is needed.

[@Jesus-kt5dc]

*Not necessarily that politicians don't know MMT, but they benefit from the public being ignorant. The fact that you can pay for things without raising taxes will send citizens into a frenzy and overthrow every member of congress. The fact that FICA doesn't pay for social security will piss off a lot older voters. The fact that we can give people healthcare, by not raising taxes will piss people off, why so much suffering? Not to mention in order to give people M4A you actually need to cut taxes not raise them. Which to people that think federal government runs like a household can't grasp.*

[@mutton_man]

@@Jesus-kt5dc maybe some but I think most don't understand it or think the public won't accept it. I think the latter is probably the case. Just look at the comments for this video. This video beautifully describes mmt but you get a bunch of comments like 'mmt will debase the currency' 'mmt is QE' 'government debt is a burden most of our taxes will be used to pay it off' 'mmt will cause inflation'.

[@nachannachle2706]

​@@mutton_man Well, look at Australia. Household debt is the highest in the world and nobody cares. Why? because household have the means to service their own debt and stick at it. In the case of Australia, households hold bigger debt-to-income ratio (about 3.5) meanwhile the government has one the lowest debt-to-GDP ratio in the world (0.45). The country is entering into a recession now because the government is stubbornly refusing to open its treasury and throw money at people who are dying to start their business/studies/training/ventures. As a result, unemployment keeps rising, low-income earners keep getting poorer, money-supply is depleting rapidly within the economy. Instead, the Aussie government has decided to do nothing but rely on China to buy its Iron Ore, on Tesla to build its solar power plants and on Japan/South Korea to buy its livestock. Still, the Aussie government wonders why the country's growth has stalled for the past 7 years, mystified that their quest for a "surplus" hasn't convinced Australians to spend and feed the economy. Duh. Even without much national debt, MMT would be very much welcome Down Under.

[@davidgarth4285]

Really interesting, I wish i had a lot more knowledge of economics than i do, everything in this video makes sense but my gut tells me it seems to good to be true, but i dont have enough knowledge of the subject to substantiate my gut feeling

[@davidgarth4285]

Something ive always wondered and maybe someone can explain it to me. Generally speaking large multinational corporations operating in the UK will pay significantly less tax in UK than an equivalent/ similar company that is based in and operates in the UK. Why doesn't the government reduce corporation tax to 0% over next 5-10years, Scrap business rates for any business with a turnover below £500k. scrap employers NI contributions, increase minimum wage by 50p/hour each year until it reaches say £15/h. Remove all forms of tax on PAYE below £25k Set at 20% between £25k-£75k 45%above £75k and 60% above £1m / year Tax all company dividend paid out at 25% therefore encouraging companies to reinvest. Place a progressive tax on property (houses) say 1%/annum above £400k rising to 5% above £1m. Impose a 5% tax ( payable annually based on value) any second home , buy to let or property owned by a company unless it is their primary place of business. Impose luxury tax so anything that's is say 3x more expensive than average (say average cost of new car in UK is £30k any car sold new above £90k is taxed an additional 10%. (excluding anything with a value below say £10k for purely practical purposes) And any company who wants to pay their highest paid employee more than 15x the average UK salary should have all profits taxed at 50%. Therefore discouraging obscene pay for CEO's.

[@davidgarth4285]

One other thing. Inheritance tax. 0% 0-50k 5% 50k-100k 10% 100k-200k 25% 200k-500k 50% 500k-£1m 95% £1m+

[@carlinaylsworth7866]

@@davidgarth4285 I believe this can be easily answered with 2 more questions. Who stands to lose from these changes? And who holds the most power/influence?

[@a2comuk]

@David your gut is right. For a full view of the "benefits" of MMT - check out my response to Jesus (under my initial comment) here in the video comments. MMT may be all good for the governments but unfortunately, it's robing off on "normal everyday people".

[@jznemovitosti7229]

@@a2comuk exactly

[@vdmehta1]

Super.. well explained

[@Pensioncraft]

Thank you 🙂 @Vishwesh Mehta

[@mulllhausen]

11:10 "Now after the [2008] financial crisis, central bank balance sheets grew imensely. Both in Europe, and in the US... Now the narrative that I remember in 2011 was that everybody was talking about the amount of money printing being done by the central bank - the FED - and also by the ECB. And the accepted wisdom was that this would be hugely inflationary. And although inflation did go above 2% - both in Europe and in the US - it certainly didn't stay there. In fact what characterises the decade after the financial crisis is that inflation was actually below target, and central banks were strugging to get inflation back up to that 2%, despite massive bond buying programs all over the world. So it turned out that this narrative that was almost certain that we were going to get hyperinflation was completely false." Not at all. Only the things that the new money is spent on will go up in price (inflation). And since the FED put the money into the stock market, the stock market went up in price. Hence why it is at all time highs despite the fact that we are now in the deepest recession since the great depression.

[@roarchristoffersen]

So true. Consumer inflation has stayed under 2%, but if you include real estate and the stock market in the equation of inflation, we've had massive inflation. When people live paycheck to paycheck to pay their rent/loan and utility, it doesn't matter how cheap all the Made in China stuff is.

[@JesterEric]

They also changed the way inflation is calculated so it is understated. CPI used to be based on the price fixed basket of goods. Now it's a cost of living index. So if say beef increase s in price they substitute cheaper chicken. If the new model microwave has digital controls instead of analogue at the same price that is calculated as a price reduction as it is better product at a lower price

[@mulllhausen]

@@finchbevdale2069 what you say would not account for the average house price across the nation rising over time. of course supply and demand for houses has an effect on the price of houses, and in fact the fed plays a big role here. since about the 1940s to the present day, most people have viewed real estate as a good investment, and so they are willing to spend pretty much all their income on buying the best house they can afford. however its not like they buy the house outright - they get a loan. and when interest rates are low they can get a much bigger loan. much more money chasing roughly the same amount of goods causes big price rises. the average house price moves almost in lockstep with interest rates (in the opposite direction). the fed controls interest rates via things like qe, tarp, operation twist, etc. which means that the fed largely dictates whether house prices rise or fall.

[@lukestyles]

@@finchbevdale2069 Nope, House prices went up because QE helped the richest people in the world who put their money into assets.

[@Tuppoo94]

Looks like someone else also noticed the big rainbow-colored elephant in the room.

[@FairnessIsTheAnswer]

At 5:20 Ben Bernanke is quoted, "So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed." Then it is stated by the person narrating this video "that the money is literally created out of bits and bytes." The money created by this method is obviously not metal coinage or paper bills. Imagine that computers didn't exist, but the same exact process happened, except that instead of the account balance being stored on a computer, it was recorded on a paper accounting ledger. In either case, the money being created is essentially just a record on an accounting ledger. The computer is simply a way to record and save the record of the transaction, just like a physical piece of paper would be used. The real foundation of the money creation isn't the tool of either the computer or the paper ledger being used, it's that an amount in an account is being recorded that can be verified. So, it's memory storage and the capability to retrieve that information when needed. The computer records the accounting transaction in a certain way without using paper storage. It could be stated that money is literally created by an accountant writing a number on a piece of paper with a pen. And before computers, that's probably how it was done. The point is, that unless a monetary system has 100% percent backing by some type of material asset, then there has been and always will be SOME AMOUNT money in the system that is nothing more than a number on an accounting ledger at a government monetary agency or at a bank. Is that good, bad or indifferent?

[@user-kl1zh8lv3o]

Ramin, you mentioned the one of the ways to control inflationary tendencies within an economy, especially that of the sovereign wealth using MMT was to increase taxes isn’t that what is stealthily going on at the moment is the government using an MMT strategy but not telling anybody

[@TheRepublicOfUngeria]

In an MMT sense: fiscal policy and monetary policy are basically one and the same. The Federal Funds rate and reserve requirements are merely regulations on private lending and the interest rates on treasuries are just another spending program. Inflation essentially becomes a flat wealth tax that applies only to reserves, in real terms. This isn't some proscription on how things ought to be: this is simply a description of the mechanisms involved.

[@DaveTube81]

Very good lesson. What I dont see in this video, is deap enough analysis how "external" debt holders are affected in case of printing money. By external I mean any body excet government which is printing. That includes local people and people and entities from another countries. It looks like the model is too simple and considers Gov, CB, FED and people spending their salaries. But nowdayws a lot af people are also investors and the number is growing. E.g. I leave in Russia but I used to have some US bonds and I am also almost usual worker. So that s interesting how US CB and Fed can affect me in terms of MMT.

[@Tuppoo94]

If I've understood MMT correctly, it doesn't fix the underlying issue of inflation that's associated with printing money. However, it does say that as long as a country's government only borrows in their own currency, and that most other countries have a vested interest in that country's economy or currency, there's no way for the other countries to harm that country financially.

[@DaveTube81]

@@Tuppoo94 As far as I understand, MMT really may be not "fixing" inflation issues, but it tries to prove that inflation is not an issue at all and CB or FED can print money as much as they want given several preconditions. What I wanted to say by initial comment is that It seems to me that theory is missing at least one important aspect, people are not only spending, they also invest. And all this proof is finally very doubtful

[@WilhelmDrake]

MMT is primarily a DESCRIPTIVE economic theory, that is, it simply describes the operational realities of money and monetary systems.

[@Rob-fx2dw]

MMT is Wrong facts because it ignores historical fact and omits part of te operation of the money system to put across a false narrative. Example :- It ignores the debt that is created when new money is created. It ignores the fact that the government debt is not paid off by government but becomes the debt for the taxpayer to fund. It ignores the fact that the history of the last 60 years of all economies where inflation caused the money to be valueless there were taxes but MMT puts across a narrative that taxes put value into money.

[@katiecannon8186]

@@Rob-fx2dw Rob, you really need to wrap your head around the fact that our government funds your ability to pay tax by issuing the 💵 you use to pay tax You do not issue the 💵 that fund our federal government And if you’re lucky enough to have some extra 💵 you can swap them for a treasury bond and earn interest Interest on bonds is paid for by our gov printing up some more 💵 and giving them to you

[@wisebear2919]

Thanks for your video on MMT. Mainly a good overview of the concept. It is however way to symplistic and the obligatory "straw man" objection posed to challenge MMT raises a question as to your serious engagment in the subject. This forum will not allow me to go into any deep analysis however I will add 2 most important takeways when it comes to MMT. MMT is a theory and I admit does look good on paper, however has some fundamental fatal flaws when it comes to the real world. First of all it assumes that the labour force efficient, which of coarse it is not for a myriad of reasons. It does admit that there "damaged goods" (the unemployed) but idealistically assumes that if you give them money or a job they will be productive and add efficiency to the labour force hence creating a better "more just" economy. The 20th century is littered with the failures of central planning to gain full employment. It also does no account at all for how human beings act, interact and what motivates or disincntives the majority of people. Secondly, It assummes that Government is efficient. That somehow policy makers and it's institions can make the economy more efficiemt through their monitary and fiscal interventions. This we know ends in disaster, history proves it, and why?? Because government is made up of people who by their very role in government will be inneficient at best, corrupt and self serving on the main or at worst controlling, expoitive and totalatarian. So any theory, economic or otherwise, that does not account for the innate weakness in humanity or at the very least does not account for its defficiencies will be a failed theory and time will prove it so.

[@maurolongone3190]

I do think that, having though Soviet Union for decades, Western politicians and economists have developed a prejudice towards any form of economy planning, taming it as a failure. BUT, the greatest example in the last decades of economic devleopement is China, which is NOT a Capitalist, but a Socialist country, with an absolutely strong government planning. So, USSR proved it it didn't work the way they did it, but China proves it works great when correctly implemented (whit a mix of controlled freedom AND planning)

[@rongants6082]

MMT says, basically, that the US Government can do whatever they please, without consequence. And so they will. And if they are wrong, who will suffer?: -Not the Government drones. -Not the proponents of MMT. -Not their corporate cronies. It will be small business, the middle class, working Americans who suffer. So, WHY aren't we allowed to vote on this?

[@smc340uni6]

it doesn't say that at all.........watch the video again without judgement or agenda, just an open mind. It is essentially about socially responsible spending based on managing interest rates, unemployment rates and the capacity to produce goods.

[@427vot]

This all sounds wonderful and reassuring. But the problem's with MMT (and all other monetary theories) is they just cannot or do not account for countless feedback loops that can blow up everything fast.

[@curryattack8985]

Worth a revisit, Ramin, after violent QE during ‘Covid’ has caused massive inflation.

[@Charles-pf7zy]

Supply chain issues and global market restructuring. QE did not cause inflation in the 2010s there’s no reason to believe it magically became any different this time. Other factors explain inflation much more

[@DizzyNLD]

@@Charles-pf7zythere’s a world of difference between QE directed at buying assets from the banking sector (2008) and QE directed at buying assets from the non-banking sector (2020). The first will never cause inflation and the second has the potential to cause inflation. Whether or not it will depends on the rate of credit creation in relation with economic growth. If credit creation > growth you will have inflation. It matters a lot where the credit creation is directed. I find that MMT is a good tool for analysis, but the devil is in the implementation of policies. I have tried to find a good spokesperson for MMT who takes my above explanation into account and covers for the pitfalls. I haven’t found any yet, if you have I’d be interested in that.

[@mnh31113ah]

Would be interesting to revisit this top given what has happened since it was published.

[@edblomfield6277]

If inflation runs hot under MMT and governments have to raise taxes and cut spending (i.e. put people in the public sector out of work) that’s not going to make them very popular. It therefore seems likely that they would not take sufficiently strong action for fear of being voted out, and sooner or later inflation would get out of hand, no?

[@MarkusBabris]

A progressive income tax is one way that tax revenue could be automated, thereby avoiding the optics of a government doing this manually. Under MMT, government spending will boost activity in the private sector and raise some individuals into higher tax brackets, who will give more back to the government.

[@KarlEriksenopinion]

inflation requires a lack of production. There is little risk of this under modern automation and production.

[@billsticker4080]

Rubbish

[@sportsnutjim7236]

good video thank you. just tell me about gold.

[@wisebear2919]

Mark Hatt 1 second ago Thanks for your video on MMT. Mainly a good overview of the concept. It is however way to symplistic and the obligatory "straw man" objection posed to challenge MMT raises a question as to your serious engagment in the subject. This forum will not allow me to go into any deep analysis however I will add 2 most important takeways when it comes to MMT. MMT is a theory and I admit does look good on paper, however has some fundamental fatal flaws when it comes to the real world. First of all it assumes that the labour force is efficient, which of coarse it is not for a myriad of reasons. It does admit that they're "damaged goods" (the unemployed) but idealistically assumes that if you give them money or a job they will be productive and add efficiency to the labour force hence creating a better "more just" economy. The 20th century is littered with the failures of central planning to gain full employment. It also does no account at all for how human beings act, interact and what motivates or disincntives the majority of people. Secondly, It assummes that Government is efficient. That somehow policy makers and it's institutions can make the economy more efficiemt through their monitary and fiscal interventions. This we know ends in disaster, history proves it, and why?? Because government is made up of people who by their very role in government will be inneficient at best, corrupt and self serving on the main, or at worst, controlling, expoitive and totalatarian. So any theory, economic or otherwise, that does not account for the innate weakness in humanity, or at the very least does not account for its defficiencies, will be a failed theory and time will prove it so.

[@wisebear2919]

@Junyoung Heo Maybe so, but history will prove it a failed theory!! Just the same old central planning that assumes an idealistic almost utopian view of humanity, and does'nt account for the real condition of the human condition or the constitution of human kind!!

[@tomooo2637]

You won't like this comment, but in science we consider to the Nobel prize in economics is considered only "half a noble prize" as economics was never based on the "scientific method" : the process of using evidence from facts to determine correlation and causation. (there are many definitions - but that will do). Much of economics is based on dogma, and much teaching of economics is based on dogmatic definitions of economics. I am very happy that you actually show data/graphs and correlations and attempt to see causation - a proper analysis of economic analysis. Thank you for your video on this subject.

[@filippxx]

Watched this great explanation, end of 2023. Everything said here was already proved to be true in a period of just three years. Over printing, QE and QT to move from stable economic projections to highest inflation in 30 years and then back again to 2%.

[@ahmedalsharman]

Great Video thanks , i recently bought a large sum of Gold backed EFT , when i was reading the Doc it says that the ETF is backed by physical gold which is stored at HSBC vault ,, and i was thinking is there any chance or circumstances were that the UK confiscate HSBC gold vault ? thanks

[@gerrykelly-zk6lf]

Historically it has happened when gold was still part of the monetary system. Unfortunately or fortunately as per the BIS gold is a tier 1 asset that can be held as a CB reserve just like the dollar or pound. So yes it could happen, will it happen, don't know. If it does happen it will because the price is skyrocketing and your currency is plummeting. You will at least get the spot price in cash currency in that event which will probably be a considerable amount more than you initially paid. I personally hold physical but that can be confiscated too so I'm under no illusions of safety. I'd still rather have than not though regardless of the risk.

[@mikemike5973]

Some etfs hold vaults in Switzerland which would potentially put it out of reach of the UK government

[@wild3812]

The confiscation is unlikely but possible hence it is better to diversify across different locations. There are few gold backed ETFs such as Sprott PHYS. You can also buy your own bullion

[@TheCluelessgenius]

What about the velocity of money? Wouldn't that decrease if the debt to gdp ratio gets to high, and slow down growth? Also, wouldn't unhindered money printing cause people to loose confidence in the currency?

[@Rob-fx2dw]

Yes. That is correct. Money increases without production increases that preceed it cause inflation presure and loss of confidence in the money.

[@henrygustav7948]

The currency is a tax credit. The reason it is used for transactions by everyone is because a USD will always satisfy a dollars worth of taxes. Its the coercive taxation that gives demand for the USD.

[@mikehardwicke23]

The other issue is that despite full unemployment there was no growth in GDP (pre COVID); thus debt cannot be reduced.

[@blueplanethand]

Most importantly, all fiat currencies are based on trust.. MMT will work until the big crash, but cannot outgrow deteriorating trust that will lead to it's demise. Once enough people think debt is unsustainable, see stockmarkets disconnected from real economies & 20% permanent unemployment, people lose trust in the system & withdraw money to purchase secure hard assets, gold, silver, real estate. The financial system has completely crashed roughly every 80-90 years, the average length of the long cycle, and a new financial system or reserve currency has always been created. Great video, but MMT is no different.

[@Userkzb20253]

Don’t get it. Until it’s fully tested, how do you know it’s no difference? A century- long crash cycle indicates an inherent problem of the existing economic machine.

[@stlouisix3]

I wish people focussed more on promoting market economics, as opposed to attacking MMT.

[@Pensioncraft]

Hi St Louis IX I agree, I think MMT is pretty interesting and actually explains what's been happening after the Global Financial Crisis and post-Pandemic better than existing theories. It also puts more of a burden on fiscal policy which makes a lot of sense. I just hope politicians get on board because that could mean a faster recovery from this downturn. Thanks, Ramin.

[@pistachio775]

@@Pensioncraft do you think MMT is sustainable long term though?

[@stlouisix3]

@@Pensioncraft agreed

[@aaronbirook4367]

@@pistachio775 The world has been MMT since 1970

[@katiecannon8186]

@@aaronbirook4367 Well, the world has been off the gold standard for international settlements We’ve been off the gold standard for domestic settlements since the 30s But the core MMT public policy is a Job Guarantee. So we haven’t been doing MMT since the 70s

[@advisorsandy2068]

What about the need for government's to purchase goods and services from other countries and the effects on their exchange rate by MMT,excluding the USA with reserve currency status.

[@garysymons3930]

RAMIN , Hi, your proposition at 20.30 is that say the gov issues bonds , ie borrows money, say $5, then orders the central bank to buy them back using printed money , ie , gives the money, $5, back using printed money , $5, so +5--5=0 with +5 left over ., the $5 would be inflationary . but I dont think it is the same as QE because the central bank did not buy back the bonds using printed money , and speaking from (a bad ) memory Bernanke specifically said the monetary base would not increase with QE . I am only a layman trying to get my head around the basics , but it cant be far off the mark because to date there has simply been no inflation , other than stocks/shares which has been caused by inflows of money from outside the country .

[@billl1127]

I've always been a staunch supporter of balanced budgets but this along with a few podcasts discussing the recent interest in an expected inflationary period have caused a shift in my thinking. It's not the influx of money that necessarily causes inflation. For instance, if $2T is introduced into the supply chain and that money is put in bank accounts and not spent, it is not inflationary. It is the increase in demand for goods and services that promote inflation.

[@isawaturtle]

If the non govt sector net saves then your balanced budget is rekt.

[@smc340uni6]

Exactly, both of our Govts (UK and US) provided furlough stimulus during covid and neither caused inflation because it was spent in the real economy, the micro-economy that kept the flow of money active; just as MMT advocates.

[@nthperson]

We should remember that the Fed's dramatic reduction in interest rates has had very different impacts on different segments of the population. Retirees with most pensions and modest savings had little opportunity to move into equities; the risk was just to great. So, they simply lost interest income. Those who were still employed and had high credit scores and wanted to purchase a residential property (notice I do not same "home" because the purchase is of both land and a structure) were now in a position to qualify to take on higher levels of mortgage debt. This widened window of affordability was capitalized by supply-demand forces of the market into higher and higher property prices in many already high-priced urban and metropolitan markets. At some point in the next several years, the stress of such high property prices will bring on yet another property-led crash, recession and another long period of defaults, foreclosures and potentially a full-blown depression.

[@Blt-rr2lm]

At 8:44 you show the equation Debt plus interest plus spending minus income. Why is there interest on your own money. If I print my own money, who do I pay the interest to?

[@dchat15]

It raises the question where does it stop though? Can you go upto 200%? 1000%? Can your debt become million times your gdp? Its the same question with lowering interest rates, but atleast a 0% rate is somewhat of a floor. Below that its the same as MMT. But there is a potential risk of your economy becoming to dependent on public debt. Its a slippery slope.

How does Alexander Johnson's view on MMT differ from Margaret Roberts?

[@robertbrandywine]

I thought MMT also involved government-created basic jobs so that in an economic down-turn people would go from working in the private sector to working in these government jobs (picking up trash, removing graffiti, building public works, etc.).

[@zane2664]

The problem is that people won’t do it

[@henrygustav7948]

@@zane2664 Non profits already do it. If a jobs program available to anyone who wants to work was passed, I'm pretty sure most unemployed people would take the job. We would just be basically expanding non profit work.

[@zane2664]

@@henrygustav7948 The problem is unemployment benefits. Why work minimum when unemployment nets $1600 a month. Plus many high skilled workers (i.e engineers, financiers, etc.) won’t do it becuase it downgrades their resume.

[@henrygustav7948]

@@zane2664 I see it the other way around, who is going to work a crap job for crap wages when unemployment pays more? That's a condemnation of the way we treat "essential workers". That a bump in unemployment is enough to discourage people from working shows how bad working conditions and pay really are. I'd bet people would love a job working from their own community working the hours they want to work doing the job they want to do instead of working for a for profit company being treated like garbage. Also employers like to hire people who are already employed, they keep their skills and work habits as opposed to people who are unemployed for long periods of time. a Jobs guarantee would help peoples resume, also provides on the job training, all on the unemployed persons terms.

[@zane2664]

@@henrygustav7948 You make it sound as if government jobs will compete with private sector with more benefits, good work-life balance, better pay, all while increasing productivity. There are no solutions in economics, only trade-offs.

[@MrHarveyrex23]

Your federal reserve note says. This note is used to pay off all debts. Public and private.

[@apacheattackhelicopter8185]

I remember one of MMT proponents said that exports are a hindrance while imports are an advantage. That closed the debate for me.

[@Stefanitza27]

Maybe you need to rethink your logic, our country sends electronic digits to other countries for real goods freeing up the productive capacity of our workers to perform labor that is more beneficial such as infrastructure rather than making nick nacks and doodads that feed our shallow wants and pollute our atmosphere. Just because we aren’t taking advantage of this fact doesn’t mean it isn’t true.

[@apacheattackhelicopter8185]

@@Stefanitza27 And why do you think other countries will give you real goods in exchange for electronic digits?

[@Stefanitza27]

Apache Attack Helicopter Because they do? Have you not noticed?

[@apacheattackhelicopter8185]

@@Stefanitza27 No, I haven't. There is a thing called Balance of Trade, and every administration in the USA has been trying to bring the trade gap down. So why do you think other countries should send you real goods in exchange for numbers?

[@Jesus-kt5dc]

@@apacheattackhelicopter8185 *Probably because the dollar facilitates trade between nations, and the US is probably the most important economy.*

[@andrewwalsh2755]

I'm thinking that UK (now Ex) PM Liz Truss was a believer in MMT... She's now the shortest serving UK PM to leave office alive... After immediately going for huge additional borrowing (on top of the current £2.5 Trillion national debt)... an unknown (by her at least) flaw in the govt debt structure meant she very nearly collapsed the pensions industry... and had to leave... taking with her the epithet "Brains"... The Bank of England now needs to raise interest rates because their economic forecasting model "isn't working"... and housing market crash looms... Seems to me... that MMT says: Borrow to invest, so debt grows, import cheap labour, give tax incentives to investors (and loopholes to take cash out by incurring debt)... so reinvestment, and new investment, and more govt borrowing is done... but that's OK because gdp grows... so (debt/gdp) is balanced... and it's a virtuous economic circle... But... what if gdp falters?... Maybe cheap imported labour leaves, because cost of renting is now sky high?... Maybe climate change means there's a water shortage, so people leave?... Maybe there's an energy crisis, so businesses close? Then... National debt remains... as (debt/gdp) rises higher and higher... The USA recently faced defaulting on national debt... and the solution was... raise the debt ceiling... Anybody see a looming problem??? MMT is definitely a Cunning Plan... like Ponzi Schemes...

[@mikehardwicke23]

Gibson's paradox shows there is no relationship between interest rates and inflation. Why has this been ignored by Keynsian economists? Practice shows that historically the correlation is actually between gross economic price and interest rates. It seems that modern Economists have failed with their experiment to increase M2 velocity. Continued monetary debasement can only result in bad outcomes despite CBs increasingly frenzied machinations.

[@lesterlau2011]

I think the only reason why inflation wasn’t there is because other countries are also printing money. Imagine only US printing lots of money, then massive amount of US dollars causes the depreciation of US dollar. And imported goods and services will be the inflationary force. Any ideas?

[@Pensioncraft]

Hi Kin Wing Lau the velocity of money is also very low, and has been decreasing for decades in the US which goes a long way to explaining why an increasing money supply hasn't led to inflation fred.stlouisfed.org/series/M2V The dollar has probably been weakening because the interest rate differential is no longer as large as it was a year or so ago. Thanks, Ramin.

[@chuckleaf8027]

Take a look at inflation now and tell me MMT is a good idea. It's fine if you don;t mind a huge wage cut...which is what inflation really is. Those fiat dollars bleed value off existing dollars. There's no magic money tree. and even money is not real it's production... You can;t print goods and services..which is essentially what MMT idiots want you to think... Oh print a trillion dollars so we now have a trillion in new stuff!!!! No we don;t.... we just have a trillion worth of hot air blended in.. like adding water to paint and thinking we have more paint.

[@thadtheman3751]

The dollar as a reserve currency also helps. I t makes me wonder why a lot of economists totally ignore supp0ly and demand. Increase supply and the value goes down. In the case of money that means inflation. Also if demand goes down then value goes down. For money That means inflation. If the the dollar lost it's status as a reserve currency we would be in trouble because the demand will decline significantly. Now think BRICS.

[@Charles-pf7zy]

That only applies to foreign trade. The vast majority of US economy operates domestically, so it is completely possible for money printing to exist worldwide keeping the dollar exchange rate stable, whilst also experiencing inflation within the country. It’s interesting that didn’t happen in the 2010s.

[@katiecannon8186]

@@Charles-pf7zy So now you say America DOES just print money. Seriously, you gotta make up your mind. Then ask: Does Greece print its own currency? Or, did it give up its ability to issue its own currency when it adopted the euro? Answer: Or course it did. As it is, you want to say that America & Greece are exactly the same. Which is just silly. You gotta try to understand the difference between America & Greece. Until you understand the difference you can’t possibly understand basic public policy options available to the U.S. that are not available to Greece

[@MrHarveyrex23]

MMT exposes the monetary banking system as absurd and insane. That’s the entire point. Deficits are good while budget surpluses and spending cuts are bad. Governments suppose to fund the people. Not the other way around. Balanced budget amendments is just another cruel form of neoliberal fiscal austerity on the poor. Deficits and debts are good because it means the government is spending money on its people. Taxes are just used to pay off the perpetual debt topped with compound accrued interest, boost the currency, and control inflation when new money is being printed out. The more debt there is. The more money there is. Which keeps the economy from collapsing

[@sang3Eta]

Thatcher was right the value of money comes from the labour of your population. A country is effectively a corporation that can issue bonds (debt) or dillute it's shareholders (currency users).

[@maurolongone3190]

Grazie.

[@Pensioncraft]

Thanks

[@paulyhart]

I'm glad Nate found some work outside the football clubs.

[@laurentirgo5042]

3 years old suggests this video needs to be updated as inflation did resurge in a very big way and world wide. MMT has flaws.

[@LboroWick]

I’m still not convinced

[@BlahBlahPoop617]

Dr. Lacy Hunt debunked MMT

[@alecalm2wh683]

@@BlahBlahPoop617 lacy hunt is the don

[@Rob-fx2dw]

Why would you be convinced . Molser makes so many incorrect assumptions that it is crazy - He claims government deficits are savings in the private (non government0 sector . Factually wrong since savings only come from people or organizations spending less than they earn not increase government spending. His MMT also fails to take things into account when they are relevant like in the same Federal deficit situation the funding comes from government's Treasury department selling bonds to the public, to overseas entities and some to the Federal reserve bank which pays for the bonds in newly created dollars. Those treasury bonds eventually mature and the public taxpayers is forced to pay for the maturing bonds with interest. Government does pay for those because it's income comes eventually or straight away from taxes. His MMt claims taxes are not necessary but the same theory claims the government policy should be to tax to control inflation which they admit will occur if they spend too much. But that is only a small part of the faults in their theory .

[@missj.4760]

@@alecalm2wh683 Me neither.

[@widehotep9257]

@@Rob-fx2dw Biggest flaw of MMT is their incorrect belief that governments create all money. In fact the governments create NO money! In the USA ALL money is created out of thin air when banks issue loans, and that is why 97% of all money exists only the the computers of private banks. Mosler says money creation is a public monopoly, but in fact money creation is a private oligopoly. Mosler says that governments only collect in taxes that which they create and spend as money, but this is easily disproven because people often borrow money from banks (brand new money created in bank computer) to pay taxes. The entire MMT structure seems laughable because their foundation is constructed of obvious nonsense like this. That being said, I think they are right when about some things, but these are theoretical and don't describe contemporary reality. For example, if the government DID have a monopoly on debt-free money creation, the government COULD spend money and tax it back without inflation. But this is Star Trek nerd talk because the government gave away their money creation monopoly to private bankers a long time ago, and now the government must continuously borrow from private banks.

[@PeterHeard]

Amazing

[@Pensioncraft]

Thanks @Pete Heard

[@reasonerenlightened2456]

​@@Pensioncraft MMT is a scam designed to make you work without giving you any real wealth in return. MMT, Crypto currency, etc. are all FAKE. If you could be bothered to read more, here follows the only correct "Monetary" "theory". There must be a Law to ensure that 'Money in circulation' equates to 'Wealth owned'. (as the Wealth disappears, money must be destroyed; as new Wealth is created, money must be created to represent it) (if you bring a fish (Wealth) to the market then I can print money to represent the Value of the fish. I eat the fish (the Wealth is gone). The printed money must be kept until I do something for you of equal value for which you pay with the money I gave you.) MONEY MUST REPRESENT WEALTH OWNED. (i.e. the owner of all Wealth must not have money, and the one with all Money must not own Wealth. The law must ensure equivalency between Money and Wealth ! ) Measurement of wealth is done by using numbers. Numbers are used for quantification , i.e. there is something ( a thing 'A') which needs some quantification. (e.g. you value a thing 'A' as 3 now whereas as I value it as 4. Then we talk/debate and we reach an agreement that at this particular moment in time and particular set of circumstances in the Universe the value of the thing 'A' is 3.5) Tokens, coins, credits, dollar, etc. are carriers for the number we use to quantify the Value of things. Then the function of money becomes just a representation of a numerical value assigned to Wealth/things.

[@mikehardwicke23]

Good summary (I think?). Trouble is we have failed to deleverage since the GFC. And changing interest rates does NOT stimulate the economy since Banks merely horde and people try to save. Gibson's paradox.

[@PianoCat-Music]

surprise, after the world printed tons of money, nearly every country has inflation never seen before. Well done

[@patchpeek]

MMT is effectively currency debasement and a justification for deficit financing and ballooning government debt, which results in a fragile financial system vunerable to collapse due to unaffordable indebtness. MMT theory seems thin on how to combat inflation. In the 1970s we had inflation spike to 20% and income tax levels were already 89%; yet "increasing taxes" is their answer at 18:00 ! Hard to grasp.

[@Akshay-qt5qi]

patchpeek govt doesn’t earn anything other than taxes. If govt is going bust due to its debt, they will and should increase taxes. There is no way to pay for the govt debt unless one brings in BS of MMT which in long run will destroy the credibility of United States.

[@Stefanitza27]

Akshay obviously you have not looked into MMT AT ALL!!!

[@philipritson8821]

The inflation in the 1970s broke out because we had an oil crisis!

[@patchpeek]

@@philipritson8821 Err. Inflation was already out of control by 1971 running just under 10% and top rate of income tax was 75% ; well before the "oil crisis".

[@Userkzb20253]

It’s a bitter medicine for 70’s. But it worked, didn’t it according to the theory. It seems like trick is not to get there in the first place. MMT does warn about inflation.

[@SneakySteevy]

Never heard of this but that is what I was saying since 5 years. They told us the debt is too high and 10 years later the debt is much higher and we are doing fine. The next thing we know is that they tell us that the debt is too high and 10 years later the debt is much higher and we are doing fine. There low and high, we are definitely in a low.

[@mikehardwicke23]

NAIRU - Exactly how is that calculated then Ramin? (Same way as CPI😂?).

[@normankoo6159]

@PensionCraft MMT I see many problems not covered in this video. Either it is ignorance or intentional: 1. Government spending is not the same as private sector spending. It is way less efficient. This isn’t even taking into effect that usually the government expenditure programs often favor a form of wealth transfer to the (rich and) powerful. 2. When government debt gets too high, the cost of servicing debt can become a big drain on the effectiveness of the usage of tax dollars collected. Often people will then claim that the interest rates can be lowered to reduce the interest burden. But then that actually robs the people of their pension benefits later because of the lost interest from this move. 3. Indeed the real limiting factor in monetary inflation is price inflation. Three problems pop up from this: A. The so called official price inflation has been distorted to show it being much lower than reality. I am happy to ask ANYONE whether they have experienced the levels as officially published?? B. Fiat or actually all currency derives its value from the faith in it. It can be lost in a flash. C. Nobody really knows where the limit is regarding “too much”. When massive(hyper) inflation starts to set in, it is usually game over. I do agree that the Phillips curve is not eternally precise and that it is hard to plan perfectly. But current government intrusion into the markets have become disproportionately large and dangerous. Are we not approaching the catastrophically inefficient central planned economy of the older communist nations?? One point that everyone blindly accepts is that price inflation is good. Wrong!! Inflation is the theft of your wealth. Companies and governments like it because they benefit from it, but for the common person, it really is terrible. There is (before supply/demand forces) deflationary effects that people should benefit from(ie productivity and technological advances). But the money printing and other inflationary effects cancel out this. In general, we are again being promised a free lunch until the SHTF and we somehow end up being debt slaves or just serfs. Beware of the tricks being pulled.

[@jasonryan2175]

you are a smart cookie, aren't you

[@cutestbear3327]

to me, MMT is like the Ideal Gas Law in Physics. it may correctly describe how spherical chicken in vacuum may behave, but if you ever try running a chicken farm based solely on this theoretical construct..... good luck

[@belegarironhammer3200]

Very nicely put! 😁👍

[@jasondaniels8962]

The reason why inflation didn’t materially catch on after the financial crisis is in part due to the psychology of people. If you just got into a car crash it might be awhile before you get back into a car. The financial downturn was and is still fresh in minds from 08

[@jasonbeary8427]

And it's not a pie in the sky cure all in every situation. But the situation we are in now, low growth, low utilization (aka "the Rust Belt": Detroit, Cleveland, Rochester, Buffalo, Toledo, Akron ), underemployment, excess skilled workers (look how many 4 year degree people there are w/o 'real' jobs) plenty of surplus (food toxic environment, housing going to waste, farmers paid not to farm, grain prices below the cost of production,) MMT is on the mark.

[@douglasjarnagan3835]

The argument is that we can just create money in accounts and spend as long as there is a corresponding growth in GDP. Once there isn't growth in GDP, we'll just stop putting money into those accounts and will even tax people. I'm not optimistic that a future politician or that voters would be very receptive of either of these events. In fact, I'd fear that political pressure would delay action until we had inflation. Kelton has some good arguments and even has a nuanced view on things like universal basic income. However, I am skeptical that politicians that thirst for votes will be as nuanced in reality.

[@Ferdinand208]

Is there an explanation of MMT for me? It seems to me that every extra dollar that is produced by the economy above what is needed to keep inflation low is used by the government to increase government debt. That would be stupid right? Because you would put a break on the amount of wealth that is created each year. So can somebody explain where I am going wrong?

[@a2comuk]

All looks good on paper- but if MMT is so great why do we have the so called “everything bubble”? Real estate is so expensive young people often fall short on getting a mortgage as they can’t even save for the down payment. Stocks on all time highs, crypto currencies are booming even cars are getting to expensive to buy without a loan... Truth is simple and painful. Constant printing of money makes currencies loose their value on record pace yet salaries are still relatively the same as 2-3 years ago. Thats the real effect of MMT. The public is getting screwed but hey, at least thanx to low interest rates governments can print (borrow) more and still technically not go bankrupt... ohhh joy. Saving money has no sense today (thanx to low interest rates) so people are force to either spend money on stuff they don’t need or invest in risky assets. But hey let’s all be grateful that we have MMT so the governments will not need to worry on how they will pay off their debts. Was expecting a bit more from you sir.

[@Jesus-kt5dc]

*Those everything bubbles are created by the capitalist class to feast on the working class. If you look glass stegall work beautifully for decades, when Bill Clinton removed it, will you know the result.*

[@FriendOfN0ne]

Wouldn't MMT help immensely here by shifting the focus to inflation and forcing rigorous assessment of policy decisions for any inflationary pressures before passing them in Parliament?

[@justinparkinson2679]

PROBLEM! Everything I have seen on MMT equates Federal Reserve with Government, but it's not. The Fed is privately owned and if that issues money and lends it fi government MMT is flawed. Can anyone answer this?

[@dallassukerkin6878]

For my sins, in my youth, I was an Economics graduate and to watch a video lay out an economic theory so clearly was a great pleasure :). And to those politicians who want to raise taxes (I am looking at you in particular, Joe Biden!), maybe they should have a listen to some advisers as to potential consequences before they act.

[@coolbeans8647]

If you're concerned, raise taxes on only the rich and reduce taxes on the lower class to near zero.

[@mk91-vz1oj]

The mmt understanding of monetary operations is correct

[@AlecMuller]

12:06 "People said the money-printing during the financial crisis would cause inflation, and it turns out the narrative was completely false." Exactly *who* got that newly printed money? Was it poor people who spend most of their income on CPI goods? No, it went to wealthy people who spend a tiny fraction of income on those goods, and plow a far higher fraction into stocks, real estate, and other assets. The printing not only caused an *asset bubble*, it also artificially increased wealth inequality. MMT is great for moneyed elites and disastrous for everyone else.

[@relobmit]

Exactly. If you bury your head in the sand and say that inflation is only measured by consumer prices and totally ignore asset price inflation you can make this false statement.

[@gregwilliams2746]

You are rightly careful when you present Thayer's results concerning periods of debt reduction and depressions in the table at 7:11 minute mark - correlation is not causation. However, is it a coincidence that a lot of the depressions occur in the last year of deficit reduction? It makes sense that the onset of depressions induce governments to stop reducing debt and drawn on it more to support more aggregate demand and turn things around. So, if that is what we are seeing then the results in the table don't support the MMT argument at all.

[@32mlucas]

The biggest risk for inflation isn’t a heated economy, its currency debasement. Inflation in the UK was high post the financial crisis despite the so called austerity because the pound was hit by printing too much money.

[@relobmit]

Sorry had to comment again as some of this stuff really does need to be challenged. At 9:16 the slide quotes James Galbraith as saying "The prudent policy conclusion is: keep the projected interest rate down" [in order to keep real growth higher than the increase debt service cost]. However this is economically illiterate. The real interest rate is itself a function of projected future growth. Real Interest Rate(Natural Rate of Time Preference, Future Economic Prosperity) In a high growth economy the real interest rate is axiomatically high - and the converse is also true. Yes the rate can be somewhat manipulated in the short run but only by more money printing. More and more QE and bond purchases would be needed to peg the long-term yields especially when inflation eventually starts to pick up and the yield start to rise. At some point the central bank becomes the only buyer in town and runs out of bonds to buy without the government issuing yet more debt. Then they move on to equities and eventually buy all those up. Then we have all the means of production owned by the state/central bank. This is called communism. Is this what you want? Maybe it is? But otherwise it's a completely circular argument.

[@relobmit]

@Clifford your big red God Agree. MMT is a smoke and mirrors game to centralise monetary and economic power.

[@coolbeans8647]

That's when War comes in, to blow everything up, literally burn down the cities. Then humans have to rebuild it. And a redesign of the money system can be done, because there is no choice as everything is blown up.

[@guyvert49]

the clue is in the phrase - "borrow in own currency". Who is going to buy & if foreign actors, how about factoring in exchange rates!

[@MrMeneillos]

There is a big mistake In the narrative: there was inflation, the energy and the most important one: housing. All that "banking money" were to massive debt and insane mortgages and the final 2007 bailout. We need to be extremely careful because all that money, indeed, does cause inflation in specific assets.

[@katiecannon8186]

If you want to limit how much banks can loan to buy real estate, then you gotta address that issue directly Like via a Land Value Tax or something similar

[@jemimaunicorn6446]

So now we should be massively raising taxes to sort out the economy during a cost of living crisis - maybe time to up fuel duty? MMT is very popular in periods of low inflation…