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Modern Monetary Theory Explained - Is MMT Right or Wrong?

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PensionCraft

PensionCraft

Күн бұрын

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@Pensioncraft
@Pensioncraft 4 жыл бұрын
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@pawegraczyk6050
@pawegraczyk6050 4 жыл бұрын
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
@pawegraczyk6050 4 жыл бұрын
@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
@web2yt488 4 жыл бұрын
I didn't find your argument to be complete. I think it's lacking depth.
@pawegraczyk6050
@pawegraczyk6050 4 жыл бұрын
​@Danger Zone As you wish.​
@henrygustav7948
@henrygustav7948 4 жыл бұрын
@@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.
@AlecMuller
@AlecMuller 4 жыл бұрын
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
@relobmit 4 жыл бұрын
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.
@crawkn
@crawkn Жыл бұрын
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
@katiecannon8186 Жыл бұрын
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
@coonhound_pharoah Жыл бұрын
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
@crawkn Жыл бұрын
@@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
@katiecannon8186 Жыл бұрын
@@coonhound_pharoah lol. Tell that to someone who can’t find a job.
@coonhound_pharoah
@coonhound_pharoah Жыл бұрын
@@katiecannon8186 As long as they are looking they are not idle. They are moving toward the new equilibrium.
@nthperson
@nthperson 2 жыл бұрын
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.
@ShaneBurns-dc6fr
@ShaneBurns-dc6fr 3 күн бұрын
You are making a really flawed argument. You say that the rental value "belongs to the community." But that's an assertion of opinion, not a fact. Aside from that, your assertion comes from a flawed premise that somehow land has "a zero cost of production." However, that really is not true at all. Any land that actually produces rental payments does in fact have upkeep, including drainage, pest removal, defense from intruders, and other costs too numerous to list here. All of those costs have to do with making the land useful for whatever purpose they are being rented for. For example some of those costs are more important than others, depending on the type of renters you are trying to attract. Also, keep in mind that landlords are actually competing with one another, so rental prices are partly determined by the supply of people willing to be landlords. If you make it more difficult to rent (through taxation and regulation as Henry George proposed), then prices will go up. To be exceedingly kind to Henry George (unfairly so), he was a crackpot, and very few people like his proposals because it would effectively eliminate the ability of new homeowners to enter the market, leaving all of the existing land in the hands of fewer and fewer large landlords in only a few short years.
@nthperson
@nthperson 3 күн бұрын
@@ShaneBurns-dc6fr Two points only in response: (1) Henry George argued against the taxation of commerce, against the taxation of incomes earned producing goods or providing services, and against all produced assets; and (2) Almost every economist of any note has endorsed the public capture of economics rents as both economically efficient and fair.
@ShaneBurns-dc6fr
@ShaneBurns-dc6fr 3 күн бұрын
@@nthperson , First, we would never get "just an LVT." We would almost certainly get income tax, plus LVT, plus VAT, plus sales tax, plus tariffs. We never get rid of other forms of taxation when a new tax is proposed. Second, are you seriously including the term "every economist of any note" in a post about Georgism? That's immediately false. On the one hand, everybody who loves the idea of wielding income tax margins to reshape society will NEVER let go of the idea of income tax. Also, anyone who dislikes redistributionism would also have a problem with it. Since a Georgist LVT is the land's rental value, that is to say, its value represented as a revenue stream corresponding to its usefulness as a factor of production, the revenue per acre would absolutely crush certain kinds of businesses. These utopian schemes never go without consequences. George himself wrote glowingly about how this would redistribute wealth, and a lot of economists (both in his time AND today) have problems with redistributive schemes.
@rolyars
@rolyars 9 ай бұрын
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.
@0reo2
@0reo2 4 ай бұрын
Yes, if inflation is the ONLY restriction for MMT spending, then that measurement should be examined more critically compared to an opaque "basket of goods" that's changed all the time. Include all prices and I'd actually be ok with this. Until then, I'll invest assuming we have and will have inflation due to money printing.
@davideyres955
@davideyres955 3 ай бұрын
Yes. The problem is they removed the things they inflated from inflation. If they had kept housing costs as part of inflation then we would have seen the influx of inflation and people would have started demanding wage rises so their pay packet would have kept up with housing. This was a deliberate policy to create growth but at an artificial structure. It all fell apart in 2008 because it was always built on sand.
@richardcope8102
@richardcope8102 4 жыл бұрын
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
@mattwarrilow 4 жыл бұрын
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
@remlatzargonix1329 4 жыл бұрын
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
@richardcope8102 4 жыл бұрын
@@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
@nachannachle2706 4 жыл бұрын
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
@g0ld3nb Жыл бұрын
very good questions, now more than ever perhaps. I'd love to hear what Ramin thinks on these points? @Pensioncraft
@mulllhausen
@mulllhausen 4 жыл бұрын
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
@roarchristoffersen 3 жыл бұрын
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
@JesterEric 3 жыл бұрын
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
@mulllhausen 3 жыл бұрын
@@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
@lukestyles 3 жыл бұрын
@@finchbevdale2069 Nope, House prices went up because QE helped the richest people in the world who put their money into assets.
@Tuppoo94
@Tuppoo94 3 жыл бұрын
Looks like someone else also noticed the big rainbow-colored elephant in the room.
@lukebowers536
@lukebowers536 4 жыл бұрын
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
@Gman290a 3 жыл бұрын
Have you looked into the new digital financial system that is coming? Look into crypto currencies like XRP, XLM. You won't regret it.
@ps-dh8ef
@ps-dh8ef 5 ай бұрын
@@Gman290a😂😂😂😂 how did that work
@CaseyBurnsInvesting
@CaseyBurnsInvesting 4 жыл бұрын
MMT is the reason why this economic crisis has created a wider wealth gap and every other crisis will continue to.
@sergest-amand1164
@sergest-amand1164 4 жыл бұрын
I'm not that sure about this. I think it's more due to the way it was carried out than to its very nature. It's like socialism, Stalin called himself socialist while killing hundreds of thousands of people, while workers cooperatives just give work to people... Plus, remember Bernie Sanders embedded the politics he promoted for his presidential campaign on a MMT foundation, and i sure don't think he's in favor of a more unequal society.
@alexturlais8558
@alexturlais8558 4 жыл бұрын
Not necessarily. Corrupt governments choosing to benefit the rich is the problem, but the theory.
@normankoo6159
@normankoo6159 4 жыл бұрын
Jesus Which countries have implemented UBI permanently ?? I know of none that have been successful.
@edblomfield6277
@edblomfield6277 4 жыл бұрын
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
@MarkusBabris 4 жыл бұрын
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
@KarlEriksenopinion 4 жыл бұрын
inflation requires a lack of production. There is little risk of this under modern automation and production.
@billsticker4080
@billsticker4080 4 жыл бұрын
Rubbish
@pattty847
@pattty847 4 жыл бұрын
This was the top video when searching "mmt explained", thought that would be useful as your channel is doing something right
@jank3441
@jank3441 4 жыл бұрын
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
@muhammadazam7141 3 жыл бұрын
Very smart
@themsuicjunkies
@themsuicjunkies 11 ай бұрын
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
@smc340uni6 9 ай бұрын
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
@patchpeek
@patchpeek 4 жыл бұрын
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
@Akshay-qt5qi 4 жыл бұрын
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
@Stefanitza27 4 жыл бұрын
Akshay obviously you have not looked into MMT AT ALL!!!
@philipritson8821
@philipritson8821 4 жыл бұрын
The inflation in the 1970s broke out because we had an oil crisis!
@patchpeek
@patchpeek 4 жыл бұрын
@@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".
@Buckzoo2030
@Buckzoo2030 4 жыл бұрын
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.
@stuartwood5448
@stuartwood5448 4 жыл бұрын
MMT solves nothing, just ask japan or Europe who have been trying to inflate their way to growth with more debt. Now an increasing amount of tax payers money is being used to finance the debt without anything to show for it. You can print money, you can’t print growth.
@Pensioncraft
@Pensioncraft 4 жыл бұрын
Hi Stuart Wood try telling the people who still have jobs and a house to live in thanks to governments bailing out industries and forgiving loans that there's nothing to show for the extra debt. Thanks, Ramin.
@DrBenVincent
@DrBenVincent 4 жыл бұрын
As the video explains, if you increase govt debt, but spend that on things which increase GDP more, then your debt/GDP ratio decreases. So obviously the debt must be wisely spent in order to achieve this. But it’s not that hard if you spend into sectors with a multiplier > 1 such as universities, R&D, construction ,infrastructure etc
@epgui
@epgui 4 жыл бұрын
@rkb100100 the hallmark of sub-academic discussion (a term I made up just for this occasion) is people who don't listen to, and try to understand, the other viewpoint, before criticizing it. You need to be able to abandon (even if just temporarily) your own preconceived notions of what's good and what's bad, before you engage in this sort of discourse. Talking about sophistry, what you are doing here is an informal fallacy called "begging the question".
@epgui
@epgui 4 жыл бұрын
@rkb100100 I haven't said what I was supporting. But I'm capable of holding opposing views in my head, and understanding them, and identifying their shortcomings, without my brains falling out.
@BarrySlisk
@BarrySlisk 4 жыл бұрын
@@DrBenVincent "So obviously the debt must be wisely spent in order to achieve this" And you trust the government to do this? LOL !
@vaclavmiller8032
@vaclavmiller8032 4 жыл бұрын
These videos on marco are just fantastic - I'm taking MMT much more seriously having seen this one. Thanks so much!
@Pensioncraft
@Pensioncraft 4 жыл бұрын
Hi Vaclav Miller that's very kind thank you! Ramin.
@a2comuk
@a2comuk 4 жыл бұрын
Vaclav - for a full view of the benefits of MMT - check out my response to Jesus here in the comments & think again.
@fennadikketetten1990
@fennadikketetten1990 4 жыл бұрын
Who's Marco?
@davidsummit9851
@davidsummit9851 4 жыл бұрын
Give a child a silver coin today
@a2comuk
@a2comuk 4 жыл бұрын
@@davidsummit9851 Better yet Bitcoin...
@jaywhoisit4863
@jaywhoisit4863 2 жыл бұрын
So fast forward two years and the monetary stimulus has happened. Unemployment went to decade lows. Inflation run rampant. Demand pull inflation is happening. Supply shock inflation is also happening. And the MMT policy of jacking taxes to control inflation would break every Govt in the world. Let’s raise taxes when people cannot afford their heating bills. So we revert to Keynesian monetary policy to wield the megladon called public debt. Quantitative tightening fully involved. Rate rises without foreseeable heights. MMT is ridiculous because no mathematical formula can predict when the inflation and employment reach a cliff and we all retreat to our mud and wattle houses to eat grass! There are no jobs or services remaining in this end times scenario. That’s the ultimate end journey of MMT.
@chrisyates2591
@chrisyates2591 3 ай бұрын
Thanks for the explanation Ramin - I knew about Stephanie Melton - but didn't understand her ideas - 4 years after you made this video I've just watched it and benefited from being better informed now - so thank you.
@Pensioncraft
@Pensioncraft 3 ай бұрын
You're very welcome @chrisyates2591
@maurolongone3190
@maurolongone3190 3 жыл бұрын
Grazie.
@Pensioncraft
@Pensioncraft 3 жыл бұрын
Thanks
@desmondknox
@desmondknox 4 жыл бұрын
Zimbabwe and Venezuela need some mmt then. Lots left off the table with this theory.
@autom8ed
@autom8ed 4 жыл бұрын
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
@Dee-Ell
@Dee-Ell 4 жыл бұрын
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.
@RuinDweller
@RuinDweller 10 ай бұрын
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.
@blueplanethand
@blueplanethand 4 жыл бұрын
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.
@Buckzoo2030
@Buckzoo2030 4 жыл бұрын
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.
@Rob-fx2dw
@Rob-fx2dw 4 жыл бұрын
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.
@MrHarveyrex23
@MrHarveyrex23 4 жыл бұрын
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
@brightnbreezyfelix1003
@brightnbreezyfelix1003 4 жыл бұрын
I found this overview very reassuring. I’m feeling more comfortable about investing after viewing. Thank you Ramin.
@Pensioncraft
@Pensioncraft 4 жыл бұрын
Hi BrightnBreezy Felix I'm glad to hear that! Thanks, Ramin.
@surreal6643
@surreal6643 8 ай бұрын
How do you feel now?
@robertbrandywine
@robertbrandywine 4 жыл бұрын
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
@zane2664 3 жыл бұрын
The problem is that people won’t do it
@henrygustav7948
@henrygustav7948 3 жыл бұрын
@@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
@zane2664 3 жыл бұрын
@@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
@henrygustav7948 3 жыл бұрын
@@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
@zane2664 3 жыл бұрын
@@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.
@Blt-rr2lm
@Blt-rr2lm Жыл бұрын
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?
@mikehardwicke23
@mikehardwicke23 4 жыл бұрын
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.
@Rob-fx2dw
@Rob-fx2dw 3 жыл бұрын
Proponents of MMT are debt deniers. They want to call debt an asset but only want to do that in respect of the Federal government and nobody else. Not even the state governments. Their belief is that somehow Federal governments debts never have to be paid back when the reality is the bonds that were created to fund them mature and are paid back on maturity which is process that happens every month of every year when bonds sold some years ago mature. They also claim that money collected from taxes is destroyed but the Federal budget surplus or deficit is calculated by comparing tax receipts with government spending but they can't explain how the Federal budgets have ever been in surplus if that is the case if taxes are not funding government spending. They are even in conflict with the central banks around the world whose explanations of how new money is created conflicts with their own explanation. Their theory is based on wishful thinking and when the errors in their assumptions and huge the conflicts and contradictions within their own theory are pointed out they run away and hide.
@TheCluelessgenius
@TheCluelessgenius 3 жыл бұрын
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
@Rob-fx2dw 3 жыл бұрын
Yes. That is correct. Money increases without production increases that preceed it cause inflation presure and loss of confidence in the money.
@henrygustav7948
@henrygustav7948 3 жыл бұрын
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.
@sang3Eta
@sang3Eta 4 жыл бұрын
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).
@ivanchernenko9879
@ivanchernenko9879 8 ай бұрын
An interview Stephanie Kelton, author of the Deficit Myth did on Feb 8, 2024 titled “Was MMT right about inflation?” at 12:25 she says, “We are getting real GDP numbers that are eye popping”---She is ignoring the elephant in the room which is, how much debt was incurred to get those “eye popping numbers”? In 2023 the US government borrowed $3.2 Trillion, of which only $2.4 Trillion of GDP was recorded. The remaining $800 Billion generated ZERO economic activity whatsoever. She talks about the “multiplier effects” yet every 5 year period since 2006, GDP grew by much less than the increase in the debt which means that money vanished without generating any GDP activity. We would have been far better off taking the entire $3.2 Trillion borrowed and spent it entirely on battle tanks and aircraft carriers. We would have gotten at least $3.2 trillion in economic activity from such wasteful spending and that is with no economic multiplier effect, which is pretty hard to do. This consistent, horrific economic multiplier effect of less than 1, for the last 18 years goes against MMT theory. This theft from the US populace shows that government cannot, and should not manage all but the smallest amount of public money since they are evaporating money in a way that not even the Mafia could do.
@Lobos222
@Lobos222 8 ай бұрын
So what you are saying, dogmatically I might add. Is basically that the people at Enron would do better than the US government because Enron was private? Secondly, does public schooling and healthcare create economic activity in your eyes or is it just a waste of money. You know, like generals training their soldiers before battle. Why would the government be interested in having a well educated and healthy workforce and therefor spend resources and money getting them there. " US government borrowed $3.2 Trillion" Who are the US federal government, the only entity on the planet allowed to print US dollars in practicality, borrowing US dollars from?
@ivanchernenko9879
@ivanchernenko9879 8 ай бұрын
@@Lobos222 No, the crooks at Enron destroyed one company but thankfully they were not so big like the US government that they could ruin an entire system for decades to come. Certainly schooling and healthcare generates economic activity but the question is how much debt is needed to get this return? If the economy grows more than the amount of new debt spent, then its a positive return and thus beneficial. Every 5 year period since 2006 has resulted in more debt created than economic activity created. Thus in the big picture it was many mal investments and a big waste to the tune of many $Trillions. The private sector on average would have generated more GDP than the government did. Yes the government CAN print the money instead of borrowing it from the world market, but doing so would unleash massive inflation, as proven by countless numbers of countries over the centuries. Learn from history instead of endlessly repeating the same mistakes.
@Phil_D_Waller
@Phil_D_Waller 2 жыл бұрын
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
@dannyarias8786 Жыл бұрын
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?
@a2comuk
@a2comuk 4 жыл бұрын
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.
@FriendOfN0ne
@FriendOfN0ne 3 жыл бұрын
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?
@Lobos222
@Lobos222 8 ай бұрын
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.
@ricoman7981
@ricoman7981 3 жыл бұрын
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
@KeithWhittingham 2 жыл бұрын
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
@markcollins3445 2 жыл бұрын
Are you sure that inflationary drive is not nothing to do with excessive profit chasing by large monopolies
@ricoman7981
@ricoman7981 2 жыл бұрын
@@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.
@widehotep9257
@widehotep9257 3 жыл бұрын
4:32 "...many countries...CAN issue their own currency." But they don't. In the USA, ALL money is created when banks issue loans. Government gets all money from taxation and borrowing. Money creations WAS a public monopoly, but it has been given away to banks and is now a PRIVATE oligopoly. Banks create all money as debt, and they charge endless interest for every penny that circulates. This is still fiat money because the government requires us to use bank-created money for paying taxes AND settling contracts (legal tender laws). Therefore Mosler and MMT are wrong.
@lesterlau2011
@lesterlau2011 4 жыл бұрын
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
@Pensioncraft 4 жыл бұрын
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
@chuckleaf8027 Жыл бұрын
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
@thadtheman3751 Жыл бұрын
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
@Charles-pf7zy 11 ай бұрын
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
@katiecannon8186 11 ай бұрын
@@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
@FairnessIsTheAnswer
@FairnessIsTheAnswer 2 жыл бұрын
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?
@ProgressiveEconomicsSupporter
@ProgressiveEconomicsSupporter Жыл бұрын
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
@555salt 10 ай бұрын
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.
@ProgressiveEconomicsSupporter
@ProgressiveEconomicsSupporter 10 ай бұрын
@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
@relobmit
@relobmit 4 жыл бұрын
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
@relobmit 4 жыл бұрын
@Clifford your big red God Agree. MMT is a smoke and mirrors game to centralise monetary and economic power.
@coolbeans8647
@coolbeans8647 3 жыл бұрын
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.
@TheRepublicOfUngeria
@TheRepublicOfUngeria 3 жыл бұрын
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.
@normankoo6159
@normankoo6159 4 жыл бұрын
@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.
@alexobrien3890
@alexobrien3890 2 ай бұрын
The Deficit Myth is extremely enlightening! I recommend it to everyone!
@josdesouza
@josdesouza 10 күн бұрын
For starters, it's not a theory. As an explanation of how money works in fiat currency economies, it does a pretty good job. Far better, indeed, than the neoclassical models that politicians are so fond of parroting.
@ThomasVWorm
@ThomasVWorm 7 күн бұрын
It is a theory. Or why do you think it is not?
@mutton_man
@mutton_man 4 жыл бұрын
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
@Pensioncraft 4 жыл бұрын
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
@mutton_man 4 жыл бұрын
@@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.
@mutton_man
@mutton_man 4 жыл бұрын
@Jesus 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
@nachannachle2706 4 жыл бұрын
​@@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.
@stlouisix3
@stlouisix3 4 жыл бұрын
I wish people focussed more on promoting market economics, as opposed to attacking MMT.
@Pensioncraft
@Pensioncraft 4 жыл бұрын
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
@pistachio775 4 жыл бұрын
@@Pensioncraft do you think MMT is sustainable long term though?
@stlouisix3
@stlouisix3 4 жыл бұрын
@@Pensioncraft agreed
@aaronbirook4367
@aaronbirook4367 4 жыл бұрын
@@pistachio775 The world has been MMT since 1970
@katiecannon8186
@katiecannon8186 Жыл бұрын
@@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
@infinitedonuts
@infinitedonuts 2 жыл бұрын
Good video, it was very informative.
@Pensioncraft
@Pensioncraft 2 жыл бұрын
Glad it was helpful!
@andrewwalsh2755
@andrewwalsh2755 Жыл бұрын
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
@mikehardwicke23 4 жыл бұрын
The other issue is that despite full unemployment there was no growth in GDP (pre COVID); thus debt cannot be reduced.
@curryattack8985
@curryattack8985 Жыл бұрын
Worth a revisit, Ramin, after violent QE during ‘Covid’ has caused massive inflation.
@Charles-pf7zy
@Charles-pf7zy 11 ай бұрын
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
@DizzyNLD 9 ай бұрын
@@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.
@filippxx
@filippxx Жыл бұрын
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%.
@charlierob4377
@charlierob4377 7 ай бұрын
Thank you for the video, I have read Stephanie’s book to and the one word I am left with is responsibility. I would struggle to see politicians being responsible when so many other human motivations are at play
@thinkitthru2754
@thinkitthru2754 4 жыл бұрын
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
@clashclues370 2 жыл бұрын
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
@homewall744 2 жыл бұрын
No matter what, you cannot consume any more than you produce, and nearly all that is produced is consumed in some way.
@WilhelmDrake
@WilhelmDrake 3 жыл бұрын
MMT is primarily a DESCRIPTIVE economic theory, that is, it simply describes the operational realities of money and monetary systems.
@Rob-fx2dw
@Rob-fx2dw 3 жыл бұрын
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
@katiecannon8186 Жыл бұрын
@@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
@Rob-fx2dw
@Rob-fx2dw 3 ай бұрын
@@alecdurbaville6355 Does it describe who creates the money and how it is done? - No it doesn't. It seems you have believed any stupidity without testing what MMT says against historical and present facts. Who creates most of the money in the economy ?
@Rob-fx2dw
@Rob-fx2dw 3 ай бұрын
@@alecdurbaville6355 You say " MMT describes all of those mechanics". What are all of the mechanics and where did you get them from? - One book or one video ? Who told you that they are all of the mechanics? How do you know they are "all the mechanics" Does it describe what credit is and how it works? For instance answer this. - If MMt is valid why does it say tax puts value into the money and gets it accepted when in every country last century where inflation made the money worthless there were also taxes but the money was rejected by the government and the people after it became worthless ?
@Rob-fx2dw
@Rob-fx2dw 3 ай бұрын
@@alecdurbaville6355 before I answer then where are they different ? They do the same job for start.
@LboroWick
@LboroWick 4 жыл бұрын
I’m still not convinced
@TruthsSake
@TruthsSake 4 жыл бұрын
Dr. Lacy Hunt debunked MMT
@alecalm2wh683
@alecalm2wh683 4 жыл бұрын
@@TruthsSake lacy hunt is the don
@Rob-fx2dw
@Rob-fx2dw 4 жыл бұрын
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
@missj.4760 3 жыл бұрын
@@alecalm2wh683 Me neither.
@widehotep9257
@widehotep9257 3 жыл бұрын
@@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.
@orihoola
@orihoola 8 ай бұрын
Valiant effort at explaining MMT.
@rongants6082
@rongants6082 4 жыл бұрын
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
@smc340uni6 Жыл бұрын
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.
@dchat15
@dchat15 4 жыл бұрын
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.
@KeithWhittingham
@KeithWhittingham 2 жыл бұрын
There is so much wrong with MMT that I don't know where to begin. Perhaps here @17:58 1/ "When unemployment is higher, the government cuts taxes or spends more" The opposite is then held to be... 2/ "When inflation rises then raise taxes and/or spend less" In 2/ when inflation rises so much that is a problem then who is suffering? Not the rich: paying $1 or $2 for a loaf of bread is hardly noticeable, it's the poor. Using MMT logic we have to raise working class taxes (remember those are the ones you cut taxes for in 1/) and spend less which again hits the working class much harder than the elites. This is not new, in Germany just after WWI the rest of Europe tried to sort out the economy the 'normal' way but not Germany. They followed MMT although they didn't have a name for it and everything went great. They thought that they had discovered a new economics and Germany prospered as other countries looked on jealously as they slogged away in austerity. It all went great, until it didn't. MMT has been (re-)discovered before every hyperinflation event in modern history.
@Rob-fx2dw
@Rob-fx2dw 2 жыл бұрын
Yes. Look at some of the other basic fallacies of MMT. 1. Believing taxes drive the value and acceptance of money when the facts are taxes did nothing to prevent the absolute loss of the money in all of the instances of countries where massive inflation made the money worthless. Even their own governments dumped the official currency. 2. That the national debt does not have to be paid back. The reality is the Treasury securities ( T bond and notes) which are the entire components of the national debt actually always mature in time and have to be paid out when that happens with interest. If Treasury securities did not mature then nobody would have bought them initially. 3. That the government is the issuer of the money and must issue it before it can be taxed back. False because government do not create or issue currency. They borrow or tax to get it. False because most of the money in the fiat money system we live with today is created by fiat credit lending by private banks and their lending funds purchases and incomes from which taxes such as VAT, sales taxes and income taxes are collected. The rest is created by the central government and lent to the government. False again because the only creators of currency in the system are the Central banks who lend to the government and Private banks who lend to anyone they think is appropriate and a good risk of paying it back. 4. That government is an 'issuer' and not a 'user' of the money. False because taxes are spent by government every year as funding for their national budget.
@KeithWhittingham
@KeithWhittingham 2 жыл бұрын
@@Rob-fx2dw Stephanie Kelton sneaks off and exits stage left...
@davidgarth4285
@davidgarth4285 4 жыл бұрын
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
@davidgarth4285 4 жыл бұрын
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
@davidgarth4285 4 жыл бұрын
One other thing. Inheritance tax. 0% 0-50k 5% 50k-100k 10% 100k-200k 25% 200k-500k 50% 500k-£1m 95% £1m+
@a2comuk
@a2comuk 4 жыл бұрын
@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
@jznemovitosti7229 4 жыл бұрын
@@a2comuk exactly
@Panther-
@Panther- 4 жыл бұрын
@@davidgarth4285 But what is the point of taxing people when they can print as much as they want ?
@PeterWaldron-j8y
@PeterWaldron-j8y 10 ай бұрын
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
@PianoCat-Music
@PianoCat-Music 11 ай бұрын
surprise, after the world printed tons of money, nearly every country has inflation never seen before. Well done
@nthperson
@nthperson 2 жыл бұрын
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.
@nachannachle2706
@nachannachle2706 4 жыл бұрын
Regardless of what people say and rant about, MMT is the only way out of this late stage crony capitalism where loopholes in taxation for both rich and middle-classes abound. The USA is launching stage 1 of MMT: printing until the threat of inflation is round the corner. There is nothing to fear from this, given that we have been in low inflation environments (low wages, low-cost services, low manufacturing costs, etc) for over a decade. The question that remains is: will the USA follow this with stage 2: launching a government-guarantee job scheme? This is what MMT advocates for at its core to help maintain inflation at bay. So long as citizens are working and paying enough taxes, the country will remain solvent to itself (i.e a healthy GDP-to-Debt ratio). Japan has rolled out its own version of the government-guaranteed job scheme, and this probably why the country is still able to function normally with a debt as high as 200+% of GDP. Bottom line: Staying solvent is more important than paying your debt in full. People who are into Real Estate/Property investment are the poster-children of this narrative. Don't own assets in full: leverage your ownership to acquire more assets and live off the rental income generated. If governments were run like this, our world would not be short on booming small businesses/returning customers/educated workforce/thriving schools/healthy individuals. Time to get rid of these Classicist (Keynesian) and Neo-liberal (Austrian) ideologies: this is 21st century.
@wisebear2919
@wisebear2919 3 жыл бұрын
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
@wisebear2919 3 жыл бұрын
@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!!
@apacheattackhelicopter8185
@apacheattackhelicopter8185 4 жыл бұрын
I remember one of MMT proponents said that exports are a hindrance while imports are an advantage. That closed the debate for me.
@Stefanitza27
@Stefanitza27 4 жыл бұрын
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
@apacheattackhelicopter8185 4 жыл бұрын
@@Stefanitza27 And why do you think other countries will give you real goods in exchange for electronic digits?
@Stefanitza27
@Stefanitza27 4 жыл бұрын
Apache Attack Helicopter Because they do? Have you not noticed?
@apacheattackhelicopter8185
@apacheattackhelicopter8185 4 жыл бұрын
@@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?
@cklinger500
@cklinger500 4 жыл бұрын
Jesus Also exports decrease unemployment right?
@FlywheelAcademy
@FlywheelAcademy 4 жыл бұрын
Awesome analysis!
@Pensioncraft
@Pensioncraft 4 жыл бұрын
Thank you
@gregwilliams2746
@gregwilliams2746 11 ай бұрын
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.
@MrMeneillos
@MrMeneillos 3 жыл бұрын
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
@katiecannon8186 Жыл бұрын
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
@garysymons3930
@garysymons3930 3 жыл бұрын
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 .
@427vot
@427vot 8 ай бұрын
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.
@SneakySteevy
@SneakySteevy 2 жыл бұрын
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.
@philc4661
@philc4661 4 жыл бұрын
QE of 10 years ago gave money to the banks and corporations... The extra cash never reached the working man, it just ensured they didn't lose their job and resulted in a load of new billionaires. The theory is that when governments print money, you get inflation but also devaluation. With QE, neither of these happened because all the extra cash went to the billionaires. Contrast that to today, the UK government is borrowing billions to pay the wages of working people, encouraging their employer to stay in business and wait for the recovery. This seems to be MMT in practice as the Bank of England will support ANY government borrowing for the Covid pandemic. We don't believe this will cause devaluation because most countries are doing something similar. What we don't know is whether we will get inflation when the V shaped recovery occurs, assuming a Covid vaccination is found before the government/Bank of England loses its nerve. If there's no vaccination, then we have bigger problems! I suspect inflation is on its way because we can't remove the extra cash in circulation as quickly as we injected it.
@advisorsandy2068
@advisorsandy2068 Жыл бұрын
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.
@cutestbear3327
@cutestbear3327 3 жыл бұрын
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
@belegarironhammer3200 Жыл бұрын
Very nicely put! 😁👍
@mnh31113ah
@mnh31113ah Жыл бұрын
Would be interesting to revisit this top given what has happened since it was published.
@douglasjarnagan3835
@douglasjarnagan3835 3 жыл бұрын
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.
@tomooo2637
@tomooo2637 Жыл бұрын
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.
@KN-ml2gp
@KN-ml2gp 4 жыл бұрын
Amazing video, many thanks!
@Pensioncraft
@Pensioncraft 4 жыл бұрын
Glad you liked it!
@mynameisosca
@mynameisosca 4 жыл бұрын
Great vid, huge fan
@Pensioncraft
@Pensioncraft 4 жыл бұрын
Hi Oscar, thank you! Ramin.
@pawelglinka5630
@pawelglinka5630 4 жыл бұрын
To me it all comes down to allocation of scarce resources, money is just a mean through which the redistribution of resources occur. If gvmt can print unlimited amounts of money means it own all resources and directs their use. How is that different to central planning idk, but certainly have been tried in practise so it is all not that modern.
@dgw7748
@dgw7748 4 жыл бұрын
Event if MMT was valid, in the US, the MMT control mechanisms (adjustments to taxes and spending) belong to congress. Congress will never delegate this responsibility and history is clear they do not have the discipline (recall Budget sequestration) to manage these controls effectively. Imagine the good times are rolling and inflation begins to rise. Is congress going to end the party by raising taxes and spending less? There are too many countervailing political pressures to keep the good times rolling. And low inflation remedies? Well, current ideologies control the conversation around cutting taxes or spending more and will no doubt co-opt the MMT to their own ends. If valid, MMT might be workable under a technocratic government but in the real world of politics not so much. Congress would have to cede control to an analogous entity to the Fed for it to have a chance.
@MrKongatthegates
@MrKongatthegates 4 жыл бұрын
The fed does drastic things without ever asking congress
@jank3441
@jank3441 4 жыл бұрын
Joshua Lee and thus the solution is letting them do even more? Sounds about right
@rustylidrazzah5170
@rustylidrazzah5170 Ай бұрын
What happens to MMT if the economy doesn’t continue to expand indefinitely? Can all nations apply MMT, or does it only work for currencies with some kind of hegemony? How does it account for money creation by private banks through issuing loans? (Steve Keen) It seems the theory is extremely reliant on accurate GDP, inflation, and government debt calculations. If those are not accurate how does that effect the theory?
@ThomasVWorm
@ThomasVWorm 7 күн бұрын
Nothing happens to MMT. MMT is comparable to a blueprint, which describes your car, its parts, and how they make your car go. It does not become invalid, when you stop your car and park it.
@wisebear2919
@wisebear2919 3 жыл бұрын
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
@maurolongone3190 3 жыл бұрын
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)
@Akshay-qt5qi
@Akshay-qt5qi 4 жыл бұрын
I wonder if the way MMT is utilized in US is responsible for equities going ballistic in last 6 months. Take finest company Apple. How do you justify its 2t MCap. It got 2x in less than 2 year! Also, why is asset inflation not counted as a part of regular CPI inflation is beyond my understanding. You bet there is inflation. Just that it is in asset class and not yet getting reflected in normal day to day products ‘YET’. :)
@chiichan3774
@chiichan3774 4 жыл бұрын
Buying shares is not counted in CPI because you don't _need_ to buy shares to live. You need food/rent/utilities etc. These are goods and services - and shares (and other financial assets) are not goods and services.
@Akshay-qt5qi
@Akshay-qt5qi 4 жыл бұрын
@@chiichan3774 thanks chio chan. Makes sense.
@rautanen81
@rautanen81 3 жыл бұрын
Great video!
@Pensioncraft
@Pensioncraft 3 жыл бұрын
Glad you enjoyed it @Jeve Rautanen
@johnyjsl9219
@johnyjsl9219 4 жыл бұрын
Thanks I needed this to understand what is going on.
@Pensioncraft
@Pensioncraft 4 жыл бұрын
Glad it helped
@pedroalmeidasantos8918
@pedroalmeidasantos8918 4 жыл бұрын
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
@katiecannon8186 Жыл бұрын
Banks largely determine the price of real estate because most real estate is paid for by bank credit.
@Charles-pf7zy
@Charles-pf7zy 11 ай бұрын
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
@katiecannon8186 11 ай бұрын
@@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
@Charles-pf7zy 11 ай бұрын
​@@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
@katiecannon8186 11 ай бұрын
@@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
@32mlucas
@32mlucas 4 жыл бұрын
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.
@neilhollands2750
@neilhollands2750 5 ай бұрын
MMT sounds like an idea that could work in a closed system… but how does the idea work in a reality of global trade?
@Pensioncraft
@Pensioncraft 5 ай бұрын
Hi @neilhollands2750 I don't know of any MMT run government as I expect that it would be difficult to sell to the electorate. Perhaps it's just been branded incorrectly in the past? Thanks, Ramin.
@Rob-fx2dw
@Rob-fx2dw 3 ай бұрын
@@Pensioncraft The trouble for MMT in getting accepted is that there are enough people with an above the IQ of 100 who understand is it is rubbish.
@alexobrien3890
@alexobrien3890 2 ай бұрын
@@Rob-fx2dw Read the book The Deficit Myth it's quite and easy read considering it's about economics. She wrote it in language for us regular folks...though there are still some weighty parts. It extremely enlightening.
@Rob-fx2dw
@Rob-fx2dw 2 ай бұрын
@@alexobrien3890 Enlightning ? Her idiotic claims are just the opposite. They are based on a number of fallacies. Example: - Denying that most of the sovereign money in the economy is created as credit by private banks and and all of the other is created by the central bank as credit and once created and spent every unit of money is indistinguishable from each other. Another example of Kelton's faulty theory is her claim that the national debt does not have to be paid back and is not a burden for the future. This is again false because it ignores the fact that creation of new money for government to spend is done by the government treasury department selling treasury securities to the central bank in exchange for newly crested money. Those treasury securities eventually mature an the money has to be paid back from taxes collected from the private sector.
@justinparkinson2679
@justinparkinson2679 3 жыл бұрын
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?
@gerry2345
@gerry2345 4 жыл бұрын
I like this vid. Good insight.
@Pensioncraft
@Pensioncraft 4 жыл бұрын
Thank you GerrysPlace
@Tuppoo94
@Tuppoo94 3 жыл бұрын
11:29 The graph measures inflation with the CPI. I'm not sure if this is the right approach to measuring inflation in this case. There has been inflation, it has just gone to capital goods like stocks, which aren't included in the CPI. For example, the S&P500 has risen over 200% in the past 10 years. I don't think the price of Coca-Cola has doubled during the same period. At the same time, real wages haven't grown much.
@augmenautus
@augmenautus Жыл бұрын
​@Sundar Sarangan MMT is a terrible economic theory. It says countries should print money to pay for things they can't afford, and then when inflation rises, it says, "Oh wait, nvm spend less." No shit 😑
@DaveTube81
@DaveTube81 4 жыл бұрын
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
@Tuppoo94 3 жыл бұрын
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
@DaveTube81 3 жыл бұрын
@@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
@PabloTBrave
@PabloTBrave 11 ай бұрын
Its a massive gamble with extreme risk though, lets just assume we try MMT and do massive spending, but we discover MMT is wrong( no one has proved it can work so its hightly possible ) ,we now have massive debt many rimes higher than we have ever had before that will destroy future generations and the entire country .
@rufanuf1
@rufanuf1 3 жыл бұрын
I'm dissappointed you didn't voice a final opinion? In my view MMT is a nonsense that is storing up a massive problem for the future,
@gltate2833
@gltate2833 3 жыл бұрын
Here is a real simple view of MMT. MMT enables BIG, BLOATED government with NO accountability and centralized planning to boot. It’s not a theory, it has failed repeatedly under the guise of '”communism”. The US Constitution “as written” and intended put the people first and wanted the government as restricted as possible. BAD, BAD idea...
@widehotep9257
@widehotep9257 3 жыл бұрын
After studying money creation for twelve years, my conclusion is that ALL economics is a disinformation brainwashing trick used to confuse us about how money is truly created out of thin air by private banks. This means you have been duped by the Chicago School, the Keynesians, The Austrians, MMT, and every college professor and teacher you've ever met.
@Charles-pf7zy
@Charles-pf7zy 2 жыл бұрын
Inflation isn’t when there’s more money. It’s when there’s more money fighting for the same resources. It’s like worrying about your personal spending and consumer habits but you actually only work 20 hours a week. You don’t cut spending, you get to work. And MMT gets people to that otherwise can’t find work to *do* work
@rufanuf1
@rufanuf1 2 жыл бұрын
@@Charles-pf7zy Not sure what point your trying to make? In simple terms the creation of more monetary units is theft from those who already own ones they worked for.
@Charles-pf7zy
@Charles-pf7zy 2 жыл бұрын
@@rufanuf1 mining gold isn’t theft towards people that own gold. Currency is a tool, over-inflation has to be avoided for practical reasons, and like I said printing more money doesn’t necessarily lead to inflation.. printing money to be used to buy limited resources leads to inflation, which is mitigated by getting people to work and creating more resources. And a little inflation is actually healthy. people say taxation is theft, now they say creating money is theft. Currency isn’t a house, or your family heirlooms
@DrBenVincent
@DrBenVincent 4 жыл бұрын
Great video
@jasondaniels8962
@jasondaniels8962 2 жыл бұрын
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
@ahmedalsharman
@ahmedalsharman 4 жыл бұрын
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
@gerrykelly-zk6lf 4 жыл бұрын
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
@mikemike5973 4 жыл бұрын
Some etfs hold vaults in Switzerland which would potentially put it out of reach of the UK government
@wild3812
@wild3812 4 жыл бұрын
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
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