What We Get Wrong About Money | Steven Hail

[@RieCherie]

American listener here. Yes Rachel, it is a lot to digest. I believe I heard the concept before that govs just make more $$, but in this interview it really landed. Also how much political air has been used up, arguing about the deficit in my lifetime. I appreciate the wide scope of topics presented on this channel. This one stretched my listening skills, and don't ask me to repeat any of that terminology, but in all I found it valuable. TY

[@alastairleith8612]

there's a pile of online resources devoted to educating us all about MMT. all free and all made by people dedicated to shattering the neoliberal myths and neoclassical falsehoods which frame mainstream economics today.

[@dannywindham3295]

As an advocate for MMT for the past 10 years. I can only say Rachel thank you very much,

[@antonyjh1234]

Why are you an advocate for it?

[@dannywindham3295]

@@antonyjh1234 Better question why are you anti m m t and I assume you are

[@antonyjh1234]

Well that's a subjective opinion that it's a better question, one I disagree with, and I asked you first, you can see my post on the matter in the main comment section if you need something to bounce off.@@dannywindham3295

[@koltoncrane3099]

Danny I’m a huge advocate of MMT. I think it’ll work for a few years. But professor kelton an advisor to Bernie sanders warns when inflation starts you must raises taxes and decrease spending to fight inflation. Otherwise you legitimately can have a Weimar Germany situation. I support MMT cause the more I think about it the more I realize politicians buy votes. This means MMT will always fail. The government won’t decrease spending and increase taxes a lot when there’s inflation especially if the inflation is supply side related. It’s so dumb the description said that inflation is supply side related nothing to do with deficits. Obviously supply side matters but think about it. If MMT happened tomorrow and everyone woke up with a billion dollars showing in their bank account it’s pretty hard to see how that wouldn’t cause lambos to go way way up in price. Abraham Lincoln did MMT and they killed him for it in my view since bankers had the most to gain if Lincoln died. They wanted to charge him 27% interest to fund the war. If the U.S. kept printing money out of thin air like MMT or Lincoln did bankers would have struggled especially European bankers making tons of money in America. Remember some Europeans own part of the federal reserve today as our central bank is privately owned paying a 6% dividend. So MMT possibly could close the federal reserve which is great but ultimately it’ll create a Weimar Germany situation especially as third world countries say screw the wests inflation and start using gold or their own forms of money to settle trade

[@koltoncrane3099]

Danny I’m a huge advocate of MMT. I think it’ll work for a few years. But professor kelton an advisor to Bernie sanders warns when inflation starts you must raises taxes and decrease spending to fight inflation. Otherwise you legitimately can have a Weimar Germany situation. I support MMT cause the more I think about it the more I realize politicians buy votes. This means MMT will always fail. The government won’t decrease spending and increase taxes a lot when there’s inflation especially if the inflation is supply side related. It’s so dumb the description said that inflation is supply side related nothing to do with deficits. Obviously supply side matters but think about it. If MMT happened tomorrow and everyone woke up with a billion dollars showing in their bank account it’s pretty hard to see how that wouldn’t cause lambos to go way way up in price. Abraham Lincoln did MMT and they killed him for it in my view since bankers had the most to gain if Lincoln died. They wanted to charge him 27% interest to fund the war. If the U.S. kept printing money out of thin air like MMT or Lincoln did bankers would have struggled especially European bankers making tons of money in America. Remember some Europeans own part of the federal reserve today as our central bank is privately owned paying a 6% dividend. So MMT possibly could close the federal reserve which is great but ultimately it’ll create a Weimar Germany situation especially as third world countries say screw the wests inflation and start using gold or their own forms of money to settle trade @koltoncrane3099 0 seconds ago Yes if you take a college Econ class they’ll indoctrinate you to believe in Keynesian economics where if there’s a slow down just have the government step in or the central bank and spend money. Obviously the nations debt isn’t like household debt. But lots of studies have looked at countries with debt to gdp ratios over 100%. Everyone defaults eventually. Even the U.S. defaulted in the past. They pay the debt but do they really? Look at inflation before ww2 and prices in the 1950s. Food prices went up like 100% after ww2 in five years and didn’t go back down. Gold priced in the U.S. was set at $35 an ounce, but the U.S. sent gold to Saudi Arabia and then Saudi Arabia sold that gold at $70 an ounce. Other nations globally set the gold at a different price than the U.S. Just because the U.S. set the dollar to gold doesn’t make it so. Likewise just because you think the treasury can print money like Abraham Lincoln did and spend huge amounts of new money just cause ya can doesn’t mean you can do it forever. Nations like Weimar Germany literally destroyed their currency doing MMT essentially as they had to print money to pay back ww1 reparations. The west destroyed Germany by crashing the currency to pay for reparations and that basically caused ww2. So maybe MMT can work sometimes but other times Weimar Germany happens

[@pluribus]

"Energy is the economy. Money is a call on energy. Debt is a lien on future energy." - often credited to Art Berman

[@marcariotto1709]

That bit of truth that so many are ignorant of is the cause of so many troubles.

[@life42theuniverse]

7/8 of Energy is Oil. Global supply peaked 2012.

[@mr.makeit4037]

​@@marcariotto1709well said

[@mr.makeit4037]

Bravo. So many do not see this. Finally someone who does!

[@koltoncrane3099]

Ya but money used to be formed as miners took metal to mints. Now since 1971 like Robert kiyosaki has pushed banks create new currency as new debt is made. New currency is made out of thin air as new mortgages are made.

[@MrPaddy924]

I can't say I understood all of that, but the sense I got is that the economic system and MMT is, to a great extent, smoke and mirrors and does not work in the way that most people think it does. Budgets do not necessarily have to be reconciled over the short term and national debt is not nearly as compelling as household debt. And YET, politicians still use metaphors to discuss the economy that are based upon household budgets. I think I'm gonna have to listen to this a few times before I can say I've understood it all. Interesting stuff.

[@koltoncrane3099]

Yes if you take a college Econ class they’ll indoctrinate you to believe in Keynesian economics where if there’s a slow down just have the government step in or the central bank and spend money. Obviously the nations debt isn’t like household debt. But lots of studies have looked at countries with debt to gdp ratios over 100%. Everyone defaults eventually. Even the U.S. defaulted in the past. They pay the debt but do they really? Look at inflation before ww2 and prices in the 1950s. Food prices went up like 100% after ww2 in five years and didn’t go back down. Gold priced in the U.S. was set at $35 an ounce, but the U.S. sent gold to Saudi Arabia and then Saudi Arabia sold that gold at $70 an ounce. Other nations globally set the gold at a different price than the U.S. Just because the U.S. set the dollar to gold doesn’t make it so. Likewise just because you think the treasury can print money like Abraham Lincoln did and spend huge amounts of new money just cause ya can doesn’t mean you can do it forever. Nations like Weimar Germany literally destroyed their currency doing MMT essentially as they had to print money to pay back ww1 reparations. The west destroyed Germany by crashing the currency to pay for reparations and that basically caused ww2. So maybe MMT can work sometimes but other times Weimar Germany happens.

[@5353Jumper]

Anyone who has ever worked in government projects and budgets will know this common occurrence: quite often, there are obvious improvement projects where spending double this year will lead to spending half the amount every year afterward. Or spending double one year will lead to a massive increase in revenues every year afterward. But these projects almost never get done, because no one wants to authorize spending more any particular year, no matter the justification. If we all understood MMT in self currency countries, we could overcome this obstruction and actually make some efficiency improvements. But there is too much resistance for this to ever happen.

[@koltoncrane3099]

Why is there resistance though? Could it be because the military or any government agency wants to maintain the current level of spending and slowly increase it yearly? You never hear of NATO or the military saying okay we can cut funding to half our bases or do without new equipment for a while. It’d be so easier to have Europe pay their fair share and pay cost to nato. That’d save trillions as the U.S. has spent trillions to Europe which gives free college and health care to Europeans but not Americans. We socialize the heck out of Wall Street and Europe or the military. Americans could easily have free college if Europe paid cost to nato. But it’s all about indoctrination. Soldiers say I fought for your freedom in Iraq or wherever. It’s like some goat herder over there didn’t offend me. The politicians in the U.S. are way more likely to reduce my freedom than some goat herder I’ve never seen. It’s so funny. I had a few relatives serve over there and they’re like ya it’s a waste of time and money so I decided not to join the military. Communism was a much easier sell I think for the endless war we had for decades.

[@aureliusp1330]

The only issue I have with the people who promote MMT is their framing of inflation. Inflation does not necessarily happen when there's more money in circulation than the economy can "absorb", it can, but it isn't a given. Inflation happens when sellers choose to raise prices; there are many reasons why sellers may choose to do just that, or are forced to, but that's what causes inflation. Inflation can be prevented through price controls, there isn't really any reason why it must be curtailed through the removal of money from the economy. WW2 proves this; Nixon's Executive Order 11615 proves this. Removing money from circulation is just one tool, but not, as all MMT promoters imply, the only tool.

[@JerimiahHam797]

So true, it is is almost always skipped over in these high-level intro discussions. Even though we measure inflation as a whole, in reality there are usually small sectors driving it, and there is a whole array of things that can be done to address pricing pressure in those specific areas.

[@aureliusp1330]

@@antonyjh1234 No. Inflation is when there's a general increase in prices period. Literally all of last year, CEOs were saying, in plain English, in shareholder meetings, that they have been raising prices far in excess of a rise in their costs; sometimes even when their costs actually decreased.

[@BenHuttash]

Doesn’t wage stagnation also play a role here. If workers got regular cost of living adjustments our buying power wouldn’t be diminished during higher inflation periods.

[@175griffin]

​@@BenHuttash The problem with responding to inflation by increasing wages is positive feedback. If demand doesn't drop when prices go up, then prices continue to go up. On the other hand, money could be removed from circulation to increase purchasing power indirectly or price fixing can target specific sectors which become too greedy. Cost of living adjustments certainly should be made as a small amount of inflation is desirable, at least according to classical economics, but it's not an effective tool to combat inflation.

[@alastairleith8612]

it's not easy to cover the entirety of monetary policy in all the important details in one introductory lecture! non the less I think Steven is an excellent educator in MMT (and ecological economics, I hope Rachel gets Steven back to talk about how we can integrate MMT and ecological economic understandings and insights) and get this out there.

[@kk-xj5oz]

What people get wrong is believing economy and politics is seperat. This is wrong economy is purely political. The working class is paying for both the existence of the rich and the poor who can't work.

[@voidisyinyangvoidisyinyang885]

sure - the first thing is force people off their self-reliant land (indigenous living for thousands of years). Now you have a free labor pool for slave labor and if they don't work you can blame them for being lazy. It's a Win-Win!!! Then with the remaining land you have a speculative source of UNearned income since land is a monopoly - make any capital investments be tax deductible so you can just subtract any supply costs for maintenance and construction - like the interest payments on bank loans, etc. Wow NOW you have an awesome source of UNearned "rents"!!! Sit back, rack in the UNearned income and then castigate the poor even more for being lazy, not being able to afford their rent, etc. Then if the poor try to raise taxes on the rich you just move all assets to another country and move the capital investments abroad based on even more tax deductions via "free trade" agreements. Do this until the planet is destroyed and in the meanwhile build rockets and bunkers to try survive the destruction of life on Earth. Of course you'll need a private military to fund this expansionary policy but that's funded by the debt spending also - with a regressive tax on the poor. So 50% of their income tax will go to the military spending.

[@TennesseeJed]

​Truth! @voidisyinyangvoidisyinyang885

[@lancechapman3070]

Political Economy

[@TennesseeJed]

Neo-feudalism.

[@5353Jumper]

Contrary to intuition - economic models (for example Capitalism, Communism, Socialism) have nearly zero effect on citizen prosperity. Despite the propaganda the conflicts of the world are not about Capitalism vs Communism vs Socialism. These are fairly irrelevant to how a nation is run and how money flows, other than a nation waiving a loyal flag of one of these economic theories is often used to create pockets of financial inefficiency where corruption and undue power is congregated. The only real thing that influences the general citizen prosperity is the quality of citizen representation in government. The global conflict is really Dictatorship vs Democracy. Countries with a benevolent Democratically elected leadership have growing citizen prosperity. Countries under Dictatorship has failing citizen prosperity. Countries that used to be Democratic but it is falling to corruption have slipping citizen prosperity. Capitalism fans will say Socialism leads to Dictatorship. Socialism fans will say Capitalism leads to Dictatorship. BOTH ARE CORRECT. Because misapplication and undue loyalty to one or the other leads to corruption. Or if things are going well, then citizen apathy leads to corruption. The only thing that improves general citizen prosperity is achieving a benevolent representation in government through Democratically elected representatives, with plenty of day to day citizen involvement (lobby and journalism) in the decision making process of the representatives. Once a nation has that, it tends to form a mixed economy with different models applied to different industries depending on the practical physical realities of each industry. Highly regulated industry that distributes the wealth equitably amongst citizens.

[@XxKnuckleSOverlorDxX]

Great talk. I wish he would have spoken about the recent idea of the BRICS to create a new currency pegged to a basked of real resources. Whether that reduces soverignty from the other BRICS countries in relation to China, and if limiting currency by real resources goes completely against the ideas in MMT

[@johndavis2399]

Great information and analyses from Mr. Hail. The statement that governments create money simply by passing legislation, and that collected taxes disappear in the "electronic dust bin"......appears to overlook the fact that bonds are issued to cover the difference between authorized spending and collected taxes. No?

[@trixn4285]

In the current monetary system bonds are issued not to "fund" government spending (although it is usually depicted like that) but to help the central bank maintain its interest rate target. When the government spends money it increases the central bank reserves the banks hold at the central bank (The government doesn't spend private bank money, it always spends central bank reserves). Everything else equal this would lead to an increase of reserves which drives the interest rate down. To prevent this, the government first issues bonds which the banks buy effectively replacing reserves with another interest bearing asset which is the bond. This leads to a drain of reserves which the government can then spend in an interest rate neutral way. Bonds are to "sterilize" spending by maintaining the current amount of reserves in the banking system. The central bank can now buy or sell those government bonds to achieve its interest rate target (this is called open market operations). The notion that the government "borrows" money from the private sector in order to spend it does not apply. It sells government bonds to the banks at the primary market (usually organized as an auction that only a selected group of banks is allowed to participate in called "primary dealers"). It is up to be banks if they sell it to private investors afterwards. It's a little bit technical but the point is that the notion that the government finances itself at the private financial markets is just completely wrong. It just swaps reserves (coming from prior spending) with bonds and then spends the reserves. The central bank can then buy or sell those bonds whenever it needs to to control the interest rate. If you consolidate the balance sheets of the central bank and the treasury it gets perfectly clear that the government not only doesn't borrow from the private sector but in fact CAN NOT borrow from the private sector as it is the issuer of what it wants to borrow.

[@truthseeker5911]

Listen to what Steven says at 18.30, the issuing of bonds has nothing to do with financing spending, it is a monetary procedure.

[@koltoncrane3099]

Yes bonds cover the difference but the government rolls over the bonds. They take out a new credit card to pay off the old credit card. But because the federal reserve act created a private central bank it pays Wall Street 6%dividends and a 90% franchise tax to the treasury.

[@joehopfield]

At least in the US, the demand for low inflation was an intentional result of defunding of pension systems and impoverishment of retired workers. Needed a question about government capture by concentrated wealth in the US our "democracy" is owned. - hard to see a peaceful transition.

[@sjoerd1239]

The government must manage resources, meaning controlling what is spent on specific resources. Entities, especially rich entities, may not spend their money as they wish, because that would upset the balance of resources. Theoretically, the government cannot run out of money. However, the government will run into difficulties if it badly mismanages resources and prints too much money. If more resources are used in one area, then resources being used elsewhere need to be cut back. Taxes are a method of taking money out of the economy and wealth redistribution. It requires global cooperation, to tackle global problems and it means more regulation, not less.

[@marcariotto1709]

"Our economy as we know it is a wholly owned subsidiary of the biosphere". Brilliantly put! One of, if not the best, short phrasings to set the table before serving up some ecology. I don't know if these are Steven's own words, but regardless it needs to be turned into a childrens book and taught as the most important lesson from elementary school onward! It really can't be overstated and is absolutely true, even from a barter or subsistence living viewpoint.

[@715andy715]

Something that I've been thinking about for a while and it reconciles with what was being said: With how country's create money by spending and how private banks create money through loans, wouldn't that mean that money act as a kind of future human-labour IOU?

[@tomcop668]

MMT includes a domestic policy of a Job Guarantee in their sphere. I would like them to also include a policy of Balanced Trade among nations.

[@alastairleith8612]

this is a _tour de force_ in MMT basics and fundamental concepts to the theory. (A scientific theory is not simply a hypothesis, I,e. Theory of Gravity, Special Theory of Relativity, General Theory of Relativity. Colour Theory.)

[@pluribus]

"If the government's going to run a surplus, then somebody else has to run a deficit because in every monetary system, this is always true. Deficits and surpluses cancel out, just as for every lender there has to be a borrower. For every surplus in the monetary system, there has to be a deficit. If you're not talking about countries that have large persistent balance of payments surpluses like Norway, where the rest of the world is in deficit on your monetary system, then that means if the private sector wants to habitually be in surplus to net save, then the only way to facilitate that is for governments to run deficits. And that will happen in the future as in the past, and that's not a problem because, of course, the government issues the currency, and what the government needs is not your money. The government needs you to need its money so that it can spend its money into circulation. So if you want to set up a monetary system, and this was well understood in Victorian England as they conquered country after country in Africa and introduced their currency into these countries, if you, for example, are invading Ghana and you want people in Ghana to come and work for you without actually enslaving them, then what you do is you introduce a Hut tax, a tax liability. You say to people, 'If you don't want us to demolish your hut, lock you in prison, you've got to pay us a tax. You're going to have to pay us a tax using these coins with Queen Victoria's head on.' Well, you don't have any coins with Queen Victoria's head on. We'll come and work for us. We'll pay you using some coins with Queen Victoria's head on, and you can pay some of them back to us in taxation. Or if you don't want to work for us, sell some goods or services to other people who do work for us, and you'll get the currency by doing that, and then you'll be able to pay your taxes. That is how you introduce a currency. You start off by imposing a tax liability on people with the power of the state behind you that creates a demand for your currency, and you can then spend the currency into circulation. If you spend more into circulation than you tax out, which is what normally happens, well, you'll be running a deficit. You can either leave the cash in the system, or if you want to, for reasons to do with interest rate management, which we're not going to be here all night, so let's not worry about those reasons, if you want to, you can auction some government bonds, which will give people a nice rate of interest that wasn't necessary to pay for your spending. You're the currency issuer, and it's actually to do with monetary policy and interest rate management. It's not really to do with financing the government." this ^

[@JerimiahHam797]

Understanding what bonds are is so important. The government doesn’t sell them so that they can then use that money to spend. It sells bonds and then locks those dollars away so that they CAN’T be spent. The interest is actually a payment made to the bond holder in exchange for effectively removing the bond money from the money supply. This process used to be really important when we were on a gold standard. But now, since we have fiat money, it doesn’t really matter. It is only done because they haven’t changed the rules that require it.

[@antonyjh1234]

Can you explain how or where the govt is locking money away?@@JerimiahHam797

[@marcariotto1709]

Thank you both for your comments. These concepts, although quite simple, are so contrary to what average people know and live by that they can be rather tricky to explain.

[@trixn4285]

@@JerimiahHam797 Historically I agree they did it to protect the peg against gold. But today it serves as a way to maintain a positive interest rate. If the government spent reserves without first draining reserves it would drive the interest rate down to zero (or down to whatever support rate the CB pays on reserves if it does so). But there would be other ways to maintain a positive interest rate (not debating whether or not this is necessary to begin with). Interest on bonds is basic income for people that already have money as Warren always frames it.

[@ken.nethandthepinch7090]

Damn, that was good. I have listened to it twice now. A question, can a country ( economy ) go it alone with mmt or would it not be possible unless a group, say the Commonwealth or just Aukus changed to a mmt policy, and then, how would other, less wealthy, or dollar dependent countries be affected??

[@alastairleith8612]

MMT is not a policy prescription. It's a lens for understanding modern monetary, or functional money at the operational level. There's only one policy prescription that is usually included in the MMT discussion, and that is the Job Guaranty. This seems to be humanitarian policy, but it's actually in the first instance a macroeconomic policy, a counter-cyclical stabiliser. People are often made unemployed by business owners when their profits fall, non-frictional unemployment in technical jargon. The unemployed are made to suffer for the failures of a boom-bust economic cycle, often driven to boom and bust with speculative investment in tech stocks or property bubbles (literal Ponzi schemes in many cases, unrealistic expectations in the rest of cases). Since the unemployed receive almost no income, even where unemployment benefits exist, and this means the domestic economy slumps as many are made unemployed. It also makes the unemployed endure all sorts of psychological and financial burdens, making them less likely to reenter employment when the economy "recovers". The JG needs to be paid for at the federal level, they (we) can afford it easily since they issue the currency (on our behalf, in "Full faith and credit". Typically JG advocates like me say it should be operated and organised at the level of local communities, and the communities decide where they want to create positions for JG opportunities to offer to the unemployed. When you say dollar dependent countries, what do you mean? there's no gold standard anymore, and very few nations peg their currency to the Greenback. Also if a country does have what some MMT academics call monetary sovereignty, simply meaning they spend and tax in their own currency and have no major debt in foreign denominated currency. Such countries can spend more or less and this might deflate or inflate their currency accordingly. Using this knowledge wisely they may choose to increase spending into the grassroots of the economy though universal public services in order to support people enduring poverty should this devalue the currency, it doesn't necessarily but if it does, that creates opportunities for business who export their products or services to other countries. The citizens of Portugal, Italy, Greece and Spain all would have benefit enormously from their national governments spending into benefits for the under- and un- employed (a large portion of their working age adults) and universal public services to stimulate the local economy and support people while things were extremely bad and many adults were emigrating to other parts of the world. The devalued currency would hurt businesses wanting to import equipment, but it would make workers more affordable in comparison. Devaluation of their currencies (if they still had a national currency, like UK did while they were part of the EU and I think Scandinavian countries still have in the Crona) would also have made for greater export opportunities, adding a new potential for their commercial and agricultural sectors, and the foreign income is still good and actually pushes the exchange rates back the other way. :-) Swings and roundabouts.

[@ken.nethandthepinch7090]

@@alastairleith8612 yep, I get what you mean by mmt not being a policy, and I love the job guarantee along with basic services guarantee/share...and I'm hoping for a smooth transition toward a more social based economy and away from end stage drift into fascism. By dollar dependant I mean countries that do not print their own money as well as those that are trapped in globalized trade traps, it just feels like if the wealthy countries who print their money make a big change to their end of this corrupt system that we may make life harder for the poor countries Really appreciate your time and your great reply

[@thurstonhowellthetwelf3220]

I think the australian dollar has value because of our iron ore , coal mineral trade... without that we could just sell gumnuts.

[@sarahheys2770]

😂 classic aussie response 👍⭐

[@ecocentrichomestead6783]

Government "Spending money into the system" means they printed more money and sent it into circulation. There's no such thing as the government not having money. Trouble is, the more currency there is in circulation, the lower said currency is valued to buy products/services. That's what we call inflation. It's a supply and demand issue.

[@truthseeker5911]

The banks create the vast majority of our broad money supply though as the Bank Of England explained in its article titled 'money creation in the modern economy'.

[@lancechapman3070]

The limits are real, not monetary.

[@koltoncrane3099]

Limits of goods and services do exist unless if there’s an advance in innovation. But id say the limits are real and monetary limits also exist. For instance if the U.S. gave every one a billion dollars tomorrow and everyone was a billionaire would everyone truly be able to drive a lambo or whatever nice car they wanted? Just cause the U.S. has an elastic money supply sure they can get more commodities abroad and ravage the jungles of Africa like Bezos new mine in Africa. But monetary limits existed when Weimar germanys monetary currency was worthless paper or the trillion dollar African currency Zimbabwe or whatever. They had to print it to fund the troops there but it doesn’t mean it retained purchasing power. One of the key tenets to the definition of money in the past was money retained purchasing power. England hated Spain but I will say spains Spanish real dollar retained purchasing power and was used globally for centuries. The U.S. finally banned the U.S. of Spanish silver dollars in like the 1850s though.

[@lancechapman3070]

Financial actors use sovereign bonds in markets to create leverage, effectively creating currency, how does this effect the sovereign's ability to manage the currency?

[@trixn4285]

You have to differentiate private bank money and government money. The government spends reserves, the private banks issue "promises to pay government money" which is also money but it sits effectively on level below the government money in the hierarchy. In fact the balance you hold at a private bank is not government money, it is just a promise to pay you government money. The government (partly through its central bank as an agent) controls issuance of private bank money (which is most of the money in circulation) by setting an interest rate (that price at which the banks have to borrow at the central bank) and by setting capital requirements and other legislation that restricts the way in which banks can create money. The well-known economist Hyman Minsky said: "Everyone can create money, the challenge is to get it accepted". There are two other things to differentiate: Normal bank lending and money market funds. The first is effectively creating private bank money by lending to borrowers the second is lending already existing money for collateral (often government bonds) in repos (repurchase agreements) basically working like a pawn shop. The second is also often called shadow banking as the market makers at the money market act in a way like banks but are not controlled by the same legislation as banks. This has become very problematic since the financial crisis and has let to the central bank not only acting as the "lender of last resort" but also as a "market maker of last resort" by providing liquidity for collateral when the money market broke down. This was not well understood back then (and the financial risks have been massively underrated) but has become common practice at the central banks to keep the money markets functional as the have become so vital to the functioning of the economy.

[@chaz0matic]

Gen Patton said, "Compared to war, all other human endeavors are insignificant...". Well, it turns out that the surreptitious accumulation of CO2 in the atmosphere turns out to be perhaps much more significant than war, that ubiquitous aspect of all human history to date! While all other wars are marked by human versus human contests, now, CO2 versus global human civilization may dwarf the significance of all the human wars put together.

[@davidwilkie9551]

If there is someone who needs to be heard it's Professor Bill Black, eg if Stephanie studied his work on "How to Rob a Bank", and apply the knowledge to how Dark Money is accumulated and used to enable Planetary destruction, ie money is involved in exchange and applications of Intent- valuations of actions like loans etc., and the actual value of the intention carried out is suspended in the quantity represented by the cash amount. What do weapons Stockpiles actually mean for cultural and intellectual politics? By definition, none of them can be good for the Ecology as a whole.

[@michealc2292]

Bill Black and Stephanie were colleagues at UMKC Dept of Economics for years so I am pretty sure she is aware of his work

[@dannywindham3295]

Fraud behind the 2008 financial crisis needs to get to a wider audience. William k black is an expert criminologist in fraud. Who need to be heard

[@TennesseeJed]

Thanks Steven and Rachel!

[@TennesseeJed]

I ain't sure it is empowering at all knowing they are starving a lot of people over money.

[@davidwilkie9551]

There's a whole realignment of perceived cultural word applications due for revision, like "magic", and guessing, estimation or diagnostic reductions etc, in the context of "Theoretical", where the usage of concepts in self-defining context have more concrete interpretation and become a basis of informal approximations of meaning, a "made-of-making" consequence of the elemental e-Pi-i relative-timing thermodynamical Equation Form following Fusion-Fission Function, in the application of sequential abstract techniques superimposed on an expected outcome. Ie only competent Mathematicians have sufficient skills to apply Magical Thinking Labelling effectively to Physics practice effectively. So Modern Monetary Technology is up for renewal in the accepted PhDs reiterative context. As demonstrated, thank you.

[@dervishdee3706]

Maybe my most favorite video ever!

[@wazzup4u]

Will a new global reserve currency based on natural resources turn around the USA deficit based currency

[@type1civilization168]

Why did not ask Steven why we need money at all? Money and market are not the only way to organize a society.

[@michealc2292]

MMT founders like Randy Wray and Stephanie Kelton have brought us a little more understanding about money, but they fall short on that front and thus also in understanding and transforming the the system and its patterns. It is still a capitalist system, and we need a post-capitalist economy in which patterns are good for both the people and the environment.

[@sjoerd1239]

What we need is to put reasonable constraints on capitalism, by limiting what entities are free to do in the market. MMT does that in terms of associating money with resources. Other limitations are required for the overall good, but they are political and relate to the allocation of those resources/money. Not everything about capitalism is bad, but it needs to be constrained.

[@michealc2292]

Sorry, but everything about capitalism is bad. Systemic inequality, the need for exponential growth, war/conflict, hyper-competition, maximisation of externalities, inappropriate technology, liquidation of resources and ecological capacity...the list goes on. You cannot overcome the negative patterns of capitalism with constraint, regulation etc.. You can only transform the system through serious institutional change of the financial system. We have been told so long by the system of propaganda that we call economics that there is no alternative that we cannot imagine anything but capitalism or the favourite straw/bogeyman of soviet style communism. MMT was not conceptualised to transform the system but to patch it up, preserve it, and stabilise it. MMT does correctly indicate that the government does not have to borrow to spend, and that they need to tax somewhat inline with the level of spending...spend then tax. But they have not created any sort of ecological theory of money, finance or production. Like I said I learned a deal from Randy Wray and other folks at UMKC and respect them. I spent a bit of time there and was going to do my PhD there before going in a different direction. But MMT is ultimately a dead end that too much hope is wasted upon unfortunately. @@sjoerd1239

[@naturewonders3604]

This is confusing concerning tax and government spending. If governments can print money and not rely on tax then countries like South Africa wouldn't have loadshedding, aka not enough electricity to supply the grid, because the government would never run out of money. Yet in South Africa and Finland they have to cut spending in certain sectors due to lack of money which they claim is to due to not enough tax money. So he is saying tax plays very little part in government spending. I don't get it. Why do we need tax payers to fund pension schemes if government can just endlessly print money.

[@vthilton]

Sharing will save the world.

[@wazzup4u]

Beyond currencies but create value in utilitarian resources & issue social credit like China?

[@captainfutur3]

Great conversation. Thanks you for clarifying what real resources and narrative resources like money are. I have been working on a framework with some maps on this for 5 years now so that we can navigate how a society and an economy works. Filmed it a year ago and it has come along way since: kzbin.info/www/bejne/jJzEiqCmoLBpiZY Would love to hear what you think 😃

[@trunoholdaway2114]

If the economy isn't money and resources but labor and energy then degrowth means we have to start thinking in terms of human labor again. It's a shift away from the skills and knowledge that's dependent on fossil fuels and to more traditional skills and knowledge.

[@5353Jumper]

Fed spending creates money in the system, as does new bank loans and asset value increases. Too much money in the system causes inflation, particularly in foreign exchange goods. When the Fed announces it is "printing" money it is usually to cover money created by bank loans and asset value increased; not due to spending. Taxation removes money from the system. (Notice the hypocrisy of the party that most often whines about national debt from spending is also the party that likes to lower taxes which worsens the problem) Issuing bonds (national debt) temporarily removes money from the system as well. Governments use this to balance the amount of money in the system to maintain currency value on global markets (control inflationary effects). The balancing factor is the interests puts new money into the system which then needs to be managed either with taxation or new bonds. So spending that reduces long term expenses in the long term can reduce national debt or money in the system. Spending that increases the income of citizens eventually comes out of the system through increased taxation. Spending by giving money to corporations (particularly foreign corporations) which do not pay much in taxation, or giving corporations tax subsidies which leads to tax protected shareholder capital gains keeps money in the system or causes more debt.

[@bundleofperceptions1397]

“....if the private sector wants to net save, let's say we're talking about the US private sector wants to accumulate more dollars, well the only place they can get those dollars from is the federal government.” I don't think that's true. The private sector gets dollars by selling goods and/or services at a price higher than it costs to produce those goods and/or services; otherwise, it gets dollars from the bank, but not from the federal government. “....if you've got governments that pursue surpluses, like the Australian government did in the early 2000s, you either drive the economy into a recession …, or what actually happened in Australia in the early 2000s, you get a rapid accumulation of debt in the private sector....” A government surplus happens when the government takes in more in taxes than it spends, a recession happens when the economy contracts (negative growth), and private sector debt happens when the private sector needs to borrow to cover expenses. What's the connection? The U.S. government ran surpluses in the 1990s, but that didn't result in recession or private sector debt.

[@trixn4285]

Yes, private banks also create (private) money but they also create a creditor and a debtor in the private sector in the process. This means that if you look at the private sector it cancels out as one entity in the private sector has a new asset and another has a new liability of the same size. Therefore the private sector as a whole does not net safe by issuing private credit to itself. It has to be someone that is not in the private sector that goes into deficit on order for the private sector to have a surplus (which is either the government or the foreign sector if you consider an open economy). For example the private households could net save by earning more salary than they spend but someone else must spend more than they earn to make that happen. This could e.g. be the companies which finance that gap with private credit. But as both the companies and the private households are part of the private sector the net saving is zero. "The private sector gets dollars by selling goods and/or services at a price higher than it costs to produce" But that does not create dollars it just changes its ownership if the buyer and the seller are both part of the private sector. The seller now has the dollars and the buyer doesn't. It doesn't create any net financial savings for the sector as a whole. "The U.S. government ran surpluses in the 1990s, but that didn't result in recession or private sector debt" Of course it did. You can clearly see that every time the US government ran a surplus a recession followed.

[@michasosnowski5918]

If governments didnt have the ability to print money, go in debt at the expense of future generations, we would not be in a mess we are right now. Becouse all of this productivity is a result of all of this debt(34 trillion in USA). Maybe we would grow much slower, or parts of the economy or society which woud not get the government money would grow slower, but we would be in a much better place right now(climate related). Real free market is susceptible to booms and busts. Growth and depressions. And thats ok. People save, then people spend. Those who save get the benefits of interests, those who get credit get the benefit investing in something they think will bring them profit later at the expense of interest. When you have central bank controlling interest rates, you dont have natural signals of how much savings there is for investors to get hold of credit. Its all la la land. I think this is the root cause of all of our problems. Governments can print, and banks can create credit by fractional reserve banking. MMT is leading every country on Earth in this mad race towards economic growth by manipulating its own economies. To think that governments can restrain themselves with this tool is unhinged.

[@j85grim4]

Rachel looks how I feel listening to this guy talk........😴😴😴😴😴.

[@dannywindham3295]

You know, you may think this is boring. But it's extremely important to millions of people. And it should be important to you

[@Rob-fx2dw]

Steven Hail - Can't explain why the MMT belief is that taxes put value into the money but despite taxes in every country where inflation caused the money to become worthless despite those taxes. Taxes yet worthless money rejected by their own people and their own governments yet he still pushes that and other false MMT beliefs that historical facts show is wrong. The idea he has about introduction of needing taxes money into a country is just plainly wrong. You just have to ask yourself after observing the recent introduction of the Euro into Europe is did they need some new taxes to do so? No they didn't because they had an exchange rate of new Euros for every Lire or every Deutschmark or what ever existing currency was in each member's country. People just exchanged them for the incentive of being able to trade without worrying about a rate of exchange as was required before. No need for taxes. .

[@graemetunbridge1738]

'reduce the spending power of people with savings' ie 'money printing/borrowing' is just a tax on people who have saved for retirement, or are saving for a house.

[@AaronNGray]

Yep

[@mamajojoful]

this guy is a lush...waste of time soz

[@tactileslut]

Awful audio pickup. Word (whisper) word ha(lf) (word).