@@colingifford3113 you are aware that the US economy has become more volatile due to the adoption of Milton Friedman style economic policy. Reaganomics is a shitty term to use, however it puts the blame on the party and the individual who put it into practice. Also, Nixon is the president who negotiated the deal with OPEC to only sell oil in US dollars. Which allowed them to fuck with the value of the US dollar and hurt the US economy.
@@billmitchell2080 (1.) No sir, MMT is *NOT* a description of today's economy, and *NOT* everything MMT claims is observable in any economy. Wray gets away with saying such things because all economic and/or monetary theories much have many points in common, but that doesn't mean MMT is currently in use, much less was *ever* in use ... though I'd grant you that it's possible that MMT's precepts were previously in use during the *Fall of the (Western) Roman Empire in 471 AD* - after all they had a lot of uncontrolled inflation, which is more-likely to occur under MMT's precepts, than any other so-called "theory". (2.) Please explain how MMT squares with the *Federal Reserve Act* - which says the Fed can only issue money by exchanging newly-printed money for "high-quality" collateral of equal value, which has usually been bonds. (As you should be aware, "high quality" is required to ensure that the value of said bonds do not decline due to heightened suspicions of a pending US default, or US inflation.) (3.) MMT claims they'd issue money by exchanging newly-printed dollars for government provisions or programs, and use taxation or borrowing to fight inflation, if such a threat arose. (4.) MMT has never truly been implemented anywhere, except perhaps the Fall of the western Roman Empire (mentioned above), or perhaps during the *Weimar Republic of Germany* about a decade prior to WWII, when Germany suffered inflation so high that prices doubled roughly every hour. (5.) Actually, MMT is incompatible with central banking, so that's a peculiar problem that all your Giants of MMT have swept quietly under the rug. Please kindly leave your thoughts and comments on that score, I'd love to see your reply.
I felt this review plodding and superfluous. Altho for someone who may have never picked up a single book on any of this I suppose it's adequate. Not concerned if I come off any particular way, just sharing my experience for anyone else desiring an intro to MMT without all the redundant intro info. Cheers.
Erin, I found it fascinating too. As irrelevant as it might be today, going over early concepts like bartering are good foundations for what is to come.
I have heard this before, but I don't know why am I only getting it NOW. I've never understood it. I would always just get small explanations of some concepts. This was an explanation of the WHOLE picture. And it's wonderful.
@@lu881corporations all raised prices but the gross margins stayed relatively constant. You either have to admit the inflation was caused by the money supply or you have to believe practically every company is committing fraud and all their auditors are complicit.
Would you think issuing money benefited you if you were in charge? Given the level of understanding exhibited by many comments here I would think it would be a huge headache. Your job is to issue the currency for government purchases and public use and a vocal minority is so addled by miseducation that they think money comes from Someplace Else! I couldn't deal with that.
MMT is new to me. What I am hearing is that money is little more than a confidence game. If a country is in turmoil, an unbacked currency will lose value. LRW says trust is a thin reason for the keeping the value of money, but MMT is based on it. Secondly this type of economy does not rely on the objective measure of supply and demand, but rather the subjective judgement of self interested leaders who control money supply and taxation. Even smart people can make big errors. LRW states that the US economy was doing very weill into the mid 70's. Coincidentally we left the gold standard in '71. Coincidence? When we left the gold standard in 1971 debt climbed exponentially and so did the disparity of wealth. Printing money we don't have enriches the powerful and makes billionaires out of millionaires. While we’ve accumulated 20+ trillion in debt, the poor stay poor, the middle class treads water, and the rich get astronomically richer. Where does all that borrowed money go? To the wealthiest. When the money is circulated they can get much closer to the printing presses than the ordinary citizen. I think there are major flaws in this theory.
Ed Hauser MMT also assumes that the people controlling the levers of the system are trusted and competent. A monetary system needs to trust-less and controlled by no single power
@@freddiemercury5659 noooooo. That's way too simplistic of a reduction. Marxism is defined as a field of studying society, philosophy, and the economy inspired by Karl Marks (and Ingles). If you think it stops at the economy then you're missing the social aspect, which is at the core of the current political movement in the west.
Christ, finally. I've spent weeks trying to figure out what federal taxes are for, because the whole 'funding' thing is such obvious BS. I don't particularly agree on every aspect of MMT but this at least explains how things operate today.
@@mjpaganetti Like I said, I don't like MMT, I just think it accurately describes the system we're forced to live under. It's just useful to know what's coming, since we can't change anything about it.
Great Lecture. I enjoyed it. "...affordability is not the issue........productive capacity is the issue". [For a national economy] There's a number of similar, allied phrases that go with the above..... or go against it... Those that go with it. -Compete on Quality (Remember Michael Porter) -Just Do it- Focus on Action - the things that need to be done to achieve the objective -Build it and they will come (Steve Jobs lived this) -There's always money to support a good idea -Investment, Investment in all things, machinery, facilities etc. Good skilled workers want to work with the best tools in the best places. -Focus on quality - of people, systems, policies, environment (natural and workplace) ...these are all part of 'productive capacity'. Look at a few companies - indeed a few countries - where the above ethics hold and compare their economic performance, living standards etc. (Germany for example) Those that go against it. -Complete on Cost. Undercut competitors and you undercut your margins if you don't put pressure on your cost side -Sweat Your Assets....drive them into the ground before renewal. -Pay Out High Divs... -Make everything a cost type business case -Cost, Cost, Cost ...these and more are all factors which drive a firm in the wrong direction and impede production capacity and/or production and product quality. Sure in the short term they give the appearance of good performance, but over time.....productivity and competitiveness are eroded. Look at companies and economies that exist with this mantra.(UK for example) In fact, the UK and Germany are a great comparison. Even after re-unification [in Germany] the two countries are still comparable. There are structural differences of course (distribution of population, geography etc.) but certainly the above factors contribute to why Germany out-competes the UK. Germany does think differently about how its firms exist in their economy and how they compete internally and internationally. So does Britain - but in different directions.
Because it is a fantasy belief that does not deal with the reality that goods and services are the real wealth and goods and services are created by the work in the private sector not someone creating more and more money for government to spend first through their deficits before anyone else gets to spend it.
Money creates markets. Money is always the creation of the authority. As Wray explains, there is no record of a "barter market" in history. You need a pricing mechanism to make it possible to buy and sell numerous kinds of goods. It should be tax supported to give it value and universality. You will buy goods with the instrument you pay your taxes with. You don't need to beg people to accept it for that reason.
Money does not create markets. Only a complete moron who has never thought about anything other than what their retarded left wing professors taught them could think that. Humans have needed to trade FAR before ‘governments’ with money printers existed. You don’t need a government with taxes To make money work. You need a trustless final settlement system that allows ANYONE to trade with anyone else without the use of force. Gold is good but requires a credit layer. Bitcoin is the best form we have PRECISELY because it can’t be abused by corrupt governments.
Can we please have access to a chart pack of the slides displayed for this lecture. Its nice watching Professor Randall speak but would have been better if the slides were displayed too.
HI, We always balance adding slides with getting the videos live in a timely fashion. We thought Professor Wray did a great job explaining, so didn't see the need to wait. Sorry for the invconvenience.
@@stevenhail2837 Stop trying to fool people. You are an MMT pusher from a university in South Australia and already a member of the group promoting MMT. You can't even answer why you and other MMT promoters including Randall Wray claims Federal deficits are an asset for the private sector when it is the private sector that is burdened with paying off the debt that funds deficits.
Great lecture professor. One question I have is is that if it's true that the government can "print" as much as it needs in order to service shortages in the real economy, and it can offset or avoid monetary inflation by doing so, then does this mean that there are no limits or constraints to foreign aid? It seems that the government here is printing to service a shortage so there's no inflation concern here. Is that right?
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!
_"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"_ MMT is not a hypothetical, nothing that can be implemented. It's a description of how our monetary system operates to today. Therefore you can not implement MMT as it is not a policy. So we do not need to reach a consensus if it would work. We need to reach a consensus on if it is correct about how thinks work. And believe me, it is much more correct than any neoclassical view on the monetary system. It has mountains of proof at hand for every claim it makes about how the monetary system actually works. So what we have to change first is our mental model of money. Because if we do not get this step right, we can't base any policy on it and think that it will work the way we expect it to.
I'm always confused by comments like this. MMT is first and foremost a description of what money is and where it comes from. Its most public-facing proponents have policy ideas, of course, but those ideas aren't dictated by the theory, which, again, is just descriptive.
Great lecture. I take exception only to one thing: Prof. Wray's characterization of the concept of legal tender. The fact that the US Dollar is a legal tender in the United States does not mean vendors must accept it; it means creditors must accept it. The concept is irrelevant until there's a debtor/creditor relationship. Customarily, most retail transactions are arranged in such a way that the customer is at no point the vendor's creditor. The customer is typically required to perform first (by paying), and before that happens, the vendor doesn't have to do anything. For example, I'm never indebted to Starbucks when I buy a coffee there, because I have to pay BEFORE they do anything. Rather Starbucks is indebted to ME between the time I pay and the time they deliver the coffee. By the terms of our unwritten contract, provision of the coffee extinguishes Starbucks' indebtedness. But if it wanted to, it could also discharge the debt by a tender of US Dollars (i.e., by giving me a cash refund). This works whether or not I consent; if Starbucks tenders the dollars and I refuse, the debt's still extinguished. If I sue, Starbucks can pay the amount of the tender into court, plead the defence of tender, and the court will dismiss my case. While I don't think there's much litigation like this, the threat of it is at least partly what makes the dollar money. If I'm owed "money" in the United States, I can't refuse to be paid in US Dollars. Oh, also, a court judgment (as opposed to a declaration or injunction) is itself a debt. As such, almost any legal obligation (e.g., Wal-Mart's liability to somebody who slipped and fell in their parking lot) can be transformed into a debtor-creditor relationship that can be discharged by a legal tender. I wouldn't discount the importance of this fact to "monetizing" the dollar. I'm a lawyer, not an economist, so I think of this as a lawyer. And I agree that one way or the other, the modern dollar has economic value because of its legal attributes. But as between the fact that the government will accept the dollar in settlement of public debts and the fact that they can't be refused in settlement of private debts, my sense is that the the latter probably has a bigger impact.
I take your explanation of the dollar being a participant in indebtedness between entities in the private sector as fact but you failed to see one of the most obvious flaws in MMT. That is the fact government is the big indebtor of others in the economy. It indebts others via taxes which allow it to spend and by selling securities to the market and the reserve bank to fund further spending. It does not happen the other way around with the private sector taxing government to buy things. The reality of money is most money in the economy is created by private bank lending rather than the reserve bank and taxes are paid on that money created by the private banks and lent to the customer. MMTers pride themselves on what they call a different 'lens' to view the economy. It is nothing but rose coloured glasses that ignore todays realities and historical fact. Facts like saying taxes drive value into money and ignoring the reality that taxes did not put any value into money in all of the instances where massive inflation made the money valueless and rejected by even their own government. There are many instances of this including Zimbabwe, Brazil Hungary, Chile, the Weimar republic where their money became worthless.
This is very profound and has transformed my understanding of the economy and debt. The government needs to print and spend money to utilize unused productivity.. If what is produced has value it won't cause inflation. To talk about central bank debt is meaningless if it's denominated in its own currency. Deflation is likely an indicator that the supply of money is not sufficient to exploit unused productive capacity
You are Wrong. So wrong and have been fooled by this crazy power seeking MMT pusher. Government debt matters since it has to be repaid when it matures. It also has interst that the taxpayer has to pay in the interim. When it matures it has to be paid in full and this is a burden on the taxpayer.
@@Rob-fx2dw I am increasingly skeptical about MMT. People like Charlie Munger point out that with the same conditions and actions the results can be completely different because there are too many variables. QE apparently avoided / delayed a depression. But QE was also a huge transfer of wealth away from the 45% of US who don't own equity.
@@testblustacks5799 You are right to be skeptical about MMT. It is just wrong in so many respects. The glaringly obvious part is that it claims taxes do not fund government spending which is totally rubbish since there never could have been a federal budget surplus if that were the case and the history of budgets is that there often has been a surplus. But that is just a start since it has so many facts wrong as well as it disregards other historical evidence which does not support it's claims. You are also right that the QE transfered a large proportion of wealth away from the people who don't own equity. That is because there were a great number of companies who acted in their own ineterest as most people do and took cheap loans provided by the QE to buy back shares at an unprecedented rate. The ones who were left out and did not have shares or sold them were the losers in that.
Excellent points at the end about inter generational divide being stoked to undermine state welfare. Especially in light of yesterday’s hike in National Insurance contributions in the U.K. 08 Sept 2021.
0:52:35 - Inflation before Full Employment IF : 1:09:29 - Young people being urged to trust again risky stock investments 1:09:44 - Productive Capacity is the issue. Affordability is not the issue.
affordability is an issue, a resource can either be divided equaly or in some other ratio. for a given raw material either you can create homes or you can create bridges, all the raw materials have many use cases and those resources needs to be allocated where they are most needed. by thinking that people are unemployed and one can put them to work is false, the moment you will put those people to work they will work with some raw materail and from where that raw material will come? it has to comes from places where it is produced but then it won't go where it was already going, as You have just out bid the other industry and given those resources to the people you saw as unemployed. Now people in the industry from where you have taken these raw materials will be sitting idle or they will lose the job. Hence you can't afford everything, because with limited resources you will always be facing this balancing problem. And you will never know where resources are needed the most. That's why there is free market which are more efficient and that is the reason all centeralized countries has failed.
Inflation is not the same for everybody. Capacity is not homogeneous. How on earth is the government going to have factual information (accurate and in time) about the countries capacity.
I would have liked to see the slides too. I googled Professor Wray and found he has a book about the history of modern money. I reckon the images and material of the slides can be found in the book.
@sgrant39 😅 what a douche... Central American economies are tied to the Forex exchange which is tied to the dollar. If you want to look at Central American countries, look at all the twos and economic barriers the United States has placed on them.
PROBLEM! Everything I have seen on MMT equates Federal Reserve (or any Central Bank) with Government, but it's not. The Fed is privately owned and if that issues money and lends it to government MMT is flawed. Can anyone answer this?
@Justin Parkinson the fed is privately owned but controlled by the board of governors, an independent government organization. I.E privately owned, government-operated.
There is a division of powers, the fed cannot spend on social programs, that is for congress to argue about. The fed is mainly independent. So MMT ideas about wresting control of the printing press are fanciful. The fed will step in in an emergency, it dosent just do what Biden, or Trump, or congess wishes it would do. But its not privately owned, its a government created entity. It was created by an act of congress.
The United States government can remove their capabilities to print the United States Dollar and then seize the facilities that are on United States Land. Your point is surface level
lie "Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District's Reserve Bank. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund."
Very interesting, I remembered Wray or Mosler mentioned something written about bees. So it was Wray that mentioned A Mitchell Innes wrote about bees and two books about money. While searching out of curiosity who he was talking about, I came across Bernard Mandeville, who was an economist in the 1700s that wrote the Grumbling Beehive.
3 great books that prepared me for this lecture and help me to understand the MMT movement. 1.The Book of Leviticus 2.Debt: the first 5000 years 3.LOTR : The Annals of the Kings (Oh yeah and my B.A.A in Finance !)
To paraphrase what Stephanie Kelton talks about in the deficit myth “ the federal government has options”, for example they could make more federal jobs programs. I live in Japan where I work at a small business teaching S.T.E.A.M to children. It’s been my experience that in Japan job security comes before profits. I speculate that since America and Japan are both sovereign nations so they can have big debt deficits, in Japans case they spend a good amount of money on keeping businesses afloat and infrastructure intact. They say lots of Zombies companies exist here, but at least there isn’t much homelessness and it’s pretty easy to find work( not great work but work none the less ) They have dinosaurs and ancient tree companies over here too lol.
There are a dozen or so in the classroom so they get to see the slides. 185,000 people have heard the speech in three years -- but we don't get the slides, we get the moving head. Whose idea of rationality is this?
before talking about the clay tablets of mesopotamia, which we can read and understand, he talked about bones with etchings in them where we have no idea what they were for. could have been debts, could have not been. most likey we will ever know.
To put things straight: For the Yap Islanders these stones were used as money (currency = Rai). The stones didn't get the value through the Germans imposing taxes. The stones were used as money and had their value long before any European set foot on these Islands. The stones got their value through the dangerouse efforts to get them, the scarcity and the rare material. All money has one thing in common (whether its stones, sanils, paper, gold etc.): It is realtively scarce! It is easy to see why historically gold became the monetary standard. It was accepted by many people (not only civilized), it is relatively scarce, it is available in a constant quality that is easy to check (weight) and no one can multiply it easily, but it is easily divisible. That's why tabacco didn't work well as money in the colonies and paper money had frequently to be burned in Virginia. BTW the value of the Rai on Yap Island was inflated by a steam boat connection to the neighboring island where the stones were found. Not because there were no taxes on the stones, but because they were suddenly not as scarce and the transport wasn't life-theatening anymore. Therefore stone money also had (intrinsic) value and it could change rapidly (as any other money)!
The thing with money is that if you want someone to give you something in return for your money, whatever it might be, it should be something not easilly obtained by the person giving you the exchange. If dirt or gravel was money, why should i give you 5 chickens for a handful of dirt or gravel if i can step out the door and pick up my own dirt and still have my chickens. And why would i produce anything if i can just pick up a wheelbarrel of dirt on my way to the store and buy everything in it. Nothing would be produced so there would be nothing to buy with all the dirt in the world. The key to money is how hard it is to obtain, not it's scarcity. That is why government can't spend limitless even though it could theorethicly. Money is now tied to productivity, productivity provides acces to money trough labour because labour is needed to produce the things we want and need. That is also why the gold standard is a stupid idea because that puts a limit on the supply of money and thus a limit on investment and the ability to buy labour to produce things. Before fiat money economic development was so low because there was a chronic shortage of currency because the only money that could be invested was money that was saved and not spent on consumption which in turn limited demand. Decreasing the desire to invest. As soon as there no longer was a limit on how much money could be created productivity and technological progress has skyrocketed because now the limit on the amount that can be invested in labour is the availabillity of labour, not the availability of money. If we where still on the goldstandard we would still be using steam engines and telegraphs.
@@baronvonlimbourgh1716 Dear Baron, thanks for your comment. I like your analogy with the gravel and I agree on that. But what do you mean by "how hard it [money] is to obtain"? The scarcity of a good will automatically make it hard to obtain. And this is the difference of fiat money. Fiat money is very easy to obtain, never the less central banks _try_ to keep it scares, i. e. makes it relatively hard to obtain. Of course with the Greenspan put this has changed... The gold standard is not a stupid idea because it was not "invented" by some bureaucrat. It evolved constantly during the history of money up to its peak before WWI. The rapid growth of the 19th century up to WWI shows that the gold standard did not prevent rapid economic growth and development. Within a few decades mankind has not only invented many things (phone, movie, camera, automobile, airplane, electricity, light bulb, rubber and plastics etc.), which are still the foundation of our technology of today, but it has also marketed all those things to make it accessble to all of us. Not to mention all scientific progress that has been made and the start of globalization with the rapid development of railways and steamboats (later diesel) back in those days. And all those things were mostly *privately funded (in contrast of today!).* So no, economic progress was not low but incredibly high under a gold standard. Anyway it is a different discussion if we should re-introduce a gold standard today... Whenever there was or is a shortage of currency mankind has introduced different instruments like paper money, credit, leasing, bank transfer (clearing), bills of exchange etc. to pre-finance investments and consumption. Most of these credit instruments were *developed under the gold standard!* Even back then there was rarely a shortage of currency, but money was not always accessible where it was mostly needed. Of course this has improved through a world wide net of connected banks. So all those payment methods worked under a gold standard and improved the accessibility for means of payment even back then. Furthermore there was never throughout history a 100% backed gold standard - so no need to finance investments only through savings. Also under the gold standard the _fractional reserve banking_ was the norm, allowing to increase flexibly the money supply to meet demand. I'm not sure where mankind would be if we would still be on a gold standard but I'm 100% sure that we wouldn't have only steam engines and telegraphs, since as I mentioned above the automobile (1886), phone (1861), airplane (1903), electric locomotive (1879), TV (1886), diesel engine (1893) electric motor (1835) etc. have already been invented under a gold standard. Not to mention all the scientific progress that laid the basis of modern science. Maybe we wouldn't have dozens of different sneakers, handbags and Barbies in our closets but since money would be _scarce_ we would hopefully have concentrated first on the most needed goods and services for mankind instead.
@@dave77v how hard it is to obtain just means access to it is not limitless. Like rocks can just be picked up without adding productivity to the economy. Our current money is not limitless available to the general public, you need to perform labour to obtain it, it is your reward for the adding your economic output to the system. That makes it harder to obtain then the earlier mentioned wheelbarrel of dirt. Even though money is harder to obtain it is in no way scarce because it is simply bits in a computer, there is no physical limit on it, neither has it any intrinsic value. Which is a good thing, if money is needed it can simply be created and there is Always an unlimited amount available for investment and research and development.
@@dave77v the gold standard mayby was the best option available at the time, i'm not sure but it can be argued for. Just like everything else, monetary theory and technology also evolves over time and better solutions that solve existing problems are developed along the way. The industrial revolution was done by men in sheds with screwdrivers and wrought iron. It was a revolution of inventiveness, engineering and development in understanding of basic phisics principals. All inventions you mention where made by 1 or 2 men with basic tools and resources and could be produced with the same simple tools and resources. The capital intensitivity was low and often was simply funded by savings of 1 or a handful of modestly wealthy people, it simply can not be compared with what happened in the second half of the 20th century and forward. The capital investment needed to build entire railway networks back then could maybe barely fund the development of a new generation of optics alone used in a new lithographic machine used for ic manufacture. Technological development went in line with efficienty gains in agriculture for millenia. It only went exponential when capital became readilly available. The problem with a physically backed currency is that credit can only be given in already existing currency that someone else put away as savings, a lease on something had to be payed first with physical existing currency before it could be leased to someone else. There could only ever be as much money as there was gold, or silver or whatever. A loan reprisented someone else's savings. Either the lender spent that money or the saver, it could not be spent by both at the same time. The fixed supply could only either be spent on consumption or investment in a self correcting fixed ratio. We no longer have that problem. People can spend their money and capital for investment can now be created on demand without interfering in the consumption side of things. Fractional reserve was implemented exactly to solve the currency shortage issue. We now simply have an further evolution of it. Currency shortage has been a chronic problem troughout history for the before mentioned reasons. It is not something that happened periodicly. The steam engines and telegraps comment was a bit over the top to make a point ofcourse. But we would be living in the 50s or so. A manufacture level using tenths or houndreds of a millimeter. Below that the needed investment levels simply skyrocket.
Oh - If that is so how do you explain Randall Wray's claims about taxes driving value into money when the historical facts prove otherwise? It's pure fantasy and that is proven by the history of money and the history of failures of money in the 30 or more countries over the last 60 years where there were taxes but inflation caused the money to become utterly worthless despite what Randall Wray claims about taxes driving value into the money. The facts are against what I say is his plain stupid claim. I would like to see your explanation of why I am wrong.
@@Rob-fx2dw you're wrong because of two things: 1. The ratio of taxes to money matters so too much money without enough taxes make the demand for money to pay taxes low 2. You also have to look at the global market and effects of PPP
@@MichaelRosmer Where did that happen? You have no evidence to show that is correct. There is evidence that I can provide to show what happened. If you are correct just what ratio does it take to make your claim correct? Have you knowledge of the ratio of tax in the countries where inflation made the money fall to zero value or close to it? What is also wrong with your claim is it defies facts of countries like Hungary or Argentina or the countries listed here :- www.munknee.com/21-countries-have-experienced-hyperinflation-in-last-25-years-is-the-u-s-next/ Were that all low taxed? Lower than the ratio?
@@Rob-fx2dw no, you're not looking at the broad view that's why I mentioned two factors. Here's the thing you require a minimal amount of tax relative to currency to maintain demand IF there is also other demand specifically, additional demand priced in local currency because the exchange volume will adjust. What happens in cases of extreme hyper inflation like Hungary and Argentina is they've got foreign debt and are reliant on imports that aren't priced in the local currency. As they aren't able to make their payments they begin printing money in order to do so, which in small amounts isn't significant but as the velocity of printing increases the value of the currency begins to drop. As the value of the currency begins to drop they need to print more and more in a deadly spiral. At the same time what happens is acceptance for the local currency to pay for goods as well as the ability to borrow in their currency decreases (all factors that decrease the demand for the currency) as confidence implodes. The less confidence there is the more money is needed to be produced to pay for things and the prices of goods explode until the currency isn't accepted at all. You can see the same in Venezuela, ex-Yugoslavia, Zimbabwe, etc.
@@MichaelRosmer You said only this "1. The ratio of taxes to money matters so too much money without enough taxes make the demand for money to pay taxes low." You now say "IF there is also other demand specifically additional demand priced in local currency because the exchange rate will adjust". That seems to be something you just fabricated without presening any evidence. Where is the evidence? So what you have said so far is you agree taxes drive the value of money But don't drive the value of money if they are not at a high enough level OR if there is not sufficient demand for the money in local currency. You cannot have it both ways. Either taxes drive the value of money or thay don't. I know that don't and can supply evidence that they don't. What you now say contradicts the MMT claims of taxes driving the value of money which I say is something in reality that does Not happen.
Belky Hernandez , MMT is not something you should want to be converted to. It gives the government freakish power and ability to abuse it. There is also no control for government overspending. Even though they give it lip service, they don’t seem to account for the limited resources of each economy. So often it comes across as “unlimited money equals unlimited resources!”
You cant "convert to mmt." You either understand the source of money is the government, or you don't understand. Its a matter of comprehension, not choice
@@Creshex8 MMT does not give, but points out the government has freakish power, and they are abusing it by bailing out banks. The question is that why when it comes to real economic development, the government says that they don't have money?
Randall, what you have just said applies only to USA and few rich countries because when you produce money here, it creates some degree of inflation to every holder of USA dollars (which is spreed all over the planet, even central banks), but the only direct beneficiares of the extra currency, subsidies, and social programs are the people who reside inside the USA (they can afford to buy goods from other countries with the extra currency). Do it in other countries like Argentina (1950-date), Venezuela (2000-date), Peru (1985-1990) and you won’t see a “miraculous multiplication of fish”. No need for fancy books, just ask them!
You contadict yourself when you say that the only benifiaciars are US residents when at the same time you say they buy foreign products with the dollars issued. Further, the sole issuing of money wont cause inflation. Its a myth. Inflation is caused by external or internal shocks mainly - as mentioned in the video. And finally, why should Japan not do the same with their Yen so that Japanese would actually profit?
@@brettmcclain9289 You quoted from a site that is dedicated to full-blown Neoliberalism like Ludwig Von Mises who was an ardent admirer & firm believer of all things Fascism. Next time try to quote from a site that's NOT a front for reductive austerity economic ideologies. You only have to see the plight of Greece. It's 11th year running in full-blown depression.
we need more economists to start speaking truth to power and telling government to stop lying about how money, debt and taxes really work ... thanx Dr Wray ...
To be fair, the only reason it works is because the public doesn't understand how it works. Money is only money because it's users trust in it's value and function. It it becomes something that is available in unlimited quantities it will lose it's value and then it's function. There needs to be a system that limits the availability to make it functional. It needs to represents a value, so logicly you want it to be created when new value is created. And banks and investment have been chosen to be the vehicle to distribute it. Traditionally debt is used to create new aditional value trough investment. And it also used to be a way to distribute that value trough society. If you had a business you payed wages to local workers and the profits where spent locally because the owner was also local. He used it to buy bread from the baker, groceries at the grocer beer at the local bar etc. And those businesses also employed people and made profit payed with that money. And those owners spend their money again at the original business owner. That way money gets distributed properly troughout society and the ones creating value end up with it and can spend it to buy other things of value. Nowdays the owners are no longer local and no longer of practical size. The baker that made a nice income from his business and spent it into the community has disapeared. That money is now extracted by wallmart into a central account. And every little community in the country lost that money from their communities and now 1 owner recieves the income of the tens of thousands of local businesses walmart replaced. Money that will never return because one person can simply not spend the income of tens of thousands so it accumulates and is extracted from the economy. And this has happened with virtually everything that is now bought and sold. Everything is now spent with multinationals who now accumulate it centraly away from the community it came from. Creating a constant a constant flow from the public to multinationals without a return flow, the only way to keep replacing the money that disapears is by printing more of it and giving it out to the people to then spend it at these multinationals, or for people to borrow more to keep the feed going. The only way to create a return flow is to tax it away from these central acumulators and spend it back into the communities it came from, again completing the circle. This makes the government fulfill the function of what previously was done by local business owners, redistribute that profit back trough the community it came from. But people insist taxes need to stay low, so this circle stays interupted. So one side keeps being depleted and requires replenishing with newly created money while on the other side money is acumulated and not being used because to ones acumulating it acumulate it faster then they are able to spend it. Until this cycle is again equalised again the population will keep getting poorer and more endebted and the acumulators will keep increasing the rate they grow the pile of excess money that is not allowed to fulfill the function it was created for. When people know money can be created i definatly they will demand more and more of it will be created without new economic value being added to the economy. It is a difficult problem that some political movements have weaponised to gain advantage.. If government is allowed to actually fulfill it's function and balance the system, programs like universal healthcare are an example of this required redistribution for example, it can be a pretty good way ofmaking sure money fullfills it's tasks and is usefull to everyone instead of a burden to the many and a free ride to the few.
The trust is actually in the promise to deliver production. Either directly or vicariously. Use of force is a form of production when it protects the order of things to preserve the channels of production in a society. When the use of force is abused, it will result in a reduction of production.
Sound money is a symbol of the "Stuff" (Production) completed in the past. Fiat money is a symbol for the "Stuff" we trust will be produced in the future.
@ThomasVWorm again, I said Sound money, and I'm using precise language. You're talking about modern money. Which is is fine. Please restudy my original text before you beat the drum. We are not in disagreement at all. It just appears you're not actually understanding what was said. I have no preference over Modern money or Sound Money. I'm merely pointing out the difference.
@@madamkirk I do not understand the word "sound" in this context. It does not appear in any way "sound" to me, when money is a symbol for something being produced and consumed in the past, because it then is the same as "meaningless".
Even if it is true that within a country or a geographical location, It is the state or the religious authority which dictates what the medium of exchange is going to be, How do two rivalrous nations, geographical locations or religious authority come to a consensus about what the medium of exchange is going to be, It needs to be something which both parties agree to and it needs to be a store of value which means there would be some commodities which are socially selected to serve as the medium of exchange.
When the indus valley civilization around 3400 years ago traded with other ancient civilizations, They did with a mutually accepted medium of exchange which was silver and gold. why did they choose gold and silver ? , Or why do some specific goods become the socially acceptable medium of exchange? , what should we call the process where commodities are evolve into an object which stores values and is used in exchange
Yes you're correct. Technically money is a symbol of production. In sound money, such as bitcoin, it is a symbol of completed production. In Fiat money, the production is not completed, thus it is debt based.
I've seen a few economists argue against MMT. But surprisingly it's the dude arguing for it here that finally really explained to me why this entire theory is complete bollocks. Thank you sir!
Checks are correspondent ciphers of bank notes that are written payment orders to a dealer bank to pay a certain amount of representative money to the bearer, upon selling the security to the Federal Reserve.
@@lepidoptera9337 That is because taxes are about giving the government (politicians) more power over people. It's a wonder they don't put a price on any and all social interaction and exchange between people including copulation if they could.
@@lepidoptera9337 NO. They are not paying a debt i have to anyone. I have no debt to 'society ' because "society' is Nobody at all. It is purely social construct that is meaningless and has no defined measurable limits or restrictions. If you disagree then explain in monetary terms the extent of what anyone has in terms of a debt to society. Of course you can't because it is just a meaningless throw away line. I can as easily say society has debt to me.
Money arise from marketability, in a barter system there will be some goods which will be more marketable and people will prefer to convert to them and then exchange it in some other thing. wheat acted like money because it was most marketable. so how money gets it's value, first it will be a comodity, then the most marketable one will be prefered, then one remember from previous experience what he can get for that comodity that sets its initial value, but as more and more people start to store it because it is more marketable, it makes it more valueble than its other uses, other than medium of exchange and gain even more preference because it's social acceptance has increased. Which makes people try attain more of it, this is what leads to mining or growing of the comodity, (there was a time when tobaco leaves where also used as currency it ended up in hyperinfaltion because everyone started planting tobacco). as you can see the move towards something which doesn't get infalted easily, doesn't rust, easy to divide, transport and fungible got preference, the gold and silver were inevitable to become money. authority never set what money will be, people do and then government tax it to latter fight war etc, but greed takes over, now because authority has monopoly of violence it uses the gold and put a stamp on it, soon normal gold gets collected and converted to stamped gold, till now both have equal value but as more and more is stamped the new authority one takes over. then comes desperation either in famine, war or some other way. which makes the authority inflate the supply, either by mixing other metals in it or cliping off some gold and decreasing the size of gold coin. which again ends up in hyperinflation because we humans push it and we never stop. (the history is full of it.) This is how romans did, this is how USA did when they broke the breaton wood system. the system which is mentioned in this video is not a valid one and it is not how money works. but yes violence can make anything more marketable, but it last until hyperinflation take over and people revolt.
Now, now this is crazy talk. There is a reason why everyone has adopted a fiat currency. When the economy does very well and tons of wealth is created very quickly, gold standards cause unnecessary deflation. When the economy does do poorly or needs to run close to 100%, which inevitably happens during times of war or depressions, gold standards are almost always abandoned because they make necessary investments too expensive.
@@iWouldWantSky yes that is very much so, but that again doesn't take away the fact that market decide what will be the money. At that time Gold was good for the system, now fiat came, but no fiat system ever survived. Something new has to come to replace it and that can't be mmt, because even the new money will come from free market. Not the other way around. Given people are not forced. (with force you can do almost anything.)
@@ChitranjanBaghiofficial While I wish you all the luck in the world with that, markets don't exist in vacuums. Capitalism requires a body with a monopoly on violence to enforce private property rights using legitimate force. Even cryptocurrencies can't help you here.
@@iWouldWantSky again you are right, and yet unable to see you are saying the same thing as I am. individuals do violence against each other when that can't happen groups gets formed and when single group can't make it happen then multi groups join hands. again the all mighty powers of violence is made up of individuals and again in the free market they either compete with each other or form groups to fight each other. free market is part of nature and its participator set the regulations. so even the monopoly that you see is because of free market and if monopoly doesn't work for its parts its individual parts will again form groups in free market against it. so from currency to government monopoly everything is because of free market not the other way around.
@@ChitranjanBaghiofficialI wouldn't call that "free," I'd call it chaos. Thinkers of the past would call it the "state of nature." Out of the state of nature, order arose. Societies can fall back into a 'state of nature' at any time, but we are not free in such a state.
I imagine I’d prefer a society that isn‘t based on debt. Unless the only entity that‘s „in debt“ is the government. Instead it seems in our society almost every entity is in debt. People, companies, etc. Debt sounds like slavery. Shackles. Fear. Stress. Pressure. Who would be in favor of this? Who benefits? Is this the best we can do? The story at 32:26 sort of epitomizes my point. Are we supposed to be excited about living in a society where those with the better weapons and less happy minds like to motivate us to work for money by putting us in debt by design (taxation)? Not a happy story
@@banzobeans I think your middle paragraph is an effect and the cause is the perpetuity of the idea that money comes from the barter system, i.e. one for one and if you don't have one it's a negative. The modern monetary theory is just an explanation for the system we find ourselves in. The policy and programs implemented are a result of the politics. Sort of like if you never knew what a car was and you wake up in one on cruise control at 40mph. You can hit the brakes, accelerate and steer but the car itself is just a car no matter what you do inside it.
@@brakeman211with one huge difference - that we know alternate ways. So why would we put up with something that increases the scope of the government's outreach? Government=one part of the society (not you, me) that has the tools and power to redistribute resources. Doesn't sound wrong? No? Ok, put yourself to sleep.
A student, probably. Amateur. Set up the camera and walked away. You can find a show of Randy doing this as a PowerPoint for college econ students where you can see the slides. Part 2 of that one is Michael Hudson.
How do you explain the refusal of antagonists to accept the fiat of the others in trade ? For example why did the USA demand gold from the UK during WW2 in payment of oil and weapons ; because gold is an internationally accepted means of payment that doesn’t rely on an issuer defaulting . This is the reason Gold is money without a counter-party debtor . Gold is money - all else is credit .
If you redefine money as something the government collects as tax payments then of course rocks were not money, but if you use the correct definition of money being an intermediary method of exchange, then those giant-ass wheel rocks were of course money.
I don't accept the definition of money in the video. I was only pointing out that the stones became money when the Germans taxed it. That is a strong point to refute. Example in India some governments taxed it kind. Specially paddy (rice) was taxed and paddy became money.
@Dale Harper Government steal things (taxes) to build White House and live in luxury. that is how it works. I do not agree with this crazy story. Example. Cigarettes' served as medium of exchange during war time and was money. Postage stamps served as money. Cowrie served as money and was not acceptable as tax. In India the Value of a Cowrie is maintained but is no longer freely exchangable. My definition of money is any oblect that is freely exchangeable for goods and services that does not lose it's value after the exchange.
@@amadeusdebussy6736 They are still in the sh..T now ! According to travellers experiences last year when travelling to Argentina it is best to pay your accomodation bills and restuarant bills in another currency than in the local because you can ask for up to 40% off and get it.
Omg...this is so mind boggling....absolutely fascinating. I wish i listened to it earlier....i cant help but clapping my hands at the end of the speech. Lol....MMT deserves a much wider audience definitely
It's fantasy based on incorrect understanding and false proven misleading assumptions. The whole of MMT is full of conflicting irreconcilable statements. It is based on absurd claims like the government being the creator of all money which is totally wrong since private banks create more money than the government through their lending mechanisms.
Bitcoin is not money because people don't purchase things with it. It's just a vehicle for speculative value. People are not buying groceries, electronics, cars, houses, or much of anything using crypto currency.
@@Mbahoue95200 Never, because gold is no longer a currency. I've also never used a denarius, but that doesn't mean that it didn't used to be money in the past, or that it doesn't have some sort of value today. It's just no longer a currency.
44:00 "No economist knew" the operational details of how the system worked but "the fed employees did because they had to do the work." From 1970 to 1990.
mark collins that‘s a very weird story. Who decided to implement a full fiat MMT system and why? Noone? So we just stumbled into this system which MMT proponents say is such a positive thing? An angelic conspiracy?
This is soooo whack. Begs the question: WHO knew when it was implemented. WHAT were their motivations? Who can be so naive as to assume this system that not even the experts understood for 50+ years, let alone the people, was built for noble egalitarian reasons?
@@banzobeans You are getting it backwards. No one decided to implement MMT per se. Warren Mosler, one of the fathers of MMT just noticed that this is how the system worked, when he was a banker, and later described it. He didn't study economic history or theory. MMT was "implemented" in the US when Nixon took the dollar off the Gold standard. Before that MMT did not exist in the US. It's like evolution. One does not ask who went back to implement a dinosaur. We just look at their fossils and describe them.
Stewiehleba I understand MMT is purely descriptive. But I cannot accept the story that this was just decades of stumbling (what you call evolution) that lead to the system we now find. I cannot accept that no thought was put into such matters when the Fed was created and all the intermediate steps took place over multiple decades to end up where we now find ourselves. Nothing about this process is natural or inevitable. These are a series of choices made by people in power and with all the knowhow available at the time and all the expertise to be able to understand the consequences of these decisions. That being the case I wonder what the real deliberations and motivations of those involved in these decisions were.
@@banzobeans Of course people created the systems we have today, but that is true about everything a human hand touches. Markets are not natural. Nothing we do is natural.
This lecture has a lot of good information in it, but unfortunately the speaker neglects to explain that Austrian Economics makes a distinction between currency and money. Currency is anything that's used as a means of exchange, but money also has to be a commodity. He gets close when he says that electronic currency doesn't have any intrinsic value because it's not physical, when he explains that currency started as a substitute for grain, and when he explains that fiat currency is only backed by faith in a government; but failing to at least present the concept of currency being different than money, makes this lecture incomplete.
_"when he explains that fiat currency is only backed by faith in a government"_ He said the exact opposite. That's the whole point. It's not backed by faith, it's backed by the power of the government to force a tax obligation on you and to enforce the redemption. Just try not to pay your taxes and see what happens. It is coercive and it has always been throughout the history. No trust involved. _"but money also has to be a commodity"_ Not at all. Money is just a record of debt. How did you miss that? If I write on a piece of paper that I owe you 5 apples (or the equivalent of 5 apples to make it more abstract) that's money. It's book keeping. Nothing more. The only challenge is to get your money accepted. Actually thinking of money as a commodity is one of the primary reasons why most people get almost everything about our monetary system and how it actually operates wrong. They think that US is borrowing from China, they think that when we pay Dollar to Russia the money actually physically leaves the country when in reality it's always just a balance on a domestic bank account that is not in russia. Money is not a commodity. Money is debt. And it always has been. You are starring at the wrong thing. Using gold as money is nothing but a pure barter economy. It works very badly and is restricting the economy for no good reason. Why should the economic activity depend on the amount of gold there is? It's such a strange idea.
@@trixn4285 First off, thanks for engaging. As to your first point, I get what you're saying, but if you look at times when things get worse in the economy, the amount of people paying taxes goes way down. Look up what happened during the Great Depression and in Weimar Germany. When things get bad, people stop paying and the government doesn't want to enforce it because it knows the people will get violent if they're already having a hard time paying for food. Things have definitely changed as far as the government's ability to track the exchange of currency, services, and assets; so it'll be interesting to see what happens the next time things get really bad in first world countries. I think this is part of the reason the government wants to get rid of cash. It theoretically makes tax enforcement without physical violence much easier. As far as the definition of money, it seems like you missed my point. You can use whatever definition you want, but conflating the separate ideas of currency and money makes it so people don't understand the difference between the two. Currency is debt. Currency doesn't have much of a usage except to transfer/trade information. And as a credit system, it relies on faith. Money is an asset that can be used to trade for other assets or services. The best money has usages outside of being used to trade for other things, and it's a store of value over long periods of time. You could make an argument that currency could be used as wallpaper, toilet paper, etc. so it has usages, but it's ability to last long periods of time compared to more sturdy substances like gold, is why it's not good to consider it as money. This is a distinction that's made in Austrian Economics. And the whole reason this video is deficient for someone who wants a more complete understanding of economics, is because the lecturer didn't cover the extra information.
@@geoffgjof I agree that when "things go bad" either the ability or the willingness to enforce the tax obligation might disappear. But the "things go bad" part is almost exclusively because there was a major real economic disruption, like a war or something that greatly reduced the economic capacity. It's usually not the case that the government simply spent too much of its own currency in an otherwise working economy. Debt in a foreign currency and major breakdowns of production are usually the reasons. And it's true that in that case even if the government kept collecting taxes it isn't even able to get anything from the economy through issuing its currency because the economy itself is defective. And I would disagree that you should be able to store "value" in money for a very long period of time. Money does not store real wealth it only stores "virtual wealth". Wealth is only what you actually produce. And for wealth to actually be produced you need to spend money to get resources working, not hoard it. So an economy is running much better if the value of money depletes over time. Not too much and ideally at a pretty much constant and predictable rate, but it should not be a perfect storage of value forever. A house can store value because you can use it as shelter. It actually has value. Money is only a means to the goal to produce actual value. _"You can use whatever definition you want, but conflating the separate ideas of currency and money"_ I would define currency as the unit of account and money as the representation of debt denominated in that currency. Unfortunately those two are often called the same, e.g. we call the currency Dollar and the actual note also a Dollar. Money is just the physical representation of debt, it's book keeping. It can be printed paper or digital numbers in a spreadsheet. It doesn't matter. It's totally replaceable. The most important requirement must be that you can't counter-fit it to create debt if you are not the issuer. The main defining criterium that distinguishes money from any other commodity is that it represents debt and there is no fixed amount of debt relations in a society. Gold is not money, bitcoin is not money, cars are not money. If you define those as money virtually anything is money, that is tradable. You simply loose the defining feature if you include every commodity into the money definition. Now I understand that in some cases people have used commodites as means of exchange and also to store value. But still I prefer to call those what they are. Commodities. An economy without debt money is a pure barter economy where every transaction is immediately settled. And this works really poorly for advanced economies as there is simply always a shortage of the commodity where it needs to be.
@@trixn4285 A lot of great points. The one thing you're missing is that gold has held close to the same value on average (not price) for like 5000 years because there isn't a lot of it compared to other things, we can't just manufacture it (perhaps this will change later), and it doesn't degrade much. All those things are what makes it a great store of value. You can definitely argue about whether that's a good thing or not. But the things you say about currency and money make me think you don't respect property rights as much as you should. The greatest evils are always done under the guise of being what's best for everybody. And that's always what gets fiat currency into trouble. How many fiat currencies have survived longer than 500 years? Much less 5000. Also, I don't agree that debt is money. Debt is based on faith. That's why assets often times have to be used to securitize larger amounts of debt.
@@geoffgjof Btw. Thank you for the exchange of ideas. It's always a good thing and I appreciate your input. If I disagree with you this is a good base for discussion and constructive exchange. _"But the things you say about currency and money make me think you don't respect property rights as much as you should"_ This has nothing to do with property rights. Inflation is an endogenous effect. It's a constant battle for purchasing power between the owners of the means of production and the workers and it's absolutely necessary. The government doesn't set the inflation at will. It arises from processes endogenous to the economy. Inflation will be low if the power of workers and companies is about the same. This is when everybody will get a fair share of the purchasing power. If you want to preserve the value of money over time you need to invest or you buy something that actually has value. There is no natural right on infinite hoarding of money and there is no right on risk-free interest payments. _"The greatest evils are always done under the guise of being what's best for everybody"_ That is simply not true and pure ideology. Most Austrians do not realize that what they imagine to be a just world will be a horrible dystopia and feudalism 2.0. We evolved from that for a reason. A society can only endure a certain amount of inequality. And gold as a currency or something similar will both shut down economic activity and lead to a great amount of inequality which will in the end lead to everybody being much worse off. The reasonable way is to do what is best for both the individual and the community, not some extreme way. I'm not arguing for communism or anything like that. There should be a great amount of private ownership and private investment and there should be markets. But to think that private ownership and markets everywhere will fix all the problems is a mistaken belief. _"Also, I don't agree that debt is money. Debt is based on faith. That's why assets often times have to be used to securitize larger amounts of debt."_ Even if debt is based on faith (which arguably isn't the case) this wouldn't contradict money being debt. This is a non-sequitur. Debt is based on trust, not blind faith. This is something different. If trust in the debtors is lost, sure it will break down. But this is not an argument against debt at all. Debt and trust are integral parts of society and economy. And trust is always proportional to the evidence there is that debt will be paid back. The government should focus on providing a sound and fair system to deal with debt, not to get rid of it all together. Also I think we can agree that conceptually there can be commodity money which is money backed by some real commodity (e.g. gold) and there is debt money which is simply an IOU and a transferrable record of debt. Is that fair to say? What I'm actually trying to say is that debt money plays the more important role both historically and today and when we talk about money usually its debt money. But I wouldn't disagree that there can also be commodity money. It's just important to distinguish the two because the implications of having one or the other are very different. So I guess we can skip arguing semantics and call it commodity money and debt money.
All I got from this convoluted presentation is merely a description of modern mechanism of money creation and not a theory that explains consequences of unlimited money creation, nor on money’s role on real economy ( production, prices, disparity etc). The mechanism of money creation itself has become convoluted with the evolution of banking and the shift in the physical manifestation of money.. and, importantly the convoluting process of money creation is deliberate and political to concentrate wealth and power.
Yeah, that’s because MMT is not an actual honest attempt to comprehend and explain these things, it’s just a half hearted pseudoacademic attempt to justify that it’s ok to try to control the economy through taxes and money printing. Almost nothing he says about history of money is true or not taken out of context. There are thousands of years of history of foreign money being preferred to domestic one due to better value / more convenience. Even now, there are multiple countries in the world, in Africa, Central Asia, South America, Balkans, where USD or Euro are accepted instead of local currency even though neither is legal tender there. The pound sterling he mentions was redeemable in silver (A POUND OF SILVER to the surprise of absolutely nobody), etc... It’s just motivated reasoning all the way.
@@gtpk3527 Great point. To add to it, there's even a fiat currency in circulation, the Somali Shilling, which persists despite its government's lack of ability to tax the population. MMT has no explanation for this, and that is a red flag in particular for the Chartalism embedded in the MMT story.
Parallax it’s the cumulative effect of total fiscal irresponsibility. “Unlimited” at once? Maybe not, but thirty years ago a “$4T infrastructure package would sound like unlimited money” basically this theory is the equivalent of a charlatan spending without repercussion. Except ultimately we all know there are repercussions of indiscriminate spending. We’d all have to file chapter 11, or worse get locked up.
@@mjpaganetti I see what you're alluding to but isn't that kinda... How should I say this? If the country survives, 200 years from now we could be running gazillion dollar budgets. For the founders in 1776, spending 3 trillion a year on anything would sound crazy, that amount would immediately destroy the economy. For us, we could spend that on top of a few more trillion a year without heating the economy too fast. We provided 29 trillion in relief to businesses and banks, large and small, national and international, during the wallstreet bailout. That was enough money to fund a 12k/yr universal basic income for over a decade without cutting spending anywhere else. Over ten years later our economy has inflated but not significantly, not hyperinflation, because the US dollar has special deflationary pressures other countries don't and the fed is expanding the sink on money (they destroyed about 1 trillion a few months ago). They're going to have to raise rates, this 0 interest policy might help private banks reduce interest burdens on businesses, but I have a feeling the federal govt could make up for it in deficit spending without having to even charge interest, and it would probably be cheaper because through Democratic control of the govt we could limit corporate welfare. Problem with all this is many people, democrats and republicans, would fight against anything that both give people more welfare and made the rich pay more tax. That's a big no no for the people who donate to our politicians and their super PACs.
45:26 this is also true for businesses because remember the central bank is just monopolizing one record that being cash of many records of money or record of payment whether electronic assets or physical assets
Randy, this is one of the best and most through. To counter all the ideological critics (in contrast to economic critics) this talk also focuses on economic nationalism (for fans of Trump rhetoric) and clearly capitalist concepts.
Well answer this then if you believe he and his MMT is right. Or defy historical fact and fly out of the window on a magic carpet to prove you are right. MMT claims taxes are not re spent by government but can't explain why the budget deficit is not about the same size as the total government spending which it would be if taxes did not fund it. The historical yearly records of spending are on this Whitehouse site and show the revenue source is taxation incomes that fund government outgoings (spending) . MMTers deny history. The whitehouse site: www.whitehouse.gov/omb/historical-tables/ table 1.1
@@Rob-fx2dw The "budget deficit" is an arithmetic subtraction of total spending (estimate or real) minus total taxes. That's a real number. It's accounting. This also means the total number of net US Dollars *added* to the private sector, for use by capitalism, which equals *net private savings* aka "financial wealth", and may result in real assets being created, such as a Beautiful Wall Not Paid For By Mexico, in which American laborers earn income, or a bullet train, or nuclear power, or defense research, or various "aid" for poor, elderly, veterans, etc that benefits retail sales, housing & landlords, etc. What taxes ARE NOT is an account of a limited amount of income in USA Dollars that the USA Govt has available to spend ... because the USA Govt is the sole monopoly source of USA Dollars in the entire universe ... unless we're talking about String Theory and parallel universes. When Treasury spends, reserves are created for banks, and dollars are then created by banks in private sector accounts. THEN, real money exists in the private sector. MMT views the Fed like the interface between Fed Gov (Congress, Treasury) and Capitalism, like the blood-brain barrier. Another example is Windows has a HAL (hardware abstraction layer) for a common driver interface for gaming programmers, so they don't have program all possible models of Graphics and Audio hardware are installed in computers. In that sense, the Fed Gov never HAS money and never DOESN'T HAVE money, because money exists in the private (non-govt) sector after the govt creates money by spending. Non-govt includes local govts which don't create money, like State of California or City of Detroit, those being more like corporations or households. Fed Gov is NOT in competition with private firms for a share of income. Fed Gov creates the Dollars that facilitate private income to be possible. *Uncle Sam is the top facilitator of Commerce and Capitalism* , both domestic and global. Isn't that obvious? Fed Gov doesn't have hard limits on how many Dollars it can create. The ECONOMY has soft and *dynamic* limits on how many new Dollars it can use at a given moment and rate, depending on real resources (human workers) and the ability of business to expand. (We have seen business expand when war spending expands, like World Wars and Cold War. Reagan's Cold War deficits expanded high tech sector.) More tax revenue does not ACTUALLY grant govt more spending power, but creates more space (more unemployment) in the private sector to absorb more federal spending.
@@Rob-fx2dw it's sometimes helpful to back up a step, review Alan Holmes' comments from decades ago on how *private banks create credit/loans then look for reserves later, if needed* . Or review what the Bank of England stated about banks and credit creation. Once we grasp that govt-authorized and licensed banks create credit dollars, not quite "out of thin air", but by adding numbers to accounts with keystrokes, by creating new financial liabilities of the bank, based on signatures or agreements on legal contracts, by willing and qualified borrowers (new financial assets to the bank), in FAR LARGER VOLUME THAN ANY GOVT SPENDING, it's not so difficult to grasp that national spending happens in a similar manner. Federal Money is created not quite out of thin air, by using legal processes, institutions, and accounting, but UNLIKE BANK LOANS, not needing customers to sign loan agreements or pledge any specific quantity of taxes.
@@gg_rider You are talking politics and I am not. You are very confused about finance and economics and that puts you in a position of being a real bunny for MMT propaganda that you don't seem to be able to realize is rubbish. I am talking the rational side of economics as a way of understanding what happens and having sound tools to improve the outcomes of economies. Net private savings are not created by excessive amounts of fiat money added to the economy. It is a confusion of ideas that MMT puts forward but can't answer when the questions are put about how it happens. You are confusing two concepts, one of which is savings which are ONLY as a result of people spending less than they earn and not someone else multiplying the amount of currency. If what you said about expanding the money was true then a counterfeiter would increase people's savings so it would be a good thing for everyone if counterfeit were allowed for everyone. The same "Real Money " you talk of existed in all of the countries with failed fiat currencies. The currencies failed for very much the same reasons and were replaced by other currencies that had not been expanded to the same degree. You say the government creates the new money by spending. That is not so. The facts are different from both the MMT and your incorrect idea. They don't create the money by spending. The process is different and that process in the US is the Federal Reserve creating new fiat money to pay Treasury for government bonds. The government (Congress) then decides what Treasury should allocate to pay for the various government programs. Then government spends the new money buying what resources it decides to acquire from the private sector. Those bonds have an interest rate on them and have a maturity date and that means the taxes that the private sector pays must fund their interest and the whole amount of the pay out on maturity. It is a financial burden for the private sector created by the process of creating and spending that new money. . The MMT explanation ignores these facts that resources are taken from the private sector by the government spending and the poor observation and lack of recognition of the debt burden that accompanies new fiat money creation which are more fatal flaws in the MMT reasoning. Your claim about tax revenues denies historical fact that is plain to see unless you are blinded to reality and history. It is here in the Whitehouse documents at www.whitehouse.gov/omb/historical-tables/ Table 1.1-Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789-2024 Explain you way out of that historical reality with MMT fantasy claims that revenues are not used to fund government spending.. As for UncleSam - Well commerce and capitalism and trade and people and the economy existed well before Uncle Sam. You are talking rubbish.
@@gg_rider You say - "You are talking politics and I am not. You are very confused about finance and economics and that puts you in a position of being a real bunny for MMT propaganda that you don't seem to be able to realize is rubbish. I am talking the rational side of economics as a way of understanding what happens and having sound tools to improve the outcomes of economies. Net private savings are not created by excessive amounts of fiat money added to the economy. It is a confusion of ideas taht MMT puts forward but can't answer when the questions are put about how it happens. You are confusing two concepts, one of which is savings which are ONLY as a result of people spending less than they earn and not someone else multiplying the amount of currency. If what you said about expanding the money was true then a counterfeiter would increase people's savings so it would be a good thing for everyone if counterfeit were allowed for everyone. The same "Real Money " you talk of existed in all of the countries with failed fiat currencies. The currencies failed for very much the same reasons and were replaced by other currencies that had not been expanded to the same degree. You say the government creates the new money by spending. That is not so.
The facts are different from both the MMT and your incorrect idea. They don't create the money by spending. The process is different and that process in the US is the Federal Reserve creating new fiat money to pay Treasury for government bonds. The government (Congress) then decides what Treasury should allocate to pay for the various government programs. Then government spends the new money buying what resources it decides to acquire from the private sector. Those bonds have an interest rate on them and have a maturity date and that means the taxes that the private sector pays must fund their interest and the whole amount of the pay out on maturity. It is a financial burden for the private sector created by the process of creating and spending that new money. . The MMT explanation ignores these facts that resources are taken from the private sector by the government spending and the poor observation and lack of recognition of the debt burden that accompanies new fiat money creation which are more fatal flaws in the MMT reasoning. Your claim about tax revenues denies historical fact that is plain to see unless you are blinded to reality and history. It is here in the Whitehouse documents at www.whitehouse.gov/omb/historical-tables/ Table 1.1-Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789-2024 Explain you way out of that historical reality with MMT fantasy claims that revenues are not used to fund government spending..
As for UncleSam - Well commerce and capitalism and trade and people and the economy existed well before Uncle Sam. You are talking rubbish.
You say " More tax revenue does not ACTUALLY grant govt more spending power, but creates more space (more unemployment) in the private sector to absorb more federal spending." . Yeah sure that's about the MMT thinking in a perfect perspective ! - Government creates more unemployment so it can employ more people thus solving the unemployment . Government creates a problem so it can solve it !! Thinking like that is all they are capable of. - The circular reference of MMT.
@@First4America I've read arguments that other precedents of countries suffering runaway inflation (Weimar Republic Germany, Zimbabwe, etc) were not actually results of their governments adopting something akin to MMT, but rather were the results of other forms of mismanagement.
SoulfuzZ Right. Careful as in: not too fast (give enough time for real resources to be established along with it) and injected in the right places. In theory, I can make sense of it. It‘s in the trust in institutions of centralized power where MMT proponents tend to lose me. Seems like highly irrational optimism. I guess either we fight to get people in power to use our real existing MMT monetary system to great public good. Or we fight to reduce centralized power and distribute it.
First4America maybe we should run with the the „money is a lubricant“ analogy. Put the lubricant in the right place at the right time in the right amount it makes many things significantly better. volume knob turns, Car drives. Babies are made. But too much lubricant in the wrong place all at once: speakers drown, cars crash, lovers can‘t make contact.
I think MMT will work in countries like USA,UK,Norway,Japan. Because it has a central bank. ( but ... It does not function in countries with many foreign bonds. ) I think this idea is amazing, The limit of fiscal spending, It places it on the production capacity of each country. ( correct? My understanding. ) Before reaching that level, the inflation rate surely rises and it is easy to match with the target. There is a yield curve for that. In Japan, by elites who fear government debt, Even though 100% of it is in Japanese Yen, For 20 years the Japanese government has been AUSATERITY. It is fu*king. Political forces aiming to expand government expenditure are still extremely small. I wish this MMT 's way of thinking would be spread all over the OECD country. Thank you video. sorry broken english. from JAPAN.
Why does everyone say "money has no intrinsic value, except for gold"? Gold has no intrinsic value either. It has some use today in electronics applications, but for most of human history it had no practical use and its only value was due to its rarity, of which many things are rarer. Gold has no more intrinsic value than anything else people have used as currency. It's precisely because it doesn't have a practical use that makes it useful as a currency.
First of all, gold has more uses than just electronics: Jewelry, ornaments, dentistry, and if nothing else, it is a shiny paper weight. Gold has a lot of properties that make it a good money. It does not tarnish, is easily divisible, is easily identifiable, and it is scarce. I believe that the practical uses of gold do not hinder its use as money because the demand for non-monetary gold is fairly predictable and probably negligible. I mean it was used for thousands of years as money until recently.
@@hbgl8889 yeah, I know it's useful as a currency. The very properties that make it useful as a currency are the same ones that make it not useful elsewhere. Also, ornamentation is not a "use."
I agree with you that gold has no intrinsic value in the sense that nothing has a value that is separate from human desires. I have to disagree about ornamentation not being a 'use' though. Vanity and status are strong and widespread human desires. People kill on a regular basis to prove their status and over pride.
So this whole thing came about because he missed a couple of points people like Greenspan made? Yes, the US Gov can print more money to not default on debt directly. Greenspan says we CAN print money to cover any debt but the reason we don't is it will devalue the dollar if done excessively. In Randall's world we cold seemingly take debt equal to the global GDP, but every square foot of real estate in other countries, then just print the money to cover it. There's a reason this can't be done; devaluation of currency. He doesn't seem to understand that we have three markets for dollars. Domestic, Corporate, and what is usually called EuroDollar. These are like a pool a pond, and a lake connected by a garden hose. You can pump a lot of money into one and it takes some time to leak into the other, but it does leak. Many people say "We did QE 1-3 and saw no inflation." First, we saw inflation. QE works at the Corporate level. QE inflation was very clear as we saw inflated equity prices. Those dollars went to the stocks. This leaks into the domestic economy as wealth in pension plans that would not otherwise have such high numbers, thus giving anyone drawing pension more money in the domestic economy. If we do helicopter money now through payments to individuals, forgive student loans, etc we will see inflation in the Domestic economy (the smallest group of dollars, the pool above). This idea that we can just print money and there will be competition for resources so we'll have roads but no more Trump Towers misses that it will also devalue the savings of Bob who will not get a new car, Jane who will not get a new shirt, and Jack who will not get a new bike. Currency is an arbitrary representation of goods and services. Increase the dollars without increasing the goods you get "inflation" but really it is more accurate to call it "currency devaluation". This is just the government promising to tax the wealth (wealth is the ability to acquire goods and services) you saved by devaluing your currency. Without fiat, governments would need to raise taxes to get your wealth. Raising taxes requires transparency on the part of the government. Instead with the government now able to print endlessly, the government doesn't have to say "We want to start a war and everyone needs to pay a war tax of 10%. Vote for me during re-election." Instead, we pretend that money doesn't represent wealth already accumulated and we let the government tax us without really bringing these important discussions forward. Also, don't ask the government if we have consumer inflation. As he stated, things are more expensive for seniors. Because housing and healthcare matters, it is just ignored. The government constantly redefines the CPI in order to paint a narrative that works for them. "If it is going up, drop it from the metrics". Also just because he can't take every exchange back to the first time someone said "I'll trade you this apple for that sea shell" doesn't mean there wasn't a first exchange done under a currency. The problem with his argument is he came up with a view he wanted "We can all have all the things and nothing matters" then used selective facts to get to that point instead of just looking at the reality. I think he's 95% right in this. It's just that the 5% he ignores is what allows a government to exercise complete control over the citizenry by destroying their ability to save the wealth created under their own work. And yes, I hate Republicans too but this really seemed to be just a political propaganda video by the end.
Ben Silva his theories work perfectly well... for a little while. Then they collapse. Like a person living the high life on credit cards. It is AWESOME... until one day you max out. Then it is a lot of pain.
Grinning Guise an economist defines inflation as “an increase in the quantity of money and credit. ... The beginning of the inflow of additional money makes the prices of some commodities and services rise; other prices rise later.” I assume you mean “price inflation” but I’m not sure which prices you reference. Inflation is rarely binary as in “we have it or we don’t”. And when you say “soak it up” I assume you mean the government will print money and then use the reserves to buy goods and services. It’s hard for me to respond without knowing the specifics you reference but I’ll try. If the gov is soaking it up, then this is not a UBI process where they give the money to the people to spend. Instead it sounds like classic currency devaluation in lieu of taxation for the gov to control allocation of scarce resources. We can use the government cheese program example. The government prints money instead of raising taxes. It can not allocate those dollars. It buys above natural demand quantities of cheese causing farmers to produce above natural levels of cheese. If done slowly the quantity grows as artificial demand grows and prices stay relatively stable over time. So in this case, you are correct. Cheese prices would not inflate (if done slowly, otherwise the spike in demand would certainly cause competition for scarce cheese and spike demand/competition/prices). But this is going to divert more of the nations resources to cheese. As more money is created to buy cheese, this is still going to dilute the value of existing dollars (of course all of these assume a consistent velocity of money in order to theoretically isolate the change in M1 and M2). As we increase the pursuit of cheese this way we would still be dividing more currency among the same number of citizens. But now a large amount of cheese farmers exist and have more dollars to buy more trucks, tractors, fences, etc. At the same time existing dollars are chasing all non-cheese assets but since noncheese farmers and cheese farmers alm want a new truck and cheese farmers now have assets beyond a natural level you have more dollars chasing trucks and less power behind each dollar is less. This causes trick prices (and all other assets) to creep up to some extend. Maybe it is a .01% increase in trucks but it is across all things cheese farmers want. If we extend this to more commodities than cheese the price inflation accelerates. Government generated demand, is still demand. It just makes a less efficient form of resource allocation and on this case it lead to a lot of poor people eating far more cheese than they wanted. There’s just no such thing as a free lunch, even cheese sandwiches.
"Save the wealth created under their own work"- stated as if all work is the same with the same possible outcomes. Work involved in producing a piece of furniture is very different from the work involved in figuring out how to eliminate jobs and avoid taxes in order to maximize shareholder profit. Which of the two is rewarded? Hint: It isn't the artisan stashing away millions in cash.
Here’s a question. I’m on a Randall Wray deep dive right now, and MMT in general. It’s very enlightening stuff, but I have some questions that some on this thread might be able to help with. One thing I’ve heard him and others say is that we have no evidence of bartering, so money must have been first. That seems counterintuitive. Here’s my question. What evidence of bartering would we expect? It seems likely to me that we see evidence of money first because the evidence of money is far more likely to last and be visible in archeological records. What evidence do we see of bartering once money was created? Or is the argument that bartering is a modern invention? My understanding is that anthropologists have observed bartering in modern times. It still happens in cultures that have money. But in primitive cultures, what is the record of bartering that we would expect to see 3,000 years from now that would allow us to confirm that is was being done?
Yes. It would be like looking for evidence of someone's conversations before there were recordings or a written language and then assuming langauge did not exist at all.
But also, why is he adamant about it. Why is it important to prove that barter did not exist? Imo, it must have existed on a low scale level, with the population increase it would fail because of double coincidence but that is not the point. The point, again, is why is he so adamant to prove it? Just to have another factor supporting his ideology.
@@h.a.s.42 That is hte point entirely. he is so ken to prove his theory but fails because barter which is form of mutiallyy agreed exchange without a money as an intermediary exsits today in households and betwen peole who know each othe . People co operate without money in all sorts of ways from helping each other with their labour to trading goods.
@@h.a.s.42 You are correct and that is their problem in missing out on the tax. Randall Wray is all about taxing in one way or another. His whole theory is underpinned by a madness of power seeking.
38:15 but do u know why central banks and business can just write each other iou´s physically or digitally and they are both assets until they are traded which at the point somehow a liability is obtained and in return you recieve something and set the budget to whatever suites there fancy
pimliconz Central banks are not part of government in fact you can do directly to the feds website and see this. www.stlouisfed.org/in-plain-english/who-owns-the-federal-reserve-banks
pimliconz it’s shows that it was setup by congress but no explanation of how congress actually has a say in it’s operations. Just found out about mmt, learning about it. Just doesn’t seem that it can coexist with this type of central bank setup. Serious restructuring would be needed
"How can governments control inflation when banks issue most of the money?" Bank-issued money doesn't increase the money supply. Loans must be paid back (with money that's already been issued into existence by the federal government).
26:29 - how they were created? At what amounts? How they were distributed to the public? Is it “you do service for government - we pay you in Virginia pounds” or do they distribute money through the banks in form of loans? Unless we answer this , the fact that they burned tax revenue received in the form of those paper money is not that fascinated. Maybe they just received 20 thousand, burned them and printed new notes in the same sum. You can’t say in this case that “they do not spent them”
. Exactly . It's pure self deception (stupidity at least) to say taxes do not fund government spending if you say new amounts of money replace older amounts that were collected from taxes. Like saying you didn't steal the money that you have in your bank account to buy a car because you used other money from the same bank account and used that stolen money to replace the money you already had in the same account.
Hi, he says money arose out of the ancient tribal practice known as 'vert gild'. not sure if i am spelling it right but i cant find any material. Please share a link? Thank!
@@josejaimes-ramos1546 thank you so much. He also mentions this paper called 'How Governments actually spend.' Could you please share the link or something? Thank yo so much.
While he starts off with some reasonable positions such as the fact that all money (not-mentioned, but importantly in a fiat based economy) represents a debt, this theory has more loose ends than a frayed rope. Eg. He conflates bills for work with actual work effort or value creation. Money is useful for things other than taxes and gets used for all sorts of things besides taxes. E.g. government does necessarily not need to spend first, it can (and often does) just accept another kinds of tokens that represent work effort. Indeed he talks himself in loops beginning about 55:00. What? Other countries wanted Germany to pay in - gold? But, according to Wray's money history money only ever originated with taxes! What is this non governmental thing 'gold' that was used to pay for Germany war debts? Then what about 45:30 "there are no limits". Later, ~58 "yes you need limits". Uh, exactly where are those "limits" in MMT? He wants to Target unemployment, but not for unionized workers? Uh, what exactly are these unemployment criteria? Later, he admits other countries can run surplus - but only because they export. Ok, so isn't the deficit also indicating a problem with our relative lack of exports, and thus relative exportation of dollars (e.g. feeding a eurodollar system)? What is this non-tax value use as a result of being the world reserve currency? Also, if deficits are not a problem what happens if/when the world decides to switch reserve currencies as it has done several times (e.g. Brenton Woods). Why isn't the pound still the reserve currency? Why did the US get all the gold after WWII? Why did France want the US to pay them in gold? And why are there current discussions at the world economic forum about this thing called a 'global reset'? MMT is popular because politicians want a free lunch and think that MMT justifies one. This is like telling an opioid addict that there is no problem because we can just give more opium. But, unfortunately, there is no free lunch, and people really do die from opioid abuse. The reason debt really does matter is because it represents a payment of _value_ (not currency) the future. If the gov't spends it doesn't just give away tokens - it really results in a debt that is expected to be payed. He's right we can always avoid default by printing more tokens. But that is different from saying that unconstrained token printing won't lead to other secondary effects like reducing GDP, stagflation, and eventually calls for a 'global reset' because nobody trusts the fiat anymore.
Ironically, here is the explanation by debating a completely separate issue. Watch th-cam.com/video/Vti1jkhEDoA/w-d-xo.html Notice the subtle fact not mentioned by Wray - that fiats don't start as sticks with notches. They start with something of tangible value, then the IOU becomes a convenient way to represent it - that is _until_ it eventually fails and there is a need to restore a tangible value. For example, MMT does not explain why nearly all fiat currencies have failed nor why after that failure there is a return to a tangible asset such as a metal that is NOT backed by the government where it failed, but instead accepted by the OTHER government that give that government some stable starting point. E.g. why on did the US dollar need to back with Gold (until 1971) if it could simply get have gotten away with just printing paper tokens. And why did other countries peg to the dollar in Brenton Woods use the dollar and explain the reason - Because it was backed by gold.
I think the point you're missing is that there is very little a US or France could do with german currency. They would have to use that german money to buy german things. That defeats the point of winning the war. Instead they wanted German goods, namely gold, that could be exchanged for dollars within their own country.
Your confusion at being paid in gold shows you misunderstand MMT. MMT does not state that everything except fiat currency has no value, that's preposterous. I mean think about it, why would you want fiat currency from an enemy country?
@@ThomasBomb45 re:"why would you want fiat currency from an enemy country?" Excellent question! How does MMT explain this? Or does MMT they state that there is no such thing as global trade, no such thing as a trade deficit, and no such thing as a 'reserve currency' (thus Triffin's Dilemma)? Prior to 1971 the reason wanted US dollars was explicitly because the currency was backed by a real and limited supply asset - namely Gold. The 'Fiat' claim that a US government tax might be paid was/is worthless to a foreign agent. Yet MMT presumes that's all the tokens (US dollars) ever represents. From 1971 -2021 the reason a foreign agent wanted US dollars is because if any country tried to price oil in anything but dollars, they were attacked by the US military. This essentially backed the US dollar with the US military as a world police because all countries use oil, and it required the foreign agent to have extra US dollars. After 2021, there are residual finance obligations that are denominated in dollars and a lot of financial interests that don't really want the Fiat Ponzi to change - so this is still unwinding. But now bets are off because global oil is no longer backed by the US military. Further, we just declared that foreign exchanges can be seized more or less at whim. This makes US dollars an unsafe store of value for a foreign country. So, why indeed would a country other than the US want US dollars in exchange for real goods and services anymore? Now take it to the next step? What happens to those massive US trade deficits if there is no longer external demand for US dollars? Answer: a dramatic reduction in foreign imports, and instead excess US dollars flowing back in the US because foreign countries do not have a need for them anymore. This results in massive inflation that the US can't just tax away.
I love how 42 minutes in, you still haven't mentioned the role of banks, despite the fact that banks have been issuing private debt currency for centuries.
Can people who are against MMT concisely explain to me why we can't use MMT to run full employment, providing that the goverment pays at the minimum wage? As far as I understand, this policy would eliminate unemployment, increase investments in automation, and increase aggregate demand. What am I missing?
Firstly full employement does not necessarily create more wealth for many reasons of which the main one is efficiencies drive more wealth and not just lack of employment. The job guarantee policy would not eliminate unemployment because some of the unemployment is a result of people working in industries that become inefficient or too costly compared to their competition. Sometime the lack of the flexibility of wages is a problem in adjusting prices downwards to keep businesses viable. They are frictionally unemployed for a while until they get jobs elsewhere. An application of a job guarantee takes no account of prices for goods or wages or efficiencies of industry so it can easily result in lower business efficiencies and lower effective production and lower wealth generation.
Politics. Fear. Fear of who might loose out if it happened. Nobody cares if you are unemployed, but everyone is scared of inflation. There is a lot of propaganda coming down from the rich, and its been going on a long time
@@MrKongatthegates That's exactly what I hear on hearing "taxes don't fund spending" . Much more accurate to say tax breaks for billionaires don't fund spending. Collected taxes most certainly do fund spending. trump repealed 4 separate tax laws Obama levied against the 1% to help fund the ACA. The most famous was called the Cadillac Tax. To believe tax revenue is "destroyed" rather than used to fund our country is to not fear voting away the payroll tax. Using unfounded beliefs, theories and pure bs to convince both progressives and repubs to vote to defund their own country is no small feat....give Fox, RT, Murdoch, Putin and Koch all cookies. the propaganda being used against us and the other democracies will be the most studied in history.
I do not understand why Prof Wray claims that we do not need taxes to pay the national debt? How else is the debt to decrease; tax for the vast majority of nations forms a large part of the state revenues.
why should a government that creates it own money out of nothing need money from anybody.. makes no sense. There is no debt to repay that is the outstanding amount invested in bonds. Which are returned with an interest. That taxes are used for revenues is an accounting error or a relic of the gold-standart era. IN reality we dont need taxes to fund anything, taxes are here for taking money out of the system (cool the economy if needed) and to create demand for the currency. Due to gold-standart mentality im not sure if the taxes money is actually reused, or if actually spending is solely done by creation of new funds.. could somebody explain that?
Dimitris Tsagdis The government literally pulled those dollars being taxed out of thin air; it is the sole supplier and creator and distributor of money. The government isn’t a household; it literally can’t enter bankruptcy or run out of money. The problem isn’t with paying back debt, it’s about keeping inflation in check by making sure public expenditures actually produce value and levying taxes if need be. Worrying about how a sovereign nation can pay back debt when it has the ability to create infinite amount of money is mostly silly.
Of course countries go bankrupt and run out of money; see Russia, Greece, Mexico, Argentina, Iceland... National currency becomes worthless and all countries need imports so at some point the other countries stop accepting your junk paper and demand their money which you have to borrow and if nobody is willing to lend nations go bankrupt. Don't you read history?
@@dimitristsagdis7340 Didn't you watch the video? The US is unique in the world stage in that it has fiat money, meaning the US dollar has no intrinsic value and isn't created or pegged to a commodity. All those countries either don't have fiat money, at least in the truest sense of the term, or fell victim to economic and/or political downturns that devalued the currency in a way that led to loss of international recognition: Greece is pegged to the euro and thus doesn't have true monetary sovereignty, unlike the US. Argentina went through several currencies in the last century, some of which were pegged to foreign nations, and also operated under a right-wing military dictatorship that engaged in the irresponsible spending and collection of money. The value of the Icelandic krona fell because of the collapse of the banking sector, which relied heavily off foreign debts and foreign money, essentially 'pegging' private banks to foreign currencies. Again, countries with fiat money literally can't go bankrupt; they have the ability to create an infinite amount of money. This is different from saying they SHOULD create an infinite amount of money. The main problem is ensuring that 1) the value placed on the money stays consistent and is internationally recognized, and 2) the amount of money doesn't exceed the socially productive capabilities of the economy. This is the great balancing act. Though hyperinflation can happen if governments aren't too careful, the point is that deficits and debts don't necessarily lead to hyperinflation.
David Till: 'pigs can fly' but they shouldn't (cause they crash land every time they fly :-); which is why you don't see any of them flying. Stop playing with words ! Your and the video's 'can' mean nothing if you can't because of the (1) and (2) you acknowledge above; and many other factors which MMT seems to be oblivious too or intentionally turn a blind eye. The US$ has already passed the two thresholds you mention. Look at its XR with something relatively stable like the Swiss Franc (CHF) from 2000 at 1.8 to today's borderline 1:1 and occasionally below. Wake up and smell the coffee, in a world of fiat money where all central banks can print currency, the fact that one 'can' means nothing; it is the modus operandi. It is the willingness of the world economy to accept whatever a central bank prints that valorises a fiat currency. And as the above XR shows the US$ has gone downhill during the last 18 years and if it carries on the same tune (e.g. QE, ever growing deficits, withdrawal from the Iran deal) it will go further down. Perhaps then people espousing the MMT will realise that a central bank in a sovereign country 'cannot' create infinite fiat currency.
16:00 "Where does money come from?" For a minute I genuinely thought he was going to say "it grows from the trees" 😂😂😂
This lecture should have 25M views by now!
Because it is nonsense vacuum thinking?
@@ThomasJScharmann Did you listen? It's not a theory, it is a description of today's economy. Everything stated here is directly observable.
@@billmitchell2080 oh and economy is doing great yeah?
@@colingifford3113 you are aware that the US economy has become more volatile due to the adoption of Milton Friedman style economic policy. Reaganomics is a shitty term to use, however it puts the blame on the party and the individual who put it into practice.
Also, Nixon is the president who negotiated the deal with OPEC to only sell oil in US dollars. Which allowed them to fuck with the value of the US dollar and hurt the US economy.
@@billmitchell2080
(1.) No sir, MMT is *NOT* a description of today's economy, and *NOT* everything MMT claims is observable in any economy. Wray gets away with saying such things because all economic and/or monetary theories much have many points in common, but that doesn't mean MMT is currently in use, much less was *ever* in use ... though I'd grant you that it's possible that MMT's precepts were previously in use during the *Fall of the (Western) Roman Empire in 471 AD* - after all they had a lot of uncontrolled inflation, which is more-likely to occur under MMT's precepts, than any other so-called "theory".
(2.) Please explain how MMT squares with the *Federal Reserve Act* - which says the Fed can only issue money by exchanging newly-printed money for "high-quality" collateral of equal value, which has usually been bonds. (As you should be aware, "high quality" is required to ensure that the value of said bonds do not decline due to heightened suspicions of a pending US default, or US inflation.)
(3.) MMT claims they'd issue money by exchanging newly-printed dollars for government provisions or programs, and use taxation or borrowing to fight inflation, if such a threat arose.
(4.) MMT has never truly been implemented anywhere, except perhaps the Fall of the western Roman Empire (mentioned above), or perhaps during the *Weimar Republic of Germany* about a decade prior to WWII, when Germany suffered inflation so high that prices doubled roughly every hour.
(5.) Actually, MMT is incompatible with central banking, so that's a peculiar problem that all your Giants of MMT have swept quietly under the rug. Please kindly leave your thoughts and comments on that score, I'd love to see your reply.
I think the history of money is absolutely fascinating
I felt this review plodding and superfluous. Altho for someone who may have never picked up a single book on any of this I suppose it's adequate. Not concerned if I come off any particular way, just sharing my experience for anyone else desiring an intro to MMT without all the redundant intro info. Cheers.
Erin, I found it fascinating too. As irrelevant as it might be today, going over early concepts like bartering are good foundations for what is to come.
Erin Taylor I agree😜
I think history is fascinating, money, weapons, even history of toilet paper
you mean the history of current-cy eis ,because all currencies becomes past
I have heard this before, but I don't know why am I only getting it NOW.
I've never understood it. I would always just get small explanations of some concepts.
This was an explanation of the WHOLE picture. And it's wonderful.
ditto... I think the simplified historic build helped.
After the inflation we got do you still think it's "wonderful?"
@@ChrisWill The inflation was caused by corporations raising their prices. Please go do your research and stop blaming money printing
@@lu881corporations all raised prices but the gross margins stayed relatively constant. You either have to admit the inflation was caused by the money supply or you have to believe practically every company is committing fraud and all their auditors are complicit.
Sounds wonderful when your the one issuing the currency.
Would you think issuing money benefited you if you were in charge? Given the level of understanding exhibited by many comments here I would think it would be a huge headache. Your job is to issue the currency for government purchases and public use and a vocal minority is so addled by miseducation that they think money comes from Someplace Else! I couldn't deal with that.
MMT is new to me. What I am hearing is that money is little more than a confidence game. If a country is in turmoil, an unbacked currency will lose value. LRW says trust is a thin reason for the keeping the value of money, but MMT is based on it. Secondly this type of economy does not rely on the objective measure of supply and demand, but rather the subjective judgement of self interested leaders who control money supply and taxation. Even smart people can make big errors.
LRW states that the US economy was doing very weill into the mid 70's. Coincidentally we left the gold standard in '71. Coincidence?
When we left the gold standard in 1971 debt climbed exponentially and so did the disparity of wealth. Printing money we don't have enriches the powerful and makes billionaires out of millionaires. While we’ve accumulated 20+ trillion in debt, the poor stay poor, the middle class treads water, and the rich get astronomically richer. Where does all that borrowed money go? To the wealthiest. When the money is circulated they can get much closer to the printing presses than the ordinary citizen. I think there are major flaws in this theory.
Ed Hauser MMT also assumes that the people controlling the levers of the system are trusted and competent. A monetary system needs to trust-less and controlled by no single power
Thank you very much Sir. My view on economics has changed radically.
@kim ama Marxism is literally defined as a moneyless society ... just say you have no idea what you are talking about
@@freddiemercury5659 The commodity of exchange used is second to the issue with power.
@@freddiemercury5659 noooooo. That's way too simplistic of a reduction. Marxism is defined as a field of studying society, philosophy, and the economy inspired by Karl Marks (and Ingles). If you think it stops at the economy then you're missing the social aspect, which is at the core of the current political movement in the west.
That's not a good thing.
@@luckyjinxer Sounds spooky. What do you mean about marxist culture?
Christ, finally. I've spent weeks trying to figure out what federal taxes are for, because the whole 'funding' thing is such obvious BS. I don't particularly agree on every aspect of MMT but this at least explains how things operate today.
Now go read about Austrian economics and tell me which one makes more sense to promote individualism and liberty.
@@mjpaganetti Like I said, I don't like MMT, I just think it accurately describes the system we're forced to live under. It's just useful to know what's coming, since we can't change anything about it.
@@rodentRoundup Youre right. We have to understand something before we can think about changing, improving or discarding an idea.
@@rodentRoundup They want you to get with the program and accept your rulers all the way.
@@mjpaganetti you are free to stand alone and starve when you get ill.
Great Lecture. I enjoyed it.
"...affordability is not the issue........productive capacity is the issue". [For a national economy]
There's a number of similar, allied phrases that go with the above..... or go against it...
Those that go with it.
-Compete on Quality (Remember Michael Porter)
-Just Do it- Focus on Action - the things that need to be done to achieve the objective
-Build it and they will come (Steve Jobs lived this)
-There's always money to support a good idea
-Investment, Investment in all things, machinery, facilities etc. Good skilled workers want to work with the best tools in the best places.
-Focus on quality - of people, systems, policies, environment (natural and workplace)
...these are all part of 'productive capacity'. Look at a few companies - indeed a few countries - where the above ethics hold and compare their economic performance, living standards etc. (Germany for example)
Those that go against it.
-Complete on Cost. Undercut competitors and you undercut your margins if you don't put pressure on your cost side
-Sweat Your Assets....drive them into the ground before renewal.
-Pay Out High Divs...
-Make everything a cost type business case
-Cost, Cost, Cost
...these and more are all factors which drive a firm in the wrong direction and impede production capacity and/or production and product quality. Sure in the short term they give the appearance of good performance, but over time.....productivity and competitiveness are eroded. Look at companies and economies that exist with this mantra.(UK for example)
In fact, the UK and Germany are a great comparison. Even after re-unification [in Germany] the two countries are still comparable. There are structural differences of course (distribution of population, geography etc.) but certainly the above factors contribute to why Germany out-competes the UK. Germany does think differently about how its firms exist in their economy and how they compete internally and internationally. So does Britain - but in different directions.
This theory raises lots of questions. But first why does this view of economics place the role of the government transcending the role of the market?
Because it is a fantasy belief that does not deal with the reality that goods and services are the real wealth and goods and services are created by the work in the private sector not someone creating more and more money for government to spend first through their deficits before anyone else gets to spend it.
Money creates markets. Money is always the creation of the authority. As Wray explains, there is no record of a "barter market" in history. You need a pricing mechanism to make it possible to buy and sell numerous kinds of goods. It should be tax supported to give it value and universality. You will buy goods with the instrument you pay your taxes with. You don't need to beg people to accept it for that reason.
Money does not create markets. Only a complete moron who has never thought about anything other than what their retarded left wing professors taught them could think that.
Humans have needed to trade FAR before ‘governments’ with money printers existed.
You don’t need a government with taxes
To make money work.
You need a trustless final settlement system that allows ANYONE to trade with anyone else without the use of force. Gold is good but requires a credit layer. Bitcoin is the best form we have PRECISELY because it can’t be abused by corrupt governments.
Can we please have access to a chart pack of the slides displayed for this lecture. Its nice watching Professor Randall speak but would have been better if the slides were displayed too.
HI, We always balance adding slides with getting the videos live in a timely fashion. We thought Professor Wray did a great job explaining, so didn't see the need to wait. Sorry for the invconvenience.
This is a terrific talk. Thanks for sharing it.
Will the slides be available? If so, is there an estimated time? Thanks. Greatly appreciated the talk!
I’d like to see the slides too.
@@stevenhail2837 Stop trying to fool people. You are an MMT pusher from a university in South Australia and already a member of the group promoting MMT.
You can't even answer why you and other MMT promoters including Randall Wray claims Federal deficits are an asset for the private sector when it is the private sector that is burdened with paying off the debt that funds deficits.
56:00 you actually don't answer the question of why Germany couldn't just print the money?
It contradicts the main point
Thank you St. Francis College and Professor Wray.
Great lecture professor. One question I have is is that if it's true that the government can "print" as much as it needs in order to service shortages in the real economy, and it can offset or avoid monetary inflation by doing so, then does this mean that there are no limits or constraints to foreign aid? It seems that the government here is printing to service a shortage so there's no inflation concern here. Is that right?
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!
MMT is not something to be implemented, its a new way of teaching how international finance already works
_"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"_
MMT is not a hypothetical, nothing that can be implemented. It's a description of how our monetary system operates to today. Therefore you can not implement MMT as it is not a policy. So we do not need to reach a consensus if it would work. We need to reach a consensus on if it is correct about how thinks work. And believe me, it is much more correct than any neoclassical view on the monetary system. It has mountains of proof at hand for every claim it makes about how the monetary system actually works. So what we have to change first is our mental model of money. Because if we do not get this step right, we can't base any policy on it and think that it will work the way we expect it to.
@@trixn4285 lol no
@@marcintanski8549 lol yes
I'm always confused by comments like this. MMT is first and foremost a description of what money is and where it comes from. Its most public-facing proponents have policy ideas, of course, but those ideas aren't dictated by the theory, which, again, is just descriptive.
Great lecture. I take exception only to one thing: Prof. Wray's characterization of the concept of legal tender.
The fact that the US Dollar is a legal tender in the United States does not mean vendors must accept it; it means creditors must accept it. The concept is irrelevant until there's a debtor/creditor relationship. Customarily, most retail transactions are arranged in such a way that the customer is at no point the vendor's creditor. The customer is typically required to perform first (by paying), and before that happens, the vendor doesn't have to do anything.
For example, I'm never indebted to Starbucks when I buy a coffee there, because I have to pay BEFORE they do anything. Rather Starbucks is indebted to ME between the time I pay and the time they deliver the coffee. By the terms of our unwritten contract, provision of the coffee extinguishes Starbucks' indebtedness. But if it wanted to, it could also discharge the debt by a tender of US Dollars (i.e., by giving me a cash refund). This works whether or not I consent; if Starbucks tenders the dollars and I refuse, the debt's still extinguished. If I sue, Starbucks can pay the amount of the tender into court, plead the defence of tender, and the court will dismiss my case. While I don't think there's much litigation like this, the threat of it is at least partly what makes the dollar money. If I'm owed "money" in the United States, I can't refuse to be paid in US Dollars.
Oh, also, a court judgment (as opposed to a declaration or injunction) is itself a debt. As such, almost any legal obligation (e.g., Wal-Mart's liability to somebody who slipped and fell in their parking lot) can be transformed into a debtor-creditor relationship that can be discharged by a legal tender. I wouldn't discount the importance of this fact to "monetizing" the dollar.
I'm a lawyer, not an economist, so I think of this as a lawyer. And I agree that one way or the other, the modern dollar has economic value because of its legal attributes. But as between the fact that the government will accept the dollar in settlement of public debts and the fact that they can't be refused in settlement of private debts, my sense is that the the latter probably has a bigger impact.
I take your explanation of the dollar being a participant in indebtedness between entities in the private sector as fact but you failed to see one of the most obvious flaws in MMT. That is the fact government is the big indebtor of others in the economy. It indebts others via taxes which allow it to spend and by selling securities to the market and the reserve bank to fund further spending.
It does not happen the other way around with the private sector taxing government to buy things.
The reality of money is most money in the economy is created by private bank lending rather than the reserve bank and taxes are paid on that money created by the private banks and lent to the customer.
MMTers pride themselves on what they call a different 'lens' to view the economy.
It is nothing but rose coloured glasses that ignore todays realities and historical fact. Facts like saying taxes drive value into money and ignoring the reality that taxes did not put any value into money in all of the instances where massive inflation made the money valueless and rejected by even their own government.
There are many instances of this including Zimbabwe, Brazil Hungary, Chile, the Weimar republic where their money became worthless.
I concur and will add that the demand for the dollar is highly bolstered by the government requiring it for tax payments. Which is a "debt" too eh?
This is very profound and has transformed my understanding of the economy and debt.
The government needs to print and spend money to utilize unused productivity.. If what is produced has value it won't cause inflation.
To talk about central bank debt is meaningless if it's denominated in its own currency.
Deflation is likely an indicator that the supply of money is not sufficient to exploit unused productive capacity
You are Wrong. So wrong and have been fooled by this crazy power seeking MMT pusher.
Government debt matters since it has to be repaid when it matures. It also has interst that the taxpayer has to pay in the interim.
When it matures it has to be paid in full and this is a burden on the taxpayer.
@@Rob-fx2dw I am increasingly skeptical about MMT. People like Charlie Munger point out that with the same conditions and actions the results can be completely different because there are too many variables.
QE apparently avoided / delayed a depression. But QE was also a huge transfer of wealth away from the 45% of US who don't own equity.
@@testblustacks5799 You are right to be skeptical about MMT. It is just wrong in so many respects.
The glaringly obvious part is that it claims taxes do not fund government spending which is totally rubbish since there never could have been a federal budget surplus if that were the case and the history of budgets is that there often has been a surplus. But that is just a start since it has so many facts wrong as well as it disregards other historical evidence which does not support it's claims.
You are also right that the QE transfered a large proportion of wealth away from the people who don't own equity. That is because there were a great number of companies who acted in their own ineterest as most people do and took cheap loans provided by the QE to buy back shares at an unprecedented rate. The ones who were left out and did not have shares or sold them were the losers in that.
You have been fooled by these mental gymnastics
Excellent points at the end about inter generational divide being stoked to undermine state welfare. Especially in light of yesterday’s hike in National Insurance contributions in the U.K. 08 Sept 2021.
How do i get money? Say 3 m
@@mjsmcdborrow it.
Whether or not you pay it back is up to you.
0:52:35 - Inflation before Full Employment IF :
1:09:29 - Young people being urged to trust again risky stock investments
1:09:44 - Productive Capacity is the issue. Affordability is not the issue.
affordability is an issue, a resource can either be divided equaly or in some other ratio. for a given raw material either you can create homes or you can create bridges, all the raw materials have many use cases and those resources needs to be allocated where they are most needed.
by thinking that people are unemployed and one can put them to work is false, the moment you will put those people to work they will work with some raw materail and from where that raw material will come?
it has to comes from places where it is produced but then it won't go where it was already going, as You have just out bid the other industry and given those resources to the people you saw as unemployed.
Now people in the industry from where you have taken these raw materials will be sitting idle or they will lose the job.
Hence you can't afford everything, because with limited resources you will always be facing this balancing problem. And you will never know where resources are needed the most. That's why there is free market which are more efficient and that is the reason all centeralized countries has failed.
Inflation is not the same for everybody.
Capacity is not homogeneous. How on earth is the government going to have factual information (accurate and in time) about the countries capacity.
@@MagnusAnandmaybe if you look towards history say WWII it's exactly how they fucking do it.
@@ChitranjanBaghiofficialthe only free market is one that is 12 miles outside the United States border in international waters where no laws exist
Is a link to the documents ever going to be provided?
Very glad to come across this podcast. It starts to make money make sense
Too bad the video wasn't better. I would have liked to have seen the slides and had the camera follow him around. Otherwise, full of information.
I would have liked to see the slides too. I googled Professor Wray and found he has a book about the history of modern money. I reckon the images and material of the slides can be found in the book.
We need the slides!!!!
Amazing, I have never heard of that like this before.
Oh yes you have. Think of Latin American economies
@sgrant39 😅 what a douche... Central American economies are tied to the Forex exchange which is tied to the dollar. If you want to look at Central American countries, look at all the twos and economic barriers the United States has placed on them.
PROBLEM! Everything I have seen on MMT equates Federal Reserve (or any Central Bank) with Government, but it's not. The Fed is privately owned and if that issues money and lends it to government MMT is flawed. Can anyone answer this?
@Justin Parkinson the fed is privately owned but controlled by the board of governors, an independent government organization. I.E privately owned, government-operated.
@@rydenkaye9735 The fed made $90M profit last year. To whom did that profit go?
There is a division of powers, the fed cannot spend on social programs, that is for congress to argue about. The fed is mainly independent. So MMT ideas about wresting control of the printing press are fanciful. The fed will step in in an emergency, it dosent just do what Biden, or Trump, or congess wishes it would do. But its not privately owned, its a government created entity. It was created by an act of congress.
The United States government can remove their capabilities to print the United States Dollar and then seize the facilities that are on United States Land.
Your point is surface level
lie
"Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District's Reserve Bank. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund."
Economic investigator Frank G Melbourne Australia is following this informative content cheers Frank 😊
Very interesting, I remembered Wray or Mosler mentioned something written about bees. So it was Wray that mentioned A Mitchell Innes wrote about bees and two books about money. While searching out of curiosity who he was talking about, I came across Bernard Mandeville, who was an economist in the 1700s that wrote the Grumbling Beehive.
3 great books that prepared me for this lecture and help me to understand the MMT movement.
1.The Book of Leviticus
2.Debt: the first 5000 years
3.LOTR : The Annals of the Kings
(Oh yeah and my B.A.A in Finance !)
What do you understand about it?
Well now you have to explain what those books have to do with it.
To paraphrase what Stephanie Kelton talks about in the deficit myth “ the federal government has options”, for example they could make more federal jobs programs.
I live in Japan where I work at a small business teaching S.T.E.A.M to children. It’s been my experience that in Japan job security comes before profits.
I speculate that since America and Japan are both sovereign nations so they can have big debt deficits, in Japans case they spend a good amount of money on keeping businesses afloat and infrastructure intact.
They say lots of Zombies companies exist here, but at least there isn’t much homelessness and it’s pretty easy to find work( not great work but work none the less )
They have dinosaurs and ancient tree companies over here too lol.
There are a dozen or so in the classroom so they get to see the slides.
185,000 people have heard the speech in three years -- but we don't get the slides, we get the moving head.
Whose idea of rationality is this?
Does any one have the screen shots or notes for this lecture? Where can I find them??
While I disagree with most of what he says, this is a well put together and valuable lesson!
Why can I not see the PowerPoint?😐
13:00 what is the source for 50,000-500,000 years old accounting?
I could only find 7,000 years Mesapotemia
before talking about the clay tablets of mesopotamia, which we can read and understand, he talked about bones with etchings in them where we have no idea what they were for. could have been debts, could have not been. most likey we will ever know.
To put things straight: For the Yap Islanders these stones were used as money (currency = Rai). The stones didn't get the value through the Germans imposing taxes. The stones were used as money and had their value long before any European set foot on these Islands. The stones got their value through the dangerouse efforts to get them, the scarcity and the rare material.
All money has one thing in common (whether its stones, sanils, paper, gold etc.): It is realtively scarce!
It is easy to see why historically gold became the monetary standard. It was accepted by many people (not only civilized), it is relatively scarce, it is available in a constant quality that is easy to check (weight) and no one can multiply it easily, but it is easily divisible. That's why tabacco didn't work well as money in the colonies and paper money had frequently to be burned in Virginia.
BTW the value of the Rai on Yap Island was inflated by a steam boat connection to the neighboring island where the stones were found. Not because there were no taxes on the stones, but because they were suddenly not as scarce and the transport wasn't life-theatening anymore. Therefore stone money also had (intrinsic) value and it could change rapidly (as any other money)!
MMT doesn't specify that you can't use stones as money
The thing with money is that if you want someone to give you something in return for your money, whatever it might be, it should be something not easilly obtained by the person giving you the exchange.
If dirt or gravel was money, why should i give you 5 chickens for a handful of dirt or gravel if i can step out the door and pick up my own dirt and still have my chickens.
And why would i produce anything if i can just pick up a wheelbarrel of dirt on my way to the store and buy everything in it. Nothing would be produced so there would be nothing to buy with all the dirt in the world.
The key to money is how hard it is to obtain, not it's scarcity. That is why government can't spend limitless even though it could theorethicly.
Money is now tied to productivity, productivity provides acces to money trough labour because labour is needed to produce the things we want and need.
That is also why the gold standard is a stupid idea because that puts a limit on the supply of money and thus a limit on investment and the ability to buy labour to produce things.
Before fiat money economic development was so low because there was a chronic shortage of currency because the only money that could be invested was money that was saved and not spent on consumption which in turn limited demand. Decreasing the desire to invest.
As soon as there no longer was a limit on how much money could be created productivity and technological progress has skyrocketed because now the limit on the amount that can be invested in labour is the availabillity of labour, not the availability of money.
If we where still on the goldstandard we would still be using steam engines and telegraphs.
@@baronvonlimbourgh1716 Dear Baron, thanks for your comment. I like your analogy with the gravel and I agree on that. But what do you mean by "how hard it [money] is to obtain"? The scarcity of a good will automatically make it hard to obtain. And this is the difference of fiat money. Fiat money is very easy to obtain, never the less central banks _try_ to keep it scares, i. e. makes it relatively hard to obtain. Of course with the Greenspan put this has changed...
The gold standard is not a stupid idea because it was not "invented" by some bureaucrat. It evolved constantly during the history of money up to its peak before WWI. The rapid growth of the 19th century up to WWI shows that the gold standard did not prevent rapid economic growth and development. Within a few decades mankind has not only invented many things (phone, movie, camera, automobile, airplane, electricity, light bulb, rubber and plastics etc.), which are still the foundation of our technology of today, but it has also marketed all those things to make it accessble to all of us. Not to mention all scientific progress that has been made and the start of globalization with the rapid development of railways and steamboats (later diesel) back in those days. And all those things were mostly *privately funded (in contrast of today!).* So no, economic progress was not low but incredibly high under a gold standard. Anyway it is a different discussion if we should re-introduce a gold standard today...
Whenever there was or is a shortage of currency mankind has introduced different instruments like paper money, credit, leasing, bank transfer (clearing), bills of exchange etc. to pre-finance investments and consumption. Most of these credit instruments were *developed under the gold standard!* Even back then there was rarely a shortage of currency, but money was not always accessible where it was mostly needed. Of course this has improved through a world wide net of connected banks. So all those payment methods worked under a gold standard and improved the accessibility for means of payment even back then. Furthermore there was never throughout history a 100% backed gold standard - so no need to finance investments only through savings. Also under the gold standard the _fractional reserve banking_ was the norm, allowing to increase flexibly the money supply to meet demand.
I'm not sure where mankind would be if we would still be on a gold standard but I'm 100% sure that we wouldn't have only steam engines and telegraphs, since as I mentioned above the automobile (1886), phone (1861), airplane (1903), electric locomotive (1879), TV (1886), diesel engine (1893) electric motor (1835) etc. have already been invented under a gold standard. Not to mention all the scientific progress that laid the basis of modern science. Maybe we wouldn't have dozens of different sneakers, handbags and Barbies in our closets but since money would be _scarce_ we would hopefully have concentrated first on the most needed goods and services for mankind instead.
@@dave77v how hard it is to obtain just means access to it is not limitless. Like rocks can just be picked up without adding productivity to the economy.
Our current money is not limitless available to the general public, you need to perform labour to obtain it, it is your reward for the adding your economic output to the system. That makes it harder to obtain then the earlier mentioned wheelbarrel of dirt.
Even though money is harder to obtain it is in no way scarce because it is simply bits in a computer, there is no physical limit on it, neither has it any intrinsic value.
Which is a good thing, if money is needed it can simply be created and there is Always an unlimited amount available for investment and research and development.
@@dave77v the gold standard mayby was the best option available at the time, i'm not sure but it can be argued for.
Just like everything else, monetary theory and technology also evolves over time and better solutions that solve existing problems are developed along the way.
The industrial revolution was done by men in sheds with screwdrivers and wrought iron. It was a revolution of inventiveness, engineering and development in understanding of basic phisics principals.
All inventions you mention where made by 1 or 2 men with basic tools and resources and could be produced with the same simple tools and resources.
The capital intensitivity was low and often was simply funded by savings of 1 or a handful of modestly wealthy people, it simply can not be compared with what happened in the second half of the 20th century and forward.
The capital investment needed to build entire railway networks back then could maybe barely fund the development of a new generation of optics alone used in a new lithographic machine used for ic manufacture.
Technological development went in line with efficienty gains in agriculture for millenia. It only went exponential when capital became readilly available.
The problem with a physically backed currency is that credit can only be given in already existing currency that someone else put away as savings, a lease on something had to be payed first with physical existing currency before it could be leased to someone else. There could only ever be as much money as there was gold, or silver or whatever. A loan reprisented someone else's savings. Either the lender spent that money or the saver, it could not be spent by both at the same time. The fixed supply could only either be spent on consumption or investment in a self correcting fixed ratio.
We no longer have that problem. People can spend their money and capital for investment can now be created on demand without interfering in the consumption side of things.
Fractional reserve was implemented exactly to solve the currency shortage issue. We now simply have an further evolution of it. Currency shortage has been a chronic problem troughout history for the before mentioned reasons. It is not something that happened periodicly.
The steam engines and telegraps comment was a bit over the top to make a point ofcourse. But we would be living in the 50s or so.
A manufacture level using tenths or houndreds of a millimeter. Below that the needed investment levels simply skyrocket.
One of the best videos ever on how money works.
Oh - If that is so how do you explain Randall Wray's claims about taxes driving value into money when the historical facts prove otherwise?
It's pure fantasy and that is proven by the history of money and the history of failures of money in the 30 or more countries over the last 60 years where there were taxes but inflation caused the money to become utterly worthless despite what Randall Wray claims about taxes driving value into the money. The facts are against what I say is his plain stupid claim.
I would like to see your explanation of why I am wrong.
@@Rob-fx2dw you're wrong because of two things:
1. The ratio of taxes to money matters so too much money without enough taxes make the demand for money to pay taxes low
2. You also have to look at the global market and effects of PPP
@@MichaelRosmer Where did that happen? You have no evidence to show that is correct. There is evidence that I can provide to show what happened.
If you are correct just what ratio does it take to make your claim correct? Have you knowledge of the ratio of tax in the countries where inflation made the money fall to zero value or close to it?
What is also wrong with your claim is it defies facts of countries like Hungary or Argentina or the countries listed here :- www.munknee.com/21-countries-have-experienced-hyperinflation-in-last-25-years-is-the-u-s-next/
Were that all low taxed? Lower than the ratio?
@@Rob-fx2dw no, you're not looking at the broad view that's why I mentioned two factors.
Here's the thing you require a minimal amount of tax relative to currency to maintain demand IF there is also other demand specifically, additional demand priced in local currency because the exchange volume will adjust.
What happens in cases of extreme hyper inflation like Hungary and Argentina is they've got foreign debt and are reliant on imports that aren't priced in the local currency.
As they aren't able to make their payments they begin printing money in order to do so, which in small amounts isn't significant but as the velocity of printing increases the value of the currency begins to drop. As the value of the currency begins to drop they need to print more and more in a deadly spiral.
At the same time what happens is acceptance for the local currency to pay for goods as well as the ability to borrow in their currency decreases (all factors that decrease the demand for the currency) as confidence implodes. The less confidence there is the more money is needed to be produced to pay for things and the prices of goods explode until the currency isn't accepted at all.
You can see the same in Venezuela, ex-Yugoslavia, Zimbabwe, etc.
@@MichaelRosmer You said only this "1. The ratio of taxes to money matters so too much money without enough taxes make the demand for money to pay taxes low."
You now say "IF there is also other demand specifically additional demand priced in local currency because the exchange rate will adjust".
That seems to be something you just fabricated without presening any evidence. Where is the evidence?
So what you have said so far is you agree taxes drive the value of money But don't drive the value of money if they are not at a high enough level OR if there is not sufficient demand for the money in local currency.
You cannot have it both ways. Either taxes drive the value of money or thay don't. I know that don't and can supply evidence that they don't.
What you now say contradicts the MMT claims of taxes driving the value of money which I say is something in reality that does Not happen.
Interesting beginning but I don't understand the case for mmt. At some point the argument seems circular. I need to rewatch this.
Belky Hernandez , MMT is not something you should want to be converted to. It gives the government freakish power and ability to abuse it. There is also no control for government overspending. Even though they give it lip service, they don’t seem to account for the limited resources of each economy. So often it comes across as “unlimited money equals unlimited resources!”
You cant "convert to mmt." You either understand the source of money is the government, or you don't understand. Its a matter of comprehension, not choice
I understand it better now. Mmt is a description of how money works currently. We just don't know it.
@@franzoking9956 wrong
@@Creshex8 MMT does not give, but points out the government has freakish power, and they are abusing it by bailing out banks. The question is that why when it comes to real economic development, the government says that they don't have money?
MMT: "When the government counterfeits money, it's not counterfeiting."
If they don't, there is no money
@@testboga5991 Utter nonsense.
Randall, what you have just said applies only to USA and few rich countries because when you produce money here, it creates some degree of inflation to every holder of USA dollars (which is spreed all over the planet, even central banks), but the only direct beneficiares of the extra currency, subsidies, and social programs are the people who reside inside the USA (they can afford to buy goods from other countries with the extra currency). Do it in other countries like Argentina (1950-date), Venezuela (2000-date), Peru (1985-1990) and you won’t see a “miraculous multiplication of fish”. No need for fancy books, just ask them!
You contadict yourself when you say that the only benifiaciars are US residents when at the same time you say they buy foreign products with the dollars issued.
Further, the sole issuing of money wont cause inflation. Its a myth. Inflation is caused by external or internal shocks mainly - as mentioned in the video.
And finally, why should Japan not do the same with their Yen so that Japanese would actually profit?
where can i get the slides?
Great intro to MMT, can someone please post a link to the slides?
They won't release it, because it'll be too easy for individuals to verify his facts and arguments.
Awesome speech! Fantastic! Thank you!
Mind blown. This seriously challenges the Austrian stuff I’ve been listening to for years and it makes a lot of sense.
No it doesn’t, they really don’t even know their own theory and most of the historical evidence is shaky.
yes it's possible but everyone would be equally poor, except the elites of course.
Just statements from you both. No evidence or examples.
@@Baldy4495 Here you go
mises.org/library/mmt-not-modern-not-monetary-not-theory
@@brettmcclain9289 You quoted from a site that is dedicated to full-blown Neoliberalism like Ludwig Von Mises who was an ardent admirer & firm believer of all things Fascism.
Next time try to quote from a site that's NOT a front for reductive austerity economic ideologies.
You only have to see the plight of Greece. It's 11th year running in full-blown depression.
we need more economists to start speaking truth to power and telling government to stop lying about how money, debt and taxes really work ... thanx Dr Wray ...
To be fair, the only reason it works is because the public doesn't understand how it works.
Money is only money because it's users trust in it's value and function. It it becomes something that is available in unlimited quantities it will lose it's value and then it's function.
There needs to be a system that limits the availability to make it functional. It needs to represents a value, so logicly you want it to be created when new value is created. And banks and investment have been chosen to be the vehicle to distribute it.
Traditionally debt is used to create new aditional value trough investment. And it also used to be a way to distribute that value trough society.
If you had a business you payed wages to local workers and the profits where spent locally because the owner was also local. He used it to buy bread from the baker, groceries at the grocer beer at the local bar etc. And those businesses also employed people and made profit payed with that money. And those owners spend their money again at the original business owner.
That way money gets distributed properly troughout society and the ones creating value end up with it and can spend it to buy other things of value.
Nowdays the owners are no longer local and no longer of practical size.
The baker that made a nice income from his business and spent it into the community has disapeared. That money is now extracted by wallmart into a central account. And every little community in the country lost that money from their communities and now 1 owner recieves the income of the tens of thousands of local businesses walmart replaced.
Money that will never return because one person can simply not spend the income of tens of thousands so it accumulates and is extracted from the economy.
And this has happened with virtually everything that is now bought and sold. Everything is now spent with multinationals who now accumulate it centraly away from the community it came from.
Creating a constant a constant flow from the public to multinationals without a return flow, the only way to keep replacing the money that disapears is by printing more of it and giving it out to the people to then spend it at these multinationals, or for people to borrow more to keep the feed going.
The only way to create a return flow is to tax it away from these central acumulators and spend it back into the communities it came from, again completing the circle. This makes the government fulfill the function of what previously was done by local business owners, redistribute that profit back trough the community it came from.
But people insist taxes need to stay low, so this circle stays interupted. So one side keeps being depleted and requires replenishing with newly created money while on the other side money is acumulated and not being used because to ones acumulating it acumulate it faster then they are able to spend it.
Until this cycle is again equalised again the population will keep getting poorer and more endebted and the acumulators will keep increasing the rate they grow the pile of excess money that is not allowed to fulfill the function it was created for.
When people know money can be created i definatly they will demand more and more of it will be created without new economic value being added to the economy.
It is a difficult problem that some political movements have weaponised to gain advantage..
If government is allowed to actually fulfill it's function and balance the system, programs like universal healthcare are an example of this required redistribution for example, it can be a pretty good way ofmaking sure money fullfills it's tasks and is usefull to everyone instead of a burden to the many and a free ride to the few.
How is this truth to power? Sounds like the banksters lapdog to me
Most Economists are there to get metrics right in order to get the desired result to discipline the working class
The trust is the use of force by the government on its citizens
wow that makes sense. I trust the govt will be able to compell people to pay taxes.
The trust is actually in the promise to deliver production.
Either directly or vicariously.
Use of force is a form of production when it protects the order of things to preserve the channels of production in a society.
When the use of force is abused, it will result in a reduction of production.
@@madamkirk
Sounds better, because there needen't be a government involved.
@polybian_bicycle Nice!!
Sound money is a symbol of the "Stuff" (Production) completed in the past. Fiat money is a symbol for the "Stuff" we trust will be produced in the future.
So sound money is a symbol of an apple already been produced and eaten?
@@ThomasVWorm look up the word "Future"
@@madamkirk look up the word "debt" and how it relates to "time" and "future". "Money" and "debt" are simply two words for the same thing.
@ThomasVWorm again, I said Sound money, and I'm using precise language.
You're talking about modern money.
Which is is fine. Please restudy my original text before you beat the drum. We are not in disagreement at all. It just appears you're not actually understanding what was said.
I have no preference over Modern money or Sound Money. I'm merely pointing out the difference.
@@madamkirk I do not understand the word "sound" in this context. It does not appear in any way "sound" to me, when money is a symbol for something being produced and consumed in the past, because it then is the same as "meaningless".
I genuinely listed to this with an open mind but I found you just to be wrong on a few points here. Interesting nonetheless
What points do you find wrong?
Which ones?
Even if it is true that within a country or a geographical location, It is the state or the religious authority which dictates what the medium of exchange is going to be, How do two rivalrous nations, geographical locations or religious authority come to a consensus about what the medium of exchange is going to be, It needs to be something which both parties agree to and it needs to be a store of value which means there would be some commodities which are socially selected to serve as the medium of exchange.
When the indus valley civilization around 3400 years ago traded with other ancient civilizations, They did with a mutually accepted medium of exchange which was silver and gold. why did they choose gold and silver ? , Or why do some specific goods become the socially acceptable medium of exchange? , what should we call the process where commodities are evolve into an object which stores values and is used in exchange
So money actually does grow on trees
money doesn't but wealth can. the difference between money and wealth is something this liar decided to omit from this "lecture"
No, this clown is just trying to rationalize State counterfeiting
51:30 you instantly contradict your point on bitcoin, people do accept it
Yes you're correct.
Technically money is a symbol of production.
In sound money, such as bitcoin, it is a symbol of completed production.
In Fiat money, the production is not completed, thus it is debt based.
I've seen a few economists argue against MMT. But surprisingly it's the dude arguing for it here that finally really explained to me why this entire theory is complete bollocks.
Thank you sir!
It is kind of like a cult to be honest
Could you explain what you disagree with? I'm exploring the topic and sourcing opposing viewpoints.
How can it be bollocks when that's what central banks are actually doing?
@@galek75 He didn't understand.
@@orphanpixels Exactly
Where is the discussion of the impact of all of those keystrokes?
The blood feud theory gives new meaning to the concept of money being the root of all evil.
If it is correct, though, Evil would be the root of all money.
Cigarettes were a commodity used in prisons asa medium of exchange . A barter economy?
As a linguist I would love if writing were invented by poets, but it is definitely not how the story goes.
Bingo.
Checks are correspondent ciphers of bank notes that are written payment orders to a dealer bank to pay a certain amount of representative money to the bearer, upon selling the security to the Federal Reserve.
MMT. It was called coin clipping in the Middle Ages
Wonder if he has an inflation linked pension!
But what if the treasury has no balance to debit when the check goes to your bank?
The game is up and the government's money is broke and it doesn't pay you or pays you in new worthless money. Simple as that .
@@Rob-fx2dw So that's where we are, right?
8:30. Barter economics still exists. I take care of my neighbor’s dog when they’re out of town and they look after our cats when we’re out of town.
@@lepidoptera9337 That is because taxes are about giving the government (politicians) more power over people. It's a wonder they don't put a price on any and all social interaction and exchange between people including copulation if they could.
@@lepidoptera9337 NO. They are not paying a debt i have to anyone. I have no debt to 'society ' because "society' is Nobody at all. It is purely social construct that is meaningless and has no defined measurable limits or restrictions. If you disagree then explain in monetary terms the extent of what anyone has in terms of a debt to society.
Of course you can't because it is just a meaningless throw away line. I can as easily say society has debt to me.
@@lepidoptera9337 You are running away from the issue again to avoid answering what I said. .
@@lepidoptera9337 What are my dues? How much and why. What are yours ?
This is a lecture but we can't see the slides???? :)
Money arise from marketability, in a barter system there will be some goods which will be more marketable and people will prefer to convert to them and then exchange it in some other thing.
wheat acted like money because it was most marketable.
so how money gets it's value, first it will be a comodity, then the most marketable one will be prefered, then one remember from previous experience what he can get for that comodity that sets its initial value, but as more and more people start to store it because it is more marketable, it makes it more valueble than its other uses, other than medium of exchange and gain even more preference because it's social acceptance has increased.
Which makes people try attain more of it, this is what leads to mining or growing of the comodity, (there was a time when tobaco leaves where also used as currency it ended up in hyperinfaltion because everyone started planting tobacco).
as you can see the move towards something which doesn't get infalted easily, doesn't rust, easy to divide, transport and fungible got preference, the gold and silver were inevitable to become money.
authority never set what money will be, people do and then government tax it to latter fight war etc, but greed takes over, now because authority has monopoly of violence it uses the gold and put a stamp on it, soon normal gold gets collected and converted to stamped gold, till now both have equal value but as more and more is stamped the new authority one takes over.
then comes desperation either in famine, war or some other way. which makes the authority inflate the supply, either by mixing other metals in it or cliping off some gold and decreasing the size of gold coin. which again ends up in hyperinflation because we humans push it and we never stop. (the history is full of it.)
This is how romans did, this is how USA did when they broke the breaton wood system.
the system which is mentioned in this video is not a valid one and it is not how money works. but yes violence can make anything more marketable, but it last until hyperinflation take over and people revolt.
Now, now this is crazy talk. There is a reason why everyone has adopted a fiat currency. When the economy does very well and tons of wealth is created very quickly, gold standards cause unnecessary deflation. When the economy does do poorly or needs to run close to 100%, which inevitably happens during times of war or depressions, gold standards are almost always abandoned because they make necessary investments too expensive.
@@iWouldWantSky yes that is very much so, but that again doesn't take away the fact that market decide what will be the money.
At that time Gold was good for the system, now fiat came, but no fiat system ever survived.
Something new has to come to replace it and that can't be mmt, because even the new money will come from free market. Not the other way around.
Given people are not forced. (with force you can do almost anything.)
@@ChitranjanBaghiofficial While I wish you all the luck in the world with that, markets don't exist in vacuums. Capitalism requires a body with a monopoly on violence to enforce private property rights using legitimate force. Even cryptocurrencies can't help you here.
@@iWouldWantSky again you are right, and yet unable to see you are saying the same thing as I am.
individuals do violence against each other when that can't happen groups gets formed and when single group can't make it happen then multi groups join hands.
again the all mighty powers of violence is made up of individuals and again in the free market they either compete with each other or form groups to fight each other.
free market is part of nature and its participator set the regulations.
so even the monopoly that you see is because of free market and if monopoly doesn't work for its parts its individual parts will again form groups in free market against it.
so from currency to government monopoly everything is because of free market not the other way around.
@@ChitranjanBaghiofficialI wouldn't call that "free," I'd call it chaos. Thinkers of the past would call it the "state of nature." Out of the state of nature, order arose. Societies can fall back into a 'state of nature' at any time, but we are not free in such a state.
I sent an e-mail to professor Wray, asking for the slides of this presentation, he told me he doesn't have any more, does anyone have them?
On English paper currency, it's not the Queen "promising to pay the bearer", it's the Chief Cashier of the Bank of England.
What is he going to pay with? More debt?
@@First4America yes because money is debt: an IOU.
I imagine I’d prefer a society that isn‘t based on debt. Unless the only entity that‘s „in debt“ is the government. Instead it seems in our society almost every entity is in debt. People, companies, etc.
Debt sounds like slavery. Shackles. Fear. Stress. Pressure.
Who would be in favor of this? Who benefits?
Is this the best we can do?
The story at 32:26 sort of epitomizes my point. Are we supposed to be excited about living in a society where those with the better weapons and less happy minds like to motivate us to work for money by putting us in debt by design (taxation)?
Not a happy story
@@banzobeans I think your middle paragraph is an effect and the cause is the perpetuity of the idea that money comes from the barter system, i.e. one for one and if you don't have one it's a negative. The modern monetary theory is just an explanation for the system we find ourselves in. The policy and programs implemented are a result of the politics. Sort of like if you never knew what a car was and you wake up in one on cruise control at 40mph. You can hit the brakes, accelerate and steer but the car itself is just a car no matter what you do inside it.
@@brakeman211with one huge difference - that we know alternate ways. So why would we put up with something that increases the scope of the government's outreach? Government=one part of the society (not you, me) that has the tools and power to redistribute resources. Doesn't sound wrong? No? Ok, put yourself to sleep.
Does this lecture give anyone confidence in the system?
Who recorded this? Why wouldn't focus on both the speaker and the slides?
A student, probably. Amateur. Set up the camera and walked away.
You can find a show of Randy doing this as a PowerPoint for college econ students where you can see the slides. Part 2 of that one is Michael Hudson.
How do you explain the refusal of antagonists to accept the fiat of the others in trade ? For example why did the USA demand gold from the UK during WW2 in payment of oil and weapons ; because gold is an internationally accepted means of payment that doesn’t rely on an issuer defaulting . This is the reason Gold is money without a counter-party debtor . Gold is money - all else is credit .
If you redefine money as something the government collects as tax payments then of course rocks were not money, but if you use the correct definition of money being an intermediary method of exchange, then those giant-ass wheel rocks were of course money.
To be fair he says that the giant rocks became money AFTER THE GERMANS TAXED THEM.
I don't agree to a word of his theory of money. Chinese growth is due to US government support and ineptitude.
I don't accept the definition of money in the video. I was only pointing out that the stones became money when the Germans taxed it. That is a strong point to refute. Example in India some governments taxed it kind. Specially paddy (rice) was taxed and paddy became money.
Paddy was accepted as payment of tax.
@Dale Harper Government steal things (taxes) to build White House and live in luxury. that is how it works. I do not agree with this crazy story. Example. Cigarettes' served as medium of exchange during war time and was money. Postage stamps served as money. Cowrie served as money and was not acceptable as tax. In India the Value of a Cowrie is maintained but is no longer freely exchangable.
My definition of money is any oblect that is freely exchangeable for goods and services that does not lose it's value after the exchange.
What happens when foreign holders of us dollars lose confidence and you can't tax them?
What happens is they get defaulted on by what is default in value of the money which MMT largely ignores and pretends it is not default.
@@Rob-fx2dw Don't cry for me Argentina!
@@amadeusdebussy6736 They are still in the sh..T now ! According to travellers experiences last year when travelling to Argentina it is best to pay your accomodation bills and restuarant bills in another currency than in the local because you can ask for up to 40% off and get it.
Yeah, I’ve been wondering the same thing.
Omg...this is so mind boggling....absolutely fascinating. I wish i listened to it earlier....i cant help but clapping my hands at the end of the speech. Lol....MMT deserves a much wider audience definitely
It's fantasy based on incorrect understanding and false proven misleading assumptions. The whole of MMT is full of conflicting irreconcilable statements. It is based on absurd claims like the government being the creator of all money which is totally wrong since private banks create more money than the government through their lending mechanisms.
Lol, good parody attempt
How is bitcoin not money? According to your example, I willingly accepted to spend electricity and computing power for a digital coin.
Bitcoin is not money because people don't purchase things with it. It's just a vehicle for speculative value. People are not buying groceries, electronics, cars, houses, or much of anything using crypto currency.
@@Philitron128 when was the last time you paid for your coffee with a piece of gold?
@@Mbahoue95200 Never, because gold is no longer a currency. I've also never used a denarius, but that doesn't mean that it didn't used to be money in the past, or that it doesn't have some sort of value today. It's just no longer a currency.
@@Mbahoue95200 The difference is that Bitcoin has never been a currency. It has always been a speculative investment.
See, you spoke about money, now you use the word “currency”. In Colorado you can pay your taxes with bitcoin since 2022.
44:00 "No economist knew" the operational details of how the system worked but "the fed employees did because they had to do the work." From 1970 to 1990.
mark collins that‘s a very weird story. Who decided to implement a full fiat MMT system and why? Noone? So we just stumbled into this system which MMT proponents say is such a positive thing? An angelic conspiracy?
This is soooo whack. Begs the question: WHO knew when it was implemented. WHAT were their motivations?
Who can be so naive as to assume this system that not even the experts understood for 50+ years, let alone the people, was built for noble egalitarian reasons?
@@banzobeans You are getting it backwards. No one decided to implement MMT per se. Warren Mosler, one of the fathers of MMT just noticed that this is how the system worked, when he was a banker, and later described it. He didn't study economic history or theory. MMT was "implemented" in the US when Nixon took the dollar off the Gold standard.
Before that MMT did not exist in the US.
It's like evolution. One does not ask who went back to implement a dinosaur. We just look at their fossils and describe them.
Stewiehleba I understand MMT is purely descriptive. But I cannot accept the story that this was just decades of stumbling (what you call evolution) that lead to the system we now find. I cannot accept that no thought was put into such matters when the Fed was created and all the intermediate steps took place over multiple decades to end up where we now find ourselves.
Nothing about this process is natural or inevitable. These are a series of choices made by people in power and with all the knowhow available at the time and all the expertise to be able to understand the consequences of these decisions. That being the case I wonder what the real deliberations and motivations of those involved in these decisions were.
@@banzobeans Of course people created the systems we have today, but that is true about everything a human hand touches. Markets are not natural. Nothing we do is natural.
6:48 it's not infinite. The original U.S. currency was based upon gold mine out of the ground, and the dollar was pegged at $20/ oz.
Not anymore
No it was not. That is not history. US money was based on debt and taxation from the start.
This lecture has a lot of good information in it, but unfortunately the speaker neglects to explain that Austrian Economics makes a distinction between currency and money.
Currency is anything that's used as a means of exchange, but money also has to be a commodity. He gets close when he says that electronic currency doesn't have any intrinsic value because it's not physical, when he explains that currency started as a substitute for grain, and when he explains that fiat currency is only backed by faith in a government; but failing to at least present the concept of currency being different than money, makes this lecture incomplete.
_"when he explains that fiat currency is only backed by faith in a government"_
He said the exact opposite. That's the whole point. It's not backed by faith, it's backed by the power of the government to force a tax obligation on you and to enforce the redemption. Just try not to pay your taxes and see what happens. It is coercive and it has always been throughout the history. No trust involved.
_"but money also has to be a commodity"_
Not at all. Money is just a record of debt. How did you miss that? If I write on a piece of paper that I owe you 5 apples (or the equivalent of 5 apples to make it more abstract) that's money. It's book keeping. Nothing more. The only challenge is to get your money accepted.
Actually thinking of money as a commodity is one of the primary reasons why most people get almost everything about our monetary system and how it actually operates wrong. They think that US is borrowing from China, they think that when we pay Dollar to Russia the money actually physically leaves the country when in reality it's always just a balance on a domestic bank account that is not in russia. Money is not a commodity. Money is debt. And it always has been. You are starring at the wrong thing. Using gold as money is nothing but a pure barter economy. It works very badly and is restricting the economy for no good reason. Why should the economic activity depend on the amount of gold there is? It's such a strange idea.
@@trixn4285 First off, thanks for engaging.
As to your first point, I get what you're saying, but if you look at times when things get worse in the economy, the amount of people paying taxes goes way down. Look up what happened during the Great Depression and in Weimar Germany. When things get bad, people stop paying and the government doesn't want to enforce it because it knows the people will get violent if they're already having a hard time paying for food. Things have definitely changed as far as the government's ability to track the exchange of currency, services, and assets; so it'll be interesting to see what happens the next time things get really bad in first world countries. I think this is part of the reason the government wants to get rid of cash. It theoretically makes tax enforcement without physical violence much easier.
As far as the definition of money, it seems like you missed my point. You can use whatever definition you want, but conflating the separate ideas of currency and money makes it so people don't understand the difference between the two.
Currency is debt. Currency doesn't have much of a usage except to transfer/trade information. And as a credit system, it relies on faith.
Money is an asset that can be used to trade for other assets or services. The best money has usages outside of being used to trade for other things, and it's a store of value over long periods of time. You could make an argument that currency could be used as wallpaper, toilet paper, etc. so it has usages, but it's ability to last long periods of time compared to more sturdy substances like gold, is why it's not good to consider it as money.
This is a distinction that's made in Austrian Economics. And the whole reason this video is deficient for someone who wants a more complete understanding of economics, is because the lecturer didn't cover the extra information.
@@geoffgjof I agree that when "things go bad" either the ability or the willingness to enforce the tax obligation might disappear. But the "things go bad" part is almost exclusively because there was a major real economic disruption, like a war or something that greatly reduced the economic capacity. It's usually not the case that the government simply spent too much of its own currency in an otherwise working economy. Debt in a foreign currency and major breakdowns of production are usually the reasons. And it's true that in that case even if the government kept collecting taxes it isn't even able to get anything from the economy through issuing its currency because the economy itself is defective.
And I would disagree that you should be able to store "value" in money for a very long period of time. Money does not store real wealth it only stores "virtual wealth". Wealth is only what you actually produce. And for wealth to actually be produced you need to spend money to get resources working, not hoard it. So an economy is running much better if the value of money depletes over time. Not too much and ideally at a pretty much constant and predictable rate, but it should not be a perfect storage of value forever.
A house can store value because you can use it as shelter. It actually has value. Money is only a means to the goal to produce actual value.
_"You can use whatever definition you want, but conflating the separate ideas of currency and money"_
I would define currency as the unit of account and money as the representation of debt denominated in that currency. Unfortunately those two are often called the same, e.g. we call the currency Dollar and the actual note also a Dollar.
Money is just the physical representation of debt, it's book keeping. It can be printed paper or digital numbers in a spreadsheet. It doesn't matter. It's totally replaceable. The most important requirement must be that you can't counter-fit it to create debt if you are not the issuer.
The main defining criterium that distinguishes money from any other commodity is that it represents debt and there is no fixed amount of debt relations in a society. Gold is not money, bitcoin is not money, cars are not money. If you define those as money virtually anything is money, that is tradable. You simply loose the defining feature if you include every commodity into the money definition.
Now I understand that in some cases people have used commodites as means of exchange and also to store value. But still I prefer to call those what they are. Commodities. An economy without debt money is a pure barter economy where every transaction is immediately settled. And this works really poorly for advanced economies as there is simply always a shortage of the commodity where it needs to be.
@@trixn4285 A lot of great points. The one thing you're missing is that gold has held close to the same value on average (not price) for like 5000 years because there isn't a lot of it compared to other things, we can't just manufacture it (perhaps this will change later), and it doesn't degrade much. All those things are what makes it a great store of value. You can definitely argue about whether that's a good thing or not. But the things you say about currency and money make me think you don't respect property rights as much as you should. The greatest evils are always done under the guise of being what's best for everybody. And that's always what gets fiat currency into trouble. How many fiat currencies have survived longer than 500 years? Much less 5000.
Also, I don't agree that debt is money. Debt is based on faith. That's why assets often times have to be used to securitize larger amounts of debt.
@@geoffgjof Btw. Thank you for the exchange of ideas. It's always a good thing and I appreciate your input. If I disagree with you this is a good base for discussion and constructive exchange.
_"But the things you say about currency and money make me think you don't respect property rights as much as you should"_
This has nothing to do with property rights. Inflation is an endogenous effect. It's a constant battle for purchasing power between the owners of the means of production and the workers and it's absolutely necessary. The government doesn't set the inflation at will. It arises from processes endogenous to the economy. Inflation will be low if the power of workers and companies is about the same. This is when everybody will get a fair share of the purchasing power.
If you want to preserve the value of money over time you need to invest or you buy something that actually has value. There is no natural right on infinite hoarding of money and there is no right on risk-free interest payments.
_"The greatest evils are always done under the guise of being what's best for everybody"_
That is simply not true and pure ideology. Most Austrians do not realize that what they imagine to be a just world will be a horrible dystopia and feudalism 2.0. We evolved from that for a reason. A society can only endure a certain amount of inequality. And gold as a currency or something similar will both shut down economic activity and lead to a great amount of inequality which will in the end lead to everybody being much worse off. The reasonable way is to do what is best for both the individual and the community, not some extreme way.
I'm not arguing for communism or anything like that. There should be a great amount of private ownership and private investment and there should be markets. But to think that private ownership and markets everywhere will fix all the problems is a mistaken belief.
_"Also, I don't agree that debt is money. Debt is based on faith. That's why assets often times have to be used to securitize larger amounts of debt."_
Even if debt is based on faith (which arguably isn't the case) this wouldn't contradict money being debt. This is a non-sequitur. Debt is based on trust, not blind faith. This is something different. If trust in the debtors is lost, sure it will break down. But this is not an argument against debt at all. Debt and trust are integral parts of society and economy. And trust is always proportional to the evidence there is that debt will be paid back. The government should focus on providing a sound and fair system to deal with debt, not to get rid of it all together.
Also I think we can agree that conceptually there can be commodity money which is money backed by some real commodity (e.g. gold) and there is debt money which is simply an IOU and a transferrable record of debt. Is that fair to say? What I'm actually trying to say is that debt money plays the more important role both historically and today and when we talk about money usually its debt money. But I wouldn't disagree that there can also be commodity money. It's just important to distinguish the two because the implications of having one or the other are very different. So I guess we can skip arguing semantics and call it commodity money and debt money.
Where can I see the slides?
All I got from this convoluted presentation is merely a description of modern mechanism of money creation and not a theory that explains consequences of unlimited money creation, nor on money’s role on real economy ( production, prices, disparity etc). The mechanism of money creation itself has become convoluted with the evolution of banking and the shift in the physical manifestation of money.. and, importantly the convoluting process of money creation is deliberate and political to concentrate wealth and power.
Yeah, that’s because MMT is not an actual honest attempt to comprehend and explain these things, it’s just a half hearted pseudoacademic attempt to justify that it’s ok to try to control the economy through taxes and money printing. Almost nothing he says about history of money is true or not taken out of context. There are thousands of years of history of foreign money being preferred to domestic one due to better value / more convenience. Even now, there are multiple countries in the world, in Africa, Central Asia, South America, Balkans, where USD or Euro are accepted instead of local currency even though neither is legal tender there. The pound sterling he mentions was redeemable in silver (A POUND OF SILVER to the surprise of absolutely nobody), etc... It’s just motivated reasoning all the way.
@@gtpk3527 Great point. To add to it, there's even a fiat currency in circulation, the Somali Shilling, which persists despite its government's lack of ability to tax the population. MMT has no explanation for this, and that is a red flag in particular for the Chartalism embedded in the MMT story.
MMT isn't about unlimited money creation. You can't just spend an unlimited amount at one time.
Parallax it’s the cumulative effect of total fiscal irresponsibility. “Unlimited” at once? Maybe not, but thirty years ago a “$4T infrastructure package would sound like unlimited money” basically this theory is the equivalent of a charlatan spending without repercussion. Except ultimately we all know there are repercussions of indiscriminate spending. We’d all have to file chapter 11, or worse get locked up.
@@mjpaganetti I see what you're alluding to but isn't that kinda... How should I say this? If the country survives, 200 years from now we could be running gazillion dollar budgets. For the founders in 1776, spending 3 trillion a year on anything would sound crazy, that amount would immediately destroy the economy. For us, we could spend that on top of a few more trillion a year without heating the economy too fast. We provided 29 trillion in relief to businesses and banks, large and small, national and international, during the wallstreet bailout. That was enough money to fund a 12k/yr universal basic income for over a decade without cutting spending anywhere else. Over ten years later our economy has inflated but not significantly, not hyperinflation, because the US dollar has special deflationary pressures other countries don't and the fed is expanding the sink on money (they destroyed about 1 trillion a few months ago). They're going to have to raise rates, this 0 interest policy might help private banks reduce interest burdens on businesses, but I have a feeling the federal govt could make up for it in deficit spending without having to even charge interest, and it would probably be cheaper because through Democratic control of the govt we could limit corporate welfare. Problem with all this is many people, democrats and republicans, would fight against anything that both give people more welfare and made the rich pay more tax. That's a big no no for the people who donate to our politicians and their super PACs.
Wish I could see the images being projected.
Brilliant... as per usual.
45:26 this is also true for businesses because remember the central bank is just monopolizing one record that being cash of many records of money or record of payment whether electronic assets or physical assets
so... money really did grow on trees
Only if you are a king
Randy, this is one of the best and most through. To counter all the ideological critics (in contrast to economic critics) this talk also focuses on economic nationalism (for fans of Trump rhetoric) and clearly capitalist concepts.
Well answer this then if you believe he and his MMT is right. Or defy historical fact and fly out of the window on a magic carpet to prove you are right.
MMT claims taxes are not re spent by government but can't explain why the budget deficit is not about the same size as the total government spending which it would be if taxes did not fund it. The historical yearly records of spending are on this Whitehouse site and show the revenue source is taxation incomes that fund government outgoings (spending) . MMTers deny history. The whitehouse site: www.whitehouse.gov/omb/historical-tables/ table 1.1
@@Rob-fx2dw The "budget deficit" is an arithmetic subtraction of total spending (estimate or real) minus total taxes. That's a real number. It's accounting. This also means the total number of net US Dollars *added* to the private sector, for use by capitalism, which equals *net private savings* aka "financial wealth", and may result in real assets being created, such as a Beautiful Wall Not Paid For By Mexico, in which American laborers earn income, or a bullet train, or nuclear power, or defense research, or various "aid" for poor, elderly, veterans, etc that benefits retail sales, housing & landlords, etc.
What taxes ARE NOT is an account of a limited amount of income in USA Dollars that the USA Govt has available to spend ... because the USA Govt is the sole monopoly source of USA Dollars in the entire universe ... unless we're talking about String Theory and parallel universes.
When Treasury spends, reserves are created for banks, and dollars are then created by banks in private sector accounts.
THEN, real money exists in the private sector.
MMT views the Fed like the interface between Fed Gov (Congress, Treasury) and Capitalism, like the blood-brain barrier.
Another example is Windows has a HAL (hardware abstraction layer) for a common driver interface for gaming programmers, so they don't have program all possible models of Graphics and Audio hardware are installed in computers.
In that sense, the Fed Gov never HAS money and never DOESN'T HAVE money, because money exists in the private (non-govt) sector after the govt creates money by spending. Non-govt includes local govts which don't create money, like State of California or City of Detroit, those being more like corporations or households.
Fed Gov is NOT in competition with private firms for a share of income. Fed Gov creates the Dollars that facilitate private income to be possible. *Uncle Sam is the top facilitator of Commerce and Capitalism* , both domestic and global. Isn't that obvious?
Fed Gov doesn't have hard limits on how many Dollars it can create. The ECONOMY has soft and *dynamic* limits on how many new Dollars it can use at a given moment and rate, depending on real resources (human workers) and the ability of business to expand.
(We have seen business expand when war spending expands, like World Wars and Cold War. Reagan's Cold War deficits expanded high tech sector.)
More tax revenue does not ACTUALLY grant govt more spending power, but creates more space (more unemployment) in the private sector to absorb more federal spending.
@@Rob-fx2dw it's sometimes helpful to back up a step, review Alan Holmes' comments from decades ago on how *private banks create credit/loans then look for reserves later, if needed* . Or review what the Bank of England stated about banks and credit creation.
Once we grasp that govt-authorized and licensed banks create credit dollars, not quite "out of thin air", but by adding numbers to accounts with keystrokes, by creating new financial liabilities of the bank, based on signatures or agreements on legal contracts, by willing and qualified borrowers (new financial assets to the bank), in FAR LARGER VOLUME THAN ANY GOVT SPENDING, it's not so difficult to grasp that national spending happens in a similar manner.
Federal Money is created not quite out of thin air, by using legal processes, institutions, and accounting, but UNLIKE BANK LOANS, not needing customers to sign loan agreements or pledge any specific quantity of taxes.
@@gg_rider
You are talking politics and I am not.
You are very confused about finance and economics and that puts you in a position of being a real bunny for MMT propaganda that you don't seem to be able to realize is rubbish.
I am talking the rational side of economics as a way of understanding what happens and having sound tools to improve the outcomes of economies.
Net private savings are not created by excessive amounts of fiat money added to the economy. It is a confusion of ideas that MMT puts forward but can't answer when the questions are put about how it happens.
You are confusing two concepts, one of which is savings which are ONLY as a result of people spending less than they earn and not someone else multiplying the amount of currency.
If what you said about expanding the money was true then a counterfeiter would increase people's savings so it would be a good thing for everyone if counterfeit were allowed for everyone.
The same "Real Money " you talk of existed in all of the countries with failed fiat currencies. The currencies failed for very much the same reasons and were replaced by other currencies that had not been expanded to the same degree.
You say the government creates the new money by spending. That is not so.
The facts are different from both the MMT and your incorrect idea. They don't create the money by spending.
The process is different and that process in the US is the Federal Reserve creating new fiat money to pay Treasury for government bonds. The government (Congress) then decides what Treasury should allocate to pay for the various government programs. Then government spends the new money buying what resources it decides to acquire from the private sector.
Those bonds have an interest rate on them and have a maturity date and that means the taxes that the private sector pays must fund their interest and the whole amount of the pay out on maturity. It is a financial burden for the private sector created by the process of creating and spending that new money.
.
The MMT explanation ignores these facts that resources are taken from the private sector by the government spending and the poor observation and lack of recognition of the debt burden that accompanies new fiat money creation which are more fatal flaws in the MMT reasoning.
Your claim about tax revenues denies historical fact that is plain to see unless you are blinded to reality and history.
It is here in the Whitehouse documents at www.whitehouse.gov/omb/historical-tables/ Table 1.1-Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789-2024
Explain you way out of that historical reality with MMT fantasy claims that revenues are not used to fund government spending..
As for UncleSam - Well commerce and capitalism and trade and people and the economy existed well before Uncle Sam. You are talking rubbish.
@@gg_rider You say - "You are talking politics and I am not.
You are very confused about finance and economics and that puts you in a position of being a real bunny for MMT propaganda that you don't seem to be able to realize is rubbish.
I am talking the rational side of economics as a way of understanding what happens and having sound tools to improve the outcomes of economies.
Net private savings are not created by excessive amounts of fiat money added to the economy. It is a confusion of ideas taht MMT puts forward but can't answer when the questions are put about how it happens.
You are confusing two concepts, one of which is savings which are ONLY as a result of people spending less than they earn and not someone else multiplying the amount of currency.
If what you said about expanding the money was true then a counterfeiter would increase people's savings so it would be a good thing for everyone if counterfeit were allowed for everyone.
The same "Real Money " you talk of existed in all of the countries with failed fiat currencies. The currencies failed for very much the same reasons and were replaced by other currencies that had not been expanded to the same degree.
You say the government creates the new money by spending. That is not so.
The facts are different from both the MMT and your incorrect idea. They don't create the money by spending.
The process is different and that process in the US is the Federal Reserve creating new fiat money to pay Treasury for government bonds. The government (Congress) then decides what Treasury should allocate to pay for the various government programs. Then government spends the new money buying what resources it decides to acquire from the private sector.
Those bonds have an interest rate on them and have a maturity date and that means the taxes that the private sector pays must fund their interest and the whole amount of the pay out on maturity. It is a financial burden for the private sector created by the process of creating and spending that new money.
.
The MMT explanation ignores these facts that resources are taken from the private sector by the government spending and the poor observation and lack of recognition of the debt burden that accompanies new fiat money creation which are more fatal flaws in the MMT reasoning.
Your claim about tax revenues denies historical fact that is plain to see unless you are blinded to reality and history.
It is here in the Whitehouse documents at www.whitehouse.gov/omb/historical-tables/ Table 1.1-Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789-2024
Explain you way out of that historical reality with MMT fantasy claims that revenues are not used to fund government spending..
As for UncleSam - Well commerce and capitalism and trade and people and the economy existed well before Uncle Sam. You are talking rubbish.
You say " More tax revenue does not ACTUALLY grant govt more spending power, but creates more space (more unemployment) in the private sector to absorb more federal spending." .
Yeah sure that's about the MMT thinking in a perfect perspective ! - Government creates more unemployment so it can employ more people thus solving the unemployment .
Government creates a problem so it can solve it !!
Thinking like that is all they are capable of. - The circular reference of MMT.
“If we fill the bubble REALLY carefully, it will never pop”
History shows it has always popped. Why is this time different?
@@First4America I've read arguments that other precedents of countries suffering runaway inflation (Weimar Republic Germany, Zimbabwe, etc) were not actually results of their governments adopting something akin to MMT, but rather were the results of other forms of mismanagement.
@@DanielVerberne Time will tell!
SoulfuzZ Right. Careful as in: not too fast (give enough time for real resources to be established along with it) and injected in the right places.
In theory, I can make sense of it.
It‘s in the trust in institutions of centralized power where MMT proponents tend to lose me. Seems like highly irrational optimism.
I guess either we fight to get people in power to use our real existing MMT monetary system to great public good. Or we fight to reduce centralized power and distribute it.
First4America maybe we should run with the the „money is a lubricant“ analogy.
Put the lubricant in the right place at the right time in the right amount it makes many things significantly better. volume knob turns, Car drives. Babies are made.
But too much lubricant in the wrong place all at once: speakers drown, cars crash, lovers can‘t make contact.
Where can we find the presentation of the lecture? PDF? PPT?
I think MMT will work in countries like USA,UK,Norway,Japan.
Because it has a central bank.
( but
... It does not function in countries with many foreign bonds. )
I think this idea is amazing,
The limit of fiscal spending,
It places it on the production capacity of each country.
( correct? My understanding. )
Before reaching that level, the inflation rate surely rises and it is easy to match with the target.
There is a yield curve for that.
In Japan, by elites who fear government debt,
Even though 100% of it is in Japanese Yen,
For 20 years the Japanese government has been AUSATERITY.
It is fu*king.
Political forces aiming to expand government expenditure are still extremely small.
I wish this MMT 's way of thinking would be spread all over the OECD country.
Thank you video.
sorry broken english.
from JAPAN.
This doesn't work in Japan. It's economy is in stagnation
Why does everyone say "money has no intrinsic value, except for gold"? Gold has no intrinsic value either. It has some use today in electronics applications, but for most of human history it had no practical use and its only value was due to its rarity, of which many things are rarer. Gold has no more intrinsic value than anything else people have used as currency. It's precisely because it doesn't have a practical use that makes it useful as a currency.
First of all, gold has more uses than just electronics: Jewelry, ornaments, dentistry, and if nothing else, it is a shiny paper weight. Gold has a lot of properties that make it a good money. It does not tarnish, is easily divisible, is easily identifiable, and it is scarce. I believe that the practical uses of gold do not hinder its use as money because the demand for non-monetary gold is fairly predictable and probably negligible. I mean it was used for thousands of years as money until recently.
@@hbgl8889 yeah, I know it's useful as a currency. The very properties that make it useful as a currency are the same ones that make it not useful elsewhere. Also, ornamentation is not a "use."
I agree with you that gold has no intrinsic value in the sense that nothing has a value that is separate from human desires. I have to disagree about ornamentation not being a 'use' though. Vanity and status are strong and widespread human desires. People kill on a regular basis to prove their status and over pride.
So this whole thing came about because he missed a couple of points people like Greenspan made?
Yes, the US Gov can print more money to not default on debt directly. Greenspan says we CAN print money to cover any debt but the reason we don't is it will devalue the dollar if done excessively. In Randall's world we cold seemingly take debt equal to the global GDP, but every square foot of real estate in other countries, then just print the money to cover it. There's a reason this can't be done; devaluation of currency.
He doesn't seem to understand that we have three markets for dollars. Domestic, Corporate, and what is usually called EuroDollar. These are like a pool a pond, and a lake connected by a garden hose. You can pump a lot of money into one and it takes some time to leak into the other, but it does leak.
Many people say "We did QE 1-3 and saw no inflation." First, we saw inflation. QE works at the Corporate level. QE inflation was very clear as we saw inflated equity prices. Those dollars went to the stocks. This leaks into the domestic economy as wealth in pension plans that would not otherwise have such high numbers, thus giving anyone drawing pension more money in the domestic economy. If we do helicopter money now through payments to individuals, forgive student loans, etc we will see inflation in the Domestic economy (the smallest group of dollars, the pool above).
This idea that we can just print money and there will be competition for resources so we'll have roads but no more Trump Towers misses that it will also devalue the savings of Bob who will not get a new car, Jane who will not get a new shirt, and Jack who will not get a new bike.
Currency is an arbitrary representation of goods and services. Increase the dollars without increasing the goods you get "inflation" but really it is more accurate to call it "currency devaluation". This is just the government promising to tax the wealth (wealth is the ability to acquire goods and services) you saved by devaluing your currency. Without fiat, governments would need to raise taxes to get your wealth. Raising taxes requires transparency on the part of the government. Instead with the government now able to print endlessly, the government doesn't have to say "We want to start a war and everyone needs to pay a war tax of 10%. Vote for me during re-election." Instead, we pretend that money doesn't represent wealth already accumulated and we let the government tax us without really bringing these important discussions forward.
Also, don't ask the government if we have consumer inflation. As he stated, things are more expensive for seniors. Because housing and healthcare matters, it is just ignored. The government constantly redefines the CPI in order to paint a narrative that works for them. "If it is going up, drop it from the metrics".
Also just because he can't take every exchange back to the first time someone said "I'll trade you this apple for that sea shell" doesn't mean there wasn't a first exchange done under a currency.
The problem with his argument is he came up with a view he wanted "We can all have all the things and nothing matters" then used selective facts to get to that point instead of just looking at the reality. I think he's 95% right in this. It's just that the 5% he ignores is what allows a government to exercise complete control over the citizenry by destroying their ability to save the wealth created under their own work. And yes, I hate Republicans too but this really seemed to be just a political propaganda video by the end.
Ben Silva his theories work perfectly well... for a little while. Then they collapse.
Like a person living the high life on credit cards. It is AWESOME... until one day you max out. Then it is a lot of pain.
There's no inflation if the government is soaking up excess capacity in the economy.
Grinning Guise an economist defines inflation as “an increase in the quantity of money and credit. ... The beginning of the inflow of additional money makes the prices of some commodities and services rise; other prices rise later.”
I assume you mean “price inflation” but I’m not sure which prices you reference. Inflation is rarely binary as in “we have it or we don’t”.
And when you say “soak it up” I assume you mean the government will print money and then use the reserves to buy goods and services. It’s hard for me to respond without knowing the specifics you reference but I’ll try. If the gov is soaking it up, then this is not a UBI process where they give the money to the people to spend. Instead it sounds like classic currency devaluation in lieu of taxation for the gov to control allocation of scarce resources. We can use the government cheese program example.
The government prints money instead of raising taxes. It can not allocate those dollars. It buys above natural demand quantities of cheese causing farmers to produce above natural levels of cheese. If done slowly the quantity grows as artificial demand grows and prices stay relatively stable over time. So in this case, you are correct. Cheese prices would not inflate (if done slowly, otherwise the spike in demand would certainly cause competition for scarce cheese and spike demand/competition/prices).
But this is going to divert more of the nations resources to cheese. As more money is created to buy cheese, this is still going to dilute the value of existing dollars (of course all of these assume a consistent velocity of money in order to theoretically isolate the change in M1 and M2). As we increase the pursuit of cheese this way we would still be dividing more currency among the same number of citizens. But now a large amount of cheese farmers exist and have more dollars to buy more trucks, tractors, fences, etc. At the same time existing dollars are chasing all non-cheese assets but since noncheese farmers and cheese farmers alm want a new truck and cheese farmers now have assets beyond a natural level you have more dollars chasing trucks and less power behind each dollar is less. This causes trick prices (and all other assets) to creep up to some extend. Maybe it is a .01% increase in trucks but it is across all things cheese farmers want. If we extend this to more commodities than cheese the price inflation accelerates.
Government generated demand, is still demand. It just makes a less efficient form of resource allocation and on this case it lead to a lot of poor people eating far more cheese than they wanted. There’s just no such thing as a free lunch, even cheese sandwiches.
Excellent take down of mmt
"Save the wealth created under their own work"- stated as if all work is the same with the same possible outcomes. Work involved in producing a piece of furniture is very different from the work involved in figuring out how to eliminate jobs and avoid taxes in order to maximize shareholder profit. Which of the two is rewarded? Hint: It isn't the artisan stashing away millions in cash.
Here’s a question. I’m on a Randall Wray deep dive right now, and MMT in general. It’s very enlightening stuff, but I have some questions that some on this thread might be able to help with. One thing I’ve heard him and others say is that we have no evidence of bartering, so money must have been first. That seems counterintuitive. Here’s my question. What evidence of bartering would we expect? It seems likely to me that we see evidence of money first because the evidence of money is far more likely to last and be visible in archeological records. What evidence do we see of bartering once money was created? Or is the argument that bartering is a modern invention? My understanding is that anthropologists have observed bartering in modern times. It still happens in cultures that have money. But in primitive cultures, what is the record of bartering that we would expect to see 3,000 years from now that would allow us to confirm that is was being done?
Yes. It would be like looking for evidence of someone's conversations before there were recordings or a written language and then assuming langauge did not exist at all.
But also, why is he adamant about it. Why is it important to prove that barter did not exist? Imo, it must have existed on a low scale level, with the population increase it would fail because of double coincidence but that is not the point. The point, again, is why is he so adamant to prove it? Just to have another factor supporting his ideology.
@@h.a.s.42 That is hte point entirely. he is so ken to prove his theory but fails because barter which is form of mutiallyy agreed exchange without a money as an intermediary exsits today in households and betwen peole who know each othe . People co operate without money in all sorts of ways from helping each other with their labour to trading goods.
@@Rob-fx2dw yes,sure barter exists. But they cannot tax it.
@@h.a.s.42 You are correct and that is their problem in missing out on the tax. Randall Wray is all about taxing in one way or another. His whole theory is underpinned by a madness of power seeking.
To St. Francis College: Thou shalt not bear FALSE WITNESS!!!
If the government is independent of the central bank, it can run out of dollars because it will have to issue bonds to raise dollars. No?
Great explanation
Thanks for sharing 👍♥️🙏
Magic Money Theory
Magic Money Tree lol
38:15 but do u know why central banks and business can just write each other iou´s physically or digitally and they are both assets until they are traded which at the point somehow a liability is obtained and in return you recieve something and set the budget to whatever suites there fancy
How do you account for the fact that banks don’t actually have to have the money they loan out?
pimliconz
Wouldn’t that make implementing mmt impossible? How can governments control inflation when banks issue most of the money?
pimliconz
I thought that most countries use a central banking system. Which ones use mmt?
pimliconz
Central banks are not part of government in fact you can do directly to the feds website and see this.
www.stlouisfed.org/in-plain-english/who-owns-the-federal-reserve-banks
pimliconz it’s shows that it was setup by congress but no explanation of how congress actually has a say in it’s operations. Just found out about mmt, learning about it. Just doesn’t seem that it can coexist with this type of central bank setup. Serious restructuring would be needed
"How can governments control inflation when banks issue most of the money?"
Bank-issued money doesn't increase the money supply. Loans must be paid back (with money that's already been issued into existence by the federal government).
26:29 - how they were created? At what amounts? How they were distributed to the public? Is it “you do service for government - we pay you in Virginia pounds” or do they distribute money through the banks in form of loans? Unless we answer this , the fact that they burned tax revenue received in the form of those paper money is not that fascinated. Maybe they just received 20 thousand, burned them and printed new notes in the same sum. You can’t say in this case that “they do not spent them”
. Exactly . It's pure self deception (stupidity at least) to say taxes do not fund government spending if you say new amounts of money replace older amounts that were collected from taxes. Like saying you didn't steal the money that you have in your bank account to buy a car because you used other money from the same bank account and used that stolen money to replace the money you already had in the same account.
No way are taxes and faith in the system exclusionary .
Hi, he says money arose out of the ancient tribal practice known as 'vert gild'. not sure if i am spelling it right but i cant find any material. Please share a link? Thank!
It's spelled weregild
@@josejaimes-ramos1546 thank you so much. He also mentions this paper called 'How Governments actually spend.' Could you please share the link or something? Thank yo so much.
While he starts off with some reasonable positions such as the fact that all money (not-mentioned, but importantly in a fiat based economy) represents a debt, this theory has more loose ends than a frayed rope. Eg. He conflates bills for work with actual work effort or value creation. Money is useful for things other than taxes and gets used for all sorts of things besides taxes. E.g. government does necessarily not need to spend first, it can (and often does) just accept another kinds of tokens that represent work effort. Indeed he talks himself in loops beginning about 55:00. What? Other countries wanted Germany to pay in - gold? But, according to Wray's money history money only ever originated with taxes! What is this non governmental thing 'gold' that was used to pay for Germany war debts? Then what about 45:30 "there are no limits". Later, ~58 "yes you need limits". Uh, exactly where are those "limits" in MMT? He wants to Target unemployment, but not for unionized workers? Uh, what exactly are these unemployment criteria? Later, he admits other countries can run surplus - but only because they export. Ok, so isn't the deficit also indicating a problem with our relative lack of exports, and thus relative exportation of dollars (e.g. feeding a eurodollar system)? What is this non-tax value use as a result of being the world reserve currency? Also, if deficits are not a problem what happens if/when the world decides to switch reserve currencies as it has done several times (e.g. Brenton Woods). Why isn't the pound still the reserve currency? Why did the US get all the gold after WWII? Why did France want the US to pay them in gold? And why are there current discussions at the world economic forum about this thing called a 'global reset'? MMT is popular because politicians want a free lunch and think that MMT justifies one. This is like telling an opioid addict that there is no problem because we can just give more opium. But, unfortunately, there is no free lunch, and people really do die from opioid abuse. The reason debt really does matter is because it represents a payment of _value_ (not currency) the future. If the gov't spends it doesn't just give away tokens - it really results in a debt that is expected to be payed. He's right we can always avoid default by printing more tokens. But that is different from saying that unconstrained token printing won't lead to other secondary effects like reducing GDP, stagflation, and eventually calls for a 'global reset' because nobody trusts the fiat anymore.
Ironically, here is the explanation by debating a completely separate issue. Watch th-cam.com/video/Vti1jkhEDoA/w-d-xo.html Notice the subtle fact not mentioned by Wray - that fiats don't start as sticks with notches. They start with something of tangible value, then the IOU becomes a convenient way to represent it - that is _until_ it eventually fails and there is a need to restore a tangible value. For example, MMT does not explain why nearly all fiat currencies have failed nor why after that failure there is a return to a tangible asset such as a metal that is NOT backed by the government where it failed, but instead accepted by the OTHER government that give that government some stable starting point. E.g. why on did the US dollar need to back with Gold (until 1971) if it could simply get have gotten away with just printing paper tokens. And why did other countries peg to the dollar in Brenton Woods use the dollar and explain the reason - Because it was backed by gold.
I think the point you're missing is that there is very little a US or France could do with german currency. They would have to use that german money to buy german things. That defeats the point of winning the war. Instead they wanted German goods, namely gold, that could be exchanged for dollars within their own country.
Your confusion at being paid in gold shows you misunderstand MMT. MMT does not state that everything except fiat currency has no value, that's preposterous. I mean think about it, why would you want fiat currency from an enemy country?
@@ThomasBomb45 re:"why would you want fiat currency from an enemy country?" Excellent question! How does MMT explain this? Or does MMT they state that there is no such thing as global trade, no such thing as a trade deficit, and no such thing as a 'reserve currency' (thus Triffin's Dilemma)? Prior to 1971 the reason wanted US dollars was explicitly because the currency was backed by a real and limited supply asset - namely Gold. The 'Fiat' claim that a US government tax might be paid was/is worthless to a foreign agent. Yet MMT presumes that's all the tokens (US dollars) ever represents. From 1971 -2021 the reason a foreign agent wanted US dollars is because if any country tried to price oil in anything but dollars, they were attacked by the US military. This essentially backed the US dollar with the US military as a world police because all countries use oil, and it required the foreign agent to have extra US dollars. After 2021, there are residual finance obligations that are denominated in dollars and a lot of financial interests that don't really want the Fiat Ponzi to change - so this is still unwinding. But now bets are off because global oil is no longer backed by the US military. Further, we just declared that foreign exchanges can be seized more or less at whim. This makes US dollars an unsafe store of value for a foreign country. So, why indeed would a country other than the US want US dollars in exchange for real goods and services anymore? Now take it to the next step? What happens to those massive US trade deficits if there is no longer external demand for US dollars? Answer: a dramatic reduction in foreign imports, and instead excess US dollars flowing back in the US because foreign countries do not have a need for them anymore. This results in massive inflation that the US can't just tax away.
Thanks for your comment. I stopped listening when he mispronounced Weimar.
I love how 42 minutes in, you still haven't mentioned the role of banks, despite the fact that banks have been issuing private debt currency for centuries.
ask why king defaulted
Jamy Because he would no longer accept the payment that he issued.
38:38
Can people who are against MMT concisely explain to me why we can't use MMT to run full employment, providing that the goverment pays at the minimum wage? As far as I understand, this policy would eliminate unemployment, increase investments in automation, and increase aggregate demand. What am I missing?
Firstly full employement does not necessarily create more wealth for many reasons of which the main one is efficiencies drive more wealth and not just lack of employment.
The job guarantee policy would not eliminate unemployment because some of the unemployment is a result of people working in industries that become inefficient or too costly compared to their competition. Sometime the lack of the flexibility of wages is a problem in adjusting prices downwards to keep businesses viable. They are frictionally unemployed for a while until they get jobs elsewhere. An application of a job guarantee takes no account of prices for goods or wages or efficiencies of industry so it can easily result in lower business efficiencies and lower effective production and lower wealth generation.
Politics. Fear. Fear of who might loose out if it happened. Nobody cares if you are unemployed, but everyone is scared of inflation. There is a lot of propaganda coming down from the rich, and its been going on a long time
@@MrKongatthegates That's exactly what I hear on hearing "taxes don't fund spending" . Much more accurate to say tax breaks for billionaires don't fund spending. Collected taxes most certainly do fund spending. trump repealed 4 separate tax laws Obama levied against the 1% to help fund the ACA. The most famous was called the Cadillac Tax. To believe tax revenue is "destroyed" rather than used to fund our country is to not fear voting away the payroll tax. Using unfounded beliefs, theories and pure bs to convince both progressives and repubs to vote to defund their own country is no small feat....give Fox, RT, Murdoch, Putin and Koch all cookies. the propaganda being used against us and the other democracies will be the most studied in history.
By "running full employment" you make yourself the one employer thus illuminating the choise not to work. Slavery in other words
I do not understand why Prof Wray claims that we do not need taxes to pay the national debt? How else is the debt to decrease; tax for the vast majority of nations forms a large part of the state revenues.
why should a government that creates it own money out of nothing need money from anybody.. makes no sense. There is no debt to repay that is the outstanding amount invested in bonds. Which are returned with an interest. That taxes are used for revenues is an accounting error or a relic of the gold-standart era. IN reality we dont need taxes to fund anything, taxes are here for taking money out of the system (cool the economy if needed) and to create demand for the currency. Due to gold-standart mentality im not sure if the taxes money is actually reused, or if actually spending is solely done by creation of new funds.. could somebody explain that?
Dimitris Tsagdis The government literally pulled those dollars being taxed out of thin air; it is the sole supplier and creator and distributor of money. The government isn’t a household; it literally can’t enter bankruptcy or run out of money. The problem isn’t with paying back debt, it’s about keeping inflation in check by making sure public expenditures actually produce value and levying taxes if need be. Worrying about how a sovereign nation can pay back debt when it has the ability to create infinite amount of money is mostly silly.
Of course countries go bankrupt and run out of money; see Russia, Greece, Mexico, Argentina, Iceland... National currency becomes worthless and all countries need imports so at some point the other countries stop accepting your junk paper and demand their money which you have to borrow and if nobody is willing to lend nations go bankrupt. Don't you read history?
@@dimitristsagdis7340 Didn't you watch the video? The US is unique in the world stage in that it has fiat money, meaning the US dollar has no intrinsic value and isn't created or pegged to a commodity. All those countries either don't have fiat money, at least in the truest sense of the term, or fell victim to economic and/or political downturns that devalued the currency in a way that led to loss of international recognition: Greece is pegged to the euro and thus doesn't have true monetary sovereignty, unlike the US. Argentina went through several currencies in the last century, some of which were pegged to foreign nations, and also operated under a right-wing military dictatorship that engaged in the irresponsible spending and collection of money. The value of the Icelandic krona fell because of the collapse of the banking sector, which relied heavily off foreign debts and foreign money, essentially 'pegging' private banks to foreign currencies.
Again, countries with fiat money literally can't go bankrupt; they have the ability to create an infinite amount of money. This is different from saying they SHOULD create an infinite amount of money. The main problem is ensuring that 1) the value placed on the money stays consistent and is internationally recognized, and 2) the amount of money doesn't exceed the socially productive capabilities of the economy. This is the great balancing act. Though hyperinflation can happen if governments aren't too careful, the point is that deficits and debts don't necessarily lead to hyperinflation.
David Till: 'pigs can fly' but they shouldn't (cause they crash land every time they fly :-); which is why you don't see any of them flying. Stop playing with words !
Your and the video's 'can' mean nothing if you can't because of the (1) and (2) you acknowledge above; and many other factors which MMT seems to be oblivious too or intentionally turn a blind eye.
The US$ has already passed the two thresholds you mention. Look at its XR with something relatively stable like the Swiss Franc (CHF) from 2000 at 1.8 to today's borderline 1:1 and occasionally below. Wake up and smell the coffee, in a world of fiat money where all central banks can print currency, the fact that one 'can' means nothing; it is the modus operandi.
It is the willingness of the world economy to accept whatever a central bank prints that valorises a fiat currency. And as the above XR shows the US$ has gone downhill during the last 18 years and if it carries on the same tune (e.g. QE, ever growing deficits, withdrawal from the Iran deal) it will go further down.
Perhaps then people espousing the MMT will realise that a central bank in a sovereign country 'cannot' create infinite fiat currency.