Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe wasn't All and I'm Tracy. Tracy, what are
Speaker 1: the big topics for you at We're at the Milk
Speaker 1: and Conference out in Beverly Hills. What would you say
Speaker 1: of like some of the big topics you've heard. I
Speaker 1: think it's inflation. I mean, I gotta say I was
Speaker 1: on a credit markets panel and it was called credit
Speaker 1: Markets and Inflation, So that kind of tells you everything
Speaker 1: you need to know. No, that's obviously a big thing.
Speaker 1: I saw Ken Griffin of Citadel he was talking about
Speaker 1: he was actually kind of optimistic about it, though, like
Speaker 1: he wasn't at work. He had a lot of criticisms
Speaker 1: about this administration and policy and all that. But of
Speaker 1: all the things, I was actually a little bit surprised,
Speaker 1: like he didn't seem that concerned about inflation or as
Speaker 1: much as all the media is talking about it. He
Speaker 1: thinks it'll moderate towards the end of the year, or
Speaker 1: he thinks there's a chance anyway, give the had some flexibility,
Speaker 1: so some interesting different views. Well, yeah, I mean, the
Speaker 1: thing that I've learned from the past year is that
Speaker 1: people feel very people have strong opinions about inflation, like
Speaker 1: it's a very emotional topic. Sure, and it's really striking
Speaker 1: that we've had this incredible labor market recovery, we have
Speaker 1: sub four unemployment, and yet it appears that because inflation
Speaker 1: is high, that explains why consumer sentiment is so bad,
Speaker 1: although I think there's more to it than just inflation. Well,
Speaker 1: so this is the other thing that I think we've learned,
Speaker 1: which we've talked about before. But it feels like people
Speaker 1: care about more. People care about inflation than people care
Speaker 1: about the unemployment rate. That's what it feels like to me,
Speaker 1: because inflation affects everyone, whereas the unemployment rate is this
Speaker 1: kind of abstract thing. You can go up to people
Speaker 1: and say, oh, unemployment is just four percent, and they'll
Speaker 1: be like, well, I've been employed for the past ten
Speaker 1: years and all I know is that the cost of
Speaker 1: living is going up. Yeah, exactly right. So even during
Speaker 1: period of high unemployment, most people hold on to their
Speaker 1: jobs over a given cycle, but everyone kind of feels
Speaker 1: rising prices and so there's sort of like this political asymmetry.
Speaker 1: And you think about the FED and it has to
Speaker 1: balance the two. But this is the first time we
Speaker 1: really see like this, like it appears anyway that the
Speaker 1: high inflation is coming at a cost of consumer sentiment
Speaker 1: and so forth. Yeah, I think that's right. And of
Speaker 1: course it's highly politicized, and people look at different policies,
Speaker 1: and in particularly they look at you know, the FED
Speaker 1: gets some of the blame and transitory shocks, but there's
Speaker 1: a lot of I guess ire, directed at the fiscal stimulus,
Speaker 1: and in particular that last round that Biden did um
Speaker 1: after he was elected, and a bunch of people say, oh,
Speaker 1: look it's proved it's too much. That was way over
Speaker 1: there. There There was like there was one line and the
Speaker 1: other line was a little bit below and that was
Speaker 1: the outpost. Wait, but then there's they spent trillions and
Speaker 1: it's too much. When are you going to say modern
Speaker 1: monetary theory? Okay, so I was waiting. Okay, let's just
Speaker 1: jump right in. So one of the biggest advocates not
Speaker 1: of fiscal stimulus or spending per se, but in getting
Speaker 1: us to rethink what we can do with fiscal policy,
Speaker 1: of course, is Stephanie Kelton, who's known as one of
Speaker 1: the foremost advocates of this way of thinking. Modern monetary
Speaker 1: theory and she's the author of the book The Deficit Myth.
Speaker 1: She's the co host of the Best Ideas Money podcast,
Speaker 1: and she's a professor at stony Brook, and she's here
Speaker 1: with us at Milkin. And so we're going to be
Speaker 1: talking about, Actually, you know what we're really gonna be
Speaker 1: talking about, is monetary modern monetary theory to blame for
Speaker 1: this high inflation? Are you to blame for this high inflation?
Speaker 1: Step he jumped it into. I'm just gonna jump right in,
Speaker 1: are you to blame? I think so? Congratulations. No, look,
Speaker 1: I think that you YouTube probably more than anyone to
Speaker 1: have well no, no, no, I'm just gonna say, have
Speaker 1: done deeper dives into this question. Over the course of
Speaker 1: the last what eighty months, two years or whatever. You
Speaker 1: have been chasing this story in a more sophisticated and
Speaker 1: persistent way than I think anybody out there, and you've
Speaker 1: I think, really forced the conversation to shift. I mean,
Speaker 1: maybe I've helped shift the conversation on some fronts, but
Speaker 1: on the inflation front, I really think you've helped to
Speaker 1: focus attention on issues of pandemic related supply chain and bottlenecks.
Speaker 1: Nobody has done more to change the conversation around those things.
Speaker 1: So thank you. This is going to be a double
Speaker 1: edged sword for us. I think if people start, yeah, anyway,
Speaker 1: go ahead, Well look, I mean, so we we have
Speaker 1: that we we've been paying a lot of attention to
Speaker 1: the drivers of inflation and thinking about inflation in ways
Speaker 1: that we didn't before. And frankly, we haven't really had
Speaker 1: to think about inflation for so many decades. To the
Speaker 1: extent that we talked about inflation, it was how do
Speaker 1: we get it up? I appreciate that, by the way,
Speaker 1: but to you know, the you know, the sort of
Speaker 1: it feels like there's sort of this revenge a little
Speaker 1: bit of the sort of the old school the New
Speaker 1: Kansian economists, and they're like, look, here's this line that's
Speaker 1: potential GDP. Here's this other line that's actual GDP. There
Speaker 1: is a gap between them. Biden spent too much money
Speaker 1: that was more than one line subtracted by the other line.
Speaker 1: Our models work, it showed inflation. So what is that
Speaker 1: a vindication of that style of thinking, like this sort
Speaker 1: of like vulgar output gap thinking. No, of course not,
Speaker 1: I mean, you know, being potentially getting the inflation stuff right.
Speaker 1: But for the wrong reasons. It's not vindication. Okay, So
Speaker 1: I again we go back to what is a more
Speaker 1: sophisticated way to think about why we ended up with
Speaker 1: the high inflation we ended up with, And of course
Speaker 1: it's not just here in the US, but it's around
Speaker 1: the world. You look at Europe and they're just right
Speaker 1: on our heels at seven and a half percent or so.
Speaker 1: So we know that that countries like China, countries like
Speaker 1: the UK also are at forty year highs when it
Speaker 1: comes to inflation. So it's it's a bit simplistic and
Speaker 1: I think wrong, frankly, to to look at things like
Speaker 1: the output gap and say this is all down to
Speaker 1: pouring too much fire on an economy that didn't need
Speaker 1: that much fiscal support. Can you break it down for
Speaker 1: us a little bit more, how much of the current
Speaker 1: inflation or price increases do you think are due to
Speaker 1: demand versus supply issues and energy prices and things like that.
Speaker 1: Super hard, super hard to know the answer to that, Tracy.
Speaker 1: We were talking about that this morning on a panel
Speaker 1: that I was on with current CBO director, former CEBIO
Speaker 1: director and Jason Furman. We had exactly these kinds of conversations.
Speaker 1: I don't think anybody on the panel feels really comfortable
Speaker 1: dissecting at that at that level, you know, half a
Speaker 1: third whatever, um. But we do know, and we have
Speaker 1: differences of opinion to be sure. Right, Jason thinks that
Speaker 1: more of the inflation is a result of the excessive
Speaker 1: fiscal support, and I think I put myself on the
Speaker 1: other side, which is that most of what we're still
Speaker 1: dealing with is you know, pandemic related and energy and
Speaker 1: so I think that's you know, because actually where to
Speaker 1: put the numbers, I don't know. But when it comes to,
Speaker 1: you know, where to lay the bulk of the blame,
Speaker 1: I still come down on the side of you know,
Speaker 1: pandemic and energy and now food Ukraine. Right, you know
Speaker 1: it feels to me and again I were you're the
Speaker 1: expert here, but you know, it's hard to to me.
Speaker 1: It's hard to tell a story that, say, oil prices,
Speaker 1: which we know are a huge driver of all in inflation,
Speaker 1: headline inflation, have something to do with spending. Yeah, right,
Speaker 1: I mean you could in reverse though, right when the
Speaker 1: pandemic first hit and largely things were shut down, oil
Speaker 1: prices did come significantly down, So there was some kind
Speaker 1: of a relationship between what was happening in the economy
Speaker 1: and that sort of thing. But yeah, you're you're right
Speaker 1: with respect to stimulus and the fiscal support. Yes we
Speaker 1: got a faster recovery. Thank god, we got vaccines faster
Speaker 1: than a lot of people ever imagined. I remember when
Speaker 1: early on we were hearing, you know, Dr Fauci's saying
Speaker 1: maybe four maybe five years. I mean, thank goodness, that
Speaker 1: happened much more quickly. And so the bounce back happens
Speaker 1: sooner in the strength of demands. So some of that
Speaker 1: is at play as well. So one of the things
Speaker 1: that we talked about a lot on this podcast is
Speaker 1: under investment in energy production and infrastructure, and this is
Speaker 1: something that the Biden administration has been very vocal about
Speaker 1: as well, and in fact, Biden has suggested a number
Speaker 1: of times that the solution to high prices is more spending,
Speaker 1: more investment to solve some of these bottleneck issues. And
Speaker 1: I wonder how that fits into m m T in
Speaker 1: the sense that my understanding is an MMT the constraint
Speaker 1: on spending is inflation. And now we have CPI at
Speaker 1: eight point five per cent, and we have people who
Speaker 1: are also saying, well, the solution to the inflation is
Speaker 1: more spending. How do you reconcile those two things. Well, yeah,
Speaker 1: it's a good question. So if you think about it
Speaker 1: the way I think the President Biden does, which is,
Speaker 1: we need more capacity with respect to the labor force.
Speaker 1: We need to bring more, especially women back into the
Speaker 1: labor force. And so he will in a sense justify
Speaker 1: investments in universal pre k and childcare and the sort
Speaker 1: of thing so that you can get especially women to
Speaker 1: return to the labor force to maybe ease some of
Speaker 1: the um difficulties that employers have been having hiring workers
Speaker 1: with uh computer chips. You know, he's talking about the
Speaker 1: importance of restoring some capacity with semiconductor manufacturing and building
Speaker 1: resiliency and all of that stuff. Now you're rightly raising
Speaker 1: this question about how do you do that in a
Speaker 1: supply constrained environment. You know, if they want to do
Speaker 1: all of this infrastructure and we've heard talk about you know,
Speaker 1: climate and the rest of it. You want electric school buses,
Speaker 1: you want to electrify the grid, you want solar panels,
Speaker 1: and he be charging stations all over the country. Well,
Speaker 1: the question is, you know who's going to put those up.
Speaker 1: Who's going to manufacture? Do you have firms that can
Speaker 1: meet those orders in a timely manner? Do you have
Speaker 1: the supply capacity? And to the extent that you don't,
Speaker 1: you're gonna have back logs, You're gonna have to wait
Speaker 1: to roll that out. So it isn't going to relieve
Speaker 1: a lot of inflationary pressure in the short term. And
Speaker 1: I think he keeps reminding us that these are sort
Speaker 1: of mostly medium and longer term investments, but maybe child
Speaker 1: care helps a bit. So this is sort of the
Speaker 1: the emphasis on the real resource constraint within MMT, which
Speaker 1: I will, you know, credit to m m T. I
Speaker 1: think that real resource focus has been borne out by
Speaker 1: the past couple of years. But I guess my question is,
Speaker 1: does MMT have a solution to that? Like, what is
Speaker 1: the policy recommendation in this kind of situation? Well, it
Speaker 1: depends what you want to accomplish, right If you if
Speaker 1: you're thinking about the kinds of things that worry me
Speaker 1: the most in some respects, which is the climate crisis
Speaker 1: that we're facing, then I think what you need to
Speaker 1: do is sit down and draft a program. And it's
Speaker 1: going to be a long term program. It's going to
Speaker 1: be a ten year or a fifteen year or whatever. Program.
Speaker 1: But you've got to start thinking about how you're and
Speaker 1: resource the kinds of investments that are needed to reduce
Speaker 1: c O two emissions over a longer period of time.
Speaker 1: And that means investments in energy and investments in housing
Speaker 1: and transportation and agriculture. It's a big program. And so
Speaker 1: when you say, you know, how does mm T think
Speaker 1: about the capacity constraints, In part, it's addressing a housing shortage.
Speaker 1: It's addressing got to build more housing. To deal with
Speaker 1: a housing shortage, you have to deal with the grid.
Speaker 1: If you're going to electrify, you've got to make those investments.
Speaker 1: And you know you're not going to get it all perfect.
Speaker 1: You're going to try to map this out and do
Speaker 1: it in a way that takes advantage of capacity where
Speaker 1: it exists. That build capacity, build capacity where it doesn't.
Speaker 1: That frees up capacity in the economy for other uses.
Speaker 1: If something is deemed a priority and you don't have
Speaker 1: the capacity to make the investments you want to make,
Speaker 1: you may well have to elbow out some of the
Speaker 1: private sector's current use of resources to freedom up for
Speaker 1: something that's deemed a higher priority like climate. So the
Speaker 1: way we're actually in this country attempting to deal with
Speaker 1: inflation is through rate hikes and the federal Reserve. And
Speaker 1: there's all you know, people like, well, what is the
Speaker 1: federal reserve? How is that supposed to fix supply chain bottlenecks?
Speaker 1: And everyone knows it can't and etcetera. And most people
Speaker 1: seem to also have this view. It's like even the
Speaker 1: advocates of monetary tightening. It's a blunt tool. It's not
Speaker 1: the most amazing thing, but Okay, that's what we're going
Speaker 1: to do. But at least it is countercyclical. When you
Speaker 1: look at politicians, they're proposing things like gas rebates or
Speaker 1: cutting the gas tax, which is a kind of arguably
Speaker 1: putting more, trying to douce demand even further. It's not
Speaker 1: I don't find like that very encouraging. And so like
Speaker 1: one of the good things I think about the MT
Speaker 1: view of thinking is I consider it to be democratic
Speaker 1: and outsource not outsource demand management to the to the FED.
Speaker 1: But on the other hand, I look at what politicians
Speaker 1: their response, and I don't exactly feel encouraged by how
Speaker 1: they're thinking about dealing with a period of high inflation,
Speaker 1: and so should they give people pause about the MMT
Speaker 1: political economy such that when we hit high inflation, in
Speaker 1: many cases, the first instinct of politicians is to even
Speaker 1: do spending or two spend more or well, okay, so
Speaker 1: you you raise this um the gas tax, and that's
Speaker 1: a pretty modest I mean, we're talking about a few pennies. Really,
Speaker 1: it's like tens. You know, I don't think this is
Speaker 1: gonna lead to a big burst of inflationary pressure. And
Speaker 1: of course alongside that, what at least Democrats are also
Speaker 1: talking about, are you know, trying to move another package
Speaker 1: through where President Biden is explicitly um referring to this
Speaker 1: as a package that would be deficit reducing and therefore
Speaker 1: helping to bring down inflation. So you are actually hearing no,
Speaker 1: now I may not agree with that, okay, but you
Speaker 1: are hearing politicians say we ought to pass this legislation
Speaker 1: because it will actually help us to deal with inflation.
Speaker 1: So you know, you can say I don't trust them
Speaker 1: to do it, but the truth is they are actually
Speaker 1: trying to do exactly that, but just to broaden it
Speaker 1: out a bit. This has been one of the classic
Speaker 1: critiques of M. M. T, which is that, Okay, you
Speaker 1: can you can change the narrative and make it so
Speaker 1: that people don't think that, you know, the budget in
Speaker 1: and of itself is the constraint on fiscal spending. But
Speaker 1: then you still have the problem of politicians having to
Speaker 1: agree on whatever the policy is that that we're going
Speaker 1: to enact. And to be honest that you know, recent
Speaker 1: history in Washington has not been conducive to consensus. You
Speaker 1: still have to build that consensus. Even if you say, well,
Speaker 1: the budget is not unlimited, but bigger than maybe we think.
Speaker 1: And so I don't know, if anything, it feels like
Speaker 1: that issue is still lingering, consensus is lacking in DC.
Speaker 1: To sum it up, sure it is, but I don't
Speaker 1: I don't know that this is a in recent years
Speaker 1: kind of a thing. I mean, this is this is
Speaker 1: the name of the game. You know, if the votes
Speaker 1: are there, the legislation passes, and if the votes aren't there,
Speaker 1: the legislation doesn't pass. And so MMT doesn't solve the
Speaker 1: political gridlock and that sort of a thing. What it
Speaker 1: does do, though, Tracy, I think is it really, as
Speaker 1: you said, it recenters the debate. So instead of you know,
Speaker 1: approaching something and saying, all right, we want to do
Speaker 1: a trillion dollars of infrastructure investment, and we know we
Speaker 1: have to pay for it. We're in the old framework, right,
Speaker 1: we know we have to pay for it. So we're
Speaker 1: going to couple the proposed spending with a whole slew
Speaker 1: of tax increases to generate revenues. So we can go
Speaker 1: to the Congressional Budget Office and say, look at our legislation,
Speaker 1: give it a score. Tell us if we did a
Speaker 1: good job keeping it all deficit neutral. And it turns
Speaker 1: out and we've seen this with Build Back Better, right,
Speaker 1: it's really hard to get the votes. You have to
Speaker 1: convince your colleagues in the House and the Senate not
Speaker 1: just to vote for your spending priorities, but also to
Speaker 1: vote for the increase in taxes that you think are
Speaker 1: necessary to keep it all deficit neutral. And what MMT
Speaker 1: does is say, you know, sometimes you don't have to
Speaker 1: offset the spending, maybe off set half of it, maybe
Speaker 1: you don't need offset any of it, you know, and
Speaker 1: so you can then maybe have an easier time gathering
Speaker 1: the votes to make investments because you only have to
Speaker 1: win one fight instead of win that other fight as well.
Speaker 1: I'm a little bit confused still about the role of
Speaker 1: taxes in UH inflation management because I one thing that
Speaker 1: you hear is like, well, this would be a really
Speaker 1: good time to raise taxes on the rich. That's a
Speaker 1: politically popular thing. Maybe it UH marginally diminishes their spending
Speaker 1: power that create eases some strains on the economy. Maybe
Speaker 1: not just the rich, maybe the upper middle class as well.
Speaker 1: What is is there a role for a taxation in
Speaker 1: inflation management? And how do you think of it? Because
Speaker 1: I feel like a little bit confused on this topic. Okay, Well,
Speaker 1: taxes function to remove purchasing power from somebody's hands. Right,
Speaker 1: every dollar that's taxed away from you as a dollar
Speaker 1: you don't have and excuse me, can't turn around and
Speaker 1: chase after some good or service in the economy. So
Speaker 1: taxes function to diminish one's purchasing power. Um. But there
Speaker 1: are other ways to do that as well. So the
Speaker 1: role of taxes in MMT. First, there's an origin story, right,
Speaker 1: there's an If you wanted to start up a currency
Speaker 1: from scratch, taxes play an important role, and we saw
Speaker 1: that with the Euro. The euro is a currency that
Speaker 1: didn't exist prior to January of and then because the
Speaker 1: government said, Okay, after this day, we're going to start
Speaker 1: spending only in this currency, and we're going to require
Speaker 1: taxes be paid in this currency. Will low and behold,
Speaker 1: you switch over the monetary system and now you have
Speaker 1: the Euro. So, you know, creating a demand for a
Speaker 1: currency is one role of taxes. Another role is, you know, inflation.
Speaker 1: If you simply spent the currency and never taxed any
Speaker 1: of it back again, then you would, you know, put
Speaker 1: too much purchasing power into people's hands, and the result
Speaker 1: would inevitably be inflation. So one thing that taxes do
Speaker 1: is allow the government to both spend its currency into
Speaker 1: the economy but also recover a portion of it as
Speaker 1: they tax some of it back. But can text policy
Speaker 1: be used countercyclically? And is there a role for It's like, hey,
Speaker 1: inflation is hid. Now is a good time to raise taxes? Well,
Speaker 1: the Democrats are trying to do that now, actually, But
Speaker 1: tax taxes are already countercyclical, right. Tax revenues increase automatically
Speaker 1: as the economy grows, and they drop off in a recovery,
Speaker 1: and I'm sorry, in a recession. And so I guess
Speaker 1: you're asking about discretionary right, the discretionary use in order
Speaker 1: to battle inflation. It's been proposed in the past. You know,
Speaker 1: the Federal Reserve building is named after Mariner echoes. And
Speaker 1: if you go back and you listen to the kinds
Speaker 1: of things Equals was saying when talking about how to
Speaker 1: bring down inflation now after the war or during and
Speaker 1: after the war, Equals was saying, we should use taxes
Speaker 1: to do this. So it's not a new idea, it's
Speaker 1: not an m m T proposal per se. Um, Could
Speaker 1: it work? Could it function to reduce inflationary pressures? Yes?
Speaker 1: Is it practical to adjust taxes in real time to
Speaker 1: try to battle x post inflation like after it happens?
Speaker 1: And the answer is probably no. Um, maybe you can
Speaker 1: get the votes to raise taxes when inflation is high,
Speaker 1: and it may help to reduce inflationary pressures, but it's
Speaker 1: certainly not the frontline policy prescription for reducing inflation. And
Speaker 1: m m T basic question here, what is the right
Speaker 1: way or the ideal way to reduce ex post inflation?
Speaker 1: All right, So this is the way I always have
Speaker 1: tried to say this. There is in my mind anyway
Speaker 1: no one size fits all policy response. To inflation, you
Speaker 1: have to look under the hood. If I were to
Speaker 1: walk down into my baseman and find it flooded with water,
Speaker 1: I know I have a problem on my hands, but
Speaker 1: I don't know why. I don't know if a kid
Speaker 1: left to sink, running of a toilet overflowed, if the
Speaker 1: dishwashers leaking of a pipe burst. Before I know what
Speaker 1: to do, I have to figure out where the source
Speaker 1: of the water is coming from, what's causing the problem.
Speaker 1: And that's how I think about inflation. If it's end.
Speaker 1: We were talking earlier about energy. Right, is higher or
Speaker 1: higher interest rates the right response, the right policy response
Speaker 1: to an inflation that's being driven largely by oil prices?
Speaker 1: And I think the answer is no. So I really
Speaker 1: think where we're ultimately headed. I think, I guess I
Speaker 1: hope is to a more granular, tailored policy response, more
Speaker 1: sophisticated response to the way that we approach, you know,
Speaker 1: combatting inflation. This is where we need. My idea of
Speaker 1: a FED that sets the speed limit of cars and
Speaker 1: in these days, lower the speed limit rather than raising
Speaker 1: interest rates, lower the speed limit to get better. Guess
Speaker 1: you know, the economists at the Center for Economic and
Speaker 1: Policy researches came out with a kind of six things
Speaker 1: you could do to reduce inflationary pressures today. That's one
Speaker 1: of the six ideas they put forward. A shorter work week, right, Um,
Speaker 1: work shorter work week sounds fine, Yeah, work from sounds good.
Speaker 1: Every Tracy's ears always perk up work. If MMT says
Speaker 1: everyone should work from home, that we've got you, that's
Speaker 1: okay with me. Um. But actually, actually on that point,
Speaker 1: can we talk about the job guarantee portion of MMT
Speaker 1: because I mentioned this in the intro, But it feels
Speaker 1: to me that given everything we've experienced now, that inflation
Speaker 1: seems to be a more salient issue for people than unemployment.
Speaker 1: And you know, maybe if unemployment was a ten percent
Speaker 1: or God forbid or something crazy like that, more people
Speaker 1: more people would obviously care, but a greater proportion of
Speaker 1: those not directly affected would care. But it feels like
Speaker 1: everyone has a stake in inflation. Everyone is impacted by
Speaker 1: the cost of living. So how does MMT overcome that discrepancy?
Speaker 1: How do you get people to care about the job
Speaker 1: guarantee portion of the theory? Well, I guess you know.
Speaker 1: One way to think about it is what if we
Speaker 1: had a federal job guarantee in place before the pandemic
Speaker 1: broke and instead of you know, twenty two million people
Speaker 1: lost their jobs in the first two months of the
Speaker 1: pandemic or whatever, and Congress sort of panicked because we
Speaker 1: didn't have kind of institutions in place to absorb and
Speaker 1: deal in a more focused way with the you know,
Speaker 1: the unemployment and the you know, economic fallout. So suppose
Speaker 1: we had a federal job guarantee in place, then there
Speaker 1: would have been you know, less I think panic and
Speaker 1: pulling out the bazooka, the money bazuka and just spraying
Speaker 1: it across the economy and saying, we got to blow
Speaker 1: a bunch of money into people's hands because we don't
Speaker 1: know what else to do. You could have employed people directly,
Speaker 1: and it would have been targeted as opposed to this
Speaker 1: much more you know, untargeted, would have had the infrastructure
Speaker 1: already in place, had it in place, and the money
Speaker 1: would have gone right to where it was needed. You
Speaker 1: wouldn't necessarily had to send large checks to almost everybody. Uh.
Speaker 1: And maybe to the extent that doing those kinds of
Speaker 1: things helped to fuel some of the inflationary pressures that
Speaker 1: we're dealing with today. People could be persuaded by saying, look,
Speaker 1: we don't want to end up there again. I like
Speaker 1: the Bazooka. I thought it was great. It just sprayed
Speaker 1: all that money around, and we went from what was
Speaker 1: going to be one of the worst downturns ever to
Speaker 1: the fastest recovery in history. Yeah. Actually, I mean there's
Speaker 1: no question, right, it is true, right that we did
Speaker 1: have the fastest economic recovery in recorded history. So you've
Speaker 1: got to give some credit to the policy response this time,
Speaker 1: especially as compared to two thousand, eight thousand nine. I've
Speaker 1: seen uh, Stephen Manuchin around the conference for AD and
Speaker 1: I keep trying to I haven't gotten close enough to
Speaker 1: invite him on odd lots. And we can talk about
Speaker 1: how great that was. But in all but in all seriousness,
Speaker 1: you know, looking back, sitting aside the idea of like
Speaker 1: it would have been nice if there was infrastructure in place,
Speaker 1: looking back at the various rounds, and there was like
Speaker 1: the Cares Act, right, and the America and then Biden's
Speaker 1: airp right, Well, there was the Cares Act in March,
Speaker 1: and there was the nine billion um Consolidated Spending Bill
Speaker 1: in December, and then one point nine trillion in March,
Speaker 1: five trillion in twelve months. So looking back at those
Speaker 1: three big bills, just from what we know now and
Speaker 1: where we are, in your view, are there lessons to
Speaker 1: be learned about how they might have been structured differently.
Speaker 1: So in a in a perfect world, right, you would
Speaker 1: run legislation through a sort of rigorous scoring process, if
Speaker 1: you want to call it a scoring process. Instead of
Speaker 1: asking CBO tell us the budgetary impacts of what we're
Speaker 1: about to do, you want to have somebody on the
Speaker 1: outlook for inflation risk, and you want to have somebody
Speaker 1: taken a look at what it is you're proposing to
Speaker 1: spend and looking to mitigate inflation risk ahead of time.
Speaker 1: That's the big advantage I think of MMT is that
Speaker 1: when it comes to inflation, the goal is to preempt it,
Speaker 1: not to chase it on the back end after you've
Speaker 1: caused the problem, but to avoid inflationary problems, partly through
Speaker 1: a job guarantee, but partly through changing the way that
Speaker 1: you evaluate legislation prior to voting. Now, having said that,
Speaker 1: you know, I said, we're in a perfect world, and
Speaker 1: in a perfect world, you'd also have perfect information, so
Speaker 1: you would be able to see the delta variant coming,
Speaker 1: and you would be able to see the O macron
Speaker 1: variant coming. So when I think about it, if you
Speaker 1: had been able to tell lawmakers, say, let's say you
Speaker 1: take Larry story to them and you say, the line
Speaker 1: goes here and the other line is here, and this
Speaker 1: is going to be too much, but also you should
Speaker 1: know a delta wave is coming and an omicron wave
Speaker 1: is coming, would lawmakers have wanted to air on the side?
Speaker 1: Member Everybody originally said it's better to do too much
Speaker 1: than too little. So maybe if you had perfect information
Speaker 1: about what was coming, lawmakers might have still preferred to
Speaker 1: to take the risk of going too big. We just
Speaker 1: don't know, and this was also the criticism of two
Speaker 1: thousand and eight two thousand nine was that we didn't
Speaker 1: actually do enough. But so, one other thing that people
Speaker 1: are talking about quite a lot right now is the
Speaker 1: idea of the dollar and its place in the global
Speaker 1: financial system and America's enjoyment of reserve currency status. And
Speaker 1: this has also been one of the sort of tangential
Speaker 1: criticisms of m m T, which is that it might
Speaker 1: only work for a country like the US that enjoys
Speaker 1: that reserve currency status, maybe it's not so well suited
Speaker 1: to emerging markets. And I know you have strong opinions
Speaker 1: on this, but I'm just curious, how are you thinking
Speaker 1: about that aspect of it at the moment, And what's
Speaker 1: your response to people who say, well, inflation, the inflation
Speaker 1: that we're experiencing, and you know, it just proves that um,
Speaker 1: the dollar is on its way down or that America's
Speaker 1: reserve currency status is somehow endangered. Well, I mean, I
Speaker 1: don't know. I'm looking at the dollar versus the Euro
Speaker 1: versus history. Hard to make that argument right now, but
Speaker 1: it's not I don't think Jacy, that I have strong
Speaker 1: opinions about e M. I think that for a lot
Speaker 1: of em countries they don't enjoy the kind of capacity,
Speaker 1: you know, to spend that a country like the US
Speaker 1: or Japan, or the UK or Australia, Canada doesn't. It
Speaker 1: of course not just the US, because you look at
Speaker 1: what even countries across Europe this time as compared to
Speaker 1: last time. This time, European countries, even those that are
Speaker 1: on the euro enjoyed basically the full back stopping of
Speaker 1: the e c B. It was almost as if the
Speaker 1: e c B restored monetary sovereignty to all of these
Speaker 1: countries and just basically said, we have your back. We're
Speaker 1: not going to let yields blow out. Go and spend
Speaker 1: what you need to spend deal with the pandemic and
Speaker 1: the economic fallout. So it's not just the US that
Speaker 1: can do these things. Every European country could basically spend
Speaker 1: whatever was necessary because they enjoyed the back stopping of
Speaker 1: the e c B. The UK did a lot of
Speaker 1: fiscal you know, Australia and and so um. But emerging
Speaker 1: markets are definitely different. You've got a lot of dollar
Speaker 1: denominated debt, You're dependent on energy and food and other
Speaker 1: critical items to import. You're not necessarily going to be
Speaker 1: able to get those things, and you're in a different spot. Right.
Speaker 1: This was Fidel Kabob's argument when he came on here,
Speaker 1: which is that actually MMT when applied to emerging markets
Speaker 1: is about building up that independence, that fiscal indepacity. You know,
Speaker 1: I mean, you know, when I think about like the
Speaker 1: last ten years or two thousand nine, two twenty roughly,
Speaker 1: obviously incredible ascendant m m T is around for long
Speaker 1: before then, but the conditions were very right for that,
Speaker 1: for the message that we're underutilizing our fiscal capacity and
Speaker 1: we had elevated employment, unelevated unemployment. We know expos factor
Speaker 1: that the unemployment rate could drop for far much further
Speaker 1: than economist thought, and it's like this is full employment.
Speaker 1: Then it just kept going lower. So like the conditions
Speaker 1: were very good in the post grade financial crisis for
Speaker 1: mm T to have like a big impact and for
Speaker 1: this mess age that we're under utilizing um these policy
Speaker 1: tools that we have available. I think like regardless of
Speaker 1: why we have inflation or etcetera. It feels like now
Speaker 1: it's going to be like MMT on hard mode and
Speaker 1: it's gonna be uh, these questions about like how do
Speaker 1: you build port capacity, how do you build sustainable energy capacity,
Speaker 1: how do we build electrical grid capacity? These are like
Speaker 1: these are it feels like these are gonna be the
Speaker 1: really tough questions of the next decade. And I'm really curious, like,
Speaker 1: from your perspective, how are you aiming to have MMT
Speaker 1: thinking inform these conversations. Well, at least that's the proper question.
Speaker 1: So we're now we've shifted the debate onto this new
Speaker 1: terrain and you hear you know, Secretary Yelling going and
Speaker 1: giving speeches before the World Bank just recently and saying,
Speaker 1: you know what the administration's basic macro approach is modern
Speaker 1: supply side economics and and and the ship the shift
Speaker 1: that she's talking about there is exactly what you're talking about,
Speaker 1: building capacity and dealing with supply side right reassuring and
Speaker 1: building resilience and all that sort of stuff. Um. So
Speaker 1: I think MMT can play a role in that. And um,
Speaker 1: you know, we're not quite there in the sense that
Speaker 1: for for Jannet Yellen and the way she's talking about it,
Speaker 1: you still have that adherence to the idea that everything
Speaker 1: needs to be deficit neutral and that keeping a deficit
Speaker 1: neutralist tantamount to keeping it inflation and neutral, which it
Speaker 1: is not. Um. But at least we're starting to focus
Speaker 1: on things like how do we make the investments in
Speaker 1: ports and childcare and all the rest of it, you know,
Speaker 1: semiconductors and so forth. How do we get there? How
Speaker 1: do we get there? Well, we do it. You have
Speaker 1: to make You have to spend the money. There's no
Speaker 1: there's no like secret you know recipe here. You just
Speaker 1: simply have to spend the money. So how do you
Speaker 1: continue to make the kinds of investments that are necessary
Speaker 1: in an economy that is supply constraint? How long will
Speaker 1: we be supply constraint? You know, the word recession is
Speaker 1: everywhere at this conference. Everyone is talking about whether the
Speaker 1: FED is going to successfully orchestrate a soft landing, and
Speaker 1: if they don't, hard landing means a deeper recession, which
Speaker 1: automatically means you're going to free up capacity. Right. So
Speaker 1: I'll just come back to climate because for me, that
Speaker 1: is the number one issue. It's not going anywhere, which
Speaker 1: means I don't think that MMT has lost its place
Speaker 1: in the debate. I think that you know, the weather
Speaker 1: related tornadoes, hurricanes, fires, floods, all the rest of it,
Speaker 1: that stuff is only going to intensify in the years ahead,
Speaker 1: and we have to spend and we have to make
Speaker 1: the investments, and so MMT gives us, I think, the
Speaker 1: confidence to know that there is a path to get there.
Speaker 1: One thing that just really strike me. I mean, obviously
Speaker 1: there are these sort of like big macro factors driving
Speaker 1: um the inflation we're saying, but we also have had
Speaker 1: a lot of drought, and I like in the US
Speaker 1: corn planting season right now is is moll and that's
Speaker 1: a problem. And there's you know, droughts in Brazil that
Speaker 1: have India and the heat, and so thinking about like
Speaker 1: the connection between climate and weather and the inflation and
Speaker 1: food that we're thinking right now, it's pretty rid. So
Speaker 1: I mean, just on this note of of how MMT
Speaker 1: sort of recaptures the narrative again, one of the critiques
Speaker 1: has been that the theory itself is complex and people
Speaker 1: tend to kind of see what they want to see
Speaker 1: inside of it. What do you say in response to
Speaker 1: that to people who say that the theory is is
Speaker 1: too complicated and has a tendency to sort of like
Speaker 1: change goals and aims over time. I'm not sure i've
Speaker 1: heard that critique as much. You know, I think you
Speaker 1: must have heard that m m T is complex, right,
Speaker 1: and hard to for a lot of people to grasp
Speaker 1: because like the goal post seems to change sometimes. Okay, well,
Speaker 1: I've heard people make accusations about goal postings over but
Speaker 1: I think I guess I'm used to hearing people say
Speaker 1: it's almost too obvious and too simple. I've heard that
Speaker 1: one too. Just to be clear, when it comes to
Speaker 1: the complexity with UM, can you just help me by
Speaker 1: I guess it's the idea. So for instance, it takes
Speaker 1: like a real example from from recent history. So UH,
Speaker 1: the Sri Lankan Central Bank governor, I think he came
Speaker 1: out like one or two years ago, I can't remember exactly,
Speaker 1: went and said like, we're pursuing MMT, and he thinks
Speaker 1: he's doing MMT because it's more physical spending. But then
Speaker 1: a lot of other people who are more closely aligned
Speaker 1: with MMT, who are more involved with it, will come
Speaker 1: out and say, no, no, no, this is an MMT
Speaker 1: because he's not building up physical capacity and independence, he's
Speaker 1: not focused on increasing productive capacity or whatever. That's what
Speaker 1: I mean. It seems open to interpretation. I got you.
Speaker 1: So it's I agree with you. If your takeaway, if
Speaker 1: your if your thumbnail sketch of MMT is UM, don't
Speaker 1: borrow in a foreign currency and you can do whatever
Speaker 1: the hell you want, and then that's not gonna work.
Speaker 1: But you can see how that would be attractive to
Speaker 1: some emerging market policy. And I think you know, I
Speaker 1: know only a little bit about the Sri Lankan UH
Speaker 1: comments and the justification the invocation of MMT there, and
Speaker 1: I think his his belief was as long as the
Speaker 1: proportion of domestic debt is higher than the proportion of
Speaker 1: external debt, then you're somehow okay, which makes no sense whatsoever.
Speaker 1: You still have a lot of external debt that has
Speaker 1: to be service and if you can't, you know, export
Speaker 1: and earn for an exchange to service debt, you're in
Speaker 1: a world or hurt either way. So there's no way
Speaker 1: for MMT to rescue you there. But just to bring
Speaker 1: it back to the US, for instance, a lot of
Speaker 1: people will some people I should be careful. Some people
Speaker 1: will say that, well, we just experimented with MMT. We
Speaker 1: ramped up our fiscal spending at a time when we
Speaker 1: really needed it. And some others will say, well, actually,
Speaker 1: you know, for instance, real MMT would have told you
Speaker 1: that we should have had the architecture in place before
Speaker 1: pandemic happened in order to provide that kind of support
Speaker 1: to people, or that you know, the policy should have
Speaker 1: been slightly different. That's what I mean about the complexity,
Speaker 1: And I think that's the aspect of it that might
Speaker 1: be difficult for people to sort of grasp. Yeah, so
Speaker 1: I did a post um that was I think it
Speaker 1: was titled something like it's too late for an MMT
Speaker 1: informed approach to budgeting. And again it was the pandemic.
Speaker 1: It was the panic, you know, and when everybody's in
Speaker 1: panic mode, then it just became, like I said, the
Speaker 1: whipping out of that money bazooka and trying to do smatter,
Speaker 1: you know, the the economy with enough cash to support
Speaker 1: income to pull us out of the pandemic and the recovery. Um. So,
Speaker 1: it is true though that if you're doing quote unquote
Speaker 1: doing policy, and you're doing it consistent with MMT principles,
Speaker 1: then you've transformed the federal budgeting process. You're evaluating legislation differently.
Speaker 1: We just didn't have time to do that. The FED
Speaker 1: raising interest rates seems to have some effect on the
Speaker 1: real on the economy, and I don't know like exactly
Speaker 1: what it is, but it seems to you know, it's
Speaker 1: certainly mortgage rates have shot up. That's going to make
Speaker 1: borrowing or affording a house at current prices at least
Speaker 1: more difficult. It seems to already be uh slowing some
Speaker 1: things perhaps in the housing market. What is in your view,
Speaker 1: like just from your perspective, what do we you know,
Speaker 1: let's say we're getting the fetists seems to be set
Speaker 1: on this like very aggressive series of hikes. Um, by
Speaker 1: the time this comes out, actually will have had the
Speaker 1: main decision, but you know, more hikes likely on the way.
Speaker 1: If we've given your assessment of the inflation that it's
Speaker 1: not necessarily about demand, then that it's global and that's
Speaker 1: about energy and food largely, which it's hard bit harder
Speaker 1: to tell the demand story. What are you think is
Speaker 1: going to come out of these hypes? What are they
Speaker 1: going to do to this kind of economy? I guess
Speaker 1: it depends how big they are and how quickly they come.
Speaker 1: And uh, you know, I think that the likelihood of
Speaker 1: a soft landing, you know, I think I'm on the
Speaker 1: side of that's really difficult to pull off, and uh,
Speaker 1: you know, you can slow things down. Housing is of
Speaker 1: course the probably sector that is the most sensitive to
Speaker 1: interest rates. And but you know, you've done shows and
Speaker 1: I've listened to them where you're you've talked about the
Speaker 1: housing market and you say, listen, you put a house
Speaker 1: on the market and all of a sudden you have
Speaker 1: forty bids and half of them are all cash, which
Speaker 1: makes you go, okay, so interest rates are rising, so
Speaker 1: maybe a few of the people who would have borrowed
Speaker 1: and bid on that home are out, but maybe you
Speaker 1: still have twenty all cash buyers in the mix because
Speaker 1: they're not interest sensitive. So to the extent that you
Speaker 1: do see housing start to cool, then of course a
Speaker 1: fewer people buying homes and furnishing them. Maybe that takes
Speaker 1: some strain off of durable goods and that sort of stuff.
Speaker 1: So I don't discount that interest rates have a channel,
Speaker 1: you know, but it's just very difficult to figure out.
Speaker 1: In power will remind us long and variable legs. Right,
Speaker 1: So by the time inflation starts to come down, the
Speaker 1: interest rate increases may not really have taken hold. And
Speaker 1: yet the fiscal tightening, which is already baked in, we
Speaker 1: have huge reduction in deficit right now. Um, that may
Speaker 1: do enough to help with the reduction in inflation. One
Speaker 1: of the reasons it seems that the Fed is uh,
Speaker 1: you know, uh inclined to do an aggressive series of
Speaker 1: rate hikes is this idea of like, well, yes, a
Speaker 1: lot of the inflation is still transitory factors. Maybe it's
Speaker 1: still related to the pandemic and now of course the
Speaker 1: war or the new lockdowns in China. But it's too late,
Speaker 1: and we're worried about the inflation expectations Genie coming out
Speaker 1: of the bottle, and that if you just let inflation
Speaker 1: get too high for too long, regardless of the fact,
Speaker 1: regardless of why, our expectations become unanchored, and then we
Speaker 1: have a decade of high inflation just because expectations. And
Speaker 1: I'm curious, like, do you sign any significant force to
Speaker 1: this idea of like the expectations channel. I don't assign
Speaker 1: a big force. I mean, I I won't say that
Speaker 1: I discounted entirely, but the idea that there is this
Speaker 1: dominant channel through which interest rates work, which is through
Speaker 1: inflation expectations. You know, I'll put myself on the side
Speaker 1: of Philip Rudd, who I think wrote that pay for
Speaker 1: They got a lot of attention. Again it was at
Speaker 1: the Richmond Fed. I think it was actually the FED.
Speaker 1: I think the Bed Fed. I think a lot of
Speaker 1: it is economists sort of hand waving because most of
Speaker 1: the old theories seem to have stopped working. You know,
Speaker 1: most people don't put a lot of cred in the
Speaker 1: idea of a Nirou or maybe if Phillips curve sort
Speaker 1: of fell out of favor when the data stopped working,
Speaker 1: and so people just sort of turned to this other
Speaker 1: way to explain inflation and said, well, it's mostly expectations channel,
Speaker 1: this is what's the driver. So just on this, on
Speaker 1: this topic, there are some people who in early or
Speaker 1: maybe mid I'm thinking specifically of Larry Summers. But you know,
Speaker 1: Larry Summers came out and said like, oh, this is
Speaker 1: way too much. We're gonna get massive inflation. And he's
Speaker 1: been doing victory laps um around that thesis. And you know,
Speaker 1: technically he didn't actually say we're going to have massive inflation.
Speaker 1: He said there's a one third chance of having lots
Speaker 1: of inflation. So certainly one of the louder absolutely, And
Speaker 1: so you know, people are giving him a lot of
Speaker 1: credit for for seeing these price increases. What what did
Speaker 1: he get right in that scenario or what did he
Speaker 1: see that other people maybe didn't, Well, inflation went up,
Speaker 1: you know, I mean it can be a case of
Speaker 1: right for the right reasons versus right or maybe the
Speaker 1: wrong reasons. And I'm not sure that I heard Larry
Speaker 1: articulate back in you know, January of one or December,
Speaker 1: when the debate was really heating up over that's one
Speaker 1: point nine trillion dollar COVID package. I'm not sure I
Speaker 1: heard him talk about, you know, housing and energy and food,
Speaker 1: and you know, it was this sort of line goes
Speaker 1: this way and the other line goes that way, and
Speaker 1: the gap is such that we're pouring too much in um, so,
Speaker 1: you know he I think that I had a piece
Speaker 1: out in April of one in the New York Times.
Speaker 1: It was a fairly long op ed and it was
Speaker 1: all about inflation, and so it wasn't as if inflation
Speaker 1: wasn't also on my radar and others. But I think
Speaker 1: we were thinking about it in different ways. So maybe
Speaker 1: just to sum it all up, you know, if you
Speaker 1: had a wish list right now, what would be your
Speaker 1: biggest policy recommendation or what would you like to see
Speaker 1: the has happened right now, it has to be climate.
Speaker 1: I don't see a bigger threat challenge before us than
Speaker 1: climate change, and it's going to touch our lives in
Speaker 1: ways that you know are unimaginable still for many, but
Speaker 1: I think the scientific community is telling us. In the
Speaker 1: latest Inner Governmental Panel on Climate change, report is pretty
Speaker 1: scary stuff, and um, I think we're gonna we're gonna
Speaker 1: have to deal so in a time in which we're
Speaker 1: already strained by high oil prices and high fossil fuel
Speaker 1: costs and also labor constrained to would appear and other constraints.
Speaker 1: What does climate, what is acting on climate look like
Speaker 1: from your perspective in a way that doesn't exacerbate inflation.
Speaker 1: Because Isabel sh novel the Deutsche Bank is talking about
Speaker 1: green inflation, I was going to ask if inflation is just,
Speaker 1: you know, what we have to accept and live with
Speaker 1: in exchange for healing the climate or fixing the climate
Speaker 1: change problem. I would certainly hope that if it came
Speaker 1: down to that and that was the trade off, that
Speaker 1: the answer would be unequivocally yes, that it is a
Speaker 1: small price to pay for the sake of the survival
Speaker 1: of humanity, that it seems like a worthwhile trade off.
Speaker 1: But voters are voters, and we know there's people are
Speaker 1: really unhappy about the existing inflation. And if you want
Speaker 1: to keep a durable political coalition alive in Washington, you
Speaker 1: have to win elections every two years. And so how
Speaker 1: do you think about when you say, you want to
Speaker 1: see something done on climate at a time when people
Speaker 1: are really upset about gasoline prices. How do you think
Speaker 1: about making putting? Uh? You know, what's a policy framework? Uh?
Speaker 1: Look like that? What's your energy bill gonna look like
Speaker 1: when we don't deal with climate change? What is it
Speaker 1: going to look like when your house is burned down?
Speaker 1: And what is it gonna look like? You know, I've
Speaker 1: ever seen people in an airport when their flights are canceled.
Speaker 1: Climate change is going to massively disrupt life. Uh in
Speaker 1: so many ways. Right. It is going to be an irritant,
Speaker 1: It is going to be a hardship. People are going
Speaker 1: to be feeling pain in ways that haven't even imagined
Speaker 1: in their lives, in their pocketbooks as a result of
Speaker 1: climate So um again, I think you know, the kind
Speaker 1: of inflation we're dealing with now is mild in comparison
Speaker 1: to what lies ahead if we don't get our arms
Speaker 1: around this. Stephanie Kelton, thank you so much for coming
Speaker 1: back on upload. Thanks so much, Thanks Stephanie. That was
Speaker 1: really fun. Yeah, obviously I really enjoyed that conversation. You know,
Speaker 1: something I was thinking about just in general with inflation.
Speaker 1: Um more broadly is things have really started to normalize
Speaker 1: in the United States from a pandemic perspective, there really
Speaker 1: are like very few restrictions on anything now. Of course
Speaker 1: there's still you know, the awful war that's happening in Ukraine,
Speaker 1: and there is the the ongoing lockdowns that are happening
Speaker 1: in China. But to the extent that inflation is sort
Speaker 1: of pandemic related, I kind of think like, now is
Speaker 1: the period where we're and then we're going to find
Speaker 1: out like is it start to cool down as things normalize,
Speaker 1: whatever that means, or is there some other force that
Speaker 1: continues to push it extremely high. I think where there's
Speaker 1: like a pretty pivotal juncture and the moment of truth
Speaker 1: kind of I think it is, well, the other thing,
Speaker 1: and we've spoken about this before, but in retrospect, maybe
Speaker 1: transitory wasn't the right word to use to describe what
Speaker 1: was actually pandemic related inflation or narrow inflation versus broad
Speaker 1: based inflation something like that. And it does feel like
Speaker 1: by using that word, the Federal Reserve basically put an
Speaker 1: expectation in that this would be something that last three
Speaker 1: months by the end, right when actually, to your point,
Speaker 1: it's only recently that a lot of these pandemic related
Speaker 1: restrictions are starting to go away. The other thing I
Speaker 1: would say, and this is sort of a big picture
Speaker 1: theoretical philosophical question, is I feel like a lot of
Speaker 1: this MMT debate boils down to relative versus absolute gains,
Speaker 1: and this kind of comes to the inflation point, right.
Speaker 1: It's easier to get riled up about cost of living
Speaker 1: than it is about employment. And on the other hand,
Speaker 1: a lot of it also comes down to short termism
Speaker 1: versus long termism. A lot of these policy recommendations absolutely
Speaker 1: makes sense for big long term problems like climate change,
Speaker 1: but sometimes it's hard to get people to think beyond
Speaker 1: like what are my bills going to look like for
Speaker 1: the next month. Yeah, and I thought your question was, like,
Speaker 1: was it was really astute on that matter about this
Speaker 1: sort of like disparate impact of employment versus inflation and
Speaker 1: everyone experiencing inflation only some people at any given moment
Speaker 1: experiencing unemployment. You know. The one other thing, and this
Speaker 1: is just my personal opinion, but you know, the one
Speaker 1: other thing is so much of the mm T message
Speaker 1: has been co opted and then claimed that this is
Speaker 1: always how we thought it's like, oh, we always knew
Speaker 1: that real resources or the constraint, we always you know,
Speaker 1: we always knew extra y. But I really feel like
Speaker 1: that's very relevant now. And Stephanie of course mentioned Jenny
Speaker 1: Ellen and the sort of new supply side economics, progressive
Speaker 1: supply side economics. You have like liberal pundits like as
Speaker 1: our client talking about, um, you know, the new supply side.
Speaker 1: But this idea of well, if the constraint is on
Speaker 1: the supply side, then let's build out the supply side
Speaker 1: is like this a core like MMT idea. Then now
Speaker 1: a lot of people are talking about my most MMT
Speaker 1: leaning opinion or recognition this year is and we've said this,
Speaker 1: I think we've written this, but the idea that any
Speaker 1: problem that can be solved with money isn't actually a
Speaker 1: big or real problem like that. It's a very MMT
Speaker 1: thing to say, but I think that's something that we've
Speaker 1: learned over the past couple of years. Yeah, if you can,
Speaker 1: if you can write a check to solve it, you're
Speaker 1: it's not not my most real MMT view. Actually I'm
Speaker 1: not gonna say, I'm gonna wait, it's too it's too
Speaker 1: hot for it's too hot for air, So I'll tell
Speaker 1: you after we hit record. Wait an MMT view that's
Speaker 1: too hot for air? Yeah, I can't say wow, Okay,
Speaker 1: all right, sorry all lots listeners? Um, should we leave
Speaker 1: it there? Let's leave it there. This has been another
Speaker 1: episode of The Odd Lots Podcast. I'm Tracy Alloway. You
Speaker 1: can follow me on Twitter at Tracy Alloway, and I'm
Speaker 1: Joe Wisn't All. You can follow me on Twitter at
Speaker 1: the Stalwart, Follow our guest Stephanie Kelton at Stephanie Kelton,
Speaker 1: Follow our producer Carmen Rodriguez at Carmen Armon, Follow the
Speaker 1: Bloomberg head of podcast, Francesco leave me at Francisco Today,
Speaker 1: and check out all of our podcasts at Bloomberg under
Speaker 1: the handle at podcast. Thanks for listening year to