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Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.

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Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, Uh, you

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Speaker 1: know what I was just thinking about. You don't troll

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Speaker 1: me about mm T anymore these days? Remember that when

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Speaker 1: used to do that. Yes, all roads led back to

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Speaker 1: MMT for well, I mean to some extent, they still do.

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Speaker 1: For the past year or so, we've been talking a

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Speaker 1: lot about the shift from monetary policy to your school stimulus,

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Speaker 1: and that's a big component of mm T. Yeah, you

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Speaker 1: used to every episode You're like, Joe, why I didn't

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Speaker 1: Are you gonna bring up I m MT? But I

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Speaker 1: guess we haven't really done that explicitly in a long time. Um,

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Speaker 1: And so you stopped. You stopped joking about that with me.

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Speaker 1: But today we aren't going to have to joke because

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Speaker 1: that's actually literally what we're going to be talking about.

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Speaker 1: It is an MMT episode. Yeah, And you know, I think, Um,

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Speaker 1: one of the things that's really striking to me, and

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Speaker 1: I'll just say this is that on some extent, to

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Speaker 1: some extent, I really think that MMT has completely won

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Speaker 1: the debate. And by that, I mean we have this

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Speaker 1: big fiscal expansion happening in the US, and deficits by

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Speaker 1: historical measures are very high, and there are certainly people

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Speaker 1: who are like upset about it or angry about it.

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Speaker 1: But it really feels like the entire debate is like

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Speaker 1: essentially happening on MMT terms or MMT language. So you're right,

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Speaker 1: we definitely don't hear UM many mentions of bond vigilantes anymore.

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Speaker 1: We don't hear people talking about, you know, how are

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Speaker 1: we going to fund social programs? The deficit is so large,

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Speaker 1: that sort of thing like that seems a little bit

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Speaker 1: old fashioned now in many respects, I do wonder, I

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Speaker 1: do wonder how much MMT can take credit for that

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Speaker 1: versus the fact that we've just had such an unusual

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Speaker 1: economic crisis, you know, this big exogenous shock basically, so

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Speaker 1: people are able to use that as an excuse to

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Speaker 1: overwrite those concerns UM. And this is something we spoke

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Speaker 1: about on a recent episode of the podcast. But like,

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Speaker 1: it seems like this crisis was so unusual it really

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Speaker 1: opened the door to people UM thinking about stuff differently.

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Speaker 1: But but you're absolutely right, m MT. It's definitely not

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Speaker 1: a fringe movement anymore now, And I think you're you're right.

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Speaker 1: There's a lot of things that have happened, both in

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Speaker 1: this crisis and over the last decade. The persistent lack

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Speaker 1: of inflation despite you know, FEDS balance sheet expansion, despite

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Speaker 1: deficits that obviously perhaps changed people's thinking, the nature of

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Speaker 1: this crisis, and the sort of unanimous nothing's unanimous, but

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Speaker 1: widespread belief that the government had a role in underwriting

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Speaker 1: the recovery due to it's on usual nous. But it

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Speaker 1: really is striking, like you know, coming out of a

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Speaker 1: great financial crisis Greece and bond vigilantes, and there's still

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Speaker 1: you know, there are critics of the existing stimulus for sure,

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Speaker 1: and they didn't get a single Republican vote, but it's

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Speaker 1: all on different terms. Now it's about inflationary pressures, which

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Speaker 1: was always sort of the MMT view of like, well

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Speaker 1: those the limits to spending, not the sort of credit

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Speaker 1: worthiness of the government. And so even though there's a

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Speaker 1: long you know, there's still huge policy fights and debates happening. Um,

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Speaker 1: they really have changed a lot, and I think it's

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Speaker 1: a pretty legit question the degree to which m m

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Speaker 1: T thinkers have made that happen. But I do think

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Speaker 1: it's part of what's really changed the whole discussion. Yeah,

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Speaker 1: now you mentioned policy there, and I'm really, I really

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Speaker 1: want to get into that particular topic when it comes

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Speaker 1: to MMT, because I think one of the big criticisms

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Speaker 1: of it as a school of thought is that it

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Speaker 1: even if you agree that MMT is the best um

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Speaker 1: way to describe the economic system, it might not actually

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Speaker 1: lead to specific policy prescriptions, or it might not lead

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Speaker 1: to policy prescriptions that are all that different. So politicians

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Speaker 1: can agree that spending is bound by inflation, but maybe

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Speaker 1: they all have different ideas still about how best to

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Speaker 1: spend money. So I would love to dive into that

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Speaker 1: a little bit more. Great, Well, we are going to

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Speaker 1: be speaking with the pre eminent person who, without question,

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Speaker 1: has done more to advance the mm team message over

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Speaker 1: the last decade than literally anyone else. We spoke to

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Speaker 1: her a couple of years ago, a year and a

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Speaker 1: half ago at our Odd Lots Live event New York City,

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Speaker 1: so excited to have her back on. We're gonna be talking,

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Speaker 1: of course, with Stephanie Kelton, professor of economics and public

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Speaker 1: Policy at Stony Brook and the author of the New

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Speaker 1: York Times best selling book the deficit myth which just

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Speaker 1: came out in paper at UM last week. And so

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Speaker 1: very excited Stephanie, thank you so much for joining us. Oh,

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Speaker 1: it's really nice to be back with both of you.

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Speaker 1: Thank you. Do you think that's right? I mean, I

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Speaker 1: said I think that on some level MMT has won

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Speaker 1: the debate at least in terms of how the debate

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Speaker 1: is defined. Does it feel that way to you? Yeah?

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Speaker 1: And you know, I'll tell you something that I don't

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Speaker 1: really I don't think I've ever probably said publicly, but um,

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Speaker 1: I started to feel like MMT was beginning to win

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Speaker 1: the debate before COVID. And you know, one of the

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Speaker 1: things that I did early last year was to go

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Speaker 1: UM to Washington, d C. At the invitation of House

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Speaker 1: Leadership and to sit down. Scott Fellwiler was with me,

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Speaker 1: and I won't say exactly who was in the room

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Speaker 1: because I think we were probably not supposed to do that.

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Speaker 1: But the point is we were there UM at their

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Speaker 1: invitation to talk MMT. And the reason that they wanted

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Speaker 1: us is because, uh, they were thinking ahead, and they

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Speaker 1: were thinking about what a Biden presidency with potentially Democrats

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Speaker 1: and control of the House and Senate would mean for

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Speaker 1: h legislatively right, what what could they do? How ambitious

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Speaker 1: and bold could they be? And how should they begin

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Speaker 1: to think now about you know, rethink, I should say,

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Speaker 1: the federal budgeting process, how they approached the question of

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Speaker 1: you know, paying for their priorities and so forth. So

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Speaker 1: that was pretty encouraging to me. And it was meant

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Speaker 1: to be start of a conversation. And I was told,

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Speaker 1: you know, we want to have you back in front

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Speaker 1: of a bigger audience and uh. And then of course

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Speaker 1: coronavirus happened. But I thought that was a pretty good

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Speaker 1: indication of the you know impact that we were having. Um,

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Speaker 1: you know, where it matters most. And in Congress, I

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Speaker 1: wanna delve into the policy prescriptions like I mentioned, But

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Speaker 1: before we do, could you could you maybe contrast, you know,

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Speaker 1: where we are now to where we were when you

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Speaker 1: first started thinking seriously and writing seriously about MMT, Like

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Speaker 1: how different is the environment back then versus you speaking

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Speaker 1: to prominent politicians about how MMT could actually be enacted

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Speaker 1: in serious ways. Oh, Tracy, I mean I was just

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Speaker 1: a kid in some respects when I first got I

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Speaker 1: was in graduate school. I started, you know, in the

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Speaker 1: mid nineties nineties. I graduated, I finished up my undergraduate degree,

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Speaker 1: and I was supposed to go off to Cambridge University

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Speaker 1: and start a graduate program. And I had this sort

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Speaker 1: of gap where I graduated in December and Cambridge wasn't

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Speaker 1: going to start until October, I think of the next year,

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Speaker 1: and I had this this void in this time, and

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Speaker 1: my parents said, get a job. And one of my professors,

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Speaker 1: my undergrad professor, said no, no, no, go to Denver

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Speaker 1: and work with Randy Ray and spend some time there

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Speaker 1: before you go off to Cambridge. And I thought, well,

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Speaker 1: that's brilliant idea. You know, I get sort of a

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Speaker 1: dress rehearsal uh for graduate school. And I went and

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Speaker 1: I worked with Randy Ray, who's you know, was there

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Speaker 1: on the ground floor. He was just beginning to write

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Speaker 1: UM a book called Understanding Modern Money. That was I

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Speaker 1: think his first real entry into MMT, and that began

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Speaker 1: to lay it out the scholarship, and so I got

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Speaker 1: a little bit of it there with him. But then

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Speaker 1: I finished up a year at Cambridge and I ended

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Speaker 1: up at the Levy Economics Institute, and Randy was there.

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Speaker 1: And I'm sure we'll talk later about when Godly and

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Speaker 1: people like that, and when was there and now MMT

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Speaker 1: was really getting going, but I was still a graduate student,

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Speaker 1: so I was writing papers and I ended up finishing

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Speaker 1: my program at the News School. So you know the

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Speaker 1: way that we were part of a team of academics, um,

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Speaker 1: but we were mostly you know, presenting our work at

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Speaker 1: academic conferences and doing the usual thing writing peer review

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Speaker 1: journal articles take a year two sometimes more to get

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Speaker 1: in print. And then two thousand eight crisis came and

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Speaker 1: that really changed everything. That's where you know, I got

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Speaker 1: this idea that I would start a blog and we

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Speaker 1: would try to use social media to become part of

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Speaker 1: a larger conversation, uh and get our ideas in different

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Speaker 1: ways of thinking about things out there. So that was

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Speaker 1: an exciting time because for the first time we were

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Speaker 1: having dialogue with people, you know, outside academia narrowly, and

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Speaker 1: the media started to pay some attention and things just

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Speaker 1: evolved from there. Can you talk about that a little

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Speaker 1: bit further. I mean, there are a lot of academics

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Speaker 1: in all kinds of fields, I'm sure, economic, sociology, everything,

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Speaker 1: who sort of toil away. I don't want say toil

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Speaker 1: but write an obscure journals that get read by fifty

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Speaker 1: people speak to classes, but don't really have any sort

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Speaker 1: of like meaning. It doesn't really jump the chasm into

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Speaker 1: the mainstream discussion. Can you talk a little bit more

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Speaker 1: about when you started noticing that happening with your work

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Speaker 1: and MMT and just like the role of UH new

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Speaker 1: media social media, twitter, blogs, etcetera in turning what what

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Speaker 1: you know going from those journals into the discussion where

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Speaker 1: policy changes. Sure, I mean, you know, we started committing

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Speaker 1: ourselves in writing on that blog that i UM launched

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Speaker 1: called New Economic Perspectives, And you know, you're launching a

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Speaker 1: brand new blog and nobody knows it exists, and it's

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Speaker 1: very hard to start to get people reading it. And

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Speaker 1: you're out there dropping links to everything you've written in

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Speaker 1: other on other people's blogs the comments section. They don't

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Speaker 1: always like that, but it was a way to try

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Speaker 1: to build a readership. And then there were some people

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Speaker 1: who started to pay attention in the very beginning, some

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Speaker 1: guy UH named Joe Wisenthal I think at Business Insider,

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Speaker 1: who's he's one of the first. I mean, honestly, he

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Speaker 1: really was one of the first, I think financial journalists

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Speaker 1: who started to take a look at what the kinds

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Speaker 1: of things that we were saying and what we were writing,

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Speaker 1: and um, and took them seriously enough to wonder, sometimes

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Speaker 1: wonder aloud, and to repost things or whatever and and say,

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Speaker 1: you know, the sort of curious what these people are

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Speaker 1: saying and it's such a departure from what we normally here.

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Speaker 1: And then you know, a handful of others started to

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Speaker 1: do it. I think even John Carney, who maybe was

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Speaker 1: writing for CNBC at the time, he started to look

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Speaker 1: more closely and and uh, Pedro DaCosta, who maybe was

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Speaker 1: at Reuter's or I don't know where he was. But

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Speaker 1: there were a handful of you guys who were you

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Speaker 1: know too, who were kind to us I think that's

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Speaker 1: the right word in the early years, and weren't dismissive,

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Speaker 1: didn't didn't just you know, go full on embrace of

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Speaker 1: the ideas, but gave it a shot and gave it

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Speaker 1: a mention, and it really did do a lot for

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Speaker 1: us to to help us elevate, you know, the work

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Speaker 1: that we were doing, and to give us a shot

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Speaker 1: to prove ourselves credible and worth maybe you know, paying

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Speaker 1: a bit of attention to why do you think mmt

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Speaker 1: resonated with I guess journalists and also a broader audience

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Speaker 1: like what was the attraction or what was the thing

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Speaker 1: that opened the door to people like I guess having

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Speaker 1: an open mind towards a fairly radical like rethinking of

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Speaker 1: traditional economics. Yeah, I mean I think maybe you know,

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Speaker 1: I'm not a journalist, but if I were, I think

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Speaker 1: I would be looking for things that are new and

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Speaker 1: different that spark a bit of controversy. Um, you know

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Speaker 1: that that would be more fun to write about. I

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Speaker 1: think those sorts of things and uh, pull new ideas

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Speaker 1: in and and punch them around and see what happens.

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Speaker 1: So I think to some extent, maybe we were red

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Speaker 1: meat for some and we were an interesting new way

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Speaker 1: of thinking for others. But uh yeah, I think people

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Speaker 1: probably you know, used us in different ways over time. Um.

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Speaker 1: But but a good story. You know, there's this sort

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Speaker 1: of group of economists who don't come from the Ivy

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Speaker 1: League universities, nobody's ever heard of or and they're out

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Speaker 1: here saying some some really unusual things. And so it

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Speaker 1: became a story of sorts. If I could just talk

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Speaker 1: first person for one second. One of the attractions for me,

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Speaker 1: for your work and others. Very early on two thousand

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Speaker 1: and ten or so, was that there just seemed to

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Speaker 1: um the mainstream writers and thinkers didn't seem to have

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Speaker 1: very compelling answers for And the biggest one to me

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Speaker 1: was why is it that government debt is exploding and

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Speaker 1: we don't seem to have higher interest rates or hyper

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Speaker 1: inflation or uh, you know, dramatically weakening currency. And so

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Speaker 1: it's like these were just this was like a puzzle

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Speaker 1: out there to me, and you know, I was like

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Speaker 1: looking for answers, and I it's not that I was

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Speaker 1: like entirely convinced right away, oh that you guys have

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Speaker 1: the answer, but at least like you're supplying I thought,

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Speaker 1: like something, but I'm curious, like you know how much.

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Speaker 1: One of the things that we talked about on a

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Speaker 1: recent episode was this idea that the between the Great

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Speaker 1: Financial Crisis and the coronavirus crisis, there seemed to be

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Speaker 1: a lot of things that actually happened in the real

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Speaker 1: world that we're not helpful to mainstream macro. So we

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Speaker 1: didn't have hyper we didn't have inflation, let alone hyper inflation,

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Speaker 1: and the unemployment rate went down a lot further than

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Speaker 1: people would have, um expected. All kinds of sort of

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Speaker 1: mainstream views didn't seem to work out. Que didn't really

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Speaker 1: have much of an effect. Talked to us about that

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Speaker 1: as well. That's sort of like that period in which

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Speaker 1: it felt like mainstream views became a little bit discredited

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Speaker 1: by facts on the ground. That's exactly right. Everything that

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Speaker 1: the mainstream had been warning about for decades really kept

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Speaker 1: not happening. Uh. And as the evidence mounted, and you know,

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Speaker 1: I think this is one of the things that really

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Speaker 1: did earn us some some cred, some street cred, was

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Speaker 1: that we were writing in real time, Uh as the

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Speaker 1: you know, European debt crisis was unfolding. Um, we we

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Speaker 1: were taking positions and had taken positions early on that. Um.

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Speaker 1: You know, there was this design flaw in the Mastic Treaty,

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Speaker 1: and that a debt that a debt crisis was entirely

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Speaker 1: possible due to the fact that these countries, in giving

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Speaker 1: up their sovereign currencies and adopting this common currency which

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Speaker 1: they could no longer issue, would mean eventually the financial

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Speaker 1: markets would figure out that they were lending two currency users,

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Speaker 1: and they would begin to price that default risk in

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Speaker 1: and yields could blow out. And I mean, we had

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Speaker 1: written it all up years before the thing happened, and

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Speaker 1: when others became surprised and then later confused, because if

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Speaker 1: it can happen to Greece, then it can happen here.

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Speaker 1: Only our deficits got very large, you know, ten percent

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Speaker 1: of GDP uh and interest rates went down, not up,

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Speaker 1: and then we had the downgrade, you know, US government

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Speaker 1: bonds were downgraded, and people said, oh, this is the end.

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Speaker 1: You know, yields are going to spy it, and we

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Speaker 1: said no, no, no, And of course the rates went

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Speaker 1: down the next day. And then you can always look

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Speaker 1: to Japan and the warnings for years with respect to

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Speaker 1: their debt and persistent deficits and currency holds up and

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Speaker 1: they can't get inflation anywhere close to the two percent targets.

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Speaker 1: Some would say in spite of QUI I would say

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Speaker 1: maybe even partly because of I mean, there's just the

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Speaker 1: models and the things that we thought we understood about

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Speaker 1: relationships between deficits and interest rates and and dead and

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Speaker 1: um and printing money so called, and inflation, and so

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Speaker 1: we're just kept not bearing any fruit. And at some point,

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Speaker 1: you know, we were writing all along about why we

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Speaker 1: understood things to work differently and why what was happening

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Speaker 1: was consistent with our models UM and so I think

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Speaker 1: you know, as I said, I think it earned us

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Speaker 1: some credibility. So I want to pivot slightly to UM

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Speaker 1: specific policy prescription from mm T. And as I mentioned

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Speaker 1: in the intro, I think this has been one of

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Speaker 1: the criticisms. But what does an MMT policy actually look like?

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Speaker 1: Is it focused on reaching full employment or can it

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Speaker 1: be related to you know, any sort of government spending. Well,

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Speaker 1: I think you know, we generally accept the idea that

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Speaker 1: you know, the dual mandate makes sense. The goals of

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Speaker 1: the dual mandate. You want an economy high levels of

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Speaker 1: employment and low levels of inflation, you know, broadly balanced

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Speaker 1: macro economic conditions in the economy. For from the very

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Speaker 1: beginning though, we just thought that the central Bank was

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Speaker 1: not the proper institution, at least not to bear primary

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Speaker 1: responsibility for delivering on those objectives. That uh, in fact,

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Speaker 1: fiscal policy was a more durable, reliable, appropriate tool, if

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Speaker 1: not you know, as a replacement, at least is a

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Speaker 1: very strong front facing part of the way that you

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Speaker 1: get that outcome, that you achieve a balanced economy. So

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Speaker 1: MMT does not come with a prepackaged set of policy proposals.

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Speaker 1: You hand someone this set of ideas and say, here,

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Speaker 1: go do this. This is mm T m T S.

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Speaker 1: You know, I sometimes say it's not a verb, it's

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Speaker 1: an adjective. It's mostly a description of the nature the

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Speaker 1: monetary system and the mechanics of government finance. Uh. And

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Speaker 1: you can apply that lens. You can use that m

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Speaker 1: m T understanding to look at any country in the world,

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Speaker 1: understand their monetary system, and explain the mechanics of how

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Speaker 1: government finance will work in that country, what the constraints

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Speaker 1: would be given different types of monetary systems and other things, um.

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Speaker 1: And then you can craft policy based on the spending

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Speaker 1: capacity of that country. But you the policy prescriptions themselves

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Speaker 1: don't fall out of an m m T box. They

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Speaker 1: come out of the political process. So if we accept

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Speaker 1: that MMT is more of an adjective or a description

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Speaker 1: of the existing system or like sort of more of

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Speaker 1: a state of mind than a set of policy uh prescriptions,

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Speaker 1: Like I'm curious, how much does that change things in

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Speaker 1: your opinions? So if tomorrow every single person in the

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Speaker 1: world woke up and accepted MMT has like, you know,

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Speaker 1: the way the economy actually works, what do you think

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Speaker 1: would change, Like how different with the world look? Well,

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Speaker 1: I you know, I've often said that I think the

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Speaker 1: big breakthrough will be that we start having more fruitful debates,

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Speaker 1: that we stop debating and wringing our hands over things

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Speaker 1: that aren't of concern, that aren't legitimate. You know, I

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Speaker 1: will often say that MMT is about replacing an artificial, fake, phony,

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Speaker 1: imaginary budget constraint with a real resource constraint, with an

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Speaker 1: inflation constraint. So when I say the debate would change,

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Speaker 1: I mean that we would not be bogged down and

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Speaker 1: debating all the kinds of things. Joe opened the program

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Speaker 1: talking about, you know, we're gonna run out of money.

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Speaker 1: We're going to burden the next generation. The bond vigilantes

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Speaker 1: will come after us. We will China will turn off

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Speaker 1: this picket and no more dollars will come out. All

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Speaker 1: of those things that hamstrung us, you know for so

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Speaker 1: many years. When we think about what's possible, we could

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Speaker 1: set those things aside and then start having a very

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Speaker 1: different kind of debate if we could all come to

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Speaker 1: some kind of agreement about, you know, the low hanging fruit,

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Speaker 1: how much fiscal space do we think is available, then

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Speaker 1: we would just be debating how do we want to

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Speaker 1: use that fiscal space. And that's where the politics are unavoidable.

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Speaker 1: Republicans will want to use up physical space doing tax

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Speaker 1: cuts and you know other things, and Democrats will want

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Speaker 1: to use physical space doing healthcare, education, or infrastructure, climate. UM.

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Speaker 1: So you still end up with a healthy debate, I

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Speaker 1: think a healthier debate because you're no longer um worrying

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Speaker 1: about things that won't happen, and you start focusing on

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Speaker 1: on the real areas of concern. So the next criticism

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Speaker 1: that comes, or the sort of logical sequence of this

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Speaker 1: I see it in discussions all the time, is that, Okay,

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Speaker 1: you're right, the real constraint is inflation, real resource constraints.

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Speaker 1: But you have no way of measuring actual physical capacity.

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Speaker 1: You have no way of really defining where we knowing

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Speaker 1: where we are in terms of real resources. When you're

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Speaker 1: talking to either in academic circles or you're talking to

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Speaker 1: policymakers that have to make these things, how do you

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Speaker 1: think about gauging resource capacity? And avoid unwanted inflation. Well,

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Speaker 1: you know you do it. I think you take a

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Speaker 1: specific policy proposal. If you want to ramp up, you know,

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Speaker 1: a major infrastructure spending program. Then you know, in the

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Speaker 1: old days, somebody might do some sort of input output analysis.

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Speaker 1: You you say, I want to do three trillion dollars

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Speaker 1: of infrastructure. Okay, what is your infrastructure program include? While

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Speaker 1: it includes some broadband and high speed rail, I want

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Speaker 1: to build more community health centers. I want you know,

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Speaker 1: you lay it out. This is what I want my

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Speaker 1: infrastructure to do, solar panels and all this kind of stuff.

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Speaker 1: So what are the real resources that you would need

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Speaker 1: to carry out that program? And oh, by the way,

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Speaker 1: how quickly do you want to spend three trillion dollars?

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Speaker 1: Is it a five year program? Is a two year program?

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Speaker 1: So you need a lot of information. And then you say,

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Speaker 1: all right, so I know what I want to do.

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Speaker 1: I know what I want to construct, build, you know whatever,

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Speaker 1: And now what do I need to do it? How

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Speaker 1: much steal, how much concrete, how many machines, how many

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Speaker 1: workers I need? Construction workers, architects, engineers. You can actually

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Speaker 1: get a sense of how readily available these things are

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Speaker 1: because you know, we have measures like you know, unemployment

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Speaker 1: by occupation, how many out of work construction workers are there?

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Speaker 1: In engineers and architects, how much slack is there in

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Speaker 1: manufacturing capacity. We know this stuff by you know, production

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Speaker 1: and moving equipment and so forth. So it's an imperfect world.

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Speaker 1: You're not going to know precisely what the actual number

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Speaker 1: of people available to you are. You can get a

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Speaker 1: pretty good sense of whether it is realistic to think

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Speaker 1: of three trillion dollar infrastructure plan rolled out over two

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Speaker 1: or three years, given the capacity that you have. You

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Speaker 1: call Caterpillar and you say, if I were to place

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Speaker 1: an order with you folks for you know, X dollars

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Speaker 1: and this much equipment of this type, becauld you fill

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Speaker 1: that order? They'll tell you. I have a slightly weird question,

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Speaker 1: but I'm just curious, like in Washington, are there specific

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Speaker 1: people or like, which politicians would you say have grasped

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Speaker 1: the basics of MMT or are embracing mmt UM the

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Speaker 1: most Well, you're not asking me the name name, Sorry, Tracy, Well,

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Speaker 1: I I kind of I was hoping, but like, okay,

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Speaker 1: let me rephrase it, Like, is there a body of

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Speaker 1: politicians that are embracing it more than others. And like,

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Speaker 1: I guess the obvious answer to that is the Democrats.

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Speaker 1: But we're just getting to that policy debate. Like Republicans

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Speaker 1: could easily embrace MMT as a reason to do tax cuts,

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Speaker 1: as you mentioned, just as easily as Democrats could embrace

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Speaker 1: MMT as a way to do you know, some sort

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Speaker 1: of social spending or something like that. So I'm curious,

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Speaker 1: is there is there an underlying like feature of politicians

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Speaker 1: who are interested in MMT. Uh. Probably, but look, let's

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Speaker 1: let's be very clear. Tax cutting taxes is in the GOP,

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Speaker 1: d n A. They do not need MMT uh justify

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Speaker 1: tax cuts. They have always done that. They've been doing

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Speaker 1: it for decades, long before MMT existed. And uh, I

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Speaker 1: mean the existence of m MT doesn't I don't think

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Speaker 1: boost their enthusiasm for tax cuts in any way. They're

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Speaker 1: going to do it no matter what if they get

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Speaker 1: a chance. Um. Yeah, you know. I after the November election,

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Speaker 1: when uh President Biden, when Biden became the nominee m

431
00:26:29,400 --> 00:26:33,159
Speaker 1: the Congressional Progressive Caucus reached out and it is chaired

432
00:26:33,160 --> 00:26:38,160
Speaker 1: by Congresswoman Promilagia Paul. She asked if I would address

433
00:26:38,200 --> 00:26:40,720
Speaker 1: the caucus. Now there are I think a little over

434
00:26:40,760 --> 00:26:44,520
Speaker 1: a hundred members of the CPC, and every Tuesday they

435
00:26:44,560 --> 00:26:48,040
Speaker 1: do a call, and I was the first Tuesday call

436
00:26:48,359 --> 00:26:52,199
Speaker 1: after the elections. So h that's just one example. I

437
00:26:52,240 --> 00:26:55,159
Speaker 1: think there are some people. You know, I won't out people,

438
00:26:55,320 --> 00:26:59,040
Speaker 1: but if somebody like Senator Brian schatt out people as

439
00:26:59,160 --> 00:27:03,119
Speaker 1: mm tears, I won't. I won't talk about private conversations

440
00:27:03,520 --> 00:27:06,560
Speaker 1: that I have. But you know, Brian Schatz, Senator shots

441
00:27:06,600 --> 00:27:09,639
Speaker 1: from Hawaii, was out there tweeting about how much he

442
00:27:09,720 --> 00:27:12,320
Speaker 1: was had enjoyed the book and how I think he's

443
00:27:12,359 --> 00:27:14,440
Speaker 1: done interviews. In fact, I know he has. I read

444
00:27:14,480 --> 00:27:17,960
Speaker 1: some of them where he talked about being on a

445
00:27:18,520 --> 00:27:21,440
Speaker 1: Senate it's either banking or Finance committee, and he said,

446
00:27:21,440 --> 00:27:23,680
Speaker 1: we're talking about it, you know, I'm talking about MMT

447
00:27:23,800 --> 00:27:26,480
Speaker 1: We're thinking about this. I think there was a article

448
00:27:26,480 --> 00:27:28,360
Speaker 1: in the New York Times two or three weeks ago

449
00:27:28,560 --> 00:27:32,159
Speaker 1: that you know, disclose that I have been working in

450
00:27:32,200 --> 00:27:36,720
Speaker 1: an advisory capacity with Senator Schumer's office and staff for

451
00:27:36,840 --> 00:27:39,679
Speaker 1: a number of months. We had regular calls and I

452
00:27:39,680 --> 00:27:42,119
Speaker 1: wouldn't have spoken publicly about that that they did, and

453
00:27:42,119 --> 00:27:44,399
Speaker 1: it was in the Times, and I do this with

454
00:27:44,680 --> 00:27:48,480
Speaker 1: lots and lots of House members, and I'm just I

455
00:27:48,520 --> 00:27:51,840
Speaker 1: feel very, very lucky to be in a position now

456
00:27:51,880 --> 00:27:54,560
Speaker 1: where so many people will reach out to me. Chairs

457
00:27:54,640 --> 00:27:58,119
Speaker 1: of powerful committees in the House. You know, after the

458
00:27:58,160 --> 00:28:00,920
Speaker 1: book was published, I one of them reached out and said,

459
00:28:00,920 --> 00:28:03,720
Speaker 1: I've been a deficit hawk my entire time in Congress,

460
00:28:03,720 --> 00:28:07,040
Speaker 1: and I read your book and you've completely changed my views.

461
00:28:07,080 --> 00:28:08,600
Speaker 1: And he said, I want to know if we can

462
00:28:08,640 --> 00:28:12,520
Speaker 1: start working together. So so, you know, Randy Ray worked

463
00:28:12,560 --> 00:28:17,040
Speaker 1: with Senator Rubio and his staff on something I think

464
00:28:17,040 --> 00:28:19,639
Speaker 1: a year and a half or so ago, I worked

465
00:28:19,680 --> 00:28:25,080
Speaker 1: with very briefly. One Republican UH senator his staff reached

466
00:28:25,119 --> 00:28:29,640
Speaker 1: out and wanted some input from me on the legislation

467
00:28:29,680 --> 00:28:32,719
Speaker 1: they were drafting. Wanted to think about it from an

468
00:28:32,760 --> 00:28:37,600
Speaker 1: MMT perspective, and I I was trying to be helpful there. Well,

469
00:28:37,600 --> 00:28:40,560
Speaker 1: this this brings me to an interesting question. And you

470
00:28:40,640 --> 00:28:43,080
Speaker 1: mentioned that someone reached out to you and said I

471
00:28:43,120 --> 00:28:46,239
Speaker 1: used to be a deficit hawk and now I'm not,

472
00:28:46,640 --> 00:28:49,040
Speaker 1: which gets to the question. It's like, and it kind

473
00:28:49,040 --> 00:28:51,920
Speaker 1: of speaks to what you were saying earlier about MMT

474
00:28:52,120 --> 00:28:54,000
Speaker 1: doesn't end the debate, but maybe it gets us to

475
00:28:54,040 --> 00:28:57,200
Speaker 1: a healthier debate where we're actually talking about the real things.

476
00:28:57,400 --> 00:29:00,240
Speaker 1: And there are of course going to be politicians who

477
00:29:00,360 --> 00:29:05,920
Speaker 1: who say oppose expansion of government healthcare, but they don't

478
00:29:05,960 --> 00:29:07,600
Speaker 1: really want to say and they say things like we

479
00:29:07,680 --> 00:29:09,320
Speaker 1: can't afford it, or they say, you know, we're going

480
00:29:09,360 --> 00:29:11,160
Speaker 1: to pass the costs onto our children, or we just

481
00:29:11,520 --> 00:29:14,320
Speaker 1: the cupboard is bare, we can't do it. How many

482
00:29:14,480 --> 00:29:18,920
Speaker 1: you know, in your experience deficit hawkery, how much is

483
00:29:18,960 --> 00:29:24,160
Speaker 1: it actually people care about this gap between federal government

484
00:29:24,480 --> 00:29:29,360
Speaker 1: tax receipts and outlays the technical deficit versus how much

485
00:29:29,400 --> 00:29:33,600
Speaker 1: the deficit is cited as a pretext for opposing some

486
00:29:33,680 --> 00:29:40,360
Speaker 1: policy that actually the person opposes for deeper ideological grounds. Yeah.

487
00:29:40,400 --> 00:29:44,280
Speaker 1: I mean it's such a convenient um, you know, foil

488
00:29:44,640 --> 00:29:48,680
Speaker 1: if if you can empathize with your constituents when they

489
00:29:48,720 --> 00:29:51,200
Speaker 1: ask you, why aren't we doing more to you know,

490
00:29:51,840 --> 00:29:55,560
Speaker 1: better fund our educational system or healthcare or whatever it is,

491
00:29:55,560 --> 00:29:58,400
Speaker 1: and you can just say, listen, I I completely agree

492
00:29:58,400 --> 00:30:00,560
Speaker 1: with you. I wish we could do these things too,

493
00:30:00,680 --> 00:30:03,280
Speaker 1: but you know, we got this deficits, and we've got

494
00:30:03,280 --> 00:30:06,160
Speaker 1: this you know, twenty three trillion dollar dead or whatever,

495
00:30:06,520 --> 00:30:08,520
Speaker 1: and it's sort of a get out of jail free card.

496
00:30:08,600 --> 00:30:12,000
Speaker 1: They don't have to offer much more by way of opposition,

497
00:30:12,080 --> 00:30:14,240
Speaker 1: and to just you know, pat their pockets and say

498
00:30:14,400 --> 00:30:17,240
Speaker 1: I wish I could help, but you know, obviously there's

499
00:30:17,280 --> 00:30:21,920
Speaker 1: no money for that. I think that is useful um

500
00:30:22,120 --> 00:30:25,160
Speaker 1: to a lot of people are perceived as being useful.

501
00:30:25,640 --> 00:30:28,560
Speaker 1: Other people, I think, you know, would like to not

502
00:30:28,680 --> 00:30:31,080
Speaker 1: have to lean into that narrative, but they don't see

503
00:30:31,120 --> 00:30:34,800
Speaker 1: a clear pathway out. And that's what that visits that

504
00:30:34,840 --> 00:30:38,240
Speaker 1: I mentioned early on, right before COVID really hit in

505
00:30:38,280 --> 00:30:40,480
Speaker 1: the US, when I was on the hill. So much

506
00:30:40,480 --> 00:30:44,040
Speaker 1: of what we talked about in that meeting was about messaging.

507
00:30:44,240 --> 00:30:47,920
Speaker 1: It was about Democrats feeling like they had backed themselves

508
00:30:48,000 --> 00:30:52,200
Speaker 1: into a corner for years, I coming back with these

509
00:30:52,240 --> 00:30:56,760
Speaker 1: talking points, always bringing up the deficit, um hitting Republicans

510
00:30:56,800 --> 00:30:59,560
Speaker 1: over the head for adding to the deficit, blowing out

511
00:30:59,600 --> 00:31:02,920
Speaker 1: the national debt. They've said these things and now their

512
00:31:03,040 --> 00:31:05,640
Speaker 1: views are changing and they don't know how to unsay them.

513
00:31:05,720 --> 00:31:09,000
Speaker 1: And they've talked about the Clinton surpluses as this sort

514
00:31:09,000 --> 00:31:12,640
Speaker 1: of badge of honor and tried to paint themselves as

515
00:31:12,680 --> 00:31:16,240
Speaker 1: the party that holds themselves to a different and they

516
00:31:16,280 --> 00:31:19,360
Speaker 1: think higher standard by being the party that wants to

517
00:31:19,360 --> 00:31:22,320
Speaker 1: try to pay for their priorities and worry about the

518
00:31:22,360 --> 00:31:25,240
Speaker 1: deficit and remind people that the last time the budget

519
00:31:25,280 --> 00:31:28,760
Speaker 1: was balanced and in surplus, it was under Democratic leadership, right,

520
00:31:28,840 --> 00:31:32,320
Speaker 1: President Clinton. And so they they're looking for ways to

521
00:31:32,440 --> 00:31:36,560
Speaker 1: message their way out of that and into a new place.

522
00:31:36,600 --> 00:31:39,160
Speaker 1: And that's what we spent a lot of time, uh

523
00:31:39,440 --> 00:31:44,280
Speaker 1: talking about. Hm, that's an interesting point. I hadn't thought of.

524
00:31:44,320 --> 00:31:46,959
Speaker 1: So we're so used to people using the deficit as

525
00:31:46,960 --> 00:31:49,160
Speaker 1: an excuse not to do something. I hadn't thought of

526
00:31:49,200 --> 00:31:52,600
Speaker 1: people using it as, you know, a sort of um

527
00:31:52,760 --> 00:31:56,080
Speaker 1: badge of honor in that way. UM. I wanted to

528
00:31:56,120 --> 00:31:59,680
Speaker 1: ask you about something else that's going on at the moment,

529
00:32:00,000 --> 00:32:03,720
Speaker 1: which is we have seen a rise in bond yields

530
00:32:03,760 --> 00:32:07,480
Speaker 1: and inflation expectations. And for some reason, I was looking

531
00:32:07,480 --> 00:32:11,520
Speaker 1: at one very crude measure of inflation expectations earlier today.

532
00:32:11,560 --> 00:32:14,520
Speaker 1: But for instance, if you look at Google trends, the

533
00:32:14,560 --> 00:32:18,840
Speaker 1: word inflation is being searched for um more than ever

534
00:32:19,240 --> 00:32:21,440
Speaker 1: um or at least in the history of Google trends.

535
00:32:21,480 --> 00:32:24,240
Speaker 1: And I know you're on the record saying that m

536
00:32:24,360 --> 00:32:29,120
Speaker 1: m T S overriding concern is inflation risk. I also

537
00:32:29,200 --> 00:32:32,160
Speaker 1: know that you get a question about inflation every time

538
00:32:32,200 --> 00:32:34,880
Speaker 1: you do this, but I would love to hear your

539
00:32:34,960 --> 00:32:37,760
Speaker 1: take on on what's going on now in the bond

540
00:32:37,800 --> 00:32:42,840
Speaker 1: market and how much that ties into this embrace of

541
00:32:43,400 --> 00:32:46,080
Speaker 1: fiscal policy in d C, Like, how much has that

542
00:32:46,120 --> 00:32:50,640
Speaker 1: actually impacted inflation expectations in your opinion? Yeah, I mean,

543
00:32:51,160 --> 00:32:53,240
Speaker 1: Joe has written about this in a way that I

544
00:32:53,280 --> 00:32:57,720
Speaker 1: think is is really useful and largely reflective of the

545
00:32:57,760 --> 00:33:00,880
Speaker 1: way that I think about this. Uh. You know, anybody

546
00:33:00,920 --> 00:33:04,000
Speaker 1: can look at the kind of backup in yields and

547
00:33:04,000 --> 00:33:07,400
Speaker 1: and create a narrative that fits whatever it is that

548
00:33:07,480 --> 00:33:10,840
Speaker 1: they're looking to defend with respect to what's happening. You know,

549
00:33:11,400 --> 00:33:15,120
Speaker 1: I think that, um, it makes a lot of sense

550
00:33:15,160 --> 00:33:18,480
Speaker 1: to me to say that, you know, no, nobody can

551
00:33:18,680 --> 00:33:22,080
Speaker 1: really tease out inflation expectations, as you said, we can

552
00:33:22,080 --> 00:33:24,080
Speaker 1: come up with these sort of crude ways of trying

553
00:33:24,120 --> 00:33:27,360
Speaker 1: to get at what's happening here. But you know, Chasey,

554
00:33:27,440 --> 00:33:30,280
Speaker 1: I guess my sense is that mostly, you know, this

555
00:33:30,360 --> 00:33:33,800
Speaker 1: is a fairly modest move up, and that what is

556
00:33:33,840 --> 00:33:37,920
Speaker 1: probably telling us is that, you know, people are expecting

557
00:33:38,240 --> 00:33:42,360
Speaker 1: the economy to do better, and that they think that

558
00:33:42,400 --> 00:33:45,040
Speaker 1: the FED might have to move sooner, and they think

559
00:33:45,120 --> 00:33:49,320
Speaker 1: that inflation is going to move higher. And I think that,

560
00:33:49,560 --> 00:33:52,080
Speaker 1: you know, when Powell comes out and tells us that

561
00:33:52,440 --> 00:33:57,120
Speaker 1: the FED fully anticipates that we could see some you know,

562
00:33:57,320 --> 00:34:01,720
Speaker 1: pressures over the summer as the stimulant or the recovery

563
00:34:02,000 --> 00:34:05,840
Speaker 1: of money rolls out and so forth, that they're prepared

564
00:34:05,880 --> 00:34:08,440
Speaker 1: for that they expected to be transitory. Maybe there are

565
00:34:08,440 --> 00:34:12,280
Speaker 1: some people out there who have, you know, different expectations

566
00:34:12,320 --> 00:34:14,080
Speaker 1: and think that the FED might follow a little bit

567
00:34:14,120 --> 00:34:16,799
Speaker 1: behind the curve and have to move sooner. You know.

568
00:34:16,960 --> 00:34:21,880
Speaker 1: I think I think by and large it reflects UH

569
00:34:22,360 --> 00:34:27,840
Speaker 1: optimism and enthusiasm for the economic outlook. What do you

570
00:34:27,880 --> 00:34:32,200
Speaker 1: think about this new FED? I mean, obviously MMT emphasizes,

571
00:34:32,280 --> 00:34:36,000
Speaker 1: of course, fiscal fiscal power as the sort of key

572
00:34:36,080 --> 00:34:39,440
Speaker 1: lever for macro stabilizations we've been talking about. But this

573
00:34:39,480 --> 00:34:43,239
Speaker 1: does seem to be a FED that's undergone changes and

574
00:34:43,280 --> 00:34:45,839
Speaker 1: how it thinks and how it thinks about measuring full

575
00:34:45,960 --> 00:34:49,720
Speaker 1: capacity and full employment and whether it needs to preempt

576
00:34:49,800 --> 00:34:53,160
Speaker 1: inflation lest it sort of get away from us. What's

577
00:34:53,160 --> 00:34:55,040
Speaker 1: you're thinking on this sort of like evolution of the

578
00:34:55,040 --> 00:34:59,120
Speaker 1: FED under sort of the yelling um Powell period. Well,

579
00:34:59,160 --> 00:35:01,360
Speaker 1: I think that, you know, in a lot of ways,

580
00:35:01,400 --> 00:35:06,640
Speaker 1: the FED has become somewhat more humble in the sense

581
00:35:06,760 --> 00:35:10,080
Speaker 1: that you know, they're Jerome Powell made a very clear

582
00:35:10,200 --> 00:35:12,840
Speaker 1: time and time again. I think he used virtually every

583
00:35:13,600 --> 00:35:18,760
Speaker 1: opportunity when he spoke publicly to say, we don't have this, Okay,

584
00:35:18,880 --> 00:35:23,040
Speaker 1: do not expect the central bank to have the ammunition

585
00:35:23,080 --> 00:35:27,799
Speaker 1: that's going to be necessary to get a sustainable recovery underway,

586
00:35:27,840 --> 00:35:30,840
Speaker 1: that it is going to take uh, fiscal policy. We

587
00:35:30,880 --> 00:35:34,960
Speaker 1: need a partner. And that was different, right Bernankee sort

588
00:35:35,000 --> 00:35:38,120
Speaker 1: of did that, but in much more subtle ways. I

589
00:35:38,160 --> 00:35:40,920
Speaker 1: think that and it's not just Powe, it's it's central

590
00:35:40,960 --> 00:35:44,040
Speaker 1: bankers around the world, and now, helped by you know,

591
00:35:44,080 --> 00:35:45,920
Speaker 1: institutions like the I M F and the O E

592
00:35:46,000 --> 00:35:48,920
Speaker 1: c D. You know, everybody is sort of coming to

593
00:35:49,440 --> 00:35:53,360
Speaker 1: agreement around this idea that fiscal policy has to play

594
00:35:53,360 --> 00:35:59,319
Speaker 1: a dominant role in the in the recovery so on inflation.

595
00:35:59,520 --> 00:36:03,560
Speaker 1: You know, Powell had to admit that the FED might

596
00:36:03,600 --> 00:36:08,040
Speaker 1: have tightened preemptively that you know, unemployment, it clearly was

597
00:36:08,080 --> 00:36:12,840
Speaker 1: possible for unemployment to safely move lower without causing inflation

598
00:36:12,880 --> 00:36:15,680
Speaker 1: to move higher. And I think they're doing a lot

599
00:36:15,760 --> 00:36:19,080
Speaker 1: of rethinking, you know, some of their own understanding. You

600
00:36:19,160 --> 00:36:22,120
Speaker 1: have people like Daniel Tarullo, who once served on the

601
00:36:22,120 --> 00:36:26,000
Speaker 1: FED Board of Governors, who after his term expired, went

602
00:36:26,000 --> 00:36:28,920
Speaker 1: out and started stating publicly that the FED does not

603
00:36:29,080 --> 00:36:32,000
Speaker 1: have a reliable model of inflation. Now that was a

604
00:36:32,239 --> 00:36:36,680
Speaker 1: really incredible thing to say, and so it's it's a

605
00:36:36,680 --> 00:36:39,359
Speaker 1: good sign when you know what you don't know and

606
00:36:39,400 --> 00:36:44,000
Speaker 1: you're willing to go back to the drawing board and rethink,

607
00:36:44,160 --> 00:36:46,520
Speaker 1: you know a lot of your priors and what the

608
00:36:46,520 --> 00:36:49,399
Speaker 1: FED can do. And Powell keeps reminding us the FED

609
00:36:49,440 --> 00:36:52,799
Speaker 1: can lend, but the FED can't spend. And so I

610
00:36:52,840 --> 00:36:56,120
Speaker 1: think it's helping to shift us into a sort of

611
00:36:56,200 --> 00:36:58,839
Speaker 1: new paradigm where we are going to see a more

612
00:36:58,920 --> 00:37:03,839
Speaker 1: permanent role uh from you know, the fiscal partner, and

613
00:37:04,320 --> 00:37:07,319
Speaker 1: much less reliance on central banks. And I think that's

614
00:37:07,360 --> 00:37:09,759
Speaker 1: to the benefit. Um. We have asked central banks for

615
00:37:09,960 --> 00:37:13,800
Speaker 1: too long to do too much and and in many ways,

616
00:37:13,840 --> 00:37:16,200
Speaker 1: I think you know, we're we've paid the price for that.

617
00:37:16,320 --> 00:37:19,759
Speaker 1: With central banks just constantly, you know, getting more and

618
00:37:19,800 --> 00:37:22,839
Speaker 1: more creative, pushing interest rates lower and lower. The only

619
00:37:23,239 --> 00:37:25,280
Speaker 1: thing they know how to do is try to engineer

620
00:37:25,400 --> 00:37:29,040
Speaker 1: growth via some kind of run up in in asset prices,

621
00:37:29,040 --> 00:37:51,120
Speaker 1: whether it's real estate, commercial, residential equities. So you mentioned

622
00:37:51,200 --> 00:37:53,839
Speaker 1: like knowing what you don't know there, and I think

623
00:37:54,080 --> 00:37:57,160
Speaker 1: like it is probably fair to say that MMT is

624
00:37:57,280 --> 00:38:01,759
Speaker 1: still in um sort of testing mode, like this is

625
00:38:01,800 --> 00:38:05,680
Speaker 1: probably this is we're seeing the beginnings of this embrace

626
00:38:05,920 --> 00:38:08,439
Speaker 1: as we've been discussing, and we're going to see more

627
00:38:08,680 --> 00:38:11,359
Speaker 1: fiscal programs rolled out in the States, and we're going

628
00:38:11,400 --> 00:38:13,560
Speaker 1: to get an actual test case of some of these

629
00:38:13,600 --> 00:38:18,600
Speaker 1: theories being put into action. What would it take to

630
00:38:19,040 --> 00:38:24,759
Speaker 1: like give you pause, Like what would actually make you

631
00:38:24,800 --> 00:38:28,360
Speaker 1: think like, oh wait, maybe there's something in mm T

632
00:38:29,080 --> 00:38:32,879
Speaker 1: that we you know, got wrong, or maybe there's something

633
00:38:32,880 --> 00:38:36,360
Speaker 1: that we underestimated, something that we need to rethink or

634
00:38:36,440 --> 00:38:39,640
Speaker 1: tweak or revamp. Is there a specific thing that you're

635
00:38:39,680 --> 00:38:45,160
Speaker 1: watching out for, Well, yeah, I think so much. Again,

636
00:38:45,280 --> 00:38:48,200
Speaker 1: so much of mm T is descriptive tracy. Like, right,

637
00:38:48,560 --> 00:38:54,239
Speaker 1: if if Congress wants to pass big and big spending packages,

638
00:38:54,320 --> 00:38:56,000
Speaker 1: they can do it, and this is what we said.

639
00:38:56,040 --> 00:39:00,680
Speaker 1: You know what's interesting for me actually is think back

640
00:39:00,719 --> 00:39:05,560
Speaker 1: to the Republican tax cuts. In the Republicans were getting

641
00:39:05,600 --> 00:39:08,719
Speaker 1: ready to push through these massive tax cuts, and you

642
00:39:08,840 --> 00:39:14,799
Speaker 1: had economists, I won't name them, but they were leading names, right,

643
00:39:14,840 --> 00:39:18,520
Speaker 1: big name economists who came out in opposition to the

644
00:39:18,560 --> 00:39:21,920
Speaker 1: tax cuts, and one of them made the argument that

645
00:39:22,080 --> 00:39:26,279
Speaker 1: if the Republicans are successful in pushing these tax cuts through,

646
00:39:26,760 --> 00:39:29,080
Speaker 1: that we will be these were his words, living on

647
00:39:29,120 --> 00:39:33,040
Speaker 1: a shoe string for decades to come because of the

648
00:39:33,080 --> 00:39:36,160
Speaker 1: deficits that will be created. Because of the deficits, he

649
00:39:36,200 --> 00:39:39,319
Speaker 1: went on to say that it would put us at

650
00:39:39,440 --> 00:39:42,680
Speaker 1: risk because if the economy were to slow down and

651
00:39:42,719 --> 00:39:45,799
Speaker 1: go into recession, that we would no longer have the

652
00:39:45,840 --> 00:39:51,040
Speaker 1: capacity to use fiscal policy to counter the recession because

653
00:39:51,320 --> 00:39:53,680
Speaker 1: what we had done these tax cuts, that left us

654
00:39:53,760 --> 00:39:58,200
Speaker 1: unable to do to act with fiscal policy. Another leading

655
00:39:58,320 --> 00:40:02,280
Speaker 1: top economists was right ing, you know, deficits matter again.

656
00:40:03,320 --> 00:40:06,760
Speaker 1: After Donald Trump took took office and so forth, warning

657
00:40:06,960 --> 00:40:10,040
Speaker 1: that if if you tried to do anything with fiscal

658
00:40:10,640 --> 00:40:14,400
Speaker 1: um in terms of stimulus, that you would be pushing

659
00:40:14,440 --> 00:40:17,080
Speaker 1: interest rates higher, that you would get crowding out effects,

660
00:40:17,160 --> 00:40:20,640
Speaker 1: that the economy would slow down. Now the Republicans passed

661
00:40:20,640 --> 00:40:24,719
Speaker 1: their tax cuts, and unemployment went down, not up, and

662
00:40:24,880 --> 00:40:27,000
Speaker 1: growth went up a little bit. I mean, it wasn't

663
00:40:27,000 --> 00:40:30,680
Speaker 1: a massive boon that was promised, but it was stimulative

664
00:40:30,719 --> 00:40:34,640
Speaker 1: and it did improve things. Uh. And interest rates didn't

665
00:40:34,640 --> 00:40:38,320
Speaker 1: go up. Interest rates have trended down. We had coronavirus,

666
00:40:38,400 --> 00:40:41,799
Speaker 1: we had a recession. And how did Congress respond with

667
00:40:41,960 --> 00:40:46,360
Speaker 1: multi trillion dollar packages one after another. The deficits of

668
00:40:46,400 --> 00:40:49,920
Speaker 1: the past did not impede the ability of Congress to

669
00:40:50,320 --> 00:40:55,160
Speaker 1: respond effectively, uh in the future, So that those folks

670
00:40:55,160 --> 00:40:57,880
Speaker 1: were just simply wrong. And so you know, when you

671
00:40:57,920 --> 00:41:02,920
Speaker 1: ask um, what would cause me to rethink, you know,

672
00:41:03,080 --> 00:41:06,560
Speaker 1: my the strength of my convictions, I guess it would

673
00:41:06,560 --> 00:41:10,200
Speaker 1: be if Congress had authorized uh, you know, multi trillion

674
00:41:10,200 --> 00:41:14,960
Speaker 1: dollars spending package and somehow the checks bounced, you know,

675
00:41:15,120 --> 00:41:20,080
Speaker 1: I mean, I'm serious, you know, because we're only explaining

676
00:41:20,200 --> 00:41:22,880
Speaker 1: that if the votes are there, the money is there.

677
00:41:23,160 --> 00:41:26,680
Speaker 1: And this idea that somehow, you know, there are these

678
00:41:26,680 --> 00:41:30,759
Speaker 1: fiscal constraints or somehow you've got to arrange the financing

679
00:41:30,760 --> 00:41:33,799
Speaker 1: and you might not be able to uh, something might

680
00:41:33,840 --> 00:41:36,920
Speaker 1: go haywire, and all of a sudden, you know that

681
00:41:37,080 --> 00:41:39,520
Speaker 1: the checks don't go out and it just doesn't happen.

682
00:41:40,480 --> 00:41:43,000
Speaker 1: I think, first of all, I think that last point

683
00:41:43,600 --> 00:41:46,640
Speaker 1: or the point that you made about the COVID crisis,

684
00:41:47,040 --> 00:41:49,480
Speaker 1: showing the myth of like oh, we need to like

685
00:41:49,520 --> 00:41:52,200
Speaker 1: save up our fiscal capacity is really interesting and probably

686
00:41:52,239 --> 00:41:55,120
Speaker 1: still underappreciated, because I do think there's still this sort

687
00:41:55,120 --> 00:41:57,319
Speaker 1: of like, oh, it's so unfortunate that we spent so

688
00:41:57,400 --> 00:42:00,600
Speaker 1: much during the good times, and then in instant that

689
00:42:00,719 --> 00:42:03,680
Speaker 1: talking point seems to have gotten disproven because then we

690
00:42:03,760 --> 00:42:08,239
Speaker 1: spent a lot more without without a hiccup. I like

691
00:42:08,360 --> 00:42:10,359
Speaker 1: to do like a sort of like quick lightning round

692
00:42:10,560 --> 00:42:14,640
Speaker 1: of like common m m T questions before we end.

693
00:42:15,440 --> 00:42:17,440
Speaker 1: You know, I always see these questions about MMT, and

694
00:42:17,480 --> 00:42:19,440
Speaker 1: I want to like sort of like get the Stephanie

695
00:42:19,520 --> 00:42:22,960
Speaker 1: Kelton the quick answer. So if we don't need to

696
00:42:22,960 --> 00:42:24,799
Speaker 1: worry about devisits, why do we have taxes, why do

697
00:42:24,800 --> 00:42:27,120
Speaker 1: we need to pay taxes? Well, you know, I'll just

698
00:42:27,239 --> 00:42:33,200
Speaker 1: point you to uh six article written by Beardsley Rummel,

699
00:42:33,280 --> 00:42:36,640
Speaker 1: which is a great name, who was the chair then

700
00:42:36,800 --> 00:42:39,440
Speaker 1: called Chairman of the New York Federal Reserve Bank. This

701
00:42:39,520 --> 00:42:43,560
Speaker 1: is not a short answer, Joe, that's all right. Um.

702
00:42:43,680 --> 00:42:46,760
Speaker 1: Rummel gave us a variety of answers to that question.

703
00:42:46,800 --> 00:42:49,760
Speaker 1: Why do we have taxes? Taxes are important because taxes

704
00:42:49,800 --> 00:42:54,960
Speaker 1: are forced subtraction. Taxes remove dollars from our hands so

705
00:42:55,000 --> 00:42:57,239
Speaker 1: that we don't have them, so that we can't spend them,

706
00:42:57,360 --> 00:43:00,840
Speaker 1: so that the government can spend some of its dollars

707
00:43:00,880 --> 00:43:05,000
Speaker 1: into the economy without creating an inflation problem. So tax

708
00:43:05,000 --> 00:43:08,080
Speaker 1: has helped to remove spending power from the rest of

709
00:43:08,200 --> 00:43:12,040
Speaker 1: us and mitigate inflationary pressures. Taxes are important if you

710
00:43:12,040 --> 00:43:14,759
Speaker 1: want to start up a currency from scratch. And that's

711
00:43:14,760 --> 00:43:17,399
Speaker 1: a much longer answer, but I'll just leave it with

712
00:43:17,719 --> 00:43:21,400
Speaker 1: Taxes are the currency is is it is a tax credit.

713
00:43:21,840 --> 00:43:25,280
Speaker 1: Taxes are important for redistribution. You might raise or lower

714
00:43:25,280 --> 00:43:27,680
Speaker 1: in existing tax or introduce a new tax because you

715
00:43:27,719 --> 00:43:30,160
Speaker 1: care about things like the distribution of wealth and income,

716
00:43:30,640 --> 00:43:33,960
Speaker 1: and you can use taxes for that purpose. You have

717
00:43:34,080 --> 00:43:38,880
Speaker 1: taxes because you want to incentivize or disincentivize certain behaviors.

718
00:43:38,880 --> 00:43:42,120
Speaker 1: So taxes are very useful if you're trying to encourage

719
00:43:42,120 --> 00:43:45,600
Speaker 1: people to buy energy efficient appliances or electric vehicles or

720
00:43:45,640 --> 00:43:50,160
Speaker 1: discourage people from smoking or um, you know, polluting the atmosphere.

721
00:43:51,040 --> 00:43:54,120
Speaker 1: All right, here's another question. Um, if the government isn't

722
00:43:54,120 --> 00:43:57,960
Speaker 1: really borrowing, why do we need to have a bond market. Well,

723
00:43:58,000 --> 00:44:00,920
Speaker 1: we don't technically need to have a on market, but

724
00:44:01,960 --> 00:44:06,080
Speaker 1: the government has chosen to allow folks to trade their

725
00:44:06,120 --> 00:44:10,920
Speaker 1: dollars in for interests sparing form of the US dollar,

726
00:44:11,160 --> 00:44:14,240
Speaker 1: which is a government bond. So it's a very safe

727
00:44:14,239 --> 00:44:16,400
Speaker 1: way to park on an awful lot of money in

728
00:44:16,440 --> 00:44:21,280
Speaker 1: a default risk free asset that gives you a yield,

729
00:44:21,320 --> 00:44:24,200
Speaker 1: that gives you a return. So you get to a

730
00:44:24,200 --> 00:44:26,560
Speaker 1: little bit of an interest subsidy from the federal government

731
00:44:26,600 --> 00:44:30,560
Speaker 1: when you hold US treasuries. All right, here's another one.

732
00:44:31,000 --> 00:44:33,680
Speaker 1: Is it naive if the mm T view is that

733
00:44:33,760 --> 00:44:37,080
Speaker 1: the way to fight inflation is either through taxes or

734
00:44:37,120 --> 00:44:42,040
Speaker 1: perhaps spending or cutting spending, or at least that's one tool.

735
00:44:42,440 --> 00:44:45,040
Speaker 1: Is it naive to think that politicians would ever actually

736
00:44:45,080 --> 00:44:48,319
Speaker 1: sort of quote, do what it takes if inflation did

737
00:44:48,560 --> 00:44:51,440
Speaker 1: run overly hot. Well, I think the first thing to

738
00:44:51,480 --> 00:44:53,919
Speaker 1: do is challenge the first part of the question, that

739
00:44:54,760 --> 00:44:57,920
Speaker 1: it is not the solution to any and all inflation

740
00:44:58,040 --> 00:45:01,080
Speaker 1: is most definitely not to raise taxes. And what MMT

741
00:45:01,239 --> 00:45:03,799
Speaker 1: is trying to do is to say, if we're talking

742
00:45:03,800 --> 00:45:06,200
Speaker 1: about the kind of inflation that results from too much

743
00:45:06,239 --> 00:45:09,360
Speaker 1: spending chasing too few goods, the demand pull kind of inflation,

744
00:45:09,840 --> 00:45:14,160
Speaker 1: then let's integrate inflation risk into the federal budgeting process.

745
00:45:14,520 --> 00:45:17,640
Speaker 1: So the best way to fight inflation is with a

746
00:45:17,640 --> 00:45:20,520
Speaker 1: good offense, right. You don't want to create an inflation

747
00:45:20,560 --> 00:45:22,399
Speaker 1: problem and then try to fight it on the back

748
00:45:22,520 --> 00:45:27,400
Speaker 1: end once it exists. You want lawmakers to be designing

749
00:45:27,400 --> 00:45:31,640
Speaker 1: the legislation, writing the legislation with inflation in mind, which,

750
00:45:31,680 --> 00:45:34,320
Speaker 1: by the way, they do not do today. I worked

751
00:45:34,320 --> 00:45:36,319
Speaker 1: in the Senate. I never heard a staffer or a

752
00:45:36,360 --> 00:45:42,520
Speaker 1: member of the Senate raise inflation as even an afterthought

753
00:45:42,600 --> 00:45:46,919
Speaker 1: when writing multi trillion dollar spending bills. So we want

754
00:45:47,040 --> 00:45:50,520
Speaker 1: inflation to be integrated into the process. So that you're thinking,

755
00:45:51,000 --> 00:45:54,200
Speaker 1: if I were to do this, uh, you know, proposed

756
00:45:54,200 --> 00:45:57,040
Speaker 1: new spending, what is the likelihood that it would create

757
00:45:57,080 --> 00:45:59,920
Speaker 1: inflationary pressures? And how do I mitigate those in the

758
00:46:00,080 --> 00:46:03,359
Speaker 1: legislation before moving forward with a vote. And now I'll

759
00:46:03,400 --> 00:46:07,480
Speaker 1: just ask the Tracy Alloway question. Is an mm T

760
00:46:08,480 --> 00:46:11,120
Speaker 1: just a thing that only works for the U S

761
00:46:11,160 --> 00:46:13,880
Speaker 1: Dollar at the US Well, no, I mean one of

762
00:46:13,880 --> 00:46:17,520
Speaker 1: the running jokes I think on Twitter is Japan says Hi.

763
00:46:18,239 --> 00:46:21,600
Speaker 1: And so you know, so many times people will, um,

764
00:46:22,200 --> 00:46:25,160
Speaker 1: you know, say, if you run these deficits or you

765
00:46:25,200 --> 00:46:27,000
Speaker 1: get the debt way up, interest rates are going to

766
00:46:27,040 --> 00:46:28,520
Speaker 1: go up, inflation is going to go up, and somebody

767
00:46:28,520 --> 00:46:31,880
Speaker 1: will tweet Japan says Hi. Uh so no okay, but

768
00:46:31,920 --> 00:46:35,120
Speaker 1: you know, e M okay Japan. Yeah, they're kind of weird.

769
00:46:35,239 --> 00:46:40,200
Speaker 1: They don't have whatever. What about Egypt, Well, look, you

770
00:46:40,360 --> 00:46:45,120
Speaker 1: can economists like Scott Fullweiler and fiddle Kaboob and others

771
00:46:45,160 --> 00:46:48,040
Speaker 1: are working with e m s and working with you know,

772
00:46:48,080 --> 00:46:50,640
Speaker 1: and I've I've worked I don't know that I should say,

773
00:46:51,320 --> 00:46:55,399
Speaker 1: I'll just say one developing country president and I've I've

774
00:46:55,440 --> 00:46:59,040
Speaker 1: worked with him. And so we're we're very much involved

775
00:46:59,239 --> 00:47:03,600
Speaker 1: in work king in collaboration with UM with governments around

776
00:47:03,600 --> 00:47:07,800
Speaker 1: the world, including in emerging markets. MMT is absolutely helpful

777
00:47:07,840 --> 00:47:09,960
Speaker 1: and the work of photo Kabuba I will say again,

778
00:47:10,400 --> 00:47:14,279
Speaker 1: UM check that out for sure, uh MMT as we've

779
00:47:14,320 --> 00:47:18,279
Speaker 1: actually had them on and so you know, you know

780
00:47:18,520 --> 00:47:21,799
Speaker 1: that that MMT can be helpful in all of these countries. Now,

781
00:47:21,960 --> 00:47:24,560
Speaker 1: it is true, and Tracy knows this. I I know

782
00:47:24,719 --> 00:47:27,719
Speaker 1: she does that. Uh. I mean that MMT is not

783
00:47:27,880 --> 00:47:31,600
Speaker 1: suggesting that every country has, you know, the sort of

784
00:47:31,680 --> 00:47:35,640
Speaker 1: expanded policy space that will allow it to easily orient

785
00:47:35,840 --> 00:47:39,319
Speaker 1: its macro economic policies around, you know, creating a full

786
00:47:39,320 --> 00:47:43,040
Speaker 1: employment economy. There are challenges for many countries that have

787
00:47:43,440 --> 00:47:46,680
Speaker 1: debt denominated in foreign currency, that are more vulnerable to

788
00:47:46,800 --> 00:47:49,239
Speaker 1: swings in their exchange rates, that don't have energy and

789
00:47:49,280 --> 00:47:52,440
Speaker 1: food sovereignty and so forth. So, but that's not to

790
00:47:52,480 --> 00:47:54,960
Speaker 1: say that m MT doesn't have anything to offer by

791
00:47:55,040 --> 00:47:59,920
Speaker 1: way of policy advice and design and so forth. Stephan

792
00:48:00,000 --> 00:48:03,000
Speaker 1: and Calton, thank you so much for coming out odd Luck.

793
00:48:03,520 --> 00:48:05,320
Speaker 1: It was great to be back with you both. Thanks

794
00:48:05,320 --> 00:48:07,480
Speaker 1: for having me, Stephanie. That was great. Stephan I really

795
00:48:07,520 --> 00:48:24,080
Speaker 1: appreciate it. Take care of you guys. Tracy. Obviously I

796
00:48:24,120 --> 00:48:28,000
Speaker 1: like that conversation a lot. Hearing that sort of trajectory, Yeah,

797
00:48:28,200 --> 00:48:30,920
Speaker 1: I know, kind of obvious. Hearing the like the story

798
00:48:30,960 --> 00:48:34,040
Speaker 1: of like that trajectory of like going from like blogging

799
00:48:34,120 --> 00:48:36,480
Speaker 1: to being invited in to talk to some of the

800
00:48:36,520 --> 00:48:41,279
Speaker 1: most powerful UM people in the world about ideas is

801
00:48:41,440 --> 00:48:45,520
Speaker 1: about is to me is about inspiring a story as again, Yeah,

802
00:48:45,600 --> 00:48:49,360
Speaker 1: I mean it's definitely been an upwards trajectory, like the

803
00:48:49,520 --> 00:48:52,920
Speaker 1: arrow has moved in the right direction for MMT economists

804
00:48:53,200 --> 00:48:56,880
Speaker 1: and journalists of course, Joe um So, one thing that

805
00:48:56,920 --> 00:48:59,480
Speaker 1: always stands out when we speak to Stephanie, like her

806
00:48:59,520 --> 00:49:03,120
Speaker 1: point about MMT being a set of descriptive rather than

807
00:49:03,280 --> 00:49:08,280
Speaker 1: prescriptive policies, Like I think, obviously she's right because she's

808
00:49:08,360 --> 00:49:11,640
Speaker 1: sort of come up with it, But like my question

809
00:49:11,719 --> 00:49:15,359
Speaker 1: is still how much does that actually change and if

810
00:49:15,400 --> 00:49:19,800
Speaker 1: it changes the debate or if it allows us to

811
00:49:19,840 --> 00:49:25,160
Speaker 1: avoid wasting time on irrelevant discussions like can we actually

812
00:49:25,200 --> 00:49:30,520
Speaker 1: afford it? Like how much does that actually move the needle?

813
00:49:30,760 --> 00:49:33,600
Speaker 1: And I guess like, is there is there going to

814
00:49:33,680 --> 00:49:36,439
Speaker 1: be a time five or ten years from now when

815
00:49:36,520 --> 00:49:39,759
Speaker 1: instead of politicians going like, oh but the deficit, we

816
00:49:39,840 --> 00:49:42,160
Speaker 1: can't afford this, what if they're going like, oh but

817
00:49:42,280 --> 00:49:46,880
Speaker 1: you know, inflation and fiscal space and I it feels

818
00:49:46,880 --> 00:49:49,480
Speaker 1: like they could use pretty much anything like as an

819
00:49:49,520 --> 00:49:52,920
Speaker 1: excuse or as a justifier for something. Yeah, I mean

820
00:49:52,920 --> 00:49:55,480
Speaker 1: I would saying like, my my sense is like two things,

821
00:49:55,719 --> 00:49:58,520
Speaker 1: and one is it does seem like a little harder.

822
00:49:58,560 --> 00:50:00,719
Speaker 1: I mean, I don't know. I mean, one thing that

823
00:50:00,719 --> 00:50:04,040
Speaker 1: we know about fighting about or talking about inflation online

824
00:50:04,239 --> 00:50:07,800
Speaker 1: is that people will see it even if it's not there, right,

825
00:50:07,840 --> 00:50:11,320
Speaker 1: So it's like the inflation measures can come in very mild,

826
00:50:11,360 --> 00:50:14,799
Speaker 1: but people will convince themselves that we're living in an

827
00:50:14,840 --> 00:50:18,440
Speaker 1: age of hyper inflation regardless. So I do think like

828
00:50:18,480 --> 00:50:20,640
Speaker 1: that is a good point. In the other hand, maybe

829
00:50:20,719 --> 00:50:23,200
Speaker 1: it's like not quite as like you know, it's like

830
00:50:23,560 --> 00:50:27,279
Speaker 1: the bond vigilantees or the kids are gonna have to

831
00:50:27,320 --> 00:50:29,200
Speaker 1: pay for it and we're gonna become Greece one day.

832
00:50:29,360 --> 00:50:33,080
Speaker 1: It's like you can never disprove that, right, Like it's like,

833
00:50:33,120 --> 00:50:34,920
Speaker 1: well we have to you know, something may happen ten

834
00:50:35,000 --> 00:50:36,560
Speaker 1: years from now. It has been really bad, so we

835
00:50:36,600 --> 00:50:38,680
Speaker 1: have to do this. So I think it's a little harder.

836
00:50:38,719 --> 00:50:42,359
Speaker 1: But I do think also like you know, there are

837
00:50:42,400 --> 00:50:46,600
Speaker 1: just people are going to have different policy priorities, and

838
00:50:46,680 --> 00:50:48,560
Speaker 1: there are you know, there are a lot of people

839
00:50:49,239 --> 00:50:51,680
Speaker 1: who believe that the government should have some sort of

840
00:50:51,719 --> 00:50:53,600
Speaker 1: single payer healthcare, and there are a lot of people

841
00:50:53,600 --> 00:50:56,799
Speaker 1: who strongly don't think that and that that's bad and

842
00:50:56,840 --> 00:51:00,439
Speaker 1: that socialism and I don't think that like, um, that's

843
00:51:00,440 --> 00:51:02,360
Speaker 1: never gonna go away, like people that are gonna just

844
00:51:02,400 --> 00:51:05,839
Speaker 1: be But it does feel like at least we can

845
00:51:05,960 --> 00:51:08,720
Speaker 1: sort of like move past some of the deficit stuff.

846
00:51:08,960 --> 00:51:12,239
Speaker 1: It is a more honest political conversation that we can have.

847
00:51:12,320 --> 00:51:17,520
Speaker 1: On some level, I feel like the problem is forever politics.

848
00:51:17,600 --> 00:51:20,320
Speaker 1: I think like that's the conclusion to everything that's wrong

849
00:51:20,480 --> 00:51:24,200
Speaker 1: in the world, Like the problem is politics always and forever. Yeah,

850
00:51:25,040 --> 00:51:28,239
Speaker 1: but man is a political animal and so yeah, so

851
00:51:28,320 --> 00:51:30,920
Speaker 1: that will be for thousands of years we will be

852
00:51:30,960 --> 00:51:34,360
Speaker 1: fighting about how different people feel that they should reshape

853
00:51:34,400 --> 00:51:36,920
Speaker 1: the world. Right, And to be fair, we're probably asking

854
00:51:36,960 --> 00:51:39,720
Speaker 1: a lot of an economic theory to try to fix

855
00:51:39,800 --> 00:51:44,040
Speaker 1: that problem. Like that's probably a little bit too ambitious.

856
00:51:45,040 --> 00:51:47,040
Speaker 1: But again, and it goes back to what we were saying,

857
00:51:47,080 --> 00:51:51,200
Speaker 1: like it does feel like the debate these days. I

858
00:51:51,800 --> 00:51:54,600
Speaker 1: I think it's it's a little bit more enlightened than

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Speaker 1: it was in two thousand nine, in two thousand ten,

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Speaker 1: so like things do change. And again, it's not I'm

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Speaker 1: not saying it because like, Okay, we got this like

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Speaker 1: fiscal expansion and that's good or bad. But it does

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Speaker 1: feel like the parameters of the debate, so you look

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Speaker 1: at even critics of the of the stimulus. They're talking

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Speaker 1: about these things like inflation and inflationary pressures and capacity

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Speaker 1: and how do you measure fiscal capacity or inflationary capacity,

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Speaker 1: which wasn't really even like part of the discussion in

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Speaker 1: a meaningful way, you know, like two thousand nine tended

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Speaker 1: anywhere near the same level. So maybe maybe things the

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Speaker 1: language has certainly changed. Absolutely, All right, um, shall we

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Speaker 1: leave it there. Let's leave it there. This has been

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Speaker 1: another episode of the All Thoughts podcast. I'm Tracy Allawait.

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Speaker 1: You can follow me on Twitter at Tracy Allaway and

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00:52:48,160 --> 00:52:51,279
Speaker 1: I'm Joe Wisn'tal. You can follow me on Twitter at

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00:52:51,320 --> 00:52:54,720
Speaker 1: the Stalwart, and be sure to follow our guest Stephanie Kelton.

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00:52:54,800 --> 00:52:57,919
Speaker 1: She's at Stephanie Kelton. The paperback version of her book

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00:52:57,920 --> 00:53:01,040
Speaker 1: The Deficit Myth now out. Check that out as well.

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00:53:01,560 --> 00:53:05,240
Speaker 1: Follow our producer Laura Carlson, She's at Laura M. Carlson.

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00:53:05,560 --> 00:53:09,360
Speaker 1: Follow the Bloomberg head of podcast, Francesco Levi at Francesco Today,

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00:53:09,800 --> 00:53:12,879
Speaker 1: and check out all of our podcasts at Bloomberg under

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00:53:12,920 --> 00:53:15,520
Speaker 1: the handle and podcasts. Thanks for listening.