Conversation with Stephanie Kelton 2020年12月9日

• ステファニーケルトンとの会話2020年12月9日
• love and theft: ケルトン 2020年12月9日
• ケルトン 2020年12月9日
• Conversation with Stephanie Kelton 2020年12月9日@

https://youtu.be/lWP0C4O6GU8 

ダイジェスト

https://youtu.be/Fp1BETJ0r4w?si=cOsze5j_Tm3racZ3

この分野の以前のリーダーですええとてもたくさんの私がいますつまり、iiは非常に長いリストを提供するか、自分の仕事が他の人の仕事によって以前に通知された3人の名前を提供する可能性があるので、3人から始めて、アバの学習者または機能的財政について言及しました。明らかによく、または明らかにそうではありません」ええと、mmtで重要なのは、ラーナーがジョン・メイナード・ケインズの同時代人だったことを知っているので、ラーナーはケインズがしたように、経済は総需要の欠如と有効需要の欠如で慢性的に運営される傾向があることを理解しました、そしてあなたはいつもあなたが政府の政策を通じて取り組むことができるので、アバ・ラーナーは重要な人物の1つです。ウィンは敬虔な英国の経済学者です。ウィンはセクターの財政収支アプローチの先駆者であり、mmtは敬虔なセクターの財政収支を採用して組み込んでいます。政府の赤字は、非政府部門の経済の他の部分の財政黒字と姓i 'によって反映されていることを認識していると言いますハイマン・ミンスキーとミンスキーは、前世紀の最も重要な経済学者の1人であり、経済がどのように進化し、バランスシートが時間とともにどのように進化するか、そして金融システム自体がどのように進化するかを理解する金融不安定性仮説での彼の仕事でおそらく最もよく知られていると思います小さな出来事が起こると、ミンスキーはより壊れやすくなり、危機にさらされます。ミンスキーはまた、彼が最後の手段の雇用主と呼んだものの擁護者でした。私たちは連邦雇用保証と呼んでいます。ステファニーケルトンmmtは多かれ少なかれ何十年もそこにありましたが、あなたは最近それを復活させている人の1人です。

https://love-and-theft-2014.blogspot.com/2020/12/2020129.html

https://love-and-theft-2014.blogspot.com/2020/12/0006music0012music0031music0034thank.html

BWMN

https://twitter.com/_luminous_woman/status/1337034610350333954?s=21

^_^

Conversation with Stephanie Kelton
https://t.co/7eIMmDEt77
2020/12/09
Lerner,Godley,Minsky pic.twitter.com/abfwFRshQ6

— luminous woman (@_luminous_woman) December 10, 2020

Music] [Music] [Music] thank you very much we are very pleased to have with us here um a leading economist someone who is bringing a new thinking in the field of economic theory and practice uh professor dr stefani kilten she's just written a book that was released exactly two weeks ago the title of the book is the deficit myth modern monetary theory and how to build a better economy we are very honored to have you with us here today professor kelton good morning how are you doing i'm very well thank you for having me we are very pleased and we are very honored to have you in this program only two weeks exactly after your books have been released how would you should we introduce you to african viewers and readers i'm a professor of economics and public policy at stony brook university which is located on long island in the state of new york um i've been here for a few years and before that i was a faculty member at the university of missouri in kansas city i taught there for 17 years i served as the chief economist to the democrats on the u.s senate budget committee for a period of time in 2015 and part of 2016. i've been an advisor to the bernie sanders presidential campaigns and i'm currently serving as an appointee on the economic task force for the sanders biden unity task force for the biden campaign thank you very much professor kelton and we are here today with you with something new that could be summarized in three letters mmd modern monetary theories how did you shift from say so to speak ordinary economy and ordinary monetary policy to the modern monetary theory how was your journey studied economics um as an undergraduate and then i went off to graduate school i started studying economics at cambridge university and i really had a fairly conventional training in economics up until that point and then i won a fellowship through cambridge university and that took me to the levy economics institute which is a public policy institute or a think tank in upstate new york and that that's the first time i really encountered some of the kind of core ideas that became part of what now we call mmt and you know the ideas came to me um not from an economist really but from someone who had worked in financial markets and he had a different perspective he had a different way of thinking about the economy he had a different way of thinking about the monetary system and government finance and the financial operations and you know i uh encountered his work and i um initially i thought well this is so different right from everything i've been trained to think and understand about things like money and taxes and deficits and the national debt um it didn't feel right at first but there was something about it that was so compelling uh in the way that he explained his thinking and so i just started investigating on my own and eventually i managed through research and and writing to change my way of thinking about a lot of things and basically it comes down to recognizing how the monetary system changed really after 1971. so we had the bretton woods system in place which was a system of fixed exchange rates where you know 44 countries came together after world war ii and agreed to fix the value of their currencies to the u.s dollar and the u.s government for its part agreed to convert the us dollar into gold at a fixed price and that was the monetary system we had for a number of years but we don't have it anymore and so once i started to understand what that meant you know moving to a floating exchange rate a fiat currency and then thinking about what that implies in terms of how government can now orient fiscal and monetary policy to build the best domestic economy possible taking advantage full advantage of the monetary system i realized that we had been underperforming we had been running our macroeconomic policy in a lot of ways as if we were still on a gold standard and hamstrung by the old set of rules when in fact there is a great deal more that we could be doing to take fuller advantage of the monetary system to care for our communities and our people to make the kinds of investments we know we should be making and that we have the money to do that so it just involved a big shift in thinking for me in the field of economic theories what affiliation will you put yourself through people have been talking about functional finance by professor lerner and uh even canadian economy what is your affiliation who where are the former economies that you recognize are the the previous leaders in this field yeah there are so many i mean i i could give you a very long list or i could give you maybe the names of three people whose own work um is informed by the work of others before so i'll start with three and you mentioned abba learner or functional finance and and that's obviously um well or not obviously it's important in uh in mmt you know lerner was a contemporary of john maynard keynes so lerner understood as keynes did that the economy tends to operate chronically with a lack of aggregate demand with a lack of effective demand and so you always have uh unemployment that you could be tackling through government policy so uh abba lerner is one important figure um wynn godly a british economist is another important figure because wynn sort of pioneered the work in the sector financial balance approach and mmt adopts and incorporates uh godly sector financial balances which is to say that we recognize that the government deficit is mirrored by a financial surplus in some other part of the economy in the non-government sector and the last name i'll give you is hyman minsky and minsky was i think one of the most important economists of the last century probably best known for his work in um the financial instability hypothesis understanding how economies evolve and how balance sheets evolve through time and how the financial system itself becomes more fragile and subject to crises when small events happen minsky also was an advocate of something he called the employer of last resort we call a federal job guarantee so those three together godly lerner and minsky fill out a lot of but not all of mmt professor stephanie kelton mmt has been there more or less for decades but you are one of the ones who are who are reviving it these days how is it that a silence was kept on it for so long no you need people um to pay attention to you and then you need people to start writing and talking about the work that you've been doing so i think you're right that it did take a very long time to get the work out of sort of the academic journals i mean this is the usual pathway for economists is to you know perform research to write up that research in the form of uh you know academic papers to put those papers through a peer-reviewed process and you wait a period of time and they get published in a journal that's not widely available you know these things are usually by subscription only so the ideas are sort of contained in a in a small network of people who read academic journals and it's very hard to make to popularize those ideas and so while we did that work and we have you know hundreds or even maybe thousands of publications as a group of scholars um it wasn't really until journalists and people in the finance community really started paying attention to the work and then uh writing about it you know in popular forums and talking about it so i think that was sort of part of the breakthrough for us and also you know probably to some extent um my time in the senate and being involved with presidential campaign probably also helped to push the ideas forward we thank you very much for leading this mmd movement here now let us come to your book let us consider the title it's already puzzling the deficit myth in fact there are six myths and you're going after each of this myth and tackling them in a very original way and it may seem paradoxical to many of people giving the thinking that have been widespread in the population if you agree professor let us start by the first myth the first myth you say that the government budget should look like a household budget that's why people think they say you are the household balance your budget people say oh the government please balance your budget and you say no no no this is a myth it is please explain it to us and to the ordinary people finances that we're all most familiar with are our own and so when we hear somebody say that the government should manage its own budget and its own finances like a household must manage its finances we say yeah that makes sense right uh except it doesn't make sense uh the federal government in a country like the us or i say in the book like australia or canada the japan the uk these are all what we can call currency issuing governments they have a sovereign currency okay they define their own currency they call it a dollar or a yen or a pound um and then they tax and borrow only in a currency that they and only they can issue so the government in the united states of america the us government is the issuer of the dollar that means that it can never run out of money it can never have bills coming due that it can't afford to pay unlike a household right households can run out of money households can go broke households can have debt that they don't have the cash flow to be able to make the payments the federal government is different and the key distinction i make in that chapter is the distinction between the issuer of the currency and the user of the currency so i'm a currency user so i have to go out and get the dollar in order to spend the dollar the federal government is the issuer they have to spend the dollar before anybody can have the currency right so uh makes a big difference yes as you are debunking this first myth and bring us to reality how is it that such a self-evident reality has not been popular and it's not put into practice in public policy well sometimes it is put into practice but nobody explains it quite that way right like so right now congress in the u.s and governments around the world australia and the uk are committing to spending vastly more than they had originally intended to be spending in the year 2020 because of the coronavirus pandemic and the economic fallout we will come back to it later stepping up and behaving the way that i just described like a currency issuing government they aren't raising taxes in order to collect money to spend fighting the coronavirus and and helping ailing economies they're just spending the money but the the thing is that we don't normally explain it that way okay normally we pretend like the government is supposed to budget like a household and so we hear politicians talk about wanting to spend money on programs but then asking how will we pay for it and as soon as they start asking how will we pay for it they're sort of back in that household frame where they're looking for the money they're trying to raise revenue in order to be able to spend like a household would need to do there are many implications of what you've just said that since the government is a sovereign in the system of fiat currency there is the risk and this come come to your sec the second myth because there is isn't that a risk of overspending and for you there is no such risk you say deficits because in the second the second myth you are attacking is that myth that also is widespread and it's thought in economies courses it is that deficits are evidence of of overspending and you say this is a myth and you you don't agree with it and you come with a counter reality to this myth please well okay so at first i would say that there is a risk of governments overspending that can happen um but what i'm the myth that i'm um pushing back against in this chapter is the idea that a deficit itself is evidence that the government has overspent so i say that is not the case we shouldn't think like that we should recognize that evidence of overspending is inflation not a deficit itself okay we have deficits and very big ones in the u.s right now the deficit is going to be something like 4 trillion dollars this year but it's not evidence of overspending because those deficits aren't creating economic problems right they're not creating inflationary problems in the economy so those are very good deficits we those deficits are helping to support incomes and to support the economy right now in fact if anything they're probably um still quite quite a bit too small they should be bigger um so the the purpose of that chapter is to remind us that uh as long as the economy can safely handle additional spending that is you know without creating inflationary problems then the spending itself is not problematic inflation is the relevant constraint but the problem here is by this uh safely handling the spending so what how do you safely handle spending is there not a risk of overspending if there is no uh anything that will guide this spending and you yourself you're admitting that there's a problem and there is a risk of overspending it is easy to formulate it but how do you put it in practice and how will you advise policy makers in this regard okay so right now congress is passing legislation and governments around the world are passing spending bills so we've already committed here in the u.s to spending trillions of dollars we have a house and we have a senate the house has already passed another spending bill this one would be 3 trillion more dollars on top of what's been done the senate hasn't taken that up yet so it's it's being held up but let's suppose that the senate passed that bill and authorized another 3 trillion in spending my position is that right now because the u.s economy is so depressed because unemployment rate is so high because businesses are you know um struggling to find customers as the economy begins to reopen and so forth we could safely handle three trillion of additional dollars what does it mean to safely handle that spending it means that when the government spends another dollar into somebody's pocket and they have that dollar and they can go out and get a haircut or go to the grocery store or put gas in the car or you know buy a new pair of tennis shoes if the economy has the capacity to supply the food the gasoline the tennis shoes without raising prices then that is safe spending right it's only if you pass too many bills authorizing too many trillions as the economy recovers and you run out of idle capacity you run out of the ability to produce more to meet higher demand then you're going to create bottlenecks in your economy you're going to get some inflationary pressure but look every dollar that government spends is a new dollar that exists in the economy and then that dollar will travel around it will change hands it will chase after some goods and services and when the government ultimately taxes it back the dollar dies okay it's removed from the system so the question is how much can the economy keep up with in terms of producing more goods and services to satisfy demand while that dollar travels around the economy before we reach full employment and so the limit really for congress is to recognize that as the economy recovers and gets back to something that looks closer to full employment that it can stop passing additional legislation right you don't need to continue to try to stimulate the economy once the economy has recovered yes as you're speaking like that um it sounds more or less like old canadian policy of the 60s or the early 70s would you agree with such a statement well i i will agree that mmt recognizes as abalerner did that unemployment exists because of a lack of effective demand that's what keynes would have told us and that uh a way to tackle the problem is through the use of fiscal policy but look you know keynesians have by and large for the last at least two to three decades leaned in a different direction they have favored the use of monetary policy over the use of fiscal policy to try to address problems like unemployment a lack of aggregate demand in the economy and managing inflation risk and so they really would rather see the central bank deal with this problem they would agree that you know once the central bank gets interest rates very low then it's time to turn to fiscal policy to address the problems mmt is different right we don't believe that monetary policy is an effective uh reliable policy tool we would prefer to see fiscal policy primarily used to steer the economy not just in times of crisis when interest rates are low and the central bank has done about all it can but in normal times as well so mmt is not just uh standard conventional keynesian economics but in a moment like this we are we both agree keynesians and mmt economists that fiscal policy has to play a leading role let us pass to the third myth which for me was quite strange because uh the third myth according to to your book is the myth that say one way or another we all on the hook in terms of that that you have these calculations that are posted in the streets or every americans you are because of the government that your every american's calculated you have thousands of of that that you're going to pay or you're going to pass it to your the future generations and you say no professor kelton come and say no forget about all this thing this is me how will you convince people that it is a myth and that you are coming with another reality which is more in line with what a better economy should be well look i think and i say this in this chapter i think that what we have is not a debt problem or debt crisis what we have is a communications problem we should not be referring to the outstanding stock of u.s treasuries as the national debt it's just the wrong thing to label it it's the wrong description the the stockpile of treasuries that exist today the thing we call the national debt is really nothing more than part of the net us money supply okay they're interest bearing dollars that's what they are and they were put there over a period of you know our history because the government spent more dollars into the economy than it taxed back out and it allowed those dollars to be turned into u.s treasuries okay that's all that's happened so if the government has a budget deficit and it spends a hundred dollars into the economy and it only taxes ninety dollars back out it has left ten dollars somewhere in the economy okay the government's deficit makes a financial contribution to some other part of the economy now it could just leave those ten dollars sitting in somebody's hands leave them on their balance sheet but it doesn't do that it chooses to take those dollars back away from people and replace them with u.s treasuries not treasuries are interest bearing currency and that's perfectly fine thing to do it allows somebody who already had money to have more money because they get the currency plus the interest on top of it and that's a choice that the government has made we don't have to do that but there's nothing inherently risky or or dangerous about allowing a portion of the money supply to be held in interest bearing form and that's really all that's going on there's nothing to pay back later there's it's already been the spending has already been paid for it's just that we chose to pay for part of the spending with interest-bearing currency and that's really all that's happened no they are here a social problem and it is right that you started by mentioning the communication problem because of the anxiety among the people the anxiety that the media have been producing are people are very afraid oh the government deficit is too large we have every american is going to pay 50 000 of that so how do you cool down this anxiety because it is a real problem within the the society i wish i had the ability to to you know cool the national temperature and change the entire uh discourse on my own i don't but what i would uh i guess a step in the right direction is to get journalists and reporters and politicians to change the language that they use when they communicate with the population about what's really going on it would be helpful if some of our federal agencies you know if the congressional budget office which publishes the long-term budget outlook instead of you know using words like deficit and debt if they would communicate differently you know they could just as easily replace the word deficit or fiscal deficit with non-government surplus throughout the publication throughout the report and people would have a very different feeling don't use national debt use you know currency uh interest currency or part of the net money supply or you know give this thing another name um because that would go i think a long way toward helping people kind of you know reduce the level of anxiety that we create professor carlton has you assessed or you know anyway the implication in the producing power of the us dollar of mmt well i don't think there is one i mean mmt is a description of how the monetary system works and how government finance operations work right how the government spends what is the purpose of taxes what role does do bond sales play how does it work with the treasury and the fed so it's a description of the system we have so there is no inherent implication for the value of the currency the question is with that understanding of how the system works what might a future congress do now just look back in time right we had a financial crisis in 2008 congress responded um with legislation that increased the deficit we had the american recovery and reinvestment act they called it the obama stimulus and that committed a little less than a trillion dollars uh in spending and that the deficit increased but the deficit increased also because the economy was so weak right we had a very sharp downturn and the debt increased and people got very anxious at the time i said oh this is terrible this is going to require higher taxes in the future we're not going to be able to um you know fund programs and all that kind of stuff and then what happened you know the republicans get elected after president obama we have trump the republicans are in the senate they're in the house they pass huge tax cuts massively increasing deficits adding to the national debt people said oh this is terrible this means we're never going to be able to spend we won't be able to afford things in the future because the republicans just created all this you know new debt and so forth and then what happened coronavirus and congress is passing trillions of dollars of new spending so the point is we have been running deficits and some pretty big deficits in response to crises like the financial crisis and the coronavirus and also just for fun because the republicans wanted to pass tax cuts and has not let none of that has led to a sharp decline in the value of the dollar the dollar remains strong investors around the world want to hold our currency and so there is no inherent relationship between the way the government has operated its budget thus far even with some pretty big deficit spending and the implications for inflation and the value of the currency dollars remain strong as you were just answering you mentioned taxes for the first time and to what uh i feel reading your book in terms of government spending you put taxation not at the highest level as people it used to be and this is a strange and this is also part of what you call a paradigm change because ordinary people would think that it is true taxation that government should be able to to manage its business but i don't know if i heard you perfectly or when i read your book do you mean that taxation is no more is no or let it put it away it's no longer important oh no taxes are important and i i think i give at least four reasons in the book why taxes are important they're not important because the government needs our money in order to spend and that's the key point i guess in mmt is to recognize that the government is not revenue constrained it doesn't need to get dollars from the rest of us in order to have the capacity to spend its own currency that's an important point so recognizing that then the question so why does the government bother taxing it all and in the book i tell a little bit about how you could start up a currency from scratch if you if you were trying to monetize an economy that wasn't previously monetized taxes are a a pretty efficient way to go about introducing a currency for the first time so you can give value to the currency to an otherwise intrinsically worthless token simply by requiring people to pay a tax to you or other fines or fees to the government so i talk about that in the book the other important thing or another important thing taxes do is that they help to regulate inflationary pressure if the government always just spent its currency and never collected anything back again that is a recipe for disaster that is a recipe for high or even hyper inflation right you have to regulate the amount of currency that is available to chase after goods and services in the economy so when i said before that every time the government spends it gives birth to a new dollar okay a dollar is born and now that dollar is in someone's hands and it can travel around the economy and you know some government worker can use that dollar to buy groceries and then the grocer can use the dollar to pay the um the worker and then the worker can use the dollar to pay their rent and then the landlord can use the dollar to buy gasoline you see so that dollar is chasing around goods and services in the economy until the government taxes it back and then that is the death sentence for the dollar that and and so the trick is to regulate the difference between how many dollars you are spending into the economy and how many you are subtracting away through taxes so that you don't have excessive money creation and spending in the economy creating inflationary pressures net and taxes are important for distribution and for you know creating incentives and disincentives and that sort of thing as well the myth number four in this wonderful book the book titled the deficit myth modern monitoring and how to build a better economy in this book which is really we recommend it which is fantastic written very well written and we can read it and even if you're not a economist by profession it is possible for ordinary lay people to understand the fourth myth that you're tackling is this one it is a miss that also is widespread and it said that government deficit crowds out private investment and by doing that making the population poorer and you come and professor kelton comes and say no no no this is a myth so this is a reality what is the reality so look imagine that there is a pile of dollars somewhere in the world and those dollars have been put there by savers people who had dollars but didn't want to spend everything they had so they saved some and they put them in a great big pile and the story that we're told is that those savings are available to people who wish to borrow now some of the people who want to borrow our households some of the people who want to borrow our businesses some of the people who want to borrow our governments and so this myth is about telling us that if governments are running larger deficits that that requires them to borrow more and so they have to gobble up a bigger share of the available supply of dollars leaving behind fewer dollars to finance everybody else okay so now businesses don't have the financing they need to invest in new capital equipment and so forth so this myth tells us that deficits are bad because government deficits crowd out private investment they elbow the other guy out of the room and that business doesn't have access to the dollars that he needs or it needs to make investments which are assumed to be more productive than government spending so that over time you get a less dynamic slower growing economy lower productivity lower future prosperity and that sort of thing so in this chapter i just remind people that can't possibly be true because government deficits themselves don't gobble up savings in the rest of the economy they augment them they increase them remember if the government is engaged in uh running a fiscal deficit it means it's spending more dollars into the economy than it is subtracting away and that obviously means that it's adding to the number of dollars that are outside the government and once the government sells the treasuries the borrowing piece the government is just trading in those dollars that it put in the economy for treasuries after the fact so that's all that's happening there the fifth one was a surprise to me because a conventional economy thing teaches how you have to balance your trade you have to export more than you import but you come and you say that trade deficit people looking at trade offices as if america was losing is a myth also so are you against the exports and are you in favor of import or in favor of trade deficit in the us so can you please elaborate in this so again i think that this word deficit is part of the problem once you attach the word deficit to something it sounds like somebody's done something wrong right and the trade deficit the the president trump believes that the us is losing at trade and the evidence that we're losing is the fact that we have a trade deficit so he sees dollars leaving the us because we buy more goods and services from the rest of the world than they buy from us and so he pays attention to money and cash flows that's what interests him so he sees the trade deficit and he thinks that means china's taking all of our money or japan is taking all of our money and mmt says well hang on there's another way to look at this right just like there's another way to look at fiscal deficits there's another way to think about the trade deficit so the trade deficit which we tend to think of in money terms in financial terms is also in real terms our stuff surplus right so in exchange for the dollars that we pay to china or to japan um we are importing we are getting net importing the cars and the high tech and the manufactured goods right those are coming to us so in real terms imports are a benefit and exports are cost think about it you put your people in factories they work all day long they manufacture things and then they put them in a container load the container on the ship and send it to somebody else to consume the the imports are the benefit in real terms right so mmt is in a sense agnostic as to um whether the trade uh but whether the trade balance is positive or negative we just want to explain more clearly what's actually happening and recognize that not every country can be a net exporter you know for one country to have a trade surplus somebody's got to be running a trade deficit we can't all have trade surpluses and it turns out that um the u.s is has run persistent trade deficits for decades and those trade deficits are a source of dollars to many other countries in the world many of whom for whom it's a critical lifeline and i talk in the book about you know countries that don't have the same um sort of luxury or freedom that the u.s has with respect to its trade balance we can sustain trade deficits and pretty big ones uh and a lot of countries around the world can't they need to net export to earn the dollar in order to get the currency that they need to buy critical imports food medicine technologies energy that sort of thing professor carlton you said something that strikes me and somehow shocked me i want to make sure that i heard you properly have you said that imports it's a good thing and that export is about things well what i'm saying is that some countries don't have much room to choose right for a lot of developing countries they need to export they need to put their people to work making uh things that they sell to the rest of the world because they need a currency that they can use to buy critical imports so they just don't have the same freedom of choice that countries like the us for example have but it is true that um every time you build something or manufacture something a service whatever it is you provide if you don't keep it and consume it domestically uh you are releasing some real benefit to someone else in some other part of the world right your exports become benefits to the importing country that is that is true but your capacity of exporting in the long run will improve your capacity to produce different goods but if you are not able to compete and export how are you going to to improve and to enlarge your capacity of producing goods and services yeah so for a lot of countries this is a long-term development uh issue right you've got to be able to begin to transition to make the investments in the domestic economy that open up the policy space for your individual country so that you aren't reliant on the rest of the world for critical imports that's a tough thing for some countries it's going to take years or even decades to make those investments to become energy independent to become food independent right to develop so you know it's not an easy problem to solve for many countries and this is where the rest of the world can play i think an important role and i talk about this in the book in terms of providing aid and assistance and and helping developing countries because what we've ended up with is a situation where um too many developing countries just stay developing countries and they aren't able to get to the point where they become developed economies and i think there's a lot the international community can do to aid and assist countries that you know if you just leave them to their own devices will continue um you know extracting whatever natural resources they have and you know selling them to the rest of the world in exchange for a currency that just allows them to provide the bare subsistence for their populations and we'd like to see countries do much much better than that what you have just said about this uh fifth myth don't you think that is quite unique in the world to the united states given the dollar status i'm not sure that japan can do the same thing i'm not sure that germany even though they are highly industrialized country even china are you not describing something that is absolutely unique to the status of the united states and its currency the u.s dollars no i don't think so i mean i'm not suggesting that uh every country attempt to become a net importer that that's somehow the pathway to prosperity there again there are going to have to be a net export for every net exporter there's got to be a net importer on the other side of that right but with respect to mmt what i'm saying is that there are a lot of countries that have a monetary system and the fiscal capacity to run their domestic policy their monetary and fiscal policy to orient them toward generating full employment and sustaining full employment domestically while managing inflationary pressures so that's sort of the the goal of mmt is to help i guess if you want to say it this way to help as many nations as possible recognize what the fiscal capacities of their governments are for those that have limited capacity either because of the nature of their monetary system or because of you know certain domestic challenges with respect to you know what it's possible to produce and export how do we increase the degree of monetary sovereignty so that countries can be as well suited as possible to care for their people and provide full employment thank you the last the last myth this is really a big myth because they were an outcry why obama started with the obama the obamacare these entitlement programs there we have a newspaper writing article say oh no this is unsustainable uh social security deficit it is unsustainable medicare is unsustainable and you professor kelton you're coming and saying oh please cool down this is sustainable can you elaborate and explain exactly what you mean by about this six myth social security is a program that looks after the elderly right it is a retirement program but it also provides benefits to survivors of people who paid into social security and also the disabled medicare is health care uh for people 65 and older so the government is promising to do what to pay medical bills in the case of medicare and to provide um benefit payments to pay out benefits send checks to retirees their disa dependents and the disabled so in other words they're promising to spend dollars on these programs so the question then is it could there ever be a situation where these programs become unaffordable where the government can't come up with the money to pay the prescription drug bill that someone incurred on medicare or to pay for their hospitalization or their primary care could there ever be a situation where um you have a a senior right somebody who leaves the workforce reaches retirement age moves into retirement and you can't afford to provide the benefits that you've promised to that person the answer is clearly unequivocally no the federal government can always afford to meet any financial obligation it has provided that those payments are due in a currency that it and only it can create so again the u.s government can't run out of dollars it's the issuer of the currency it can always pay any bill that comes due as long as the bill is denominated in our currency we're not borrowing in a foreign currency so um you know we've been focusing on the wrong thing we can these programs are perfectly sustainable as long as there is the political will to continue to support these programs it cannot be a financial crisis it can only be about whether congress is prepared to continue to support these programs thank you professor kelton we almost at the end but let's i have some very general questions uh one sentence is your book that strikes me and which i think summarizes this book is this one and i've read that you say spending should never be constrained by some arbitrary target or any allegiance to what you say so-called sound finance would that be a good summary of your book yes i think so okay now if we look in europe in europe you may be aware of the mastery criteria regarding the target i don't know where they get the figure from they said the government debt should not be over 60 of gdp and the government deficit should not be over three percent of gdp what is your comment regarding this type of criteria well i actually wrote about this while i was finishing my phd this became part of my doctoral dissertation um i i think that if i remember correctly according to one economist they those numbers were chosen because they were historical averages so not a lot of thought went into that except to look at the numbers and say well that's about the the historical average across these countries so we'll just pick these numbers um i think they're crazy i think that it makes no sense to commit yourself to arbitrary fiscal targets one because they're depending on changing economic conditions you might well need to be running uh budget deficits that far exceed three percent of gdp or uh a debt you might need to allow the debt ratio to far exceed 60 of gdp the other thing is these aren't really why set a target that you can't hit because if the economy goes into full meltdown as it did after 2008 and as it's doing now in many countries the the ratio is going to take off on its own right because it's a debt to gdp ratio which means if the denominator gdp is collapsing the ratio is going to blow up and so you look at italy today and you can see that the italian government is on path to hit a debt to gdp ratio of 160 percent and you know it's not a manageable thing when the denominator is not under your control right and frankly neither is the the deficit so the numerator also isn't under your control so you don't want to focus on uh the numbers that fall out of the budget box at the end of each year you want to focus on numbers that matter right focus on the unemployment rate focus on real metrics you know what is the poverty rate um orient your budget to solving real problems in your economy and you would ideally want to be able to use the budget as a tool to achieve real meaningful goals right rather than to target the budget outcome itself the difficulty these countries have is obviously that they are operating with a currency that they can't issue so there are differences the subtitle of your book is quite interesting it is modern monetary theory and how to build a better economy how will you describe a better economy and how far are we from it well i mean it's easiest for me to do this a better economy so i live in the united states okay and before the coronavirus pandemic when the unemployment rate was about three and a half percent and you know donald trump would say it was the greatest economy in the history of the world no one's ever had a better economy but if you look beyond that headline number you would see that 87 million americans before the coronavirus 87 million americans either were uninsured or underinsured when it comes to health care that 500 000 americans sleep out on the streets every night that you know uh 40 percent of the population doesn't have 400 dollars set aside for an emergency that a half a million people file for bankruptcy go broke every year because of medical related debt that child poverty you know i could go on and on right that there are a lot of problems in the economy so when i say building a better economy i mean an economy that works for all of our people and doesn't just perform well for a small segment of the population at the very very top so we we have a lot of deficits and i have a chapter on this in the book called the deficits that matter we have a retirement crisis people aren't prepared to retire we have um a student debt crisis we've got 1.7 trillion dollars in outstanding student loan debt with people struggling not just to go to school but to then pay back the loans after they graduate um you know there are a lot of problems in the economy and i think that the way the book is trying to point us in the direction of setting aside the obsession with balancing the budget and getting us to focus on rebalancing a lot of inequities and plugging a lot of holes in various parts of our economy professor carton i thank you again thank you very much one last question relating to africa and to development economics you are well aware of the action of the international monetary funds of the world bank how they have been advising it what changes do you think that modern monetary theory could bring in terms of development economics and if you were to advise african governments in their path to the economic development what would you say because i do have a chapter and much of a chapter that takes up some of this but look and we talked about this a little bit already i think that you know to the extent that it's possible and it isn't always possible but to the extent that it is possible to avoid borrowing in a foreign currency i absolutely uh we in the mmt community absolutely believe that government should do everything in their power but but the world bank has been working for in the 80s and 90s to diminish the role of the the government in those countries they're laying out people the the civil servants they cut the government budget they will impose this country to help to balance the deficits and to what you call the so-called sound for sound finance that's the issue i want and you are bringing a new perspective and i think it will be interesting to the leaders in africa to hear your voice you're bringing a new perspective and authority and you're demonstrating everything you've chosen your book i want you to address please very specifically this world bank policy on imf and to give you advice sorry to have interrupted you no that's fine i i think that again it it is critically important to understand that when you go to the imf let's say and you're borrowing in foreign currency that um you can expect that loan to come with a variety of strings attached you can expect that the imf is going to ask you to do structural adjustments where that means you're going to liberalize your capital markets labor you're going to relax regulations that protect industries and people and communities in your countries that um you're gonna you know maybe um renege on commitments you've made with respect to worker pensions and and other programs that support public sector workers you're gonna lay people off so what i'm saying is it's a bad deal in many cases and to the extent that you're able to avoid placing yourself in a position where you go to the imf and then you have to accept the conditions of of the loans try to avoid going to the imf and allowing them to force that sort of those sort of structural adjustments and policies on your country it's not always possible to do that but the international community can be helpful to you in this regard and i think you know look debts that can't be paid or shouldn't be paid we shouldn't be trying to collect on them the international community can play a role here and there can be debt forgiveness and we have to begin to make i think a a concerted effort the wealthier advanced countries to help developing countries to truly develop and that means not keeping you attached to the imf and the world bank on an ongoing basis where you see them as your only lifeline and you never are able to to make the kinds of investments in your economy they're going to allow you to become a developed country how do you see mmt let's say in the coming decades and how do you see your role in it in particular in the academia and in the curriculum in the teachings of economic science well so i i obviously uh have an academic position and i get to work with graduate students and we have you know trained goodness knows how many hundreds of students who are now themselves professors of economics and chairing economics departments all across this country and beyond so it's an important um role that we play in continuing to educate the next generation of economists so that there are more people um you know in the public policy sphere and in academia who i think better understand the limits on government what governments can do how government finance works the monetary system to be able to approach uh policy making from a more functional finance as opposed to a dysfunctional sound finance approach um but also you know i have a role to play i think in terms of the public discourse and i want to continue to be able to do that and to engage with people around the world like here talking with you today um and and so i think it's critically important and the number of people who are beginning to gain a better understanding and appreciation of how it all works i think is increasing exponentially and i think that can only offer us hope in terms of where we have the potential to go as a global community in terms of addressing really um significant challenges that we're all facing you know climate change isn't is an obvious one thank you very much professor galton we very much appreciate everything with us and uh we wish you all the best and the success in the books to spread a new language a new view in terms of economics and how the government really performs to create what we all look we are looking for a better economy thank you again thank you so much nice to be with you okay [Music]