https://youtu.be/Vt-MJ8tJnXM
文字起こし today everyone I'm Eponine Bennett deputy director at the Australia Institute and welcome to our economics of a pandemic webinar series we've got started just a little bit early this morning one minute to go I think until we officially kick off just to let you all in the door so you can see how we're going and I can see our attendees climbing above 300 and climbing fast so we've got about 1500 people registered this morning to come along so thank you for joining us I'd like to start by acknowledging the traditional owners of the land on which I live and work the Australia Institute is based in Canberra and this is not a world country and I acknowledge that sovereignty was never seated and pay my respects to elder's past and present and also just remind us all that we should be doing what we can to support the calls for a voice to Parliament for treaty and agreement making process and for truth-telling about Australia's past and for those of you unfamiliar with the Australia Institute where one of the country's most leading and influential think tanks we do a lot around economics but also many other issues and we want to thank you all for coming along to these webinars we've had about 20,000 more than 20,000 people register since we began them at the start of the pandemic so thank you very much where I need to do these webinars at least once weekly but the days and times do vary so make sure that you're subscribed at our website ta org au so you don't miss out and just a few tips before we get started to help today's webinar run smoothly if you hover over the bottom of your zoom screen you should be able to see a Q and a function where you can ask questions of our panelists and you can also upload questions and make comments on other people's questions we will take questions in the second half and if you want to ask yours live to the panel you can use the raise your hand function and I'll call on e in the second half please keep things civil in the chat or we've got some staff members who will remove you and just a reminder that this discussion is being recorded and will be posted on our website and emailed to everyone who rare interested after the discussion and will also stick it on our podcast follow the money so the pandemic necessarily shut down whole sections of the Australian economy and economies around the world to protect public health necessarily so and with the cooperation and support of the Australian public this country has successfully flattened the curve and now we're opening up our economy and the government is turning its mind to how we get out of the recession well already prime minister Scott Morrison has talked about being quite extremely cautious about expenditure because we're expecting record deficits in the coming years but anyone familiar with Australian political debates over the past decades will know well we can always seem to afford tax cuts and defense spending somehow we can never afford to raise new start or to build social housing because quote we have to live within our means and to get back to a budget surplus as soon as possible it's rhetoric that the economists at the Australian Institute of long fought against and that's why we're delighted today to be speaking to Professor stephanie kelton about her new book the deficit myth modern monetary theory and how to build a better economy and she's in conversation with our chief economist at the Australia Institute and familiar to many of you Richard Denis stephanie kelton is a professor of economics and public policy at Stony Brook University she's a leading expert on modern monetary theory and she served as chief economist on the US Senate Budget Committee for the Democratic staff in 2015 as well as being a senior economic adviser to Bernie Sanders 2016 and 2020 presidential campaigns and she was recently appointed as one of eight members advising the Biden Sanders unity task force Stephanie's book the deficit myth is available in eBook format on Google Books Kindle and that book topia and on the google play app and there's some hard copies available already in demyx in Sydney and Adelaide but it will be shipping to all good book shops from the 14th of July if you would like be so good I Stephanie welcome and thank you so much for joining us today thank you both for having me it's a real pleasure to be with you so I just wanted to first of all congratulate you on the book and asked to kick us off why you thought it was time to write this book and to briefly explain for perhaps people who are aware what exactly what monetary here he is well yeah sure I mean this book has been sort of gestating in me for a very long time there is a friend of mine she actually was a presidential candidate here in the US this election cycle her name's Marianne Williamson and we had a couple of conversations and she's a very successful author and when I started talking with her about this book project and I was sort of underway at the time I remember she said to me you have to be pregnant with a book and I thought well okay I've been pregnant a really long time so you know I had to essentially figure out who I wanted to write this book for and that was a big motivation for me that I wanted a book that would be accessible to anyone that somebody didn't have to have any prior training and economics in fact it's probably helpful if you don't because there's less that you have to undo when you read the book but I really wanted something that would empower people that would allow someone to pick up this book and to get all the way through it disabused of many of the notions that we pick up along the way when we listen to our politicians talk about really important issues around public policy and especially government finance so the ways in which we are all bombarded on a near-daily basis with talk of the need to put the fiscal house in order and bring budgets into balance and the virtues of budget surpluses and the dangers of budget deficits and the national debt and you know you know as well as I do how much of this goes on and you know in my view and what MMT Economist's have working on for a long time is to help people get a clearer understanding and to sort of you know I called it the deficit myth I wish that there were just that there was just one myth that we could dispense with it and then we would be free unfortunately it's that web of entangled myths that you have to very deliberately take somebody through the thinking and the workings of the monetary system and you know how should we think about money and taxes and the deficit in the debt and once you get a better handle on these things I think the anxiety level can be reduced and so I really do look at this book as something that not just empowers people by leveling the playing field so everybody has the right I think understanding but that we can all breathe a little easier when you know we pick up the newspaper and the headline is screaming about record deficits or the the national debt or something and we can just kind of say oh I understand that in a different context so I'm not going to feel anxiety and stress about that and I actually can demand more of my politicians I can demand better public policy because I'm not going to fall for the excuse that the reason that we can't as you said top up existing programs provide more generous benefits where there always seems to be money for tax cuts and defense as you said the excuse were given is we can't do this for other government for other societal needs for the economy and so forth because we've run out of money somehow or the deficit is the reason we can't so that's the kind of short ish answer to your question about why I needed to write this book and for I guess people who perhaps haven't read the book yet or aren't familiar with modern monetary theory I was struck by your description to begin with of it as an explanation of how the economy actually works in reality well that's I think that's the goal right I mean I teach economics and I've been teaching economics for 20 years from the principal's level all the way up through the PhD macro Theory courses I have been teaching this stuff and you know if I were using textbooks that are the most widely adopted within the economics profession I would be frankly embarrassed to stand up and and present that material to my students a lot of it anyway and so yeah mmt is trying to you know have an honest reckoning with how the economy works and how the monetary system works and how government finance and budgets work and we want to paint a clear and accurate picture rather than abstracting away from things and pretending things you know work one way when we know full well that there are problems with much of the conventional thinking so we think we owe it I think I owe it to my students and I feel like if I'm going to communicate with the public about economics then I owe it to them to try to get things right and to present an honest account of how things work I'm Richard you've also taught economics over many years I'm sure a lot of those myths will be familiar to you as well how does it apply in the Australian context you know location and addition pretty much every country yeah similar there's definitely a torn economics for 20 years we all get asked the same questions all the time and modern monetary theory I think actually helps to answer simple questions quite nicely but you know for me the islands like to put things back on to the students or to the journalists or the politicians and you know the classic question that people struggle with which be interested in Stephanie's thoughts on because I think monetary theory copes with this a bit better than average but in Australia we we've been told for decades that the objective public policy is to not just balance government spending and government revenue the objective the stated goal of the government's policy is to is to have a budget surplus on average every year over the course of the business cycle the government wants to run a budget surplus now of course if we do that what it means is the government is promising to collect more in tax then it's promising to spend on health education and services so it always confuses me that conservative governments in particular make these commitments in Australia I commit to collecting more from you in tax do you come across this bizarre contradiction that the Conservatives on the one means they don't want a small government but in Australia they literally promise they can meet the taxing more than they spend absolutely I mean we haven't had a government in recent years commit to delivering a budget surplus but the last time we had federal budget surpluses in this country was when Bill Clinton was president and the federal government's budget was in surplus for four consecutive years 1998 through 2001 so what you do here in the u.s. context is our Democrats hearkening back to the Clinton years and saying man we were so good we are the true party of fiscal responsibility because the last time the government the government's budget was put right was when we were in charge you see and so if you will put us back in control of the House and Senate give us the White House we know best how to manage the nation's finances because we were the last party to deliver not just a balanced budget but budget surpluses so this Warren is sort of a badge of honor that we achieved that I say achieved in quotation marks that that the budget went into surplus in those years but you know so much here people promising to deliver a surplus again but you do hear that sort of longing sentiment for the good old times when we were in charge and the budget was where it ought ought to be you know that sort of thing so why do you think that is like why so you write it in the book about the need to be fiscally responsible but in Australia and in the u.s. conservative politicians typically write a much larger budget deficits.
and when it comes
to tax cuts and of course you know if a
tax cut causes a budget deficit the
Soviet but they're spending more on
health or education or welfare causes a
budget deficit is fiscally reckless and
irresponsible how how the Conservatives
in a way the rules it's an excellent
question in part I think it's because in
the u.s. context Democrats don't try to
get away with it they hold themselves to
a different and they think higher
standard do they say when we when we
approach the budgeting process we pay
for our priorities we pay for everything
and what that means in practice very
often is that they don't get anything
done that they can't pass their
legislation because they insist upon
picking two fights right they have to if
they want to do put more funding in
education or healthcare or whatever it
is they pair that spending proposal with
a proposal to increase tax on someone so
that it is deficit neutral so that it
doesn't add to the deficit so they say
look we'll well do make public colleges
and universities tuition-free and we'll
pay for it with this is one example of a
candidate doing this a tax on so-called
Wall Street speculation a financial
transactions tax and that will generate
enough revenue to fully cover the cost
of doing this so not only do you have to
persuade your colleagues in the house
and in the Senate to vote for your
spending priority you also have to get
them to vote for the tax increase so
that it doesn't add to the deficit
therein lies the problem you got an
awful lot of Democrats who have been
reluctant to increase
taxes and so we get nothing whereas
Republicans as you point out with
conservatives there are more than happy
to just pick one fight I just have one
battle go out and collect the votes for
the tax cuts and be done with it and
allow the deficit to increase but at
least you've accomplished your agenda
you've got your tax cuts Democrats don't
want to play like that yeah it sounds
very familiar in Australia I thought
that the right-wing ratchet when times
are good cut taxes for your friends when
times are bad cut spending on your
enemies and you know from the
conservative side of politics in
Australia works very well whenever the
economy's growing and the budget deficit
is shrinking or we get a surplus they
rush out and commit to permanent cuts in
revenue last you know often they come in
for years but last for decades but the
minute the economy slows down the minute
the deficit starts to rise they say oh
my god there's a deficit I have no
choice but to cut spending on hills
education etc I think it's one of the
most powerful parts is talking about
this idea that we have no choice
obviously you write about the fact that
when we understand that deficits the
deficits aren't the problem deficits are
a tool that we can use we can afford to
spend money on you know whatever we want
to talk about that because I think
that's one of the most exciting that one
of the most confusing things to people
about what monetary theory the idea that
we can afford to do anything but you
know there are opportunity costs a lot
of people get a bit scared hearing
someone say yeah sure so um so let's
take just the recent example right
because the Republicans did pass very
big tax cuts in the u.s. at the end of
2017 they rammed through these very big
tax cuts tax cuts for corporations and
then on the personal individual site
large tax cuts there as well and you
know a lot of people including many
economists too
advised previous Democratic
administrations said that if the
republicans are successful in passing
these tax cuts it's going to so increase
the deficit and so add to the national
debt that no future Congress will have
any fiscal capacity they won't be able
to use you know the budget to do
anything all of that is is done and you
know two years later here we are
three years later whatever it is and the
corona virus pandemic starts and what do
we see we see Congress immediately
spring into action here we've had four
major pieces of legislation passed the
biggest is was 2.2 trillion dollars
right nobody paused for a moment to
argue or fight about pay-fors or you
know where to find the money or the
impact on the deficit they simply kick
these bills through passed them they
went to the President's desk and off we
go so what's happened is that Democrats
especially have seen now oh it is quite
easy when we prioritize something we can
just move a bill and we don't have to
offset all of the spending you know we
don't have to play in our terminology a
pay go game this framework where you
can't add to the deficit so you know I'm
fortunate in that I get to interact with
members of the House and the Senate and
I what I'm hearing is encouraging in the
sense that I think you know you said a
few moments ago that Republicans have
this playbook and every single time they
run the same play when they get an
opportunity they cut taxes massively and
then when the other party is in and the
deficit begins to increase they start
cutting spending say we have to cut
spending right so the Democrats in the
US I think are increasingly coming to
the conclusion that they have been
playing Charlie Brown to Lucy in the
football for a long time and they don't
like it and they see the other guys
having a lot of fun when they have the
power you know in the House and the
Senate and they hold the White House
they get to pass their agenda and
Democrats are sitting back now and
saying you know when it's our turn we
want to do that we want to be able to
pass ledge
solution and sometimes use that fiscal
space that's available to us where we
don't have to pick the second fight we
don't necessarily have to have the tax
increase to get what we're after so did
that Richard did I get your question we
don't talk much about theory at the
Australia Institute
doesn't mean we're not informed you know
we we put ideas out there for people to
engage can be turned into legislation a
lot of ours that in recent years a lot
of our effort has been put into stopping
cuts in company taxes stopping cuts to
high-income earners
closing loopholes some people from a
modern monetary theory perspective seem
to suggest that stopping tax cuts for
wealthy people is a waste of time
you know don't you understand Richard we
don't need the money you know don't you
understand no not at all not at all I
agree with you completely
that is and absolutely not just
worthwhile but I think vital effort and
you know I'm someone who believes that
the levels of income and wealth
inequality that exists today are not
just corrosive to or disruptive and bad
for the way our economy functions but
they are a real clear and present danger
to our democracy they're corrosive to
the functioning of our democracy these
deep concentrations of wealth result in
extreme power in the political over the
political process so I think we
absolutely have to rebalance the
distribution of income and wealth a
progressive income tax
system progressive tax policies are a
good thing to pursue in and of
themselves where I think the MMT
economists and probably maybe some of
these followers that you're hearing from
where we get frustrated is with this
often with this insistence that we can't
move forward with the left foot the
spending unless the right foot moves in
tandem that we can bring the tax piece
along with every increase dollar in
proposed new spending because what that
does is it holds the progressive agenda
hostage says unless and until we get the
votes for the closing of the tax
loopholes unless and until we can raise
marginal tax rates unless and until we
can institute a well tax we can't have
these other things so we let kids go
hungry and infrastructure crumble and
and we sacrifice you know on those
priorities because we're afraid to move
forward until we get the paid for means
and often can can accomplish your goals
without that you can still fight that
fight but you don't have to win that
fight in order to achieve other
objectives yeah well I'm gonna show you
here at the Australian Institute we're
such fans of my colleague Dave
Richardson we just put this paper out
today it's called it won't hurt us and
it's it's making exactly the point
you've just made then that especially
with unemployment rising in Australia
especially the fact Australia has some
of the lowest levels of public debt in
the world some of the lowest levels
public download history here we are in
the middle of the crisis with not only
rising unemployment but but obvious
public need for a wide range of services
it's so obvious that we we have
unemployed resources that can be
employed pursuing important tasks the
only thing holding us back from matters
is fear the dead so yet can you tell us
from an immensely point of view you know
what is that and why shouldn't we be
afraid of publicly sure so you know in
the book I
a whole chapter on this and I actually
called the chapter the national debt and
then in parentheses I said that isn't
you know the national debt that it
because I really think that so much of
what's wrong with the public discourse
is the the words we've chosen to use to
describe things you know you said
earlier when the government runs a
surplus why would you go out and tell
the population my goal is to reduce your
financial well-being right to diminish
the quantity of dollars in your hands
who would do that but the word surplus
sounds good it sounds like they're doing
the right thing and the word deficit
sounds like you know you don't want to
root for your favorite sporting team and
turn on the TV and hear that you know
your team is is trailing by seven points
and unless they overcome this deficit
they're going to lose the game you know
that the deficit is is something bad you
know and so but we use that word and
with the national debt we call it the
debt and immediately we personalize it
we say well I understand that debt is
when you borrow and you have to pay it
back and I know people who take on too
much debt and then they can't pay it
back and then their credit scores go
down and then they miss payments and
then the payments get bigger right
better penalties and maybe they filed
for bankruptcy we've all seen it happen
to businesses and so forth so we think
of debt as just inherently something
dangerous and you know something that
ought to be avoided but mmtv thinks
about this differently so what we say is
let's think about what the deficit is
and then let's think about what the debt
is so the government is is running a
fiscal deficit deficit is just the
difference between two numbers right and
as you've already said Richard it's the
differences between the number of
dollars they spend into the economy and
the number of dollars they subtract away
by taxing them from us so the government
spends more dollars into the economy
than they subtract away through taxation
we label it a deficit but what we forget
is that on the other side of their
deficit lies somebody else's financial
surplus they spend a hundred in and only
subtract ninety away through taxation
somebody gets 10 so now the government's
deficit has supplied $10 to some part of
the economy someone has those $10 now
the debt comes into play because the
government chooses and that word is
really important the government chooses
to coordinate its deficit spending it
the running of a fiscal deficit with
bond sales so when the government budget
goes into deficit the government matches
it up by selling government bonds so in
my example the government deficit was 10
so now the government holds up bonds
says I have 10 bonds who wants to buy
them the money to buy the bonds the
dollars to buy the bonds was supplied by
the deficit spending itself government
put the ten in and now what it does
I mean I'll say it like this some people
may not like it but it's basically
allowing people to trade those dollars
up into a higher form interest-bearing
now you have interest-bearing dollars
that's government those are government
bonds but we call it debt and it's
really nothing more than part of the net
money supply right it's an
interest-bearing form of Australian
currency if you like it's and and it's
already been paid for
I mean the the bonds themselves are
there because the government has already
carried out the spending so you know if
I walk into a bank tomorrow and I sit
down with the loan officer and I say I'm
here to borrow some money and the loan
officer says Oh what do you want the
money for and I say oh I want to buy a
car how much do you want thirty five
thousand dollars or whatever so we have
a conversation and we see if I'm a good
credit risk and if they want to bank
wants to lend me thirty five thousand
dollars I go to the bank for the money
because I don't have the money
I go to borrow the money because I don't
have it the federal government puts the
money down on the loan officers desk and
then says can I can I borrow that money
I mean it isn't borrowing in any
meaningful sense it isn't debt in the
same way that I take on debt when I when
I borrow it's just a another way to
allow people to hold their Australian
dollars
so in Australia I think the patterns are
quite similar us you know Australia had
record for a little bit record levels in
the US so during World War two not many
politicians that I'm aware of said on I
don't think we can afford to fight this
war it's getting a bit expensive we need
to worry about future generations why
don't we just not fight the war so hard
why don't we have some austerity in
order to not just generations Australia
came out of World War two with the u.s.
came out of World War two at record
levels a bit and both in Australia in
the US and you say this and you know
it's the golden years of not just
prosperity but increasing improving the
distribution income rolling out social
infrastructure
um why just sort of changing to a
different problem why if we for example
had a war on climate change and racked
up enormous amounts of their to not
build bombs that blow things up but
build sources of energy that give us
free energy for decades to come
why do we believe that incurring such
debt to build something would have
devastating economic consequences when
history says accumulating debt to blow
things up didn't have adverse
consequences what do you think people
think when they have these I think it's
the D word I think that the idea that
you know it's the B word and it's the D
word it's the word borrowing and it's
that we are adding to something that we
call the national debt and so I think
it's very difficult to communicate with
the population to make the case that
borrowing for the purpose of investing
when we recognize that the borrowing
will increase the debt but then we have
to apologize for that and make the
argument that even though we're going to
do this thing that I know sounds very
irresponsible and it's going to increase
the debt that really
if we think about it this way and from
this angle it's not that bad because in
the past we had have large debt to GDP
ratio but we also have prosperity that's
a lot to to wrap around someone in order
to persuade them to kind of come in to
the water is find everything you know we
can we can make these investments I just
think it's cleaner I guess to just admit
that the government doesn't have to
borrow its own currency from anyone in
order to spend we could have the
government run the fiscal deficits
without adding to the debt and I really
think it's the debt peace that gives
people the anxiety because that's where
the burdening of the next generation
comes from that's where the borrowing
from China comes from if you didn't
insist on coordinating the deficit
spending with the bond sales then I
think you know that the level of anxiety
would come way down because people would
not be bombarded with these horror
stories about the national debt no look
I say also in the book that the way I
think of the the thing we call the dead
is just it's a historical record okay it
keeps track of all of the prior
instances in our nation's history where
the government contributed more dollars
to the economy than it subtracted away
it left those dollars being held by
people in the form of US Treasuries in
our case that's all it is a historical
record of all the times we added more
than we subtracted and those dollars are
sitting as part of someone's wealth
they're part of their savings they're
they're just US government bonds that's
all they are think of it as part of the
net money supply and I think we could
start to change the conversation but as
long as we keep calling it debt I don't
know I think it's an uphill battle yeah
I've never met someone with a million
dollars in government bonds that enjoy a
final question from me and then we'll
turn over to questions the audience but
you know let's imagine that Joe Biden
wins the next election and I knew with
the election
what does an immunity policy framework
look like how would the world be a
different place if if people on the
progressive side of politics words
enthusiastic about debt as people on the
conservative side of politics what what
what could we do differently what would
we do differently well I think let me
start by saying I don't consider myself
enthusiastic about debt per se I'm just
enthusiastic about making full use
taking full advantage of the monetary
system that we have and approaching the
federal budgeting process differently
from the way we approach it today I
wouldn't go in to sit down and draft a
budget which of course is a moral
document with the goal being to achieve
balance over the 10-year budgeting
horizon that's what we do today okay we
pretend when we sit and write a budget
that that's that's the end goal is to
get the thing in balance I would
approach this very differently I would
say let's have a mission oriented
budgeting let's figure out what are the
real problems in the economy that we
have the capacity to address or solve so
if child poverty bugs me and I think
that's immoral and we ought to be
working very hard to eliminate it and
drive it to zero what are the policies
that we can put into place what are the
investments we can make over time where
the goal is to get child poverty rate to
zero or poverty to zero what are the
things that we can do if our
infrastructure is currently graded a
d-plus by the American Society of Civil
Engineers what if my goal was to get it
up to a B+ or even an A how much would I
need to spend what are the investments I
need to make what about climate change
what if my goal is to get to net zero in
the timeframe that the scientists tell
us we need to move right expeditiously
to transform housing and agriculture and
the way we generate energy and and so
forth what are the and then you know
draft a budget recognize that the
constraints are in our real resources
there's an inflamed
in constraint but there's not a revenue
constraint so and addressing inequality
along the way so do things on oxide but
that just sort of I would do a lot of
things I think and they would be bold
and they would be ambitious but they
would be mission oriented the goals
would be clear so that they can be
communicated to the population people
understand why the government is putting
resources here here and here with these
goals in mind and then there's
accountability did you succeed in
bringing child poverty rates down did
America's infrastructure grade go up and
so forth do you think that the really
the purpose of the budget the budget
constraint the purpose of the fear there
is really just a way to impose
discipline on democracy that is it's a
way for people in power to you know
trick the public like children and say
no we can't afford to do that
we can't afford is obviously got nothing
to do with money or resources can't
afford is just code for I don't want to
but rather than confront democracy with
the fact that I want to spend money on
aircraft carriers and I don't want to
spend money on childcare you know it's
the purpose of really talking about debt
and deficits to just basically
discipline the public to lower their
expectations I couldn't have said that
better than you just did I think so it
is a it is a protective shield that you
know they can actually look you right in
the eyes and empathize with you they can
go in front of their constituents when
they return home to their districts and
they attend a town hall and their
constituents come and they say
congressman X and Senator why why aren't
you doing more to address this problem
in that problem in our communities and
so when they say oh I know I I would
love to be able to believe me I would
but the the debt and the deficit we got
to get this up so I think it's like you
know it works like a
get-out-of-jail-free
card for them because to the extent that
the people they're talking to don't know
better and they too are afraid of the
debt and the deficit than just offering
that excuse I would love to do it but we
got the set and people say oh yeah we do
right so we can't do anything yeah I I
know this because my kids have just
figured out that I make anybody we
should we should probably take some
questions yeah thanks so much and thanks
everyone I've got lots of questions here
and just a reminder there's a couple of
people with their hands raised and if
you would like to ask a question
directly to the panel that is definitely
the way to do that I just thought I'd
start with this question from Sean
Carroll given those last couple of
responses from me
Stephanie Sean asks is there a level of
public debt that will hurt us I support
what you are saying but is there a point
where you do have to make cuts or rain
things in question you say me
Thank You Sean let's let me put my usual
disclaimer out that selling bonds is
optional it is a choice the government
makes we do not have to continue adding
to this thing that we unfortunately call
the national debt if we don't want to
those bonds are interest-bearing assets
right so if you happen to be fortunate
enough to have some of them you're
receiving interest payments on those so
the question for me is you know while
there are a number of dynamics here with
respect to distribution equestions and
so forth but look if this stock of
financial interest bearing financial
assets is increasing over time and
interest rate rates were to increase
then the interest income that is being
paid to bondholders over time is also
increasing so then the questions for me
I guess are twofold one is do we see
public purpose served in providing
essentially
a risk-free subsidy it's these are risk
free assets but you get a reward you get
interest for holding them so do we see a
public purpose sir in continuing to
offer bonds pay interest and allow
people to earn - I say learn to receive
interest income at the risk that they
might make a lot of interest income and
then spend that money back into the
economy creating some possible
inflationary pressures so the point is
for the debt get too big and the
interest payments get too big well sure
but only in concert with all of the
other spending that's happening in the
economy so you know if there is a
long-run debt crisis or problem then
it's the result of a long-run inflation
problem if you don't see a long-run
inflation problem you don't have a
long-run get problem to worry about so
you know look at Japan close to two
hundred and fifty percent debt to GDP
ratio they can't get inflation up to one
percent they've been battling
deflationary pressures for decades so it
isn't clear to me and I don't think it's
clear to anything more that there's some
magical number out there where you know
we were supposed to be a tipping point
where you get into trouble I think it
comes down to inflation quickly for
Australia I mean you know we know that
at the moment economy shrinking we know
from our own experience sitting around
the world when governments embrace
austerity in response to a recession
they keep the economy growing and if
people worry even the Conservatives are
worried about their I usually talk about
debt to GDP ratios so I think you know
we really have to definitely see there's
no magic number where we should worry
about it but we should be even more
concerned about a shrinking economy and
just another player you know names paper
up on the website today
did what
don't have a read about the Australian
history interesting thanks Richard um
Lachlan McCall are you on the line there
hi yes I am can you guys hear me yes we
can what terrific great on thanks
everyone
so my question for Stephanie is as a
young Mt economist the most frustrating
thing I hear from critics of mmt is mmt
is a proposal to start printing money to
pay for things now as you know full well
the MMT literature and you've written a
large chunk of it Stephanie going all
the way back to the 90s says no it's a
description rather than a prescription
and it's a description of the fact that
currency issuing government's already
right now spend by creating new money at
the central bank and when they tax they
delete old money and that's even Olivier
Blanchard former chief economist to the
IMF admitted this in November and this
is the guy who pushed austerity in the
eurozone for the last decade he's hardly
a lefty the recent ahead of this the UK
central bank Mervyn King said the same
thing recently where he said mmm tea is
nothing new the way it works now is the
government decides how much it wants to
spend and the central brain central bank
prints the money why do you think so
many and I'll quickly just read you a
quote from a very prominent Australian
economist call Andrew Lee that kind of
illustrates this why does so many
mainstream economists confuse
positivists or empirical economics a
description of the existing system with
normative economics or a proposal to do
something you I'll quickly just read you
a quote from a very prominent economist
in the ALP very quickly sorry I don't
apologize he said on both sides of
politics there are those peddling false
hopes
adherence an nmt claim that the gap
between revenue and expenditure can be
bridged by printing money a strategy
they claim will have no adverse
consequences governments that have tried
to print money to cover their
liabilities have learned the hard way
that inflationary finance has limits his
so referenced there is infamous Larry
Summers Washington Post op-ed from last
year what are your thoughts okay well
let me start by saying
that I was I did part of my graduate
training at Cambridge University and in
my macro theory course we used Olivier
Blanchard's macro text as so many others
did as a graduate level text and you
know his textbook lays out the
mainstream position which presents the
argument as though governments have
choices when it comes to how to finance
their spending okay if the government
wants to spend a dollar it can either
raise taxes to get that dollar borrow
from savers to get that dollar or the
dreaded print money right Delta M change
the money supply now this is presented
as an ex ante budget constraint before
the fact if the government know so
that's in the Blanchard text right the
idea that there are three ways to pay
and when mmt shows and you're right I
did publish on this one of the earliest
papers maybe the earliest that I ever
published was walking through the actual
monetary operations to explain how
governments already actually pay for
everything and it turns out there isn't
a choice to be made there's only one way
to pay all government's spending today
already and always is carried out by the
central bank
following Congress's instructions
Congress passes a bill the bill orders
up new dollars from the central bank the
central bank carries out the payments on
behalf of Treasury by changing the
numbers in the appropriate bank accounts
and when the central bank changes the
numbers up because the government is
spending it's effectively creating new
digital dollars so a dollar is born that
begins the life cycle of the dollar the
government's own spending gives rise to
new money creation so a dollar is born
and that dollar will travel around the
economy some government worker gets paid
and then they buy some goods and
services and somebody else receives
income and and they turn around and
spend a portion of that this is the
multiplier at work and that dollar
travels around until what until we send
back a portion of those dollars to
the government in 4 in the form of tax
payments and the tax payment is the
death sentence for the dollar so you're
exactly right Lachlan that all
government spending is carried out via
new money creation and taxes
you said delete or erase and I'm saying
you know more brutally killed off or is
a death sentence so the dollars are
wiped off off of balance sheets they
cease to exist at that point so it's
frustrating because you know we think we
have the more accurate operational story
to describe how government finance
actually works and the creation and
destruction of dollars as the government
authorizes new payments and then
collects a portion in the form of taxes
but I can't answer the question as to
what motivates them to depict mmt as
saying you know we want the government
to print money I mean how else do they
think that it could possibly work the
central bank changes the numbers in the
bank account new digital dollars are
created there's there should be no
debate over that Richardson if you want
to add me anything to that I look just
quickly I think so many people carry
this sort of you know Germany printing
money and people with wheelbarrows and
inflation for any economy I think that
baggage is just sort of so deeply set in
our culture but Larry wants to people is
if you're worried the government
spending too much then wouldn't we be
seeing inflation like we're looking at
negative inflation in Australia at the
moment so yeah anyone saying what am I
think we're spending so much money
regardless of how you conceive of how
the money is created well if you've got
high unemployment and load and negative
inflation it's quite obvious that we're
not spending enough where the money
comes from was important and economists
could debate that but the if the if the
fear of the thing we're worried about is
the government spending leading for the
outbreak of inflation well we've got the
Reserve Bank telling us for years and
inflation is too low
thank you the next question is from
Lindsay Bruce and they asked I think
we've already touched on how do we get
politicians to embrace mm tea and you
know pushing back against that question
of how do we pay for it but also asks
how do we educate the public so first
you Stephanie well you could write a
book that's one of the things that I I
tried to do you know is to this is my
attempt to communicate a lot of these
ideas with you know a lay audience and
to try to make it as accessible as
possible I would love nothing more than
for somebody who reads this book to want
to pass it on to somebody else and then
to want to pass it on to somebody else
because you know that that's a big part
of I think how we begin to change the
discourse the other thing is the kind of
work that you do I mean it is vital that
you're there and you're also trying to
communicate in different ways and to
better educate the public through the
efforts of the Australian Institute we
need journalists and reporters to have a
better understanding you know very often
and I started doing this years ago
someone would reach out to me to try to
get a quote for an article or something
like that and I would end up writing a
few paragraphs for them and they would
just stick it into their piece so if you
have the time and you're willing to kind
of help them along you know they they
will improve over time they've ever
they've got to start asking better
questions and I just think it's you know
activists have a role to play you know
it's a multi-prong this isn't going to
change easily and and I think it's gonna
take a lot of us just insisting every
time somebody says are you worried about
the government deficit say why do you
want to call it a deficit we it's it's
every bit as much a surplus as it is a
deficit so you know just kind of do what
you can to flip the conversation in in
new ways give it a new perspective but
it's not easy okay
did you wanna speak to that yeah just I
mean I had some sure
Stephanie does as well but you know the
educator in me loves to try and teach
people about things and show them how
they work and and help people understand
things better but we have to admit that
most people don't understand most of the
things that they interact with it's not
just the monetary system that people
don't understand I have no idea how my
iPad really works every no idea how my
heart really works and we don't actually
ask people we don't ask them to
understand really how their car works to
use what so without in any way
suggesting that we shouldn't try and
educate ourselves about things that are
important we I think we can lower the
bar or a lot and make part of the task
is to educate people with part of the
task is to just show me that options
exist and that the people who are trying
to crush those options down and debate
they've got something to hide we don't
always have to be right and explain
everything so it's definitely said you
know in Japan said that you know 250
percent of GDP run deficits forever and
it still has very low inflation so we
don't have to explain to everyone how
everything works to be able to point to
rich successful countries and say the
things they're warning about just aren't
real they're not worried about deficits
look at trauma the coalition government
in here in Australia not really worried
about deficit give them a choice between
a tax cut and the deficit they'll take a
deficit every single time and yes we
should engage with people about the
theory and the practice of how the
monetary system works when that's the
conversation other people won but just
as part of our democratic debate we just
need to be honest and say conservatives
loved their conservatives love deficits
they've never ever said no to something
they want to spend money on because of
the debt or deficit and and they're not
mutually exclusive but depending on the
audience yeah talk to people about how
money
works but for other audiences just talk
about how politicians really bother I
just want to say I couldn't agree with
that more I think people don't have to
know how an iPad works they don't have
to know car works but they have to feel
safe using an iPad and safe getting in a
car so if you know respected public
figures are around and everybody is
saying oh that's a great reliable very
safe automobile people feel comfortable
and good but if there are you know
public faces around saying debt crisis
this and debt crisis it creates that
anxiety in people so this paper you
should hold it up again because the
title is you know that's what people
need people need to hear enough people
in positions like yours with some
authority to say hang on this is not
something you need to worry about they
don't need to go deeply investigate the
national debt but to have someone like
you
laying those fears and from a position
of authority is obviously very important
um Valerie Bob will come to you in just
a second can you hear me there yes I can
excellent and just a reminder for
everyone we will send a link around to
that paper that won't hurt us as well as
links to how you can buy Stephanie's
book when we send around the link to the
video recording of this after the
webinar is finished and I just wanted to
give a shout out to everyone we're
hovering around a thousand participants
today so a huge turnout and thank you
all for coming and for your excellent
questions Valerie what's your question
for the panelists um
ratings agencies have been de Praetorian
Guard on behalf of the new neoliberal
economists and to my mind have been used
as a sort of like a scaffolding to sort
of continuously hold up that system
despite the fact that they never saw the
subprime and that financial crisis
coming but they're still trotted out
there and our country's financial rating
how do we deal with that as part of the
the economic mess as we know it and as
you've discussed today Valerie that is
such
a cracker question and I personally
after the dance he couldn't believe that
anyone listened to any of the rating
agencies anymore but what would I know
Stephanie what's your response to that
well I it's just been flippant but
ignore them I ignore them you know you
can't first of all again I my usual
disclaimer you can't rate bonds that
don't exist so if you don't want to have
this stock outstanding stock pile of
government bonds you don't have to issue
them but if the rating agencies want to
threaten a downgrade in a credit rating
or something like that and the
government's belief is that this is
somehow going to undermine its capacity
to borrow beyond the belief wrongheaded
belief that it needs to be able to
borrow in order to cover expenditures
then you have a problem but if you're
willing to just simply ignore them and
say listen you guys did this to the US
you guys did this to Japan
you know you downgraded Japanese
government bonds to a rating below that
of Botswana so we're really not going to
take you very seriously because you know
the Japanese government is perfectly
fine you know interest rates are right
where the BOJ puts them there's no
inflation problem you can safely ignore
the chatterings
of these rating agencies when the
argument that they're making is that a
downgrade a threat of a downgrade is
related to the government's ability to
pay a if that's the argument they're
giving you you can safely ignore that
there is no possible way that the
Australian government gets into a
situation where it cannot make the
interest in principal payments on
government bonds as they come due when
those bond payments are due in a
currency that you and only you can
create okay look agree entirely and you
know when we had the same question I
think was exactly the same we just have
to ignore them you know a ratings agency
that you know talks about
palay and double-a - and all these
miniscule gradations that they come up
with when you know let's be clear there
is there's not a corporate debt a
corporate bond in Australia that is
safer than a bond issued by the
Commonwealth government not a single
bond so yeah we talk about the risk of
Commonwealth if the Australian
government can't meet its liabilities we
are so much bigger problems than the
interest bill
so yeah it's absurd I guess there's a
good analogy in there are judges who
have decided who won an Oscar and who
didn't and in recent years people have
discovered that maybe that judging
process was not really as representative
and democratic as we might have thought
well guess what the people who have
pointed themselves to judge fiscal
responsibility aren't democratically
elected they're certainly not
representative and their track record as
you said everybody is absolutely
appalling so just ignore these people
and one final question Stephanie if you
can keep your answer to under a minute I
would really appreciate it Peter Martin
asks how do you answer ecologists
claiming that mmt has the potential to
increase the consumption of natural
resources well in under a minute it's in
the book but you know yeah there it is
it's in there look I think that one of
the one of the important contributions
that we're making with respect to the
debate over the national debt is that we
don't even need to worry about the debt
to GDP ratio I think so much of the
obsession around debt is bound up I'm
sorry let me put that in different terms
so much of the growth obsession is bound
up in our obsession with debt we're
afraid of the debt and so we think that
the way to get out of trouble is to grow
our way out of trouble so growth for the
sake of growth becomes a policy goal
because if you drive the Dominator up
high enough the ratio the debt to GDP
ratio will come down so I want to pay
a lot of attention when I talked about
mission oriented budgeting I want to pay
attention not just to an inflation
constraint and say that the goal should
be to maximize the speed at which we run
our economy and use our and deplete
resources but to also recognize
ecological constraints and so forth so I
talked quite a bit about it in the book
excellent well that's a good plug there
we might wrap it up there and I will
tell people how to find it sorry done
Richard we should worry about the shape
and if we grow the parts of the economy
that destroy the natural environment
then growth will destroy the natural
environment
if we grow the parts of the economy like
they help the education if we grow then
they would have destroyed the natural
environment so we have to look at the
shape of GDP not its size and just a
very quick focus Tiffany's book really
is very easy to read my absolute
favorite quote we can't use deficits to
solve problems if we continue to think
of the deficit itself as a problem read
the book thanks Richard and thank you so
much for your time stephanie kelton we
really appreciate it and congratulations
on the book I want to thank both
Stephanie and Richard for their time
today and thanks also to the economic
Society of Australia for their
assistance and thank you to you all for
your great questions
Stephanie's book the deficit myth is
available in eBook format at Google
Books
Kindle topia and on the Google Play app
and as mentioned at the start it's
available now in some demux stores in
Sydney and Adelaide but will be widely
available in all good book shops from
the 14th of July shipping has been
delayed due to covert my cats playing up
behind me here um
please join us tomorrow if you can first
/ 17th of June at 11 a.m. when we'll be
talking to you Alan enjoy the national
president of the Australian Institute of
International Affairs and Alan beam
director of the Australia Institute in
security and international affairs
program about how misrepresenting policy
issues as security problems does not
solve
and sometimes securitization turns
problems into threats and next week on
Thursday the June the 25th at 11:00 a.m.
we'll be talking about the success of
aboriginal led health responses to the
pandemic with leslie nelson CEO of
Southwest aboriginal medical service
professor Andrew Sandra EADS Dean of
Curtin Medical School associate
professor Dan McAuley director of the
Center for improving in health services
for Aboriginal children at Edith Cowan
University and Francine EADS
chair of the Doble Aragon Health Service
they'll be in conversation with
Australian of the Year Professor Fiona
Stanley as well as Richard Dennis
that'll be next week and you can
register for both those webinars at TA
or got a you forward slash webinars
please make sure you subscribe to our
podcast follow the money you can follow
that on iTunes or wherever you normally
listen to podcasts and please stay 1.5
meters away keep watching those hands
and stay safe everyone thanks so much
sorry we didn't get to all your
questions and we hope to see you
tomorrow thanks Stephanie and Richard
thank you both very much my pleasure
英語 (自動生成)
#AskAnEconomist
The Deficit Myth | Stephanie Kelton
7,033 回視聴•2020/06/16
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Join author, academic and economist Stephanie Kelton, in conversation with the Australia Institute's chief economist Richard Denniss, for a discussion of her new book The Deficit Myth, which explains modern monetary theory (MMT) and the critical role of deficit spending.
Stephanie Kelton is a professor of economics and public policy at Stony Brook University and author of The Deficit Myth. She is a leading expert on Modern Monetary Theory and served as chief economist on the U.S. Senate Budget Committee (Democratic staff) in 2015 and as a senior economic adviser to Bernie Sanders’ 2016 and 2020 presidential campaigns.
Part of the Australia Institute's 'Economics of a Pandemic' #AskAnEconomist webinar series.
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