2012 Stephanie Kelton on Modern Monetary Theory 2012/07/08

https://youtu.be/Qnj1ofZ8S3w

https://youtu.be/1hMEcXD2IMo

MMTの理論的な丁寧な説明

0:26:00 key stroke money

0:27:35 ジンバブエ　Zimbabwe

Music] hello and welcome to this union solidarity international web conference with stephanie kelton stephanie is going to be talking about modern monetary theory mmt and how it can be used to tackle austerity welcome stephanie hi thank you very much so um just to give us some maybe give us some background about yourself you're in you're in kansas city missouri and you're at the university of missouri kansas city is that right that's right i've been there for um well since 1999 with some other scholars that walk in the same area that i work in yep okay and uh you are a leading proponent of mmt can you tell us what that is sure um mmt is really a framework for analysis it's a an emerging i guess you would say branch of macroeconomics it's an approach that brings together insights from a number of economists who are probably familiar to many in the institutionalist or post keynesian uh maybe even the marxian strand um people like haiman minsky wynne godly keynes john maynard keynes avalerner um and and a number of others but we sort of just take the what we perceive as the most important insights from a number of economists and we sort of build and layer those insights and what comes out of it is an approach that's been called not so much by us uh initially but by others as modern monetary theory okay um i am not an economist i don't know whether listeners are economists so i've read up a bit about it and it's very very interesting and my understanding is it's about how the state can control money supply is that is that correct because currently my understanding of the way new money is created it's it's by banks issuing debt and i think you're suggesting that the states can can create money is that true well it's both it's to be sure it's both banks definitely create money uh they create a different kind of money but the state certainly creates the currency as well and so what mmt does is try to focus people's attention on um the power of the state to create money the fact that money in the modern era is not inherently limited that it is a fiat currency right it's it's created by fiat modern governments create money um by spending it into existence and so they don't have to out and and get the currency get money from someone who has it in order to spend because in the modern era governments can create currency simply by spending it into existence we're not on the gold standard anymore we don't have the types of monetary systems that are described in most of the textbooks and yet we behave as if our policy choices are constrained by those old monetary systems that may have existed in the past where countries adopted gold standards and then faced constraints as a consequence in terms of how much money they could safely spend we don't have those mod anymore and it opens up a whole range of possibilities that weren't available under the old system and i think that policymakers most economists just haven't fully recognized the um significance of going off of the gold standard and moving to a pure fiat money system and because they don't recognize the significance they fail to take advantage of the possibilities the policy space that's available under the current monetary system so i i take it you're not a fan of attempting to beat a recession through austerity well i mean the the economy is driven by spending spending creates sales and sales create jobs so uh yeah i would say it's exceedingly frustrating when people talk about um adopting austerity as some sort of a strategy for achieving economic growth i mean some countries don't have a policy space that a country like the us or the uk or canada or japan has in the sense that we have these modern monetary systems that give us additional degree of freedom to work with countries in the eurozone for example because they've given up their independent countries they've limited the policy space that's available to them um and so it really does make a huge difference in terms of getting the policy right to get the growth and the employment that ultimately ought to be i'm just going to uh mute a couple of um microphones there uh that's just because um it creates a little background noise um just to say to everyone who's joined us in the past few minutes um thank you for for joining us and um you're welcome aboard if you want to ask a question you can either type it into the box and the chat the chat box um or you can click the hand icon and then you can speak the question and i'll unmute your mic i've just muted the mics now because there was a little bit of background noise and also um camera is optional but if you'd like to start your video camera so that we can all see your glorious faces there is a camera icon in the top left window so you click that and you'll see yourself and then you push the play button at the bottom of the video window and you'll be able to share the video with within with everyone else so welcome and um please ask questions um so stephanie i guess that means that europe is in trouble in terms of being limited in what it can do the uk controls its own currency and it has a bit more space as you were saying what do you think what options do you think are available for europe what what kind of situation do the eurozone countries find themselves in and yeah what can they do well it's a dire situation obviously i mean you know people are suffering tremendously and um the options that are available to the individual governments to help recover their economies is is very very limited right and um the reason it's limited is that when the economy turns down it turns down because people spend less and less spending means fewer goods and services sold and businesses need fewer workers and so they lay people off and you end up with this downward spiral if there was someone who was able to spend in the opposite direction when the private sector starts spending less you typically expect your public sector to come in and fill in that gap right provide the demand for the goods and services that help stabilize put a floor under how far incomes are allowed to fall and how high unemployment is allowed to go the problem is that all of these 17 countries that adopted the euro are in a position where they can only spend if they can get the euro so where do they get the euro they either raise euros by collecting taxes or they borrow the euro but when the economy goes into the toilet income falls and your tax receipts fall off so what does that leave you with it leaves you with if you want to increase your public sector spending you've got to borrow in order to do it problem in the eurozone is that financial markets have recognized now that governments that don't create their own currency that those that are users of the currency rather than issuers of the currency might actually not be able to get the euros that they need in order to pay the debt when the time comes and in order to compensate them for that risk of lending to a currency user they want higher and higher rates of interest the more worried they get about the size of the deficit and the size of the debt the higher the premium that they require and this makes it very difficult for a government to go out into the bond markets and borrow the money that's needed in order to allow the governments to step in and provide the fiscal spending provide the stability to put the floor under incomes and prevent the downward spiral and so your question is what can they do well there's there's not an awful lot they can do and clearly i think what they're trying to do isn't working what they're trying to do is suppress wages lay off workers uh renewed on their commitments in terms of pensions and other social safety programs increase cut incomes to the very people who typically drive the economic engine right the consumer accounts for between two thirds and seventy percent of total spending in the economy most developed economies so you don't want to pull the rug out from under the people who drive the economic bus and that's exactly what these austerity policies are doing in so many places across the euro zone and elsewhere as well so what you've got to do ultimately is get euros into the hands of the public sector or somehow into the hands of the private sector to allow them to have the capacity to spend because spending drives economic activity so where does the euro come from well at the end of the day the person with the license to create the euro is the ecb so if goal is to keep the euro eurozone intact and to keep it functioning you've got to have the ecb violate its own rules and provide the euros in some fashion to the governments that then can step in and spend the euro as necessary you could create an employment stabilization fund you could set up a job guarantee program where the ecb says we're going to fund on a permanent basis allocate euros on a per capita basis across every country in the eurozone we recognize that no matter what you do in terms of your attempt to be fiscally responsible things are always going to happen market economies fluctuate capitalist economies are dynamic they go through cycles blues and busts they're inevitable we recognize that and in order to allow you to cope with those inevitable business cycles we're going to establish a fund that you can use when the downturn inevitably comes and help you stabilize your economy that's one option the other option of course is they scrap the entire project everybody recovers their independence through regaining a sovereign currency and they run their policy in a much more responsible in fact fiscally responsible way thank you uh that's very interesting and uh a question from peter watson which is a good one i think is what is the relationship between mmt and keynesianism well i think we have to be maybe a little bit what we mean by keynesianism because of course there are different versions different varieties of keynesian economics there are post-keynesians who are much closer uh to the spirit of the general theory and following the writings of john maynard keynes and then there are keynesians that i would put in quotation marks um those that work in the more mainstream tradition the hicks is lm framework those of your listeners that know some economics know what i'm talking about um but this is what joan robinson who's probably the most famous female economist of all time these are the folks that she referred to as the bastard keynesians so they're really not terribly keynesian um but if we're talking about the post keynesians then mmt is very close i mean people like abba lerner abelerner was a contemporary of kansas and lerner's work that we appreciate i think the most is his work in the area of functional finance and what lerner explained is that governments that have control of their own currency and they don't pledge to convert that currency into something else not into gold or silver not into another country's currency it's a floating exchange rate it's a fiat currency governments that have that type of a monetary system have this policy space available to them that governments under different monetary systems don't have and so what learner proposed and keynes and learner communicate with one another and when cain's read learned to work on funnel finance he wrote to him and said i am going to go and i'm going to personal finance i'm going to attempt to get people on my side of the pond interested in what it is you're proposing here so what lerner wanted was a very simple thing he said if you are able to create the currency in an unconstrained fashion because the currency comes from you you're the issuer then you can never cry poor you can never claim to be grow you can never run out of money you can never become insolvent you never have to ask your population to share in some sacrifice and throw your hands up and say i'd love to help but there's just no money to do it okay it removes that excuse completely from the government of course there's the money to do it the question is are there the real resources to do it and if you have as we have in the u.s 25 million americans who are unemployed looking for full-time work either underemployed or unemployed they want to work and they want to work for the dollar that's what unemployment means right de facto people who want a job that pays dollars and they can't get it then you have a government who issues the dollar well it's irresponsible in learner's view it is not sound policy to deny them the opportunity to gain employment producing something useful in exchange for the dollar so um there's a lot of overlap even people like hyman minsky and wynn godly a lot of the people that we draw on heavily to develop the framework that's become known as mnt will also post keynesians of one type or another and that's really insightful and that really helps and and i guess you know i'm trying to understand a lot of what you're saying in layman's terms and i guess the way i would put it is um you have people who want to work there are things that need to be done the only thing missing from the equation is money and why have an artificial constraint on the money supply when you don't need it is that fair enough for everyone that's so much nicer that's a much nicer simpler way to say what i've i think i more clumsily said yeah what we're trying to do at union solidarity internationally is essentially challenge this idea that there is no alternative because this is the thing that's coming out of the mainstream media and the mainstream economists everyone is saying there is no alternative this is the only way things that can be things can be done what we would like to do is make people aware that there are alternatives there are plenty of rational ideas that people have that could turn the world economy around and actually change things quite dramatically for the for the better so it really helps us um to hear this and to know that there is um you know big bodies of evidence and bodies of work which demonstrate this one of the the things which um i saw recently was an article by james gilbreth saying that his answer to the recession um was raise the minimum wage dramatically and you know i can i can also imagine how that would be congruent with your own ideas particularly because people at the bottom of the the pay scales tend to spend all of their money back into the economy they're not uh you know investing and saving and all that kind of thing so the more money the more money that that stays in the productive economy the better for all of us and the current situation seems to be that surplus capital is getting sucked up into the financialized stratosphere and uh it's not doing anything it's it's a you know there's an investment strike there's this um not enough money in the productive economy and uh this idea of just getting the money out there um in fact one of the commentators in the uk was speaking about quantitative easing and said that it would probably be more effective if they printed banknotes and took them up in helicopters and just chucked them out over the over the city to give people to money to spend because the situation was they're giving money to the banks which they're not doing anything with right yeah this is um comes from milton friedman actually the idea of the helicopter drop okay we're actually hearing quite a bit about it over here as well people are saying you know the fed needs to do more defense even if it's time to start flying the helicopters and all that kind of thing well actually the fred isn't allowed most central banks i imagine wouldn't be permitted to do just that the central banks are there uh when they make a purchase they're supposed to buy financial and just becomes an asset swap the kind of helicopter job that you're describing is really a fiscal policy it's a fiscal stimulus and it's more akin to what folks in the u.s would remember happening during the bush administration george w bush when there was an economic downturn in the early part of the 2000s and they said oh my god you know the private sector is retrenching private sector's trying to pay down their debt they want to spend less that's going to slow the economy this flight economy we need to do something to counter that so we're going to put checks in the mail and we're going to send every u.s taxpayer a 300 check for a single person a 600 check for a married couple and so one day you went to the mailbox and you opened it up and there was your stimulus check okay that's accused of flying the helicopter only and you know instead of dropping it in the middle of the farm uh you actually just deliver it straight to the mailbox so yeah that's that's something that's been done before but the problem is as it was then that high debt levels in the private sector were really the underlying problem and so the private sector had taken on so much debt and was attempting to pay down that debt that when those checks arrive in the mail a very high percentage of people who receive those checks use the check to pay down existing debt which of course doesn't add anything to aggregate demand it doesn't it doesn't cause anybody's cash register to ring it doesn't make you know business sector any better but it makes the consumer feel better because they're getting their debt level down so if we were to do something like that today it's helpful because you want the private sector to deleverage you you need to help them pay down the debt because until they get their debt back down to a level where they're comfortable again where relative to their income they don't feel like they're struggling to make every payment they're not going to go out and borrow and spend on new merchandise so they've got to be permitted to de-leverage they need to be able to get the debt down certain people aren't struggling with high debt levels those people if they got a check would go out and spend it and that's where you get the stimulus that's where the benefit to the economy comes from it's not a very solution flying the helicopters i think we can do better than that but uh it would have some positive benefit to be sure thank you there's a question which has been typed into the chat box by paulo who's asking um the estimate of gdp last due to italian unemployment from 1990 to 1999 is something like [Music] thousand seven hundred billion euros is this plural plausible according to u.s data similar to the us yeah unfortunately things are bad enough that it probably is plausible and i can tell you that right now there's an economist in australia who's put together some estimates for um the u.s economy just focusing on the difference between the path that the u.s economy was on before the financial crisis let me see if you can see my hand here's the path right we were on this trajectory but because of the financial crisis we ended up down here and so the difference between the two the gap is giving up by not recovering our economy it's all of the output the income is lost as a consequence of staying below the level that we would have been producing at had we not experienced the crisis and the ensuing economic downturn and his name's bill mitchell and uh he has a very nice blog called billy blog and he does tremendous work over in australia and he's estimated that in the us right now as a consequence of not recovering the economy to the previous level that we're sacrificing the equivalent of 9.8 billion dollars every day so you know it's nearly 10 billion it's like leaving money on the table and and just walking away and it's so inefficient and it's so socially destructive um never mind just the pure economics of it you know the social consequences of um having high levels of unemployment in terms of health issues suicide divorce rates and all the accompanying um social ills that go along that it's just it's just a tragedy thank you there's a question from sean um i'm interested in mmt policy suggestions in preventing asset bubbles okay so uh on the new economic perspectives blog we have someone who writes for us and his name is uh william k black or bill black and bill black's a former financial regulator and uh i think you know in terms of just the narrow mmt work that's been done there's not a whole lot on preventing asset price bubbles but if you bring in the regular things which is why we have bill black um blogging for us and working closely with us then i think you get much closer because what you had in the case of the housing bubble in the u.s anyway was bill would say the three d's were at work d supervision deregulation and the decriminalization of you know fraud in the financial industry and so until you address those sorts of issues um that help to hyperinflate bubbles like the one that that we had in the housing sector here you're not going to do much to stop asset price inflation that really has to come from the regulatory side okay um stephanie are we going to see a kansas city school to replace the chicago school economics which has caused so much damage in the world sure we're sure trying you know i mean i think that after 15 years of developing this line of inquiry and this we've never been more optimistic than than we have been this year uh our work was finally featured in some pretty mainstream places which is you know the worst thing you can be is ignored and we were ignored for so long by the mainstream and now finally at the beginning of the year the economist magazine ran a piece where they dealt at length with mmt as an alternative school of thought the financial times has written about our work the washington post a very large future story on yes and then um somewhat oddly last month they bring up a five-page spread on bill black and umkc's economics department and mmt and so forth so from everything from the financial times to playboy magazine is is now starting to look very carefully at heterodox economics approaches because the mainstream has failed so colossally both in terms of predicting the crisis and in essentially every policy proposal that they've put forward just they just have they've got essentially nothing to offer so people the first time in a long time are beginning to look outside the narrow confines of the chicago schools and the princetons i'm glad to hear it and we we've said to people that they can ask questions on twitter as well and um and someone yeah a question just come in from alex little on twitter saying um people say printing money equals zimbabwe and or currency collapse what's your response to that well this is something that uh we've dealt with many many times because in tears the the developers of this approach we don't use the term printing money it's really an outmoded gold standard phrase we just say modern governments create money using keystrokes they spend money into existence and they do it you know something that looks like this and this is something that ben bernanke has been really clear about when uh he was asked in an interview is that taxpayer money you're spending and ben bernanke says it's not it's not taxpayer money he says when the government wants to spend we just use a keyboard and we mark up the size of the recipient's bank account that's how we spend when you pay your taxes the numbers in your account go down and they go down because of electronic transfers of funds back and forth so we don't first of all we don't use the term printing money but we know what we need right creating fiat currency spending money into existence and many many people will hear that and say wait a minute if modern governments can create money as alan greenspan said in his words without limit and you're saying the government should keep the economy operating at full employment well that's a prescription for hyperinflation and we're going to end up like zimbabwe or something not at all okay not at all and we've explained this over and over and over because it does come up so frequently so if you were to search mmt um billy blog or you know the new economic perspectives squad and hyperinflation you'd have nice lengthy statements about this but i'll give you just a short one what happened in zimbabwe was not simply that he had a government that ran the so-called printing press presses and spent too much money but that you had supply problems that constrained the available amount of goods and services relative to demand and that hyperinflated prices and so what what happened in zimbabwe of course is that mugabe comes along and redistributes the land and it's largely farming land that we're talking about and so the land is taken from the white farmers and transfer to the uh african black population who are then who then find themselves in a position where they've got all this fertile farmland but they have no idea how to farm it because they weren't that's not what they did and as a consequence the supply of food stuff went significantly down and demand didn't change but the supply fell off and so you had a real problem in terms of uh prices because the price for food just got bit up and up and up and up and the demand wasn't there because they simply didn't know how to farm the land properly so there's a lot of things going on and and it's the zimbabwe case is not a case of government simply spending too much money trying to achieve full employment mmt is very careful and abalone was very careful as well the goal is to ensure that people who want to work have an opportunity to be employed doing something necessary useful productive in the economy and if the government can because of its power to suspend money into existence ensure that the economy is is running at full employment that's responsible to run your economy beyond full employment would be irresponsible and would threaten to set off inflation and so it becomes this question of using your power to tax and spend in a way that achieves full employment doesn't push your economy to run too fast where you get inflation but also doesn't allow the economy to run too slowly where you get unemployment so sometimes um the mmt group will say fiscal policy they should be like a thermostat in your home if you have central air conditioning or heating or you get too cold you dial up the heat a bit when you get too hot you dial down a heat a bit if your economy is overheating it's time to raise taxes or cut government spending if the economy is not warm enough it's time to cut taxes or increase government spending that's responsible fiscal policy uh first-year comment which came in from benedict is zimbabwe borrowed heavily outside its own currency which was part of it part of the issue there and a question again from paulo fiscal pub compact and europa treaties forced eurozone nations to measure competitiveness only on the basis of wage wage deflation some employers welcome this how does mnt respond well i i mean this is a this is a tragedy in motion watching the european countries engage in a in a race to the bottom you know where everybody is is chasing the guy just slightly in front of them with these wage cuts and reforms and all as we talked about earlier um it's just it's the race to bangladesh is what it is and you're never going to get to a situation where every country in the eurozone can be a net exporter as if everybody improves their competitiveness so that they can export so much of the trade takes place between countries in the euro zone and everybody thinks the solution was the savior right is becoming the net exporter it's not available to everybody and it will crush the middle class and the lower classes as policy makers attempt to implement this it pushes wages down which means lower income which means less spending which means lower growth which you just end up in a terrible race to the bottom question from john i'm looking for another period of high inflation another example yeah i mean you know in the us anyway we don't it's kind of funny that you hear people uh resist mmt on the grounds that will be inflationary when we've had so little experience with inflation in the u.s now we've seen latin american countries and we're all familiar with the weimar german case but the u.s has experienced very low inflation um i mean modest rights is certainly not intolerable in any sense and the high inflation that we did have in the 70s early 80s was largely the result of shocks on the supply side which is where the inflationary problems ordinarily come from you get an oil price shot or two and those get passed along and and it becomes generalized inflation as they feed into the prices of other goods and services high interest rates under volca starting in the late 70s and into the early 80s there's a very good argument to be made and it has been made that raising interest rates to fight inflation acts inflation as the interest is a cost of production to firms that borrow to finance production you raise interest rates it raises their costs so they raise prices to cover the rising cost of production to keep their profits from falling and you end up you know chasing your tail so um most most of the experience with inflation press comes on the supply side if you look at the cpi the consumer price index and you say if my goal is to keep the cpi fairly stable what are the drivers of the cpi and it's things like energy health care and housing those are the three drivers of the cpi so if if the goal is to limit the increases in the cpi you have to think about what kind of policies you can have in place to prevent house price bubbles right to prevent rising prices in housing from driving up the cpi health care that's a huge driver of inflation and of course energy and so unless you're going to begin aggressively developing alternatives to um oil and you know look for more sustainable alternative sources of energy you're not going to do much i think in terms of controlling inflation as as it's fed through that way hi stephanie andrew here very interesting point uh i know we've had previous discussions about some of paul krugman's analysis in this matter as well when he says that the greater danger is actually deflation it's not actually inflation in the actual why germany seems so fixated about inflation when an actual fight what brought on the rise of a hitler nazism was actually the great deflation that happened in that economy at the time so that the argument about mmt and this constant carping about how the inflationary pressures that come with that are pretty much a lot of people would say and of course you would this is a known argument but people who are using it as a uh an agenda to attack the emergence of this theory probably because they're quite worried about it is the the honest truth just an interesting point obviously we're based in the uk and ireland and we've discussed some of the eurozone issues and we've discussed partly what's going on in america how do you explain the economic position of the uk government which does have a little bit more space because it's not in the eurozone and it's not in a federal you know state like america has i ie the constraints in in the uk being able to have scope to make policy decisions it's far greater for us here than it is in the eurozone so how do what is the economics from your perspective or why the uk government is pursuing the strategy of austerity that it is because the sums just don't add up this isn't about economics is it yeah i wish i could answer your question andrew because uh you have countries like the uk the u.s i'm reading something this morning about japan and they're apparently going to replicate the fiasco that we had here in the u.s a year or so ago when there were questions about whether we would raise the debt ceiling limit whether the government was going to make the payments that were coming due on uh interest payments to bondholders and payments to the elderly and disabled with you know social security and so forth and the japanese apparently now the politicians are playing the similar sort of game and the government is saying well we may not have the money to make these payments i i don't know to what extent there's just a fundamental lack of understanding and to what extent this becomes just a purely political game where you trump up a crisis you you make threats about not paying and then you get concessions from the other side that allow you to do things that you wouldn't be able to do if you didn't have you know the appearance of a crisis at hand and so you say all right we'll agree to raise the debt ceiling or we'll agree to make these payments but in return we want significant cuts to public sector programs you know what i mean so the uk the uk is like the u.s it issues the currency it can afford literally it can afford to buy anything that is for sale in british pounds that's the limit whatever people want to sell to get pounds that much british government can afford in the us we know whatever the domestic money investor will want to produce in order to get the us dollar that's the limit now it doesn't mean it doesn't know that government or our government should go out and buy everything that's for sale that's not what mte teaches what mnth is is that there is no financial constraint in place and so behaving behaving as if affordability is the issue is simply not true together because the mainstream is still very much dominant they're they're in the driver's seat and there are alternative schools of thought out there but there's also strength in numbers and so to the extent that we can come together and provide a more formidable um defense against the kinds of mistakes and policy uh errors that are coming out of the the other side i think we're stronger if we do it together having you involved in our webinar having people like janice marafakis which you also participated in and having steve keane and other individuals as part of that conversation that usi wants to help curate with individuals like yourself because the discussion that we've had thus far has been pretty illuminating and we can speak from a trade unionist perspective as a organization that's supported by trade unions the largest ones in the uk that these are some of the ideas that deserve greater oxygen and how we can through usi and other forums which you're involved in help penetrate the minds of trade union members and our progressives who will have the intellectual tools that can take on the mantra that we've been discussing today it's absolutely essential and we're very fortunate you mentioned jamie galbraith earlier and you know we have people like jamie who has a very big reputation who is well respected even by many of the folks in the mainstream but he's he's been so brave and he's put himself out there in a way that other um keynesian economist because i would call jamie much much more of a post-keynesian i mean he's not working in the islm framework he's very different from a krugman or even a brand along or some of the other names that many of your listeners may recognize uh jd is not in that macroeconomic framework where everything is an equilibrium analysis and you have uh this idea that governments are constrained financially jamie has just issued all of that and so he's really embraced a lot of the core principles of mmt and we've worked closely with jamie over the years so when he writes a piece and he titles it in defense or deficits it's a very powerful statement to be coming from someone like jamie and he's not an apologist the way so many of the others are you know i like to use the term uh i don't know if you use this in in the uk i think you probably do do you say deficit hawks and deficit doubts uh it's a phrase we've borrowed from across the atlantic that you've bestowed upon us so yeah we do we do we do use it absolutely okay so in the us you hear it all the time and the deficit hawks are you know the folks that just believe that governments should have their hands tied behind their backs that fiscal deficits are just fundamentally irresponsible that you should have balanced budget amendments you should force the government to live within its means markets will fix everything if you just leave them alone governments will only make things worse i mean the fiscal hawks are anti-deficit spending under any circumstance and then you have the sort of kinder gentler for the deficit dubs and those are people like paul krugman and brad delong and and many others and they say well it's it's true that deficits need to be brought under control and it's true that if we don't get our fiscal house in order eventually that we could face the kinds of problems that greece and other countries in eurozone are facing but the us can borrow at such low rates right now and unemployment is still a problem and so let's continue to run deficits in the short term because the recovery is fragile and we don't want to jeopardize you know a double dip recession so let's run some deficits in the short run but get our deficits under control in the medium term so that's your deficit doubt yeah and then there there's another bird that nobody ever talks about which is the deficit owl and i cleaned the term deficit owl to try to come up with you know both of these are are damaging both of those arguments the doves and the hawks both do great damage if their policies and their frameworks are qualified is someone who understands that you don't think about the government's budget position as a policy goal the government's budget position should not be the target of macroeconomic policy the target should be the real economy the level of employment or the rate of growth in the real economy that's what you target and you allow the budget to move in the way that it needs to move in order to hit a real target like the level of employment and so an owl right is a wise bird an owl can see in the dark yeah the album knows better so go back to jamie galbraith because jamie galbraith again very brave when it comes to speaking out on the deficit because it's such a an unpopular thing to say to say that deficits could actually be good could actually be beneficial and may not need to be brought under control even in the medium or longer term that is so counter to everything else that you hear that it takes a real degree of bravery to get out there and say something like that so jamie has referred to himself now in writing as a deficit owl which is is another kind of neat thing right um and he understands that the government's budget is just one budget in the economy and that you have to consider what's happening to the government's budget in the context of what's happening to the private sector's budget balance and to the rest of the world to one balance and so all of these things are at play and you wouldn't simply it wouldn't be responsible to say by the year 2016 the government's budget needs to be three percent of gdp how could you possibly know that right unless you know what the real economy is going to look like in 2016 you have absolutely no idea how big the deficit or surplus shouldn't be in 2016. you just can't make a statement like that and be reasonable about it uh stephanie i know you're under a time constraint um but raphael has just posted a long question which might be a good one to to finish on seeing as loans create deposits if the newly created deposit is used to bid up existing resources or asset prices and bubble develops as prices accelerate once the expansion of deposits is halted due to a lack of demand for new loans prices decelerate and inevitable decline if this train of thinking is correct banks be constrained in their ability to issue loans seeing as they are not reserved constrained yes banks are capital constrained but in a boom capital is abandoned whereas in advanced capital is depleted doesn't this make the boom bigger and the bus more severe as this cycle is pro-cyclical has this not also led to an increase in demand for risk-free assets including currencies that are issued by currency issuers as a result it seems that the global financial system is becoming increasingly fragmented due to the distinctions and currency characteristics between issuers and users if this is the case how can the eurozone crisis be solved without a full fiscal integration including transfers between nations or by nations leaving the euro zone in order to gain monetary independence once again the crossroads seem to clear to me yet policymakers refuse to acknowledge this you brought the last line which is can you speak to all of this oh raphael thanks raphael i'm inviting raphael to write a blog post for nep um yes i think he's characterized things exactly correctly here he ends with the question if this is the case because i'm agreeing with everything that came before this uh if this is the case how can eurozone crisis be solved without full fiscal integration including transfers between nation states this is i i think he's hit the nail on the head here and the answer is uh that it really can't it really can't you have to have that right i mean in the u.s we have countries we have individual states that receive net transfers from the rest of the fiscal union right nobody talks about the fact that west virginia is always getting a fiscal transfer from the rest of the union we don't point our finger and shame west virginia and say why are we year after year why can't you get your fiscal house in order right that's just because we're part of a union we have um the ability to transfer in from the federal level to states when they experience a crisis like the disaster that happened in mississippi and in louisiana right the levees break your towns go underwater you have hundreds of thousands of people without any place to live you know the situation is dire we declare a state of emergency we transfer funds in it's not a loan you don't offer to lend mississippi money to rebuild you simply transfer uh some us dollars there to help with the rebuilding effort and that's the kind of thing you can do when you have full fiscal union stephanie if you don't mind just to come in and i know we've had the the conversation before whereby janice farafakis for example would take a different take in that analysis but he would say fiscal transfers aren't actually needed what you need is actually targeted investment through institutions such as the european central bank and that the issue of and the european uh financial institutions that can invest directly in productive areas of the economy and people at janus for our focus and i'm hoping not doing them at this service would say that the same as mnt the issue of printing money is used to attack uh the the emergent theory about how hyperinflation can arise if you print money that he would say the same way that fiscal transfers are being used in a damaging way as well so that states such as germany you know become allergic to the fact that they might have to give a fiscal transfer to greece or to spain and his point was to say that this issue should be removed from the argument and the conversation because fiscal transfers aren't required in his analysis well i i mean if you're not going to behave like a member of a genuine union i believe like i said we don't point our finger at west virginia nobody most americans have no clue that west virginia receives transfers every year from the rest of us we just don't talk about it because we're a genuine union uh if you're not going to have that then you need what i described earlier which is instead of having this perception that one region or one nation is subsidizing the misbehavior in in the rest of the region or in some other area then it's got to be the ecb because the ecb takes all of that out what some of the mnt or this goes back to a proposal from warren mosler that he he proposed this years ago and one said look how the ecb distribute as i said before on a permanent basis this is not a temporary distribution that uh that used to spend once the economies have recovered this is simply in recognition that as i said marked economies capitalist economies will always cycle you'll have booms and busts and so you need a permanent fund of some kind to help these countries stabilize spending when the inevitable downturn comes so if the ecb makes a distribution it goes to all 17 countries it goes on a per capita basis which means journey gets the most they're the biggest so it's not a bailout it's not a reward for bad behavior it's a one-way transfer it's not a loan you accumulate the funds you can save them for a rainy day you can use them to develop industry you can use it for a full employment program whatever it is that you want to do with it every country gets it every country gets it annually and you get it on a per capita basis now lauren has said things like you can still ask countries to be mindful of the fiscal deficit and the debt level and you can set targets for those things and you can withhold payment for countries that don't bring deficits down or achieve full employment or hit other goals that you set and if the goals aren't being met then you can withhold a payment in the future but what you ought to be doing is providing that one-way transfer in recognition of the fact that the way the euro has been designed leaves countries with no viable source of finance when there's an economic downturn stephanie thank you do you have time for another question there is there's a question from paulo who wants to know why on earth does the u.s accept libel rates when federal treasury could set you as interbank rates at will what's the political factor here i don't know this is something else warren has written about it's a very good question and uh and i don't i don't know because whenever you get into the politics and we move away from the economics i become uh less less comfortable with the answer that i'm giving because i don't i don't think that i fully understand or maybe even um begin to understand the politics behind some of these things but paulo is right uh there there's no reason to uh to be accepting libor as he rightly says here so i don't know what the politics are i wish i could give a more meaningful answer paulo sorry okay stephanie we've participated in this conversation for an hour you've kindly given that time to us at usi today on behalf of walton and myself in using we really just want to thank you ever so much for spending some time with us to have a conversation about mmt and its relevance today in all areas of the world and from our trade union perspective as well i'm sure the members of our the unions who are supporting us would be fascinated about some of the things that you've had to say and we hope at usi that this is one conversation of many with you stephanie and thank you very much you're very welcome keep up the wonderful work that you're doing there it's inspiring really thanks very much bye guys bye everyone thanks for participating thank you thank you everybody for participating hope you found that fascinating and as interesting as we did thanks to you all for listening asking questions and once again thanks to stephanie have a good weekend everybody bye everybody you 英語 (自動生成) Stephanie Kelton on Modern Monetary Theory 2012/07/08 限定公開