Stephanie Kelton in Conversation - The Deficit Myth and a Green New Deal.2021/02/23
https://youtu.be/XOBbRLtAtWU 1:11:00
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the action group in adelaide along with
stephen hale it's great to have
everyone here today before we start i'd
like to acknowledge that i'm joining you
from the land of the ghana people of the
adelaide plains
and pay my respects to elders past
present and emerging
i'd also like to acknowledge the
important role played by first nations
people
all around the world in the fight for
climate justice
um i'd encourage everybody to make your
own acknowledgement
by typing the in the chat the name of
the traditional owners of the land that
you're on
and you could also put the name of the
city you're zooming in from too so that
we can see
where people are joining us from from
right around the world
um and just a quick housekeeping because
of the large number of people
we'll just be asking people to type your
questions in the chat
for this session uh thank you very much
for your patience with this
and i will hand over to stephen
thanks very much gabrielle and i'd like
to start by
thanking gabrielle and the volunteers of
the sustainable prosperity action group
for organising this event and the
australian greens
and specifically david shoebridge member
of the legislative council in new south
wales
and our own tami franks member of the
legislative council here in south
australia
for suggesting it and promoting it and
the school of economics at the
university of adelaide for supporting it
there have been so many other groups
that have been involved too i hope
people will forgive me for not
mentioning everybody on the list i
perhaps also to also
mention democrats abroad who've been
very helpful
our guest stephanie kelton is professor
of public policy and economics
at stony brook university on long island
near new york
for the benefit of any economist
listening she first came to my attention
as the author of two papers
which are among the foundation stones of
modern monetary theory
one was entitled do taxes and bonds
finance government spending
which was in the journal of economic
issues the other
was the role of the state and the
hierarchy of money which was in the
cambridge journal
of economics um you sometimes
see people online suggest that
there are not many modern monetary
theory papers
in peer-reviewed journals that's not
right that just means they've been
reading the wrong
journals if you'd like a reading list
anybody if you are an economist then
just write to me and i'd be happy to
send you one
subsequently stephanie was head of the
department of economics at the
university of missouri kansas city
and editor of the new economic
perspectives website
in recent years she has been a chief
economist on the senate budget committee
in obviously in washington dc
advised senator bernie sanders across
two presidential campaigns
being a fellow of the sanders institute
and holder of visiting professorships
at the new school for social research in
new york and university of ljubljana
prospect magazine named stephanie one of
the 50
most influential thinkers in the world
and politico
as one of the 50 people most influencing
the policy debate in america
she was in the bloomberg 50 for 2019
and in barons 100 women in finance for
2020.
best of all from my point of view she
was the 2020 visiting
jeffrey harcourt professor at the
university of adelaide
as you almost certainly know stephanie
is also the author of the deficit myth
which is a new york times bestseller the
number one selling book in the world on
economics last year
and is having a huge impact on policy
debates globally
thank you very much for joining us
stephanie
my pleasure um thank you that was uh a
bit over
overdone but thank you for that very
kind introduction and it is so nice to
be
back with the two of you gabby and
steven uh
i you know i was with you in january of
uh last year right i mean it's hard to
believe that it was
it was just last year that i was there
in adelaide with you all
and with probably many of the people who
are are joining tonight so
i'm really happy to be with you i i'm
trying to
pick up my second win because i've done
a lot of events today and it's uh
getting late here but i'm gonna
um i would be as animated as i can and i
look forward to getting into these
these questions that you know steven's
going to take us through so
thank you for you know everything that
you have done
you too and i know a number of others to
help push the ideas forward there in
australia
and to support the book and you know all
of our work in advance
uh really i think what's what's
happening is that we're
we're having a lot of success we are
changing the nature
of the policy debate and it's
it couldn't come at a more important
moment in time
so let's dive in and thank you so much
and well that's that's perfectly okay uh
a big part of changing the policy debate
has been
the book and writing academic papers is
one thing
writing a book which leads so many
people to question things they've always
taken for granted about economics is
another thing entirely what inspired you
to take the project on in the first
place
well it's about right you know it's
writing for a different audience
and communicating with other economists
is really what you're doing
largely when you're writing articles and
publishing in peer-reviewed
journals to be frank they don't get read
by all that many people
and even the most popular articles uh
and influential articles
are mostly read by other economists and
yes you can influence the policy debate
that way
but i really wanted to empower
just ordinary people you know that we
are bombarded on
a daily basis everyone here who's
joining tonight knows that
you know the the public discourse is so
broken
that when you have the president of the
united states as we had with
uh president obama literally going
before the nation
and getting a question about where all
the money is coming from to deal with
you know supporting the economy after
the last crisis after the financial
crisis
and at what point do we run out of money
when the president of the united states
says
we're out of money now right and when
the discussion is so broken that
we're wringing our hands about deficits
and what we can afford and we're drawing
the wrong lessons from the experience
you know what's unfolding in
uh in europe in greece and and so forth
i just
wanted to you know put the ideas forward
in the most
accessible way that i could um
and try to get them out there and into
the hands of
a broader population so that people can
be empowered
to both engage in the debates because
sometimes it feels overwhelming like
you know these are lofty economic
arguments and ordinary people can't
possibly
um you know take on a nobel
prize-winning economist or
senator or president you know or
journalist when they say something
but to give them uh a set of arguments
that they can use to fight back against
some of the broken thinking and so
that's
what i wanted to do with the book
absolutely yeah well
the political debate over here in
australia at the moment is between
three parties really one of which
has pivoted towards austerity already
and the second party the main opposition
party
uh is talking about for every dollar it
spends
for every extra dollar it spends in one
area of public policy
finding a dollar of saving somewhere
else and the third
party is talking about taxing
billionaires more
in order to raise money to pay for
investments in education and healthcare
what's wrong with that narrative what
are they missing
well they're the fundamental thing
they're missing i think is
chapter one of the book right chapter
one i call
uh i say don't think of a household
that's that's the title
of the chapter so i'm trying to set us
off on like getting off to a good start
putting you know getting the right foot
forward
and so getting the right foot forward in
this
context means recognizing that the
the government is just fundamentally
different from the rest of us that
governments issue the currency and the
rest of us are users of the currency
so the currency issuer can operate its
budget
different from a household right it
doesn't have to quote unquote find the
money
in order to be able to spend so this
idea that
you know deficits are inherently
irresponsible
that good stewardship of the public
finances
means matching up uh how much you take
in
and how much you spend that if you want
to spend that dollar more
then it's got to come from somewhere you
got to carve it out of some other part
of the budget as you said
or you've got to find new revenue and
so that's broken thinking right that is
thinking of the government as having
constraints
as having a budget constraint that's
sort of akin to what households face
instead of recognizing that governments
are nothing like households
and the main thing that distinguishes
them is
that they get to issue the currency they
literally get to spend
the money into existence and so we have
to think about
the limits very differently and how the
government can operate its budget so the
three
uh scenarios that you just laid out
there are
all reflective of broken thinking none
of that
shows an appreciation for what makes the
government different
from businesses or from households
it's so strange really that that that is
the narrative when you come to think of
it that
out in australia and it's it's even more
true in the us
the government budget has nearly always
been in deficit
yeah i mean i'm not going to tell you
how old i am unfortunately
you know i think it's not as old as me
i think you know it's funny um this is a
little off topic but i do notice this
weird thing
that uh you know there will be an
article written about me
that will include my age and never see
that really happen with men
with men it comes i don't see them the
age included there but it always happens
with me so i'm not going to tell you but
it's all
it's all over the place but the point is
that i think for four years
of my entire lifetime the us
government's budget
has not been in deficit right four years
uh
that that the government has either
balanced the budget or
had a budget surplus and that's what
you're saying right deficits are the
norm
it is normal for the federal
government's budget
to register a fiscal deficit nothing
inherently
problematic unusual it's a perfectly
normal thing
to uh to have happen it's been that way
almost my entire lifetime
and without the sort of you know fallout
the negative consequences that
everybody warns about you know
increasing deficits or persistent budget
deficits
result in increasing the national debt
and you
at some point you know the narratives
are always that this leads to
armageddon that there's there's there's
fallout from this it's just done it's
just not
true it's not borne out by the history
but the story
just hangs around you know well it's
such an attractive story to tell i
suppose it's so easy
for them to tell during the heat of a
election
campaign you never seem to be put under
pressure
as a result of being too much of a hawk
as far as fiscal policy
yeah right i mean you sound like the
grown-up in the room
when you stand up and give a speech and
pound your fist and
fire and brimstone about how you vote
for me
because the last party um
you know left us with these huge you
notice the language they often use
blew a hole in the budget drowning in
red ink you know
charging the national credit card
driving us into debt they always use
that
really inflammatory language so you
stand up
and you come in sounding like the sober
um statesman you say you know the the
last party
did all of these things that put us in
danger
we're at risk because of the way the
finances were managed in the past vote
for me
and i will put the budget right i will
you know protect us
from becoming like greece or you know
some
event where china turns off the spicket
and no more dollars come out and then
we're in real trouble sort of thing and
you know to the extent that people don't
know better it sounds reasonable
it sounds responsible it sounds like the
kind of thing you want to get behind
right
so you scare people and then you tell
them
to vote for you because you're the
person who will keep them out of danger
out of harm's way
so what what should a responsible fiscal
policy look like
so the the key thing is to avoid
thinking at all really about the number
that falls out of the budget box at the
end of every year
that is largely irrelevant
right it doesn't matter whether the
government's budget
ends the fiscal year with a small
surplus
a small deficit a large deficit a large
surplus a balanced budget
the right fiscal outcome is the one that
balances
broader conditions in the economy so if
you can achieve a good economy
if you can you know carry out
an agenda that allows you to
create a good economy you know high
levels of employment
good paying jobs low inflation poverty
rates are coming down your
infrastructure is being maintained if
if the things that matter are
um being realized right you're
delivering on good outcomes in the
economy
and it takes a deficit that's five
percent of gdp to get there
so what you have low inflation full
employment high wages
low poverty rate your you what
difference does it make if you can get
there with a two percent surplus
okay fine right that that is the point
that the budget outcome isn't what we
should pay attention to you're not
trying to balance the budget you're
trying to balance your economy
and you you want to stay laser focused
on those objectives right the things
that matter
and then let the number go where it
needs to go it's like
you know i have an oven in my house i
don't
choose to you know cook dinner at 300
degrees
because last night i cooked dinner at
375 i say
well i can't i have to lower the
temperature tonight because i used all
the btus that are available or something
you know
um you you can start fresh
each year and and readjust
things to just try to maintain a good
economy
so we say that every dollar the
government spends is a new dollar the
government being the
currency issuer every dollar the
government spends is a deposit the
government's making
somewhere in the monetary system in the
in the banking system
the government doesn't have to raise
taxes in order to go
and um engage in additional spending
what's the tax system there for
well you you could get me into a a
long monologue with that question
stephen as you know
um you know there's an origin story
there's a way to talk about the role of
taxes
from the beginning like if you wanted to
start a currency from scratch
the tax or something that works like a
tax is important
because you're trying to get people to
work and accept your currency
and to provide you with the stuff that
you're after so if you want a military
if you want infrastructure you want
hospitals and roads and bridges and a
standing army and all that
governments have used taxes or fees and
fines
other things to move those real
resources from the private domain
into the public domain so it's a way to
start up a currency from scratch you say
to the population
all right everybody uh you're going to
owe me
you know at the end of the month or
whatever a certain
number of units of my currency and you
don't have it
so everybody starts scrambling around to
figure out how to earn the currency that
they need in order to settle their
obligation to the state so that
tax is important in that origin story
i'm doing this quickly obviously
once you have a monetary system up and
running
then taxes are important for a lot of
other reasons like
you might think and a lot of people ask
this question well if the government can
issue the currency
why bother taxing at all why don't you
just spend
and leave the rest of us alone like cut
our taxes to zero everybody hates taxes
you'd be so popular you know if you just
eliminate taxes and just spend your
currency and
most people can figure out pretty
quickly that you're going to run into
trouble
because if all you're doing is spending
the currency and you're not subtracting
any of it away from people by taxing it
away
then you're going to very quickly
undermine the value of the currency
you're going to create an inflation
problem why would people work for
something
that's so readily available right
there's too much of it so
taxes are important because taxes are
for subtraction
so the currency is a tax credit it's
important because it takes
some purchasing power away from the rest
of us and that helps to
mitigate inflationary pressures taxes
are important because government
might care about things like
distribution income and wealth
distribution and so you might
think about changing the tax code
closing loopholes introducing a new tax
raising an existing tax
cutting attacks right because you're
trying to disincentivize or incentivize
certain behaviors you might do it
because
you want to actually alter the
distribution of wealth and income you
might
look at what's been happening over the
course of the last
100 years or so and say my god
you know we are allowing the
inequalities to become so extreme
that this is bad not just for the way
our economy works but it's bad for the
way
democracy works wealth is too
concentrated in the hands of too few
and you can you know make adjustments to
to taxes um not because you need the
revenue
not because you need the money but
because you want to deal with those
you know um inequalities you want you
want to address
the concentration of wealth and
ownership in the economy so tax are
important for a lot of things
but not for revenue it's so uh
attractive to progressives to
who want a more um
progressive tax system who want to
address the distribution issue
to frame it in terms of taxing
billionaires to pay for things isn't it
it's
it it is attractive i call it so i don't
know you've probably heard me say this
but i call it the two-inch problem
because
look robin hood we we sort of think back
uh
about robin hood and he's sort of this
hero right we think robin hood was this
guy
uh who you know took from the rich and
gave to the poor and
that's a very heroic thing so you hear a
lot of progressive politicians and
others
talk about raising taxes for the purpose
of
getting the money that you need that you
need and that word is important
in order to feed a hungry kid or repair
a crumbling
infrastructure or whatever right so
we're going to take from the rich
and we're going to heal our nation we're
going to feed people and
and better fund our schools and our
health care and all this kind of stuff
okay so what are the problems with that
well one is
that's just bad economics because that's
not how
government finance works so the story is
wrong
the other problem from well two other
problems from my perspective
you tend then only to go
after concentrations of of wealth
in a very timid way because you see you
say
well i only need 10 billion or i only
need
70. so i can do this with a very small
tax on billionaires a wealth tax
you know right we heard this from
senator elizabeth warren who i like
i'm a fan okay but when she talked about
the wealth tax
she talked about taxing um the
very wealthy people with 50 million
or more net worth net worth right 50
million
50 million or more you're free and clear
on the first 50 million
but on the 50 million and first dollar
she said
we want two cents you just chip in two
pennies
right on that next dollar and then you
keep paying two percent
on your wealth above 550 million up
until a billion and then once you hit a
billion we want one percent more
okay so three three percent on
everything over a billion and she
said they won't even feel it okay they
won't they won't even notice it she
literally made the argument
that it's such a tiny imposition on what
they have
that they won't even notice it because
wealth tends to accumulate at a
more rapid rate right so they're still
going to become richer and richer and
richer and my reaction was
well hang on okay if the purpose of the
wealth tax is
actually to aggressively get at
concentrations of wealth
then what's the point of a little bitty
old thing that
nobody hardly even knows is happening
right
and the answer is well that's the way to
pay for everything
so if you can do this you just peel off
just what you need
so that you can claim to the
congressional budget office and
and play the legislative process and you
say
well this is all i need to pay for
making public colleges and universities
tuition-free pre-k
and some student debt cancellation which
is what she wanted to do
with the well tech so i guess what i'm
saying is
if you're coming at this from an mmt
through an mmt lens and you think about
the purpose of
taxes the way that i do then
you're not thinking of the taxes the pay
for
it's not about paying for things it's
not about the revenue you're using the
tax
to achieve a different goal which is
addressing
you know deep concentrations of
inequality and then you could
make a case for something like a wealth
tax at least
in a consistent way with through an mmt
lens
and you'd presumably go much higher
because you're not worried about
the pay for it's not motivated by that
yeah we say don't we the federal
governments in
monetary systems like australia's or in
the us
have no purely financial constraint on
their spending but
we are not implying that there are no
constraints at all
[Music]
right right so exactly and in fact
that's really
in many ways kind of the core you're
taking us right to the core of mmt
so you know i will sometimes say that
if if i'm pressed to describe mmt in a
sentence like give me the sound bite
uh mmt is about replacing
an artificial fake phony
imaginary budget constrained with a real
resource constraint an inflation
constraint
so is there a limit yes is it the limit
that almost everyone wants us to believe
that is that the government can run out
of money like obama said become like
greece have bills you can't afford to
pay go broke and bankrupt the nation and
so forth
no that is not the punishment for
overspending the punishment for
overspending
is inflation so there is a limit
the limit is how many dollars can safely
be spent
into the economy before the economy
runs out of capacity to meet that
spending that higher demand with more
supply
and remember you know government
spending
isn't the only kind of spending you have
to worry about
government doesn't do the majority of
the spending in the economy the private
sector does specifically the household
sector they normally account for about
70 percent of total spending
so the government has to share spending
space
with everybody else who wants to spend
into the economy there's only so much
space available and the government has
to respect
the the total limit right the capacity
limit for the economy so
yes there's a limit and um we are
nowhere close to it
in a pandemic depressed economy with
unemployment that's very elevated but
um if you push things far enough you
will
approach that limit
we often say that it's just a matter of
accounting that sexual balances have to
come to zero
in the monetary system and you put it in
a rather more accessible way you say
their red ink is our black ink that's
one of the
that's what the title of one of the
chapters of your book
um what do you mean by that
well so you use the phrase red ink in
australia yeah you know because
when i was doing the book and writing
the chapters i remember
asking as i would do presentations you
know in the uk
before the book came out and i was using
you know the public person red ink and
so forth
and that wasn't necessarily a common
turn of phrase there so
okay so you use ready so the title of
the chapter
their red ink is our black ink so what
does that mean
well it means that the government
deficit
is just the difference between two
numbers that's literally
all it is we have this visceral reaction
we've been conditioned to
you know hear the word government
deficit and think whoa
something bad is happening no nothing
bad is happening
the deficit is just the difference
between two numbers so what are these
numbers
the first number is how many dollars the
government spends into the economy
each year and the other number is how
many they subtract back out
mostly through taxation so in the book i
stick with the same example
which is suppose the government spends a
hundred dollars into the economy
and it only taxes 90 away from people in
the economy taxes 90 back out
we label that a government deficit so we
write minus 10
on the government's ledger we say oh
they're swimming in red ink
right this deficit what we forget to do
is pay attention
to the math which says if they put a
hundred in and only take 90 out
they're depositing ten dollars right
their deficit
is our financial surplus their red ink
is our black ink
their deficit is nothing more than a
financial contribution
they're making a deposit into some other
part of the economy so that's why i say
every deficit is good for someone every
government deficit is good for someone
because on the other side of that red
ink
is somebody else's surplus financial
surplus
so the question should never be you know
is it should should the government be in
deficit
the question is really you know deficits
for whom and for what
i mean it's just that simple every
deficit is good for someone
you reminded me of a cartoon you used in
the lecture you did here
when you were the harcourt professor of
our treasurer josh freidenberger's cupid
firing firing dollars into the private
sector
it was supposed to refer to there being
an imminent budget surplus
and they're not so confused
wasn't there you're gonna get me i'm
tired i'll make a bad joke or something
but
you're making me think of like a double
07 movie there was something like from
russia with love or something
well there's the cupid right it's um
where our deficits come to you with love
sort of thing yeah it's a i'm i'm
shooting
sometimes i say a deficit a government
deficit works like a blower
right it blows financial assets
onto the balance sheets of people
outside the government sector
a government surplus works like a vacuum
it
hoovers financial assets off of the
balance sheets off of the ledgers of
people
in the non-government part of the
economy so we have this idea that
a government surplus that is the real
thing to achieve that is the the badge
of
fiscal uh responsibility if the
government can achieve a surplus man
that's showing you you know how to run
the budget
but when the government is running a
surplus it is
reducing the financial assets from
the rest of the economy so it is
literally like
hoovering up uh dollars from the rest of
us
in order to put their budget in the
black everybody else
has to be driven into the red yeah it's
weakening private sector balance sheets
it either drives the economy into a
recession or it drives
uh the private sector further into debt
which is what of course happened here
during the howard government years when
the government ran surpluses eight years
out of ten
unless unless you happen to be
in a situation where the rest of the
world is blowing
dollars onto your balance sheet and you
can do that through a current account
surplus or
we could loosely call it a trade surplus
so it's not necessarily the case that a
government surplus
dooms the private sector because the
private sector can be
kept in good uh financial shape
if the rest of the world is supplying
the financial assets that keep the
private sector but somebody somewhere
else has to be running a deficit there
you go
yep that's right everybody can't be in
surplus at the same time
now when you explain all these things to
people and i often say
why would you want a government surplus
unless you actually
need to have one it means they're taking
more dollars off you than they're giving
to you
doesn't sound like a good thing in
itself
people talk about growing uh government
debt and increasing
national debt and uh recently a couple
of times i've had people say
our national debt in australia is over
800 billion dollars now it's heading
towards a trillion dollars
isn't this going to lead to a crisis
isn't it something we should be
concerned about
should it concern us well no i mean
again with the mmt lens in place
what should concern you are you know
high levels of inflation high levels of
unemployment
when i say that the goal should be a
broadly balanced economy
that's what i'm talking about i'm saying
you know if you can get the unemployment
rate down
without triggering
inflation you know that you consider
excessive
and you can manage the inflationary
pressure and get the economy to full
employment and we could talk about how
to
truly achieve full employment then no
well you know that again the deficit the
difference between two numbers right
so you spend 100 in you tax 90 out
you've deposited 10.
what happens as this is occurring is
that the government is
matching up its deficit spending by
selling
government bonds so that ten dollar
deposit
is immediately transformed into
a government bond let's call it a ten
dollar government bond
so that's somebody's financial assets
part of their savings part of their
wealth
so when people look at you know the
government's finances
and use language that you would use to
describe
households finances then you start
describing this as borrowing
and you start using the word debt to
describe what's happening
i don't look at it that way at all i
think that you know
using the word borrowing is misleading i
think the word
debt is misleading when we talk about
what the government is doing
if i borrow money i borrow money because
i don't have it
right so i go to a bank i sit down with
a loan officer
i say i'm here to borrow money and the
loan officer says what do you want to
borrow money for
and i say i want to buy a car or start a
you know expand my small business or
whatever and maybe i'm granted a loan
now i have debt okay i have to repay
that
with money that i got to come up with
from somewhere right
the federal government's different when
the government runs a deficit
it puts 100 in subtracts 90 leaves 10
and then comes along and says well i
want to sell these government bonds who
wants to buy them
and sure enough there's ten dollars
that's been made available
that gets turned into ten dollars worth
of government bonds
so it's not like when i borrow right i
didn't walk into the
bank and put the money down in front of
the loan officer and then
ask the loan officer to lend me that
money
that's what the government does their
spending
supplies the dollars that are then
available to buy the government bonds
i think the word borrowing is misleading
i think the word debt
is misleading those bonds are just
another monetary instrument there's
another thing that government issues
it's it's interest bearing
so the government is choosing it's a
voluntary thing right the
a currency issuing government never has
to borrow its own currency from anyone
never has to do that this is an optional
thing that they do
and it you might think it's a nice thing
i mean we could debate that but you
might think oh
you get to give up your currency and
hold a risk-free asset
and you get a reward risk-free reward
wow that's kind of nice right so this is
an
instrument that is interest bearing very
safe
and it provides a risk-free subsidy
to the bondholder so
you can you know we suggest that we
really should be thinking of the
outstanding total stock of government
securities
bonds as just part of the broader money
supply
not use that word debt to describe what
it is it's really just
an interest bearing form of currency
absolutely and that the pros the pros
and cons of uh issuing bonds could get
us on to a
quite another long right notion but
it is a choice uh governments like the
us government and the australian
government are not forced
to issue treasury bonds at all where
there are
uh regulations or practices in place
which which
encourage bond issuance at the moment
they could be changed
they're not fundamental to the monetary
system
no they are an instrument that allows
governments
to support interest rates at
positive levels right you can maintain
and manage interest rates
but there are other ways to do that
absolutely
um people sometimes confuse mmt
i don't know whether deliberately or not
i'm journalists
for example with quantitative easing
when it's got nothing really to do
with quantitative easing and there's a
question
from a member of the public from uh uh
peter holding
which uh kind of relates to this he says
that alan kohler
the uh famous financial journalist in
australia and somebody who definitely
understands mmt thoroughly called on the
reserve bank to
buy up all the government's debt and
just write it off recently
would this change anything significant
and is it a worthwhile suggestion
and they are buying up they bought up an
eighth of the government's debt
over the last year as a result
the the fed is buying 120 billion a
month
right um so but the thing
is when the central bank buys the bonds
the treasury is still continuing to make
the payments
so every government budget includes that
line
item that says interest on the public
debt
people in the media often call it the
debt burden or the debt service burden
so that language is problematic right
when i worked in the senate uh i don't
know
how many times i heard u.s senators
say they look at that number and they
see
400 billion or 350 billion
as the line item in the budget called
interest expenditure right
interest on the debt and they go oh my
god we're spending we're on track to
spend
more on interest than we spend on the
military if you project out you know
some number of years
and they would just it would blow their
minds and
you know i would i would point out that
well there are a couple of ways to deal
with that
right one is you don't have to issue the
bonds at all
and as as all the bonds matured that
line item would just disappear
if you don't like the number being as
large as it is you could always cap
interest rates we did it before the fed
has done it before
the bank of japan is pinning the 10-year
on japanese government bonds at zero
because the
the boj says we're going to keep it at
zero we're doing something similar to
that here now
okay once they're pinned at 0.1
so but i guess the point is as long as
they still
sit on the balance sheet and this gets
to the question about writing them off
um we would say mmt economist would say
once the central bank buys the bonds
it's as if the treasury never issued
them in the first place
in the sense that the treasury will make
the payments
the central bank remits the profits back
to treasury at the end of the year so
it's like a left pocket right pocket
thing
the problem with that is that everyone
still sees the line item in the budget
the interest expense
and it's still there right people still
see it so
this question uh is about whether there
would be advantages
to having it not still be there to
actually writing it off once the central
bank buys it
just make it disappear from the whole
you know accounting uh and and dispense
with the exercise where you pay the
interest
and you pay back the principal at
maturity and then it goes you know
um politically yes there would be
uh probably advantages to doing that we
have a debt ceiling limit
and the bonds that are held by the fed
are counted as part of
the public debt and subject to the debts
it's like crazy
you know so yeah there are
advantages to i i suppose doing it that
way
you see that with a negative capital
position on the central bank's balance
sheet but that really doesn't matter
no i mean again it's the politics
right you only have to deal with the
politics the economics are fine
um maybe we'll move on to
luke heffernan's question luke asks
whether the deficit myth
has got anything to say about nations
without a sovereign currency
yes um uh there's a whole chapter
that deals with uh you know it's
it's the open economy or the trade
chapter and so
the answer to the short answer the
question is yes and the long answer
could go on for a long time
but uh you know the answer is yes
i don't know how much it explains why
countries like greece or
italy can get into difficulties as far
as
financing fiscal deficits are concerned
yeah i mean the the point is to
to emphasize that countries that have
a particular set of arrangements
that you know the country has a monetary
system in place
where the government issues the currency
the currency
is a floating exchange rate where the
government doesn't promise to convert
its currency into something it could run
out of
so you're not on a gold standard where
you're promising to convert your
currency on demand into gold
you're not on a fixed exchange rate
where you know you're russia
in the mid 90s and you promised to
convert rubles into dollars at a fixed
price you're
you're on a floating fiat currency
system you're the issue of the currency
you're not borrowing in currencies that
you don't control
so you're if you're um you know the u.s
you're not borrowing in foreign
currencies
if you're um argentina or russia and you
start borrowing
venezuela you start borrowing in u.s
dollars heavily
then you're talking about a totally
different animal right and the
constraints on
government finance are different you're
mentioning greece and countries that
um are part of the emu those countries
gave up their sovereign currencies
they gave them up they abandoned them
and they adopted
a a common currency the euro which
these individual countries cannot issue
so
there are different constraints we all
saw that play out in 2010
when the debt crisis gripped countries
like greece and
portugal italy spain uh ireland and
and so we know what can happen when a
country has
debt that it literally can't afford to
service right it's got to go out and
it's got to borrow
the currency because it doesn't issue it
it goes to capital markets capital
markets are lending to
governments that don't issue the
currency so they perceive rightly
that there is default risk involved that
this country might not be able to
pay you back so they want a premium to
compensate them for the added risk
associated with lending
to currency issuing governments and at
one point you know in the 2010 era
interest rates just completely blew out
and you had a full-blown debt crisis
notice that that didn't happen in the uk
didn't happen to japan it didn't happen
in the u.s
didn't happen to australia you know we
are all operating
our governments operate with a sovereign
currency we can manage our interest
rates
we don't have to borrow in the first
place borrowing is optional
yeah greece doesn't have that option and
it's it's worth pointing out that your
one-time colleague win godley
warned the architects of the eurozone
about the potential for a crisis like
this in in the early 90s
when they were opening system up i
was so fortunate as were some of the
other mmt economists
to um to meet and work alongside wynn
and he actually you know served on my
doctoral dissertation committee and
you know truth be told he he kind of was
my dissertation advisor in in all but
name
um wynn was brilliant a british
economist who
um spent many years as really
forecasting the british economy and i
think
you know had earned a reputation of of
being just about the best there ever was
in terms of you know his ability to
accurately
see where where things were headed you
know well ahead of the rest of the pack
so you're quite right the euro was
introduced in january of 1999
officially became a currency
but you know people understood for years
ahead of that
that this was the direction that many
european countries were heading
and you know the maastricht treaty and
the um
you know uh um
i don't know what to call them the laws
that were shaping
up were leading in that direction and as
early as 1992
win was writing and saying uh oh
you folks are you're putting in place a
blueprint that is going to lead to
trouble
down the road because you're proposing
to do something
that really hasn't been done before in a
sense you are divorcing
monetary policy and fiscal policy in a
way that is going to leave you
vulnerable
to economic downturns and unable to act
when a crisis comes and you're not going
to be able to use fiscal policy and
you're going to have face debt crises
and all this
and when could you see it plain as day
it was so
crystal clear to him that when you give
up your currency
you're giving up a lot more than just
the ability
to depreciate your currency to try to
improve the
you know terms of trade and and so forth
that you were really compromising
your ability to stabilize your economy
in
times of crisis and he meant
specifically fiscal policy
so when wynn had it all figured out as
early as 1992
and because i was working with him um
you know in the late 90s but before the
euro became
official uh currency i i was lucky
enough to be influenced by his thinking
and to not
fall into the crowd that was
cheerleading
this um you know currency arrangement
because i could see
what he saw which was basically a design
flaw in the blueprint
yeah i recommend anyone who hasn't read
it uh look up wynn godly's
article maastricht and all that um which
also had one
called curry emu
the first one was maastricht yeah yeah
both of them are terrific yeah yeah
absolutely they are well i mustn't uh
finish our conversation
finish our conversation before asking
you about the job guarantee
there's renewed discussion of a job
guarantee in the us i've got the
resolution of
congresswoman anna presley in front of
me which looks as though it's very much
inspired by modern monetary theory
and you've been one of the main
advocates alongside
pavlina cheneva and in australia
professor william
mitchell as well of a federal job
guarantee for many years
would you care to explain why it would
be such a progressive measure
yeah i mean so we have this
incredible member of congress and you
just mentioned her
congresswoman ayanna pressley and
she just in the past you know few days i
think
friday of last week if i'm not mistaken
uh
formerly introduced a a resolution
in congress now that's different from a
bill it's it's not a formal piece of
legislation or i mean
a bill but it is a resolution and
she is getting it on the table and she
has come out
in favor of a federally funded
basically a public option in the labor
market right a federal job guarantee
where anyone who wants to work
wants a job and cannot find one anywhere
else in the economy
has a right right to a good
paying job right a job that pays
well we can debate 15 an hour
but a living wage job and benefits so a
wage and benefit
package that you always have
as an alternative to unemployment
so you know i saw today and i i was
pretty busy and i didn't really get a
chance to watch the whole thing but
i saw that the daughter of martin luther
king jr and coretta scott king
was retweeting and sharing a video that
congresswoman uh
presley put out where in her own words
you know
she's laying out the answer to your
question which is what makes this such a
progressive
policy and so for people who maybe
haven't seen that yet you know go
find her twitter feed and watch this
incredible video i think it's about
three minutes long
but it's that arc of history you know
that martin luther king jr talked about
that that bends toward justice and this
resolution is her effort to
bend that arc toward justice so that you
know
people who have nothing who have no
entry point in
no way to support themselves no way to
to get a job and and to survive
uh always have the security of knowing
that whatever else happens in their
lives you know
you have a right at the end of the day
to
a job that pays a decent wage and comes
with benefits
and that's a very different answer than
you know the kind of answer
that a you know buttoned-up economist
might give about
the benefits of a program like this just
you know in terms of efficiency
making the labor market more liquid
allowing workers to transition
in and out of this program as some way
of
better stabilizing the economic system
which it has those benefits as well
but there's also really important human
and moral
side of um the job guarantee and that's
that's certainly what uh congresswoman
presley
is leading with and it's what we are
campaigning for
including our sustainable prosperity
action group
in australia and greens and members of
the labour party right the way across
the country
as well and that stephanie covers the
federal job guarantee
um proposal and its role as a
counter-cyclical stabilizer in modern
monetary theory
in her book and i also recommend pavlina
schneider's
book the case for a job guarantee which
is a great read as well and uh goes into
some of these issues in
in a lot more detail too oh yeah
probably almost any question that you
you or the people joining
would have about how the program would
work and the benefits
you will find in her book and she also
has a website where she
um has created a nice faq frequently
asked questions
and that that is just really sharp
because just any question that pops into
your head i'll bet you
uh she's got it there and and she's got
an answer
to it so and pavlina was involved in a
successful
job guarantee style scheme in argentina
in the mid
2000s wasn't she which they should never
have
removed actually she left it in place
yeah
pavlina and matt forstadter
who is a fellow mmt economist and a
professor at the university of missouri
in kansas city
um i think both of them worked with
someone in the argentinian government in
the
ministry of labor to design and
implement
a version of a job guarantee program
that was for that was extremely
meaningful and successful to
people who were able to take advantage
of it while it existed
yeah i recommend reading about clan
heifers in the book
i might end my um section
of uh the event this evening just by
asking another question from a member of
the public from neil halliday
he points out that our central bank
governor philip lowe recently said
at a national press club event we don't
do mmt in australia
uh was he right
and how can we change his mind how can
we change his attitude
well okay so on valentine's day
i tweeted you know that everybody does
this every valentine's day the roses or
red violets are blue and then you finish
this
phrase i think i tweeted roses are red
violets are blue
mmt is a lens not something you do so
you know is he right no um because if
he's under the impression that mmt is
something you do
and he's not doing it then he already is
revealing that he doesn't understand
what mmt actually is it's a description
and i hate to break the news but we're
providing
an accurate description of what he
actually does
right what the central bank does the
mechanics of government finance
how the monetary system works and the
mechanics of government finance
and we're just trying to tell the truth
to people about
the nature of it all and how it works
and
you know central bankers like to be
shrouded in
this sort of veil of you know secrecy
and it's all supposed to be sort of
mysterious and we don't do that and we
don't
uh but frankly we're just
telling the people how it works so
yeah he's mistaken and they really
should know better because his deputy
was at a talk you gave in
in sydney last year guy de bell
yeah you said that i mean i think i sat
next to him
and we probably had some small talk and
i think if i remember correctly maybe he
asked one question
at the end of some remarks that i gave
but um
i don't know how much of an effort he's
made to actually engage with any of the
scholarship
so he may be next in line to be the
governor so maybe we'll see
thanks very much stephanie i'll hand
over to gabrielle now
thank you both thank you thank you um
there
are a lot of great questions coming
through from the chat
but um if you don't mind i'd like to um
just bring david shoebridge into the
meeting which i'll have to do by
uh finding him in the list and giving
him uh
co-host permission so if you don't mind
i'll just quickly do that because he's
got a question that he'd like to put
to us this event was really david's idea
just oh sorry talk amongst yourselves
well i'm finding that
i'll unmute myself
it's great thank you so much stephanie
for doing this we know how busy you've
been today and how busy you are
virtually all the time you're absolutely
wonderful and
please come back to adelaide soon
i listen i would love to come back i
can't wait to come back
thank you for hosting this
go ahead david oh um oh thanks scott
and thanks for doing um all the hard
work behind the scenes often not
celebrated enough stephanie um
i'm really grateful for you taking the
time out i'm sure you've got
global demands and and i particularly
like the way you um
dealt with what often i see as a
criticism a criticism of mmt
is this sort of tribalism between a job
guarantee and mmt
and putting to bed that sort of false
dichotomy has been really useful but i
thought i'd just bring it down to earth
with the misery that is
australian politics um and so for
example
i don't often do this but and i blame
gab for this she sent me matt canavan's
tweet that went out this morning matt
canavert is a
i'm trying to think of a polite way of
saying a right-wing nut job um
in the government at the moment senator
as well and a senator yeah senator thank
you steven he's a senator
um government senator and very pro
resources very you know
right-wing he put this tweet out so on
the day it was revealed
that surging coal exports could add two
billion dollars to government revenues
we are promising to spend two billion
extra on the doll that they put in some
extra a tiny amount of extra money into
social security
he then says this if we don't have coal
we can't pay the bills um stephanie
what's your
you're going to comment in the moment
you've got to do a tweet in response to
that
uh what's your response well i mean
that he's just wrong right i mean he's
missing
the fundamental point here that we've
just spent
the better part of an hour talking about
which is that governments that issue
their
own currency can always afford
to purchase whatever is available and
for sale in their own currency
so there is no financial constraint if
you don't have 2 billion coming in
from some channel that doesn't deprive
you of the capacity to spend two billion
dollars
whatever the government commits the
money will go out
that's the reality of the nature of the
system the way it is set up with the
central bank
and uh and the federal government so you
can commit to the spending
and you don't need to rely on the rest
of the world to supply you with
australian dollars you're the issuer of
the australian currency
um so
could i could i add something i mean
he's just talking about going from 40
a day to 43 a day to take people back
out of poverty it needs to go to 70
dollars
a day not only can they have another
three times a day
build another thirty it's it wouldn't be
inflationary as
stephanie's just explained there's no
problem in funding it
and uh i don't believe that matt canavan
actually believes what he's saying
here hopefully not getting myself into
too much trouble it's just a political
point
and every time we play into this notion
that mining billionaires pay for things
through their taxes we actually
reinforce
the arguments that um people like matt
cannabone
make even though they're foolish
arguments people
just hear them who are only half paying
attention to them to the media and they
perhaps don't
catch on what where he's coming from
he just wants to punish the unemployed i
mean we have the same conversation here
right
at one point early on in the coronavirus
pandemic the federal government did
something truly remarkable
right they passed the cares act which
was then the major piece of legislation
2.2 trillion dollar
spending package that included a top-up
in unemployment insurance from the
federal government on top of what you
get at the state level if you get
anything
uh an additional 600 a week
from the federal government 2 400 a
month that was enough to pull
so many people i mean the the research
that came after the cares act
suggests that that in concert with some
of the direct cash payments
helped to prevent 18 people from going
into poverty right lift 18 million
people out of poverty
so though that kind of cash assistance
income support was a lifeline and then
it expired and then when we came back
and we got another package together the
republicans did this in december with
the democrats we had a bipartisan bill
in december of last year they cut it in
half
so it went to 300 a week that is going
to expire
mid-march so a few weeks from now so
this covid relief package that president
biden is trying to
usher through is uh includes 400 a week
so we went from 600
cut down to 300 now we're talking about
taking it up to 400
but that number can go it could be 600
again it could have been
but they didn't do that and so what
stephen you know i saw a tweet about
this how
this has gone from something fairly
generous
whittled down and then up a little and
now whittled down again
so yeah you you can choose the
the amount of relief that you want to
provide
to you know support um
people in this in this crisis you can
pick the number
was there anything else david oh sorry i
i thought i had i i was going to hand
over to the rest
no look i mean we've had almost exactly
the same debate here
about the level of support for um uh
we called it job keeper so so businesses
were given money
um that they could they were meant to
but not required to redirect to wages to
keep people on the books
during the recession from the caused by
the contraction from covert
and then job seeker which was basically
an unemployment benefit
that job seeker benefit as well as the
job keeper benefit is just about to be
pulled
from the economy in about a month's time
and i think we're probably going to see
a significant amount of hardship
caused at that moment um stephanie can
you
can you give us some analysis about you
know a useful way to talk about that
um and a useful way to respond to what i
think is going to
be a sort of wave of pain and and
poverty
i mean i can tell you that what the
experience was
here when we allowed the relief the
income support to expire prematurely
when we
didn't stay committed and continue
those payments what happened is we went
from pulling 18 million people out of
poverty
by summer when the income support
started to disappear
8 million people fell back into poverty
by september
so you know that seems to me to be
about as good an example as i could
offer you in terms of
you know knowing exactly what the
outcome is likely to be
you can pull millions of people out of
poverty with the income support and if
you cut it off
they will fall back into poverty uh it
it's just sort of that simple you know
and it's a choice just
it's just a simple choice do you want to
extend the income support
and keep people whole or largely you
know replace
lost income and avoid the long-term
bouts i mean we talk a lot here
people like jerome powell talk a lot
about scarring effects and the longer
term damage that's done
when you know people become detached
from their employers
remain unemployed for long periods of
time become unemployable
and it's much harder to you know fully
restart the economy and get a robust
recovery underway
probably like we do you know we have
this uneven
bifurcated sort of recovery people
describe it as a k-shaped recovery
and we don't want a k-shaped recovery we
want
that bottom leg lifted up and we can do
that
with the kinds of you know uh programs
uh
income support and and the fiscal
support you just have to put it in place
and commit to keeping it in place for as
long as necessary the problems are
in trying to figure out you know which
date on the calendar is the right date
to cut off the support
and that's what we continue to do with
our legislation and that's why we have
to keep coming back again and again if
we could get
you know better automatic trigger
stabilizers
in the legislation where the payments
continue
for as long as the economy remains
weak and people need the support and you
know then it's a one-off pass a bill
um have those income support payments
continue
and then have them taper off as the
labor market shows evidence
that you know people are returning to
work and the support is not
necessary yeah i think that
task of convincing people that um you
know poverty is a political choice
it's just fundamentally a political
choice this is part of the work we need
to do on
the left of politics um but it's
these i mean that was a very persuasive
macro economic assessment but
i would have thought from an equity
point of view um that those those
payments should never be ceased
but that perhaps put a trigger in them
so that as people move into employment
take up a job guarantee
that's when those payments transfer
across oh hey if you're allowing me to
put a job guarantee in place then that's
absolutely
the trigger that that then becomes the
program that right-sizes the spending
right as long as the economy is weak and
people remain job
well not jobless they're employed but
they're not employed in
private sector uh the program supports
them and as the
economy recovers and gains strength and
people are hired out of the program
the spending on the program is
automatically
um you know adjusting to changing
economic conditions but
yeah you're you're absolutely right with
a job guarantee in place
you're the the hard the hard work is
done the heavy lifting
is now automated yeah that's the policy
setting that
sort of um um automatically it's sort of
like a super keynesian
policy setting that addresses the micro
the macro
and the micro economic issues you know
address and it addresses the dysfunction
in the politics where you have to keep
waiting for
in our case congress or parliament to
come back with another bill
and how many weeks are we going to
extend this time or months
uh it takes all the guesswork out
thanks steven you're welcome very much
david
i just thought i might uh quickly
just as a response to david's original
um question which was about a tweet from
our resources man um minister matt
canavan
um i also found this on twitter from
rohan grey i'm not sure if
you've seen this one but i'll read the
tweet out because it kind of appeals to
me as
someone who's in the activist space
rohan says it's tempting for the left to
lean into the taxpayer money trope
because it ostensibly strengthens the
argument for redistributive taxation
and then he says but it's a trap and
ultimately leads to one place only
the politics of scarcity exclusion
xenophobia and white supremacy
would you he's good yeah he's good
exactly every word yeah every word of it
yeah because it's a you're in an
austerity frame what you're saying
when you do what he just said and advise
not to do
you know i've sometimes said you know
you're in an unless and until
world i'm not going to be able to feed
this hungry kid
i'm not going to be able to support this
jobless prayer i'm not going to be able
to do
unless and until i'm successful
in putting up this new tax or you know
coming up with the revenue to do that
so you're picking two fights and you got
to win both of those fights and you're
holding hostage
uh a progressive agenda or even a humane
agenda
that is held hostage unless you can
collect all the votes that are needed
to push up the tax to generate the
revenue so that you can pretend
that you found the money that allows you
to pay for something
and in what happens 99 times out of 100
is that you don't win both fights you
don't get the votes
and therefore you don't get the tax
revenue and therefore
the spending doesn't happen and that
means people just stay
in misery right and it's gratuitous
because you could
you could address problems without you
know
that secondary and unnecessary fight you
can get there in a more direct way
alleviate human suffering
in the now um but if you if you are
committed
to not addressing problems unless
and until you can peel off a few bucks
from
the billionaire class then there's a
pretty good chance
that you're going to be stuck with just
you know crumbling infrastructure
poverty homelessness and all the rest of
it
yeah and of course the most marginalized
people are the ones
who are going to suffer the most from
the effects of climate change
and austerity and they're often well
they're they're the people who are also
um from you know different they're
immigrants or
migrants or traditional owners or
um indigenous people here in australia
already we can see that happening
it's really stark so i think the racism
aspect of it is really important that we
acknowledge and work on
couldn't agree more there's um there's a
bunch of questions that
i picked up from earlier on in the
session
shall i throw a few of those in and um
then we might also towards the end that
another one of our
um greens politicians here in south
australia tammy franks is on
on the call and she has helped us put
this webinar together
so we might give her co-host as well in
a few minutes and she could ask a
question
she says no rush but we will get to you
tammy
um so just back from because there's
at least a hundred great questions in
there and we won't have time for all of
them i'm very sorry
um but back a fair way james asked
what um what have you been using as an
alternate metaphor
to government as household
do you have any suggestions for how we
might change that
metaphor i mean i
i just tend to say currency is sure um
uh i use in yeah never use taxpayer
dollars or taxpayer money i say public
money or federal dollars
more and more politicians at least here
in the us are starting to
to do that to get more careful about the
language you ever notice
that the the phrase taxpayer money
is usually invoked when you're trying to
spotlight something that you don't like
so democrats will say taxpayer money
when they're talking about
the pentagon budget and defense spending
how the taxpayer
because that right gets you right uh
republicans say taxpayer money when
they're talking about
you know welfare programs or something
oh taxpayers are
supporting these welfare programs but um
no you just it's our money
it's our money it's public money and
the government is where it comes from
you know i use the power of the purse so
i say
uh government has the power of the purse
that's what makes them
unlike a household they have the power
of the purse
i think i read in your book as well that
you use the metaphor of like um
a football match or you know where the
one team is scoring and um
will you know will the referee run out
of points no
if a team keeps scoring points they just
keep adding points to the scope
yeah we sometimes just use the phrase
the government is the score keeper for
the dollar
so you know that does drive home the
point that
the point that it really is about you
know
just think of the government as standing
on the outside
of some giant excel spreadsheet where
all of us
are a cell you know there are columns
and all of our names are there
and they can click a button and the
numbers in our cell can go up
they spend dollars into our account the
numbers can go down if they tax dollars
out of our account but they're sort of
standing on the outside
as they have this unique capacity that
the rest of us don't have to change the
numbers up and down
so the score keeper right aussies will
get that
um there's another question about um
what are some good ways that people like
the people here on this call for example
what are some ways that we can start
getting the message out what are some
ways that have been effective
for people that you know of
you i know one way that's effective
you've done it that's definitely kelton
here for about 10 days
we were all over the media
yeah have steven hale organize
a calendar of events for you and fill it
up for 10 days and always come back to
can we do one more can i just add one
more thing
no i mean you know we have now after all
these years we do have a deep bench in
the early years there were a smaller
number of economists who were trying to
put these ideas out and
i mean after a quarter of a century
their
the ranks have grown and it's not just
economists anymore we have legal
scholars and historians and
um you know philosopher there there are
and that's just in academia
and then you have you know journalists
who have
you know come very much on board and are
sympathetic and
that's powerful when people in you know
position with positions of influence and
a megaphone
um can also start improving the
discourse just in the way that they
conduct interviews and the things that
they talk about the way they talk and
then there are
you know activists and um and
thought leaders and others like there's
just this huge community now and it's
everyone doing their what you know
contributing in their own ways that's
created that tailwind that's i think
really brought us
in the last couple of years so much the
ball has moved so far down the field
because of you know the efforts of so
many different people people in the uk
with podcasts i mean i can't imagine the
work that people do
curating articles and maintaining
websites where you can go to get
you know a collection like steven said
get in touch with me and i'll send you
all the
mmt scholarship well there are people
out there who
you know work very hard to maintain a
library of resources to
make these things available so you you
can help in
ways big and small you know
one one of the small but hopefully um
helpful ways that that we things that
we'll be doing here in adelaide this
year
our volunteers who many of you who you
met when you came over
for our conference uh we are training
to deliver short talks on mmt
to public to the public so we're going
to be going around to
like local rotary groups and
university of the third age wherever we
can get a speaking gig
public radio we're going to train up a
bunch of people
and start we've got slides prepared
you can even that's awesome from our
website if you want awesome
so you know i've been in touch with
someone who reached out to me
four or five months ago and he went
through
a program this was you know kind of in a
way
well it's like what you're describing he
did it because
al gore organized something and al gore
said we need the population to
understand
that humans are contributing to
global warming that that climate change
is you know a result of
you know actions that we take right
human uh action
and so he brought together i think
thousands of people
and trained them and in a sense kind of
certified them
and then sent them off to become you
know
uh messengers in in this effort to
to shape and change the public's
understanding of what was happening and
it
sounds a lot like what you're describing
you know a couple of days ago i got an
email
from a woman that i have a
i i met years ago and she sent me an
email
and she had a photograph and she was
asking if i would give her permission to
use the picture
in um an advertising that she was going
to do
about public talks that she so here i am
in the picture
with this gal and this guy from who
knows how many years ago
but she's going out in her community and
giving talks
on mmt and she wanted to know if it
would be okay to use the picture
i said of course you know go for it and
good luck and i
i'm sure it's going to be great but
people are you know
amazing what people are out there doing
quietly and behind the scenes and
and publicly people are pouring in a lot
of their energy
to try to you know be part of
getting us to a better place um
amazing absolutely and i think we can
all help each other
to communicate well and to communicate
with compassion and kindness even to
people that we don't agree with and
that's how
we in the argument yeah that's such a
good i'm glad you said that because
you know you could get very impassioned
and it is often frustrating to hear
people you know espousing these myths
but everybody hasn't arrived i once
didn't know you know i didn't always
have this understanding of things so i
was once as confused and probably
worried about deficits as anybody else
so
take a sympathetic approach and meet
people where they are
and and try to help bring them along
yeah just on on on that um there was a
couple of questions about
um the the
messaging around owing us
australia owing money to foreign
countries like china in particular
and i think that does play into people's
fears a bit
yeah um do you have any do you want me
to
yeah go stephen the first thing i can
say is that um
the first thing i could say is that the
australian commonwealth government has
no significant foreign currency debt at
all
um when the government i don't i
i interpreted her to maybe i'm wrong but
i thought that
it's the same thing we hear here right
that china holds lots of treasuries
so we're in debt to china that sort of
thing yeah well
and of course we don't stop foreign
investors buying
treasury bonds on the secondary market
uh the government spends more than it
raises in taxes for
reasons that stephanie was mentioning
before
in support of uh interest rate policy
they've
auctioned treasury bonds down the years
and then anybody can buy treasury bonds
secondhand and australia's currency has
been
one of the world's major reserve
currencies it's the fifth or sixth most
heavily held currency
for a long time and the foreign
investors want to hold australian
dollars and they want a safe asset
they're going to buy treasury bonds
although they don't own as many of them
as they used to as a proportion of the
total
because the rba has been buying up so
much recently
and if people are worried about
australia they shouldn't be anyway but
if people were worried about australia
as a whole borrowing from the rest of
the world the news is at the moment
not that this is important but we have a
current account surplus so
we're not borrowing from the rest of the
world in any sense
at the moment i have i have another
question here from rena
so we might just do that one and then
i'll try and bring tammy franks in
so rina asks what does mmt have to say
about
sustainable economies and i think uh
she's referring to
the need for degrowth
well lots um not lots in my book but
when i talk about the limits i do
have in the book the recognition that
the limits are not just
uh inflation but also there are
ecological limits
right the so much of the obsession with
growth right with getting high rates of
growth and generating positive economic
growth and so forth
so much of that obsession i think is
bound up in our obsession with debt
so for too many years economists told us
that the thing you have to watch out for
is the debt to gdp ratio
the debt in the numerator the gdp in the
denominator
and we had the whole you know reinhardt
and rogoff
very influential you know harvard
economist telling us there are these
tipping points out there
and you got to keep your eye on the debt
to gdp ratio and if it exceeds this
threshold of 90
or whatever then you you tip over and
bad things start happening right
so people become obsessed with gdp
growth because
it's in the denominator and if the ratio
is the thing that matters it isn't if
the ratio is the thing that matters
then you can grow your way out of the
problem
by rapidly increasing your gdp growth so
that the ratio comes down
you see so mmt helps us to get over
the obsession with debt to help us shift
our thinking how we understand the debt
so that we don't have to obsess over
growing our way out of debt
you can actually then uh accommodate
thinking about degrowth or you know
those sort of things so that's the way i
think about it i love
you know i um think that
my book pairs really nicely with the
work of
someone like kate raw worth the donut uh
economy and um and so
that's so compatible if you marry the
main insights of the two of mmt and of
where she's coming from
then you can get to a place and even
mariana matsukato you can get mission
oriented
public spending to keep you in the safe
part of the donut
and understand how to pay for it so the
three
i think can work really well together
and put you in that
sustainability not just dealing with the
fiscal sustainability but but ecological
and environmental
oh you're muted sorry i'm not sure if
tammy's uh
still on the call i did uh send her a
message but oh here she is
hi tammy hit myself hi
um thank you stephanie for again
another amazing um narrative and
and talk every time i i hear you i i
feel like i'm
a little bit more empowered as a
politician to start taking on some of
these
uh arguments if you like or debates
um you've
mentioned and this was going to be my
question gabby so it kind of got
covered i mean the narrative is so
strong that you have to have either or
we're always told in politics it's
always a choice
um and that choice is always by default
somebody misses out
um i like the idea of you know the
football game
and um there's no limit
there on the score but what i find is
that
that's not the story that we're fed as
in in the political narrative
as a budget is delivered we've got the
the prime minister with his back in
black cup
and it's all about the numbers
and the black versus the red and
the markers of the success of a
politician and paul keating did this
very successfully
uh being able to have that surplus now
how
do we get media to understand
that that's not actually how they should
be
given or the you know the high score
if you like in terms of how politicians
perform because at the moment
that is actually how journalists have
their prism their lens
how do we get to them
look it's not easy i'm not going to
pretend there's some silver bullet but
you can put your budget in balance
or achieve a surplus by destroying your
economy
greece achieved a primary budget surplus
but at the cost of mass austerity
that wrecked the greek economy and
destroyed livelihoods and
created massive suffering and so forth
so you know the idea that we're going to
measure
our success in terms of governing and so
forth by
where the budget the number that falls
out of the budget box at the end of
every
year it's not the way to go and gdp
growth is not the right metric either so
you've got a
an australian economist there uh who's
asking us to replace the you know
gdp as the measure of well-being with
something more meaningful and he calls
it a genuine progress indicator
pay attention to the gpi right phil says
he's watching actually i feel
so you know but how do you get the press
to start highlighting and shining a
spotlight
what you ideally want i think is
for the government to budget australia's
real resources say these are the real
these are the things that matter in my
book i have a chapter called the
deficits that matter
shift the focus you know i will never go
on tv and i will go on fox and cnbc and
so forth i will never let anyone
put me in a position where i have to
concede a faulty premise
so if somebody says to me well how are
we going to deal with the debt problem
what are we going to do about the
deficit i never say
well if we if we grow the economy we can
bring down the debt to gb i never
concede a false premise
and that's the problem that too many
left and
uh progressive economists even make is
reinforcing those
bad frames flip the script on them
and you know we can do our part by
centering the deficits that matter say
you know let's talk you want to talk
about deficits let's talk about the
deficit in health care or education or
housing or
you know poverty let's you let's talk
about those deficits right
because well anyway i could go on
and on but it it one person can't
re reframe the political narrative it
takes
lots of people and we've been helped out
a lot not enough but a lot by
journalists
who over the years have realized that
they ask the wrong
questions if you get a senator to come
on your show your radio show your
podcast your tv show
and you sit down and you say how are you
going to pay for that you're part of the
problem
so a number of journalists have become
part of the solution
and they don't ask those questions so so
often it's what you don't say
that matters as much as anything else
you know and
it's just it's going to take us a lot of
time and they have the weaponry and they
use it the
media is weaponized the deficit is
weaponized and
the idea that surplus equals good and
maybe the last guy that you admired
and respected and revered and he
delivered a surplus and i can invoke his
name
and we do it with bill clinton here
democrats will say
uh well bill clinton boy he was the one
right because he put the budget in
surplus and so
we democrats we are the party you should
vote for because we're the only ones
that actually balance the budget in the
last 40 years
uh we have to get away from that
so we're just on uh 1 p.m adelaide time
and we did say 90 minutes would you
like to um there's so many questions
that we haven't got to and i apologize
shows all the answers save the questions
and i will at some point do my best
as a sort of poor poor person's
stephanie kelton impersonator
i'll do my best to write answers to all
the questions and we'll put them up on
our website
i will get to every question eventually
that is very generous of you stephen in
the meantime
if you would like to um stay in touch
with
uh the sustainable prosperity action
group you can sign up to our mailing
list if you're not already on it
i don't send mail very often so you
won't get a lot of spam but that's our
website
and you can read about what we're doing
here in adelaide um
and for adelaide people we're running a
two-day summer school called
summer school in april rethinking
capitalism it's about
the deficit myth um the uh ecological
economics and the doughnut model and
much more besides
we do cowatun rawath and matsukato all
in one weekend
yep and it is uh the weekend after
easter here in
here in adelaide at the university of
adelaide so send me a message if you'd
like more info on that
and i think stephanie um we will
probably wrap it up there
because we don't want to keep you any
longer than we need to
um but thank you so so much for being
with us today and
like really really appreciate your time
you do such great work and you're so
busy and
you know this is probably the fifth talk
you've done today
fifth or sixth i reckon um but yeah it's
just been great to see
your face live and it's a great pleasure
that um
for us to be able to benefit from your
wisdom
well thank you both i mean i i adore you
both i
am so grateful to both of you everything
you do
you know that if you ask me to do
something i'm always going to say yes so
that's why we don't ask you too often
you'll ask me again and i will say yes
again so
thank you for to invite you to come to
adelaide again
that would be amazing yes yeah we look
forward to that
i do thanks thanks for everybody for uh
participating as well yeah thank you to
everyone
all right i think i will close the
meeting on that note thank you
and three cheers for stephanie
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