you know so again that's an it's an easy
issue it's a point of logic
it's not political okay and there's no
economist who would disagree
you know once they heard the argument
they go yes of course
they would agree the public sector as a
point of logic should hire
everybody point of economic loss
financial logic everything
it's just a it's just a win-win-win for
the whole country
if um you know if all the
disabled were higher in public service
rather than the private sector
now that doesn't mean you don't want
some in the private sector but that
would be like a special case
if you just want to look at the hard
numbers okay the hard numbers say look
let's get
all these people you know good paying
jobs in the public sector
right now to improve what's that
to improve it yeah to improve the total
performance of the economy
okay it's just a major benefit for the
real
for the standard so
um denise and not the uh are we good on
facebook are we ready to go
one second let me check on that yes
because we're just about to get started
so there's been like uh outages um
today uh
around uh around the southeast of the uh
of the us south and southeast of the us
i know texas had a really bad outage
last night
um so i hope that doesn't affect
our our meeting today uh
but just want to give everyone a heads
up in case
there is any issues with that um
can you all hear me okay is audio's fine
okay
good um
all right denise you let me know once
we're good on facebook
so uh
okay
looks like he's back okay yeah so i keep
having some technical issues
um and i think that's because i keep
trying to
put it live on my end on facebook um
so uh do you have it uh available on
your end uh to go live on facebook or no
you're muted you're muted myself i'm
testing it out my
i'm testing it out as well okay it's
it's not a big deal because we're gonna
record this and upload it on our
on our youtube anyways um so even if we
don't get a live stream
um it'll it'll be fine so
just uh in the
to make sure we have enough time to do
everything i think we should just go
ahead and get started
um so
so as as most people should know by now
uh we have uh
mr warren moser on uh otherwise known as
the godfather of mmt as his term has
been coined
he's been a progressive public policy
advocate for the last
three decades uh and before that
he was a successful investor and a
banker so he has the
insider knowledge that very few
economists have in terms of how
our monetary and fiscal operations work
um so everyone could give a oh so mmt
stands for modern monetary theory
uh thank you so much monetary theory was
is a school of thought within economics
um it uh it i mean i'm sure warren can
go into this a little bit more
uh but the the long the long story short
is that
it is it has revolutionized the way that
we think about fiscal monetary policy
today
uh so they're lucky give warren a little
digital hand
of applause round of applause for
showing up uh being very generous with
his time
um and uh i'd like to open it up
first uh warren by having you give us a
little bit of your own background
and you know more or less how
your ideas you know what is mmt
where did mmt come from uh the floor is
yours
okay so uh the important thing to know
about
mmt is uh sequence
you know what comes first and
up until mmt ev every con maybe even now
every congressman thinks knows that he
has to get
money he has to get dollars to be able
to spend
so he has to tax to get dollars to spend
and what he doesn't
get in taxes he wants to spend more than
that he's got to go out and borrow the
money so he's gotta
either tax or borrow
uh to be to be able to think that
everybody in federal reserve from every
central bank is always known
i worked and became i
been in capital markets for 50 years uh
they all know that the dollars to pay
taxes and the dollars to buy bonds
come from the government and are
its agents the commercial the banks are
agents of the government
under the federal reserve access you
know independence
is nonsense but they're fed they're
federally they're agents of federal
government
so the dollars to pay taxes the dollars
to buy bonds
okay connectivity issue am i okay
yeah you're okay right now we can hear
you okay but your your video is freezing
a little bit but you're okay right now
okay okay um so all the dollars to pay
taxes come from the government that
means
it's not that the government needs our
dollars to be able
to spend
and it's that we need the government's
dollars
we can't pay our taxes because that's
closely at the accounts of the federal
reserve uh
which adds those dollars to the economy
and only then
can taxes to be paid or bonds purchased
so that's what i mean by sequence all
right and the idea that
everyone's had it backwards is what's so
revolutionary
because once you realize the government
spends first
and then taxes get paid and then
government bonds get bought
then you realize there's no such thing
the question of like how are you going
to pay for it it's just not applicable
to a government that spends first or you
go
your borrowing is crowding out private
sector borrowing
it's not applicable you're spending
first and just borrowing back your own
money
all right and so uh let me just start
with that and
don't open it up to see if there's any
questions
yeah so what i have sequences
major contribution that it's all people
actually need to understand
to be way ahead of what's going on you
know uh in mainstream economics
so so maybe we could give kind of a
concrete example here
um you know because um you know many
times
uh when progressives uh uh or you know
the democrats try to offer up a a public
policy
um you know let's say we say we want to
support
um you know uh infrastructure spending
right
uh you know and we want to build a
renewable energy
expand renewable energy infrastructure
uh the first
question that always comes to people's
minds voters minds is
well how are you going to pay for that
that's right so we've we've turned that
around that kind of political question
the government pays for everything just
by crediting an account
uh they in other words if you have a
bank account and you're getting paid by
the government
and you had a thousand dollars and they
pay you five thousand dollars now you
have six stocks
well what actually happened so the
number in your bank account was one
zero zero zero and then they changed the
one into a six so now it's six zero zero
zero they just change the number in the
bank account
they didn't get a gold coin and hammer
it into a computer or get dollars from a
taxpayer and give it to
there is no such thing it's just
changing numbers up that's that's how
they spend
but the important question once you know
the sequence is
are those things that the government
wants to buy are they offered for sale
and do the sellers want to get paid in
dollars
anything offered for sale where the
seller wants to get paid in dollars
no problem the government can pay those
dollars
so the questions are are these things
available are they for sale
not just the government going to get the
money to buy them
and a lot of times the answer is no
they're not available they're not for
sale
maybe the government wants to hire
people
to build something or to be contracted
to do a large project
and everybody already has a job well
they're not available
sorry
to get them to do what you wanted
so again um you know it's about sequence
it's about understanding uh that
sequence
it changes the questions that are asked
of government the government has to ask
before it does now
let me let me uh complete the sequence
for you if i met so you have a
government
as you said wants to buy folks they want
to have medicare for all they want to
have
military they want to have public health
so how do they do that how do they get
things to be for sale
so that they can buy them with their
dollars they do that by
imposing tax liabilities they put a tax
i'll just use a simple tax for this show
for example
on your on everybody's house for
ten thousand dollars a year just for
example
okay they didn't collect ten thousand
but a tax liability means you now owe
the government ten thousand dollars if
you have a house
now they've created an economy where
people are trying to sell things
to get the dollars that are needed by
the economy to pay the tax to the
government
so the first thing they do is create tax
liabilities in order to create
sellers of goods and services so that
the government can then buy them
so number one in the fiscal process is
tax liability so taxes
are important not collecting the tax but
the tax liability is important
uh that has to come first all right so
first there's tax liabilities and that
creates people looking for paid work a
lot dollars
what do we call those people we call
them unemployed
people looking for paid work and can't
find it or unemployed so the tax
liabilities create
this army of people looking for jobs
that pay dollars
and so it creates unemployment so the
purpose of tax
liabilities taxation is to create
unemployment
why so now the government can hire all
these people who
desperately need its dollars to pay the
tax so they don't lose their house
all right so number one tax liabilities
number two we have
unemployment number three the government
hires the people
that it create the unemployed that it
created to do the work that it
wants done which was the point of the
whole exercise okay then it pays the
people
and then they pay their taxes and that's
the end of the chain
and you know it's how do you know it's
the end of the chain well if you were to
pay your
taxes with actual 20 bills let's say you
were a waiter and you had a lot of old
20 bills i went into the irs office and
used it to pay your taxes
they would say thank you very much for
helping the faithful afghanistan or
whatever they're
doing right now and uh covet vaccine
and they give you a receipt and then as
soon as you're gone they ship those
dollars out
and they get shredded you can buy
shredded money in washington
okay now who else would take your
dollars and shred them
nobody but if you think about it it
happens all the time
think of the movie theater they are the
or the super bowl
they sell you a ticket you go to the
game they take that thousand dollar
ticket
they tear it up and throw it away
because it's the end of the chain okay
so
we all see how that works notice also
that
the movie theater or the suit or the
football stadium
they don't collect the ticket first and
then sell it
we all know they have to sell the ticket
first get it out there and then they
collect the tickets
it's the same thing with the us
government they don't collect the
dollars first and then spend them
they come from the government they have
to spend them first
okay and then they can collect them and
throw them away if it's old cash if they
don't want
all right so again i i come back to the
word sequence
you understand the sequence and you
under and you understand
modern monetary theory and you
understand what's wrong with the
debate up until modern monetarists so
um why so this is something that i
i mean i personally think it's extremely
important that uh
anyone involved in politics should
understand um you know
but you know those who are you know a
little bit more left of center
uh have historically i feel ignored the
more minutia
of these things how they work uh they
focus a lot on the theory aspect so i
wanted to ask you know
why do you think it's important for you
know
you have a lot of young democrats here
uh why do you think it's important that
young democrats or young progressives
uh understand this right so they need to
understand
what fiscal responsibility is
the government that creates unemployment
with its taxes
it's tax liabilities it's taxation
policy right
in order to hire those people right has
the responsibility of not creating more
unemployed that it wants to hire
if there's if the government's hired
everybody who wants and there's still
unemployed people out there it means
that
the taxation created more unemployed
people than the government wanted to
hire
and that's irresponsible why would
anybody do that
why would you tax everybody to get them
to need your money and then not give
them a way to earn
what's the point you just want to go
burn their house down for non-payment
just out of spite or something like that
okay that doesn't make any sense
you do it uh you know you have to
recognize that unemployment
represents fiscal irresponsibility
represents a mistake
a miscalculation on the part of the us
government
they have over taxed us for the size
government that they've
established they haven't spent enough uh
to give us the funds we need to pay the
tax and to net
save because if there's any if there's
going to be any net savings of dollars
those dollars have to
come from the government they can't come
from anywhere else or else they're
counterfeit
okay and so uh
okay so tax liabilities create a need
for dollars to pay taxes and they create
a need for
savings of dollars and
if unemployment is the evidence that the
government hasn't spent enough providing
enough dollars to cover the need
that it created you have to understand
that responsibility
of the government before um if you want
to win the arguments
uh for the proposals that you make
okay that's just absolutely a
prerequisite for winning the arguments
and that's why the progressives i
believe
haven't won any one very few of their
arguments over the years
if they have one they've won some
oftentimes for the wrong reason and then
lost them subsequently okay but once
you've got
and you're making the correct argument
nobody ever goes back
so so you're telling so you're you're
telling us
that unemployment is not something that
happens in nature
uh it's not just a naturally occurring
phenomenon correct it's a monetary
phenomenon
unemployment's about people looking for
paid work and dollars they need dollars
it's not it's not about people who can't
find a job volunteering for the american
cancer society right
this is about starvation you know a
money
famine created by tax liabilities
that gets filled by government spending
and the evidence that is not filled is
is a residual unemployment it can't come
from anywhere else
you can't have people looking for jobs
that pay money if there's no such thing
as money
so so basically unemployment is a
political choice
yeah yes it's a right it's a proactive
political
uh activity you know a process
that's been done the dollars are the tax
credits needed to pay the government's
taxes government says you need u.s
dollars
to pay our taxes and unemployment is
people looking for those us dollars now
when the government spends a dollar
only one or two things can happen to you
it's either going to be used to pay
taxes that day
or it's not going to be used to pay
taxes in which case it's saved
so if people go out and work for dollars
either they need them to pay taxes
or to save and if they use it to buy
something from somebody
else before the day is up that person
either uses them to pay taxes or saves
them
if he spends them that person does so
when the bell rings at three o'clock and
the banks close
whoever's left holding the dollars uh is
either
use them to pay taxes or to not pay
taxes in which case they've saved them
so those are the only two things that
can happen either get used to pay taxes
are the same now
the government spends more than taxes
and that supplies the savings the public
debt
is nothing more than the dollars the
government has spent
that haven't yet been used to pay taxes
and they sit there as savings in bank
accounts
the bank accounts are called u.s
treasury securities those are just
savings accounts
of a reserve bank they give them a fancy
name and call them u.s treasury
securities
but if you think about it it's a bank if
you buy a treasury security you give
them money
later you get it back with interest
that's the same as a
cd a certificate of deposit or savings
account any other bank
there's no difference just has a
different name on it so nobody's
thought about it that way until we've
been promoting the understanding
of what it is okay so all this public
debt
how did it get there this year the
government spent six trillion dollars
seven trillion and uh four trillion was
paid in taxes
the other three trillion is still
sitting there in bank accounts
somebody's bank account okay it already
is
the money the treasury security is the
money
it's dollars in a bank account how do
you pay it back how how does the bank
pay back
the money you have in checking your
savings it just shifts them to another
account for you it gives you pieces of
paper
green pieces of paper it's already the
money there's nothing paying it back is
not an applicable
um question when treasury security is
mature
uh what happens is the central bank
shifts those dollars from your
savings account the treasury security to
your checking account
they call that a reserve account because
it's the federal reserve bank again a
fancy name for checking
there's no there are no taxpayers and no
grandchildren in the room
they do it for 50 or 75 billion every
month when they
just subtract the money from the
securities account from the savings
account they add it to the checking
account
the debt that part of the debt is paid
it's like
you know it's all it is it's already the
money
so just to make sure it's clear
uh to everyone uh what you're saying uh
the fact that the federal government has
a fiscal
deficit uh and that fiscal deficit gets
accumulated
in what is colloquially called the
national debt or the public debt
yes um that is not really a debt
the way like a credit card debt
is to an individual right so for the
government
what they owe you you know the money is
a debt because they owe you the
right to use it to pay a tax and so the
accountants call it a liability
which they classify as a debt so um
it's like if um i don't even need to
give you an analogy it's just a tax
credit
if you're in tax credits uh for putting
in solar
okay in the government and you have the
right to pay taxes to your state or
federal government with those tax
credits can be used to pay taxes
that's considered a government debt
because they've given you the right to
satisfy your tax
liability so for accounting purposes
they call that a debt all right so it's
not wrong to call it the public debt but
it's a little misleading
because it's not about owing something
they don't have and can't get
it's about accepting what they've given
you
back in return notice when you pay your
taxes
it's called a tax return you're
returning those
dollars back to the government the word
revenue comes from a french word that
means to return
back in the bible it says uh render unto
caesar that which is caesar's
pay your taxes give caesar his coins
back
they came from him to begin with romans
said the same everybody
in history has always had this exact
same system the knowledge has only lost
a couple hundred years
before that everybody knew exactly what
i was saying nobody
you know take two seconds to stop and
listen to it again it's just too easy
all right but unfortunately we've lost
our way and it's disastrous
it is disastrous um uh i believe uh we
have
alex uh and or stephanie uh you guys
want to ask your question
okay so they're driving right now so
they are
asking um about for example elizabeth
warren's proposal
um to do the uh it was the two cent plan
i believe that was the wealth tax
um do you do you think it hurts
progresses long term
to propose um uh that kind of
uh a policy connection between taxing
wealth
to then be able to uh spend money
yes now i don't have a problem with the
idea of taxing wealth
clarified to clarify my question she
specifically
set up the plan the way she explained
the plan was you know
this uh tax raises this amount of money
which
uh you know would pay for this because
this is how much this cost
well okay so that what that implies is
that in all cases we should have some
kind of pay go because that's why she's
doing it
where you know that you need to get the
money to be able to spend
so it shows that an ignorance of how the
monetary system works
so even if it somehow worked politically
and did things
it's still you know intellectually
dishonest
or it's a sign of ignorance i'm not sure
which one now i've offered to give her a
briefing
on many occasions over the last 20 years
she's never accepted
uh and she continues to have the
sequence backwards
and the progressive agenda continues not
to happen
and uh it's the same thing with senator
sanders okay
the progressive he's got it backwards
and
i think both of those two individuals
are part of the problem and that
because they've got the sequence
backwards they don't win the arguments
because they have to argue on their
terms and
um and so we lose so we don't have
the benefits that they're trying to
provide by doing this
wealth tax thing let me give you an
example of another example
you've heard people talk about negative
interest rates
okay so a negative interest rate means
let's say it's a negative one percent
rate
so if you give a hundred dollars in the
bank at the end of the year you only
have 99.
and that's supposed to be good for the
economy you know you lower interest
rates the economy gets better supposedly
you get to zero what do you do well you
go negative now the economy now you're
really stimulating the economy
now let's look at elizabeth warren's
wealth tax let's say it was one percent
tax on bank deposits you start the year
with a hundred dollars a year later you
have 99.
what's the difference okay well one's a
wealth tax it's a tax taking
away money it's going to slow the
economy the other is a negative interest
well functionally they're both the same
thing you start off with a hundred
dollars you wind up with 99 you really
don't care what they call them
you're gonna be worse off they're both
attacks and
negative rates being proposed to help
the economy is just a big tax
on the economy that makes it worse now
elizabeth warren's tax
on wealth there's nothing particularly
wrong with it
but what happens is you have to think
about
what the purpose of the tax is from the
beginning the purpose of the tax
is to create sellers of things that the
government wants to buy
so first elizabeth warren needs to look
at what the government wants to buy what
she's trying to spend on
her proposal and which what were her uh
expenses on that maybe public education
or what was it were there other things
that she had specifically proposed
for the spending i think universal
child care universal shock okay so the
government can look at right now and say
look
is are the resources for universal child
care available are there the
caregivers is there the place for it are
there the people the government could
hire to organize
if you look at 15 million unemployed
people i'd say yeah
we have more than enough there they're
all looking for work
they'd all accept well-paid government
jobs to do it so the people are there
they will go to work if the government
pays it
okay so the tax that we already have in
place
the tax liabilities are already creating
enough things for sale
to buy what the government wants to buy
junk
okay so you don't need the wealth tax to
pay for that
now the next thing you look at you say
okay if we do the wealth tax is that
going to create even more things for
sale
and the short answer is probably not
because that particular tax
takes tends to take the money away from
people who already have a lot of money
and they're not going to spend less
leaving more things for sale for the
government to buy
that's called creating fiscal space you
know having things available for the
government to buy
what's available for the government to
buy is called fiscal space by
economists so taxing somebody who
already has a lot of money
uh now that now they have less money
they're not going to eat less
uh fewer meals so there's more food
available for the government to buy
they're not going to
travel less on their private jets so
there's more
those resources for the government to
buy okay it's not going to happen
and so it doesn't free up any fiscal
space
what does it do well it's a move towards
social equity
you know having that massive disparity
of wealth
creates uh you know social issues
and uh you know i'm certainly i have a
lot of proposals
designed to uh alleviate some of those
stresses but
that's not one of them because uh it
doesn't
work for that either it's not enough to
make a whole lot of difference all it
does is get the mad
to hire more lobbyists to do other
things and
you know to um just try and protect what
they have
and they're pretty good at that okay so
um
and so you know so i'm against her
proposal on
several grounds but i'm entirely in
favor of
the universal child care and it's just
ways to do that where it could actually
happen
as opposed to this way where you could
say maybe it'll happen but it's been a
long time and it hasn't happened
so uh and i've been saying for a long
time the odds of just working are
slim and none it's just gonna backfire
and it continues to backfire
and the opposition knows that so they
those are the plans they put on
television put up there because they
know they're gonna lose
right right so um just just to be super
clear then uh
you know the policy idea of universal
child care
uh you know this very nice progressive
policy um you know
anyone who has a progressive on their
body would not oppose it
uh what you're saying is that the
argument to
propose it can't rest on the idea that
we have to tax
uh wealth in order to get it that's
right that's right so if you look at
uh senator sanders proposal for medicare
for all in 2016
he had a two trillion dollar tax with
that
and hillary clinton looks at it says see
we can't afford this
that's why we have to stay with
obamacare which was rodney care which is
republican
healthcare which is horrible right i'm
sure there's something worse we can do
but that's
it's pretty bad so uh we're
for all is not now i was actually in
senator sanders office back
talking to his age one of them was matt
stahler i don't know if you know
and uh and your uh your friend uh
professor kelton was one of his senior
economic advisors
okay good yeah yeah so um
you know we pointed out look the reason
we don't have medicare for all is your
tax proposal
not because of anything with medicare
fraud we get a free medicare for all it
and the proposals now you know people
are paying for it and
whatever and showing it's less anyway
because medicare for all is a highly
deflationary event
it creates physical space it doesn't use
it up number one it saves at least half
a trillion dollars a year
real resources for the country all those
people tied up doing
advertising and promotions in accounting
and private health companies that don't
need to be there
you know it's like they're digging holes
and filling it in it's just a waste of
human endeavor
they are freed up to do other things
they could be out
curing cancer or whatever and uh holding
hands and nursing
anything other than what they're doing
would be a constructive
thing and i'm not demonizing them
they're people who
are victims you know of the tax
liabilities like we are
maybe victims of work but they're
they're uh
constituents yeah they're constituents
okay uh
they're taxpayers like us and they need
everything they buy comes from taxpayers
and so they need to they need the money
to work and so they're
you know they're very forthright people
going to work every day working hard
very smart but let's put them
doing something that serves public
purpose rather than
have these have the incentives in place
where they can do something that serves
public purpose
rather than an incentive that works
against public purposes so
right if we had medicare for raw we'd
have a deflationary event 5 million new
people would be looking for work
when there's 5 million new people
looking for work raises taxes
if anything you lower taxes now maybe
five years down the road
uh everybody will have a job and the
economy will be too strong
and there'll be excess demand which by
the way i've never seen in my lifetime
72 this year and uh and so we would need
to raise taxes then to cool things down
not to get money to spend just to slow
things down if the economy was too good
which is a good thing right so things
are too good and we want to slow down a
little bit
but you don't do that now you know it's
like if you're driving down your car
down the road and you need to turn left
in five miles
you don't turn left now you're gonna
crash on the side of the road you wait
till you get to your exit
right so that's how fiscal policy works
you don't lead the target like that
that's just
that's absurdity right and so it's that
left like sanders elizabeth
that's what their primary proposals are
those are good i like their proposals
but because they tie them to how they're
going to pay for it
it kills the proposals they're
non-starters and here we are sitting
here 20 years later we still don't have
the things we should have done 20 years
ago
and i'm still saying the same thing i've
been saying for 20 years i'm glad you're
listening
so i think alex hack uh who's also a
candidate for
coral gables city commission uh i
believe he has a question
alex you're muted okay there you go
you're good uh
hi one uh just a quick question in
regards to uh
what we were talking about in uh
the wealth tax and whatnot and sort of
um
understanding all the all the jargon how
how do we go about like taking that to
the average voter
because with like the republicans and
conservatives they've been able to turn
like wealth tax and the estate tax into
the death tax
the great boogeyman and so i was just
wondering is there a way that we can
effectively brand
wealth tax and any kind of real fiscal
responsibility on
working-class families to bet to to get
them to
to see our point of view
okay well you don't i would not lead
with the wealth tax at all
what i've proposed is cutting cutting
off the wealth at source
rather than trying to take it away after
the person's turn
uh if nothing else to
the level you know it's been shown for
the size of futility so i'm not against
it but i recognize it
as not the starting place to solve to
address this issue
okay so there are certain there are
certain starting requests
one of them is zero too straight
you need to make that permanent just is
what i call it is basic income for
people who already have money
it's a major contributor to these
various incomes if you look
that disparity of income has actually
stopped getting worse the last few years
now that we've had zero interest rate
costs and so we want to keep that in
place
to keep uh you know we've got that leg
up now on that problem
it's been one step there are a lot of
steps necessary it's a one you know a
substantial step that has to stay there
the government's probably would be
paying 500 billion dollars more in
interest
to the economy if rates were higher and
that would all go to uh higher income
people because it only goes to people
who already have money
it doesn't go anywhere for all practical
purposes so it's just basic income for
people who already have money now some
people are in favor of basic
income but none of them i don't think
are in favor of basic income only for
people who already have money
right so i don't think there's any
constituency for that so it should be
that understanding should be uh fairly
easy to
promote now what it's going to require
is the uh leadership of the democratic
party to recognize it as
uh critical to be able to get your
message across
and and um sustain that
party and sustain its uh position
the leadership
uh so alex do you have a follow-up to
that or
did he answer your question
uh you're muted sorry
that's weird uh no warren you you
answered my question
um if i have any other questions i'll
try to answer
this oh hold on hold on i think we have
some connectivity okay yeah warren
you're back
all right um okay uh
okay so you have the party
right you have to have elizabeth warren
leading the promotion
and not working against you right
so uh the good news is that we do have
some of the the local party leadership
uh on the call so that's why i made sure
that they came in to listen in
um now uh warren so on that note
uh would you then suggest that you know
when it comes at least because we're
talking really at the federal level
right because this is where that's the
most relevant um how about
at the county or statewide level like
what is what makes the county or
statewide level different from the
federal level
so let me give you an analogy so
let's say uh the government uh
could create a drought and then
it it can also make it rain that would
be this the drought would be the taxes
it could also make it rain that's
suspended
okay and it
and it's it's you know there's a drought
and it's
so there's a water shortage on earth
because the government thinks
you know it's gonna balance its budget
or
it's afraid to make it rain because it's
afraid to create inflation or something
and it's not doing it so what what can
the farmer do
if the government's not allowing it to
rain properly
you know not a whole lot we're we're a
federation we're a union we're a
republic
where we've given these responsibilities
to a federal government the states have
given it to us federal government and no
longer
uh has the you know uh the control
that it might have had if it was just
the states
and so there's it's good
there are uh benefits and there are uh
you know positives and negatives to
doing that
uh the same things happen in the
european union where they've all given
the ability to deficit spend
to the european central bank basically
through these channels
and uh it's not deficit spending enough
to have european prosperity and so
they're kind of stuck with that
and over here we're in the same position
sometimes it happens where the
federal government has a large enough
deficit it's not just the federal
government well yeah federal government
has a large enough deficit
uh for prosperity and we're okay
other times it doesn't and we're just
all stuck with it until it figures out
what it has to do and the the
interesting thing is
that the total deficit spending is a
combination between
public and private they both count just
as much if you go out and borrow money
to buy a house that costs the same as if
the federal government goes out
and deficit spend spends more than it
gets
can you actually unpack because so just
to give everyone a bit of background i
mean you you worked
as a banker for many years so um you
know can you unpack
the the private sector's deficit uh so
to
so here's here's the way capitalism
monetary capitalism works
if anybody spends less than his income
there's a problem right so in the way
it's called the paradox of script and
the best way to the easiest way to
understand it
suppose nobody spent anything what would
happen
well uh and everybody just wanted to
save all their money nobody would spend
anything
well then there'd be no sales and to be
no income because that's where income
comes from sales
and the economy would go to zero it
would be nothing nothing would be
happening everything would collapse
okay so that's that's on the total level
if nobody spent anything
well if anybody doesn't spend
some of their income there's not enough
spending
for the rest of the people to sell their
products
okay and that's that's just what they
call an accounting identity
if the gdp was 25 trillion dollars last
year
it means 25 trillion was spent and 25
trillion was earned
for every dollar you spend somebody else
is earning a dollar it's getting it down
and so if those people didn't spend
their 25 trillion of earnings you
wouldn't have the 25 trillion to spend
on their products
if anybody doesn't spend a penny
then there's a penny short unless
somebody spends
a penny more than their income and so
the way to say it to sum it up is for
everybody who spends less than their
income somebody else has to spend more
than their income
but the output would not have been sold
last year it always applies to last year
looking back you can say
for everybody who spent less than their
income someone else spent
more than their income otherwise we
wouldn't have had 25 trillion
and so who is spending less than their
income well every time you save money
the dollar in your pocket
put money in your ira payroll deductions
for anything
you're spending less than your income
and who spends more than their income
well anybody who borrows to buy a house
or borrows to buy a car they're spending
more than their income
making up for all those people who spent
less than and the federal government
spends more than its income it spends
more
uh than it taxes okay
spending is a higher number than the
taxes it changes numbers up
more than it changes numbers down that's
called spending more than
right and so uh it's so the
public sector spends more than its
income and many aspects
many agents in the private sector
businesses spend more than their income
when they invest in
new plant equipment they borrow money to
buy things
so uh so we have the both sectors
spending more than their income
and that's called deficit spending
anytime you spend more than your income
is called deficit spending
what happens in the slowdown is the
private sector stops deficit spending
because it doesn't qualify you lose your
job you can't buy a house you can't buy
a car the banks won't lend you
nor should they so that means in a
slowdown the government has to step it
up
with its deficit spending it has to tax
less or spend more
to offset people's desire to save
because the private sector is not doing
the deficit spending
and the buzzword for that is pro-cyclic
private sector
when things slow down it slows down when
things speed up it speeds up it's always
you know accelerating the problem the
government can act counter cyclical
it can do more deficit spending and the
private sector is doing less
and you can do less deficit spending
when the private sector is doing more
to keep the economy in balance does that
answer your question
so i want to make sure that uh everyone
understands
you know exactly what's what's being
said here is that you know the the
right way to look at the economy is that
it is
a series of accounts and they all have
to balance out
right um there there is you know even if
you take into consideration
uh trade uh which is you know its own
its own animal
um but even if you take into
consideration trade uh you know there's
there's imports right there's exports
and then there's capital inflows and
capital outflows
which cover those things right um so
when we're talking about
the public sector doing a deficit right
we're talking about the federal
government spending
you know uh you know whatever was two
three trillion dollars
more than it's collected in taxes that
two three trillion dollars isn't just
going into
a black hole right that's that's going
to the private sector
correct yes privacy today
right now the you know and when i say
the private sector that would include
residents
and non-residents that goes to people
who live here and people who live
overseas
somebody in china might be selling us
something
earning dollars and not spending them
that's unspent income
that means we could have lower taxes or
more public services
the government can spend more than its
income to make up for it so the trade
deficit's a good thing
it allows us to have fiscal space much
higher public services
because it means all those people in the
world are selling things
and not spending their income so that's
a benefit for us which is another thing
the democrats and the republicans both
have wrong this whole
policy against imports is taking away
our physical space
it's taking a using up things
you know that the proposals are it's
giving us things for sale
the trade deaths it means that
we have all these non-farmers i say
non-residents of people who don't live
here
selling things and not spending their
income and so now all those things are
for sale
and they can be bought by entities who
are going to spend more than their
income
and that can be the federal government
and they're giving us the fiscal space
we need for the green new deal
if we get rid of that trade deficit five
six seven hundred billion
a year we have that much less room
for uh government spending on public
services
to uh to meet our needs and we have to
get that room through higher taxes
so the short answer is if we eliminate
the trade deficit of 600
700 billion we'd have to raise taxes by
700
uh and uh and this the whole argument
was out there when unemployment was
three percent
we're very close to full employment by
you know some measures
it's not that there aren't still a lot
of people available could have worked
but we were reasonably close you know a
lot closer than we've been in years
and uh both parties have a wrong
heart and they double down on it and
that has to go that's working against
progressive agenda uh you know big time
so uh i call it the innocent fraud of
the trade deaths
that's right so uh we have a robert
dempster
who's uh the outreach chair for the
miami-dade democratic party um
and also the chair of the progressive
caucus uh robert do you want to ask your
question
uh sure hang on a second
hi nice to meet you warren thank you so
much for uh you know for taking the time
to speak with everyone here today i find
you know what you're talking about very
you know fascinating i
actually went to school and got an
economics degree so i'm really
into what you're talking about um
specifically with regards to what you
just discussed with um
with regards to spending um how do you
see the
the extreme accumulation of wealth at
the upper end of the private sector
you know affecting what you're
discussing with regards to private
sector spending
so what that does is that's all unspent
income
it's better that they don't spend it
because then it allows for your
lower taxes we get rid of some
regressive taxes we've got some horribly
regressive taxes
sales taxes or uh we could increase
public services
we have increased public services
because because of that
okay so that's actually it's not good
that they
earn that much money necessarily but
it's good that they haven't spent it
right because think of the man in the
moon if he won the national lottery
one 20 trillion dollars and he just kept
it all in the bank and never did
anything how would anybody even know
okay it would have no effect on the
economy at all no effect on anybody's
life or income
some accountant would say that public
debt's gone up by 20 trillion but
you know apart from that he didn't
happen to say that nobody would ever
know the difference
be no no effect on the real world so
that unspent income is actually a good
thing the bad part of it is that it buys
influence and buys power
and that power influence a
can be getting used in ways we don't
want to be it's not um democratic praise
you suddenly don't have representative
government based on one man one vote it
becomes one dollar one vote
can i give you my uh campaign finance
proposal
yeah sure all right this because
this is fundamental to all because what
you've touched on is
this thing we've created this you know a
universe of
several thousand billionaires who can
have you know a disproportionate amount
of political power because
you know how do you address that so i
came up with this
60 40 proposal and it doesn't have to be
exactly 60 40.
that's just to make the point where
anybody can donate
as much as they want to any political
candidate
in the us uh and you can be from
anywhere but
out of every hundred dollars you donate
40 goes to the opposition
all right and i think that goes a long
way
in eliminating the influence of money in
politics
because the opposition is getting 40
it's still a pretty good chunk of money
and they're not beholden to anybody came
from the oppositions
uh donation the donation isn't worth as
much as
to the party to the intended party as it
is today by a long shot
because the other side's getting enough
money to talk back
and i'm thinking 40 is probably enough
to answer a 60
uh you know percent contribution so yeah
there's no government involved no given
money yeah and it's easily enforced
and you're not taking away anybody's
constitutional rights
so uh i just wanted to touch a little
bit on one thing you just said right now
um because this is something that i feel
like people uh
fail to really articulate which is that
the problem with having
extreme wealth uh at the top right
where you know somebody who has you know
50 mil
i'm closer uh to someone who has
50 million dollars net worth than that
person is to jeff bezos
by a long shot right by an order of
magnitude a difference
right um the bad thing about having
the jeff bezos and the elon musk's who
have you know
well over 180 billion 170 billion these
are astronomical numbers
is that it's not so much of the
economics but
more so the politics right where you now
have
individuals who can basically exert
uh astronomically more power
over you know your average citizen and
that makes it undemocratic
am i getting that correctly yes and
also they control uh investment to a
disproportionate degree
they can decide we're going to invest in
you know lung cancer research rather
than covered research
for example you know it doesn't it's not
it's not democratically decided
they can decide they're going to build a
new library whether anybody else
wants one or not as long as the zoning
law is permitted
and so you get an enormous amount of
resources directed by these types of
people
donating new football stadiums or
whatever they're doing
uh that don't necessarily serve public
purposes would not have been
the first choice of you know a
democratically a democratic body
that's right now um i did also want the
great
the great pyramids like the great
pyramids you think those people wanted
to do that
they're right exactly and i think it's a
point that often gets missed by people
who
you know i consider myself to be on the
left
uh and i think that that articulation
makes a lot of sense where
you know when you hear miami for example
right we have a lot of
uh multi-billion dollar developing
companies
miami has a very strong construction
real estate economy
and you know you basically have a
situation where
these multi-billion dollar developers
can basically buy off the city
commission
or you know whatever municipality uh uh
they want to invest in
and you know purchase and construct
luxury condos
when you know young people like myself
would much rather have affordable
housing
right
oh warren you still there right
yeah all right can you hear me yeah
there you go you're back yeah
i i heard you yeah um
yeah i heard everything uh yeah you know
more medical research and cure cancer
rather than
build more condoms you know this
trade-offs are
hard to have public transportation
you know rather than yeah you've been to
the extent there's a tree
have you been to miami are you familiar
with our public transport system
yeah i lived in uh west pont you know
for 20 years
yeah cry rail and all that yeah yeah the
public transportation
system is very sad here i have a
proposal to drive transportation that
is so distasteful to so many people
but it does work and
just to make a point and that is if you
set the private the speed limit for
private transportation at 30 miles an
hour
you will have very public transportation
very short order because
in the sense that time is money for the
wealthier people they're
the time that they spend at 30 miles an
hour is worth a lot more to them than
our time right and uh they'll make sure
that public transportation goes where
they can go 70 or 80 so they can get
where they want to be on time right
they're not going to sit at 30 miles an
hour going cross country
and the only other way to do that is
going to be public transportation
and so to me the way to drive it is to
recognize the value of time of people
who have money
and to put a price on it for them
and that that does it well what do i
hear oh no i want to be
you can't take away my right to drive 60
miles an hour what if i wanted to
you know so it's kind of a fallacy a
composition thing
no that's right that's right it doesn't
get anywhere but to me that's how you
drive
public transportation take away the
speed of private transportation that's
the real valuable commodity to high-end
people
now now one dilemma that you know
because again like
uh you know we're the young democrats of
miami-dade uh you know we have
representatives from the miami-dade
county party
um you know we have our people some of
our people got elected to county
commission
in fact uh you know the current mayor
miami-dade county
uh the democratic party uh strongly
supported her
uh you know gave her resources she ended
up winning
even though it was a non-partisan race
um however
the the real the reality of especially
in
terms of local politics is that there is
a limitation uh in our ability to to
mobilize
resources now i kind of want to pick
your brain a little bit on this regard
because
you know i do know that there can be
a way for municipals to issue municipal
bonds
to then be able to uh do public
investments
now they don't want to do that because
they don't want to take responsibility
if things don't match out but i wanted
to get your perspective
would it be worth doing a little bit of
deficit spending at the county level
to do things like public transportation
and and so and so what do you think
about that
you know they can do it and i have ways
to do it at very low interest rates but
it's going to limit them to probably 10
of the current tax base so uh if their
tax base is 100 million they could get
an extra
10 million five five to ten million a
year which is something but it's not
you know it is limited okay and and they
can issue tax credits
and they can issue longer term tax
credits they can issue interest bearing
tax bills
to get people to buy those things so
that they can get funding by doing that
but you can you know you can turn
yourself into puerto rico pretty easily
if you're not careful because you are
playing with fire to something
but in difficult times it can be done
and it can get you through
right and actually now you touched on
puerto rico i do want to
emphasize this part because we kind of
glossed over it um
there is this significant difference
between something like
greece and puerto rico versus let's say
uh you know japan and you know the
united states
uh federal government uh can you expand
a little bit on this idea of monetary
sovereignty
yeah you know i don't use that word and
the others picked it up and i've stayed
away from it because it's
it changes the definition of the word
sovereignty the way it's normally used
and so i feel it just adds to the
confusion so
if i can i can i can give you the answer
without using that word
no problem okay so it comes back to
sequence
the federal government spends first to
provide the dollars that can be used to
pay taxes
the local government has to get the
dollars first before it can spend
so it's entirely different i think
greece
when it had drachma had to spend drachma
first before dracula taxes could be paid
when they switched to the euro greece
became like florida
or california or puerto rico where
greece has to get the euro first before
it can spend so think about
what your sequence is what you have to
do first so um
the local governments have to get
dollars before they can spend it's not
the same for the federal government
federal government's the opposite
uh and so yeah
i mean that's that's that's the
fundamental difference now what some
people have done is
called used a work made up a word for
that that they call monetary sovereignty
which they apply to those who spend
first without actually saying that
then then they give you conditions of
what you have to be and
those don't always apply either they're
they're they're not consistent so i i
think it's
for me personally we are
kind of on record for everything i've
said for the last 35 years
i i don't use that word because
it just doesn't fit sure in terms of
narrative no problem now um the other
the other issue uh that oftentimes gets
into people's heads besides the how do
you pay for it which i think we've
thoroughly
uh uh showed that that's not it doesn't
apply
um is the question of inflation right
now um i am a student of history
uh i know for a fact the united states
has never
experienced any significant inflation
other than the 70s and the 70s
even then was pretty mild by historical
standards right 10 percent
um now you not only know about the
summer economics point of view
uh you lived through all that um so if
you can
actually explain you know why is
the fear of inflation in the united
states
totally overblown and why comparisons to
venezuela are totally nonsensical
well generally people
prefer unemployment to inflation i just
noticed that
and so if you know if there's 10 percent
unemployment
90 of the people have jobs and 10
unemployment is very high so now they
can you know hire a plumber and
electrician pretty cheap because all
those people are at work
they kind of like that so unemployment
is
until it hits close to home it gets
large enough
it gets widespread enough people kind of
like it they don't like the idea that uh
gee i gotta pay seventy dollars an hour
for plumber but if they're
you know when they look at their own
salary they you know they're earning a
hundred dollars an hour or whatever
two hundred thousand dollars a year
working for the city that's okay
but they don't think i should have to
pay that for somebody else who's doing
some
work it takes a lot more knowledge than
i don't want to do
and when you don't have you know high
unemployment then uh
you know you got to pay you got to pay
more to get people to come and do things
you don't have desperate people out
there willing to work for you how many
people say oh i
visited this country you know panama or
something what a great place i could get
dinner for four dollars
it's like okay you know but that's human
nature
all right yeah you go to a place that's
desperate enough you're going to get
things for very little money and
therefore you like that place okay so
but that tells you a lot about people so
people uh prefer high unemployment
low inflation they think inflation is
the government robbing them of their
savings which is
in dollars and that um
it's a form of theft and so they don't
they don't like it
and they're against it so you get people
you're you know um spooked very easily
by
talk about possible inflation
overheating economy and those kinds of
things
so i think you know so i'm answering
that part of your question now the next
thing is
like what is it uh only
the interesting thing is everybody says
modern monetary theory well
one thing they don't understand is
inflation it's the one thing
that no one else understands except
modern monetary
we understand the source of the price
level why prices are where they are
if you ask any mainstream economist
you know why are prices where they are
they don't know
they have to say well you know like how
did they get
get to where they are how did this
computer why is it a thousand dollars
not a hundred thousand
not a dollar why is the price level
where it is today
they could say oh it's because it's
three percent higher than it was a year
ago
well why was it there a year ago well
it's because it was two
percent higher than the year
they can give you an infinite regression
but they can't tell you where it came
from
where it started from and their model
so if this thing's worth three times you
want to price it yeah and it's a hundred
yen this is 300.
i'm going to price it in you know
euro they'll tell you but they can't
they can't say where it came from so
the government has the dollars that we
need it's a simple monopoly it's got
all this it's got the supply it tells us
what the price is
there's no other way for it to work
what's the price of a ticket to the
orange ball it's whatever the
operator charges if he charges too much
he might not get anybody
that's still the price if he doesn't
charge enough they'll be able to line up
the door but that's still the price
the price of his tickets doesn't change
until he tells his ticket clerk look
change the price
okay he tells you what you have to do to
get his
ticket what you have to do in exchange
so when the government tells us
you have to serve a year in the military
to earn 50 000 of these dollars
they're telling us what we have to do to
get its dollars
that don't come from anywhere else when
it buys
anything it's making a statement as to
what has to be done to get
its money and it does this every single
time it spans
we have no choice you know they're
pitching and we're catching it's their
dollars
if they say if they say look we're not
going to pay
a penny more
this year than we paid last year period
and suddenly prices go up and everybody
raises their prices by
10. well government spending would go to
zero
now there's four trillion in taxes that
have to be paid and no government
spending
where's that coming from it isn't okay
the economy will be
forced through people selling going out
of business to lower their prices
and it won't stop until they sell to the
government to get their
trillions of dollars they need to pay
taxes and if the government says this is
what i'm going to pay we're stuck
now i'm not saying it's good politics a
good policy to do that
yeah you know it's not worth throwing an
economy into reverse just to keep prices
from going up
it's not a good political choice but
that is how it works
and that is the first thing you learn in
economics one-on-one
microeconomics is monopoly somebody has
you know all the water and you're dying
of thirst they tell you the price
there's no market market requires many
sellers and many buyers
commonplace and information not some guy
who has it all and everybody else needs
it
or else you're dead right the government
is coercive the tax liabilities of
course if you get with your house
you need our money here's what you've
got to do get it take it or leave them
that's not what they're saying when they
spend but they don't know that
right now i think i think uh that point
they keep paying more and more every
year
oh sorry go ahead finish yeah there's a
little bit about
they don't know that okay the government
doesn't know it has that
influence or authority you know it
thinks it has to pay the prices people
are asking
right so it sees people asking a little
more money and it pays it they don't
realize they've just
changed the value of their money if they
do that every year
that's called inflation so it's the
government changing the value of its
money redefining it lower
by paying more and more for the same old
thing we're paying
twenty dollars an hour this year next
year we'll pay 25 the next year we'll
pay 30.
more and more dollars buys the same
amount of time
the value of the money's going down they
are the ones decreasing the value of
their own money by doing that
they don't even know it and and i think
they say oh wait a minute
justin trudeau i think i think that that
actually uh
goes into one of the reasons why
medicare for all works right so one of
the reasons why single-payer systems
work as a really good cost of cost
cutting
uh uh system in healthcare is that
the government has monopsony power where
they are the only buyers
and they can then uh negotiate prices
down where you know the case united
states where drug prices are out of
control i mean
i know uh warren you've been pretty much
all over the world and i know you've
traveled
to italy uh you know my grandmother's
from italy i've traveled italy a couple
times
um you know the prices that i tell
some of my italian relatives over there
for like american
uh prescription they think it's out you
know it's something that they can't even
understand
right uh the and that comes from the
fact that italy has
that single-payer system am i getting
that right
yeah you know i don't i don't know all
those details i know you're generally
correct so
i you know i couldn't argue it in a
debate right
now because i don't have that
to get information but we've got a
policy where we can't
because it's going to undermine the drug
companies we should be able to shop at
lowest prices and if there's a problem
with
drug companies you solve it some other
way other than making americans pay
100 times more for drugs there's other
ways if that does create a problem
much better ways you know much more
democratic
uh ways to solve those problems than
that that's that's not the
if we were buying all over the world uh
like other people can
and our drug companies have a problem
somebody would say oh i have the answer
let's have a let's have americans pay a
hundred times more
you know for other drugs i mean it just
wouldn't work it's just not a solution
so
but we're there and so we're stuck with
it right
now and so clean sheet of paper this
would never happen
and it's not it's not being looked at
that way so again that's the power
that's the problem of money in politics
and that's the problem
that has to start with my 60 40 solution
or something similar
to get that money and influence out of
out of congress
how are these people in congress
supporting this stuff
how do they get the votes to keep that
there something's you know what we know
you know my
answer to that question is like you know
what are you you know you must be new
here right we all know what's going on
uh i guarantee you no one in con a lot
of people in congress i think are even
uh
part of the silent generation at this
point yeah right
so right right but um uh warren so
uh you know i want to ask you a couple
more questions uh then i'll open it up
to the
to everyone else to ask anything they
they they uh
like uh warren is being very generous uh
he has no hard exit
but i don't want it to go too much past
2 30 p.m est um so
there is i have a question from uh
william byatt who's the
democratic uh state committee man his
question is a little wonky
uh so i apologize for those in the
audience who might not have some context
but what is the relationship between
the united states having reserve
currency status
meaning the us dollar is the one that
most central banks in the world have the
most of
in their foreign exchange reserves um
and does that play any role in our
ability to be
fiscally flexible so the short answer is
yes
that is what i was talking about before
another that's the unspent income
right where their countries have um
earned u.s dollars in this case by
selling
yen or by selling yuan or some other
currency they've earned us dollars
and they haven't spent them and so that
gives us fiscal space that gives us room
to have more public services and to uh
um or have lower taxes you know it's a
it's a political choice so
we should be thank them for doing that
and not criticize them for manipulating
their currencies
and trying to get them to stop doing it
so we can have more jobs
okay jobs are a real cost not a benefit
we've got that whole thing backwards
there's always more
work to be done than there is people do
it it's just a question of whether how
we're employing our population
uh if somebody else is willing to build
things for us so we don't have to employ
our population doing that
we can have more health care workers
more workers in public education more
medical research
you know more high-tech workers and
fewer whatever they're doing for us
so you know we're it's like we're trying
to kill this goose that's laying in gold
in there
right i i want to remind everyone that
it's it's a good thing the short answer
is yes it's
very
it gives us more physical space and
allows us to have higher
deficit
okay uh can you hear warren are you
there i'm back here
okay yeah yeah sort of some connectivity
lag um yeah i just want to remind
everyone that it's a good thing that
most of us are not
uh toiling in farming anymore um
right it's a good thing that you know
most of us don't have to work
in a in a factory anymore right the
transition
to away from that hard manual labor
it has been a good thing for humanity um
right
so um the the last little point i wanted
to
kind of circle back on was uh you know
talking about inflation
uh right now we have the 1.9 trillion
dollar
biden bill um which uh
will include 1400 checks for
i think now they moved it up to people
making up to a hundred thousand dollars
uh a year
now larry summers uh a very good friend
of yours i believe
um has stated that he thinks that this
will be
cause unimaginable inflation uh what do
you think about that
i i don't think so uh
number one it's mostly things like
unemployment compensation
and one-time checks so it's not
recurring
so whatever it's adding to the public
spending this year will not
the one times will not be adding next
year okay and
uh so if it changes if it becomes too
much demand
that causes prices to go up which i
don't see happening either not
the inflation but if it did it would be
a one-time increase in prices of one or
two or three percent
then it wouldn't happen after that you
just don't have to give the checks out
next year
so if prices go up too much this year
don't give them out next
the other thing is the rest of it is
going for unemployment compensation
and nobody's not nobody but and
the general's case is that no one's
income is
higher than it was when they were
working okay summer is a little higher
some a little lower but
let's just say the purpose of this
discussion nobody's income is higher
than it was when we were working
so you're not going to get you know more
spending
than we had before and um the other
thing is that
you're going to get less spending
because even though you collect
unemployment you don't qualify for loans
so a lot of consumer spending came from
uh buying cars or buying
electronics on payments for you know
time payments and when you don't when
you're unemployed you don't qualify so
we've lost the private sector's deficit
spending is way down
so this makes so some of the excess
income makes up for the lack of deficit
spending
and if you look at personal consumption
expenditures they're not they're down
they're not
all okay and so uh even with the extra
income
expenditures are down because of the
inability to buy through credit credits
weigh down
so and the the last part is
that if it does cause the economy to
do better if the economy does better for
any reason and employment goes back up
10 million people get their jobs back
well that's 10 million people who now
will not be collecting unemployment
and so that will automatically cut
government spending
we'll be right back where we were before
covet which was a relatively weak
economy that had already been drifting
down because of the
tariffs and uh it had been drifting down
dramatically so so you need to tell me
you mean to tell me that trump did not
have the greatest economy
in in human history you know i don't
want to speak out against the president
is this is this but you know no he did
not
of course and um it was doing okay
the tax cuts certainly didn't hurt but
then when he put the tariffs on
it just pulled the rug out of everything
and unfortunately the democrats
supported the terms
it was 90 approval across the board for
the terms
and the political leadership supported
terrorists
and supported all kinds of buy america
and president biden's just put in some
new buy america things
this is all taking away our precious
fiscal space that we're going to need
for the green new deal i'm not going to
get into specifics now
we're going to need trillions for that
and uh
we can't afford to you know to
just give away this this uh concede this
fiscal space like that
in such a you know when we don't have to
we're killing the goose that's laying
the golden eggs
giving us the fiscal room to do what
desperately needs to be done
and now we're promoting programs that
take it away for for nothing it's just
it's like it's like a new program to uh
outlaw lawn mowers
we all have to cut the grass with
scissors so we'll have more jobs so this
is
this is just madness so you know what i
call i say it's confusing a productivity
story with an unemployment story
that's exactly what it's doing and both
parties have done that and the first
party that gets these things right
is has got the high ground on everything
and i've always
been rooting for the democrats to do
this but you know i'm
disappointed this is the first gathering
of democrats that's had me speaking from
in 30 years wow yeah and i think my
family were democrats and
you know i don't have a i don't belong
to either party but i certainly was
hoping that they would
crash this in 2010 i became a democrat
temporarily when i ran for senate in
connecticut but after going to a couple
of meetings i just dropped out and ran
as an independent
uh just because i couldn't support any
you know don't worry
you're you're you're in good company
though don't worry
you know hopefully things have changed
and this is the right brand if there's a
good branch to the power
of the party i could have associated
with i would have done it but back then
there wasn't
absolutely totally understood um well
you know i could uh keep asking a
million questions but i do
have an audience here that i want to
open it up um
does anyone uh have any questions for
warren
uh robert go ahead i saw your first post
i posted one in the chat
adrian i'm just gonna go back to that
one if i can find it
well let me just do it from memory here
so it seems like economically we could
produce a progressive agenda is that
correct
yes in fact it's it relieves economic
stress to take on a progressive agenda
it doesn't
stress anything it's the opposite
and and such an agenda would generate
much income as well
in terms of taxation even though
taxation's not needed to fund all this
correct right so if it would return the
government spends dollars
and then taxation returns those dollars
to the government
so whether more or fewer of those
dollars get returned to the government
isn't particularly consequential except
i don't know
really i'm sorry unless you have a bet
on it or something what really stops
this warren
is politics yes entirely
thank you i call it the space between
our ears
all right so by the way uh transparent
uh facilitation here uh you have an
invite to come speak to
the new york progressive action network
i'm on their board of directors
we're a very progressive organization
we're also democratic mostly but we're
frustrated with the democratic party as
well
um and we meet regularly um and i'm one
of the chapter heads
on activists as well so you got an open
invite to come talk to us
whenever we'll work around your schedule
you know any at any time anytime
i'll drop everything to do it just i
mean i'm very excited
i'll even stop my further questions
right now because i'm that excited
thanks adrian yes no thank you robert
appreciate it um
so does anyone else have any questions
hi yes i have a question yes uh
susan go ahead yes so um
thank you warren i've i always enjoy
listening to you i'm learning a lot
still
and so my question is what i'm
interested in is so as i understand
selling the treasury bonds is a policy
choice and it's done to
this is the shock lay person's version
but it's done to control
overnight interest rates and then also
because people like them because it's a
guaranteed risk free for investment
so but the problem with that is that
everybody is obsessed about now the
national debt
so i've heard one way to get rid of that
is just to sell
stop selling treasury bonds and then
we'll do away with
having like this national debt quote
unquote problem
um so and i know you've also mentioned
zurp so i guess if we stopped doing that
then it would drop
automatic the interest rate would drop
to zero i'm not sure
i just wanted to know what you think
about that and if we did stop selling
bonds is that something that you think
is a good idea
and would you um uh like
what would that look like how would it
change what we're currently doing now
how we do it now
i guess
all right so you know functionally now
if we
kept interest rates at zero permanently
just had congress tell the fed leave
them at zero
and told the treasury don't sell
anything longer than a three-month
treasury bill
then interest rates would stay at zero
the public debt would go up there'd be
no interest and no payments do ever it
would not be a budget item
and so for all practical purposes that
would accomplish the same thing
and it would still be the public debt
for accounting purposes because
it's a liability because these dollars
are tax credits that the government has
awarded or spent and so they consider
those
uh for accounting purposes those
liabilities are debt
so we can let them have their little
dialogue you know it doesn't really
matter
their narrative and but functionally
it would we'd be operating as if uh
there was no public debt
according to the people who want to
abolish that you'd be in the same place
and so it can be done very easily under
current institutional structure by
going to a permanent zero percent rate
and telling the treasury not to sell
anything longer than a
three-month treasury bill and then that
accomplishes everything that
no debt people would ever dreamed of
perfect uh susan do you have a follow-up
or is that okay
no that's great thank you let me let me
add one important thing
look the central banks around the world
and the central banker richard warren
are just
uh paper honest they've got the interest
rate thing backwards
they all think raising rates bites
inflation
they say well what if you create
inflation we have to raise rates public
debt system valid interest
raising rates does not fight inflation
raising rates makes inflation
worse and he collected all the data to
show it
i've been i wrote my paper on it 1996.
okay and it's not
so for me it isn't anything new it's
something i've tried to explain for a
long time i've done a lot of
i've got published journal papers on
this how it makes it worse but
you know i don't have the credibility of
larry summers but uh if you look at the
new keynesian
economics which is larry summers and
paul krugman
it's very interesting because uh paul
krugman gotten a debate with
stephanie kelton on bloomberg and she
came to me towards the end to
his last response and stephanie had done
a paper for me years ago showing that
higher rates makes inflation worse
i said look in their new keynesian
economics what they say is
you can't support all these progressive
programs you can't have a job guarantee
in medicare for all because
if you let the public debt get too high
then if you raise rates to fight
inflation
it makes it worse because all that
interest causes more inflation
and i said stephanie you have to say
look you're absolutely correct
except we're already there long ago the
public debt was high enough where
raising rates
caused more inflation so we're already
at that point
so we don't have to worry about making
the public debt larger because we won't
be able to raise rates to fight
inflation
we already can't raise rates to fight
inflation raising rates already makes
inflation worse
and it has for the last 50 years and all
the data shows it as
you know foreign central banker richard
warner documented
a year or so ago in one of his journal
papers
so uh again
it's sort of like sequence things are
backwards so we've got backwards that
the government has to get money to spend
instead we have to get their money to
pay taxes we know that's bad
the other thing that's backwards is
interest rates raising money
causes raising rates causes the economy
to
get better causes inflation to go up
because the government's paying out all
this interest income
it's basic income it's paying it to
people who already have money which yes
it helps the economy but who wants to do
that
and who wants to create inflation like
nobody that's your last choice
you never want that lowering rates makes
the economy worse it slows it down
we've now got 30 years of data from
japan and 10 years from the u.s
in europe showing that the zero rates
have slowed the economies down
growth is all a lot less than it was
the rates was higher and they're still
thinking
it's like a little kid you know 30 years
they were asking about it they said
well we just need a little more time 30
years it's all right
it's going to work we just need more
time mario draghi said the same thing
when he was
at the european central bank we just
needed a little more time and janet
yellen said the same thing
we just need a little more time they're
wrong they've got it backwards
okay and uh i'll leave it at that
perfect
uh robert did you have a follow-up yeah
i did i hate to lose this opportunity
because he's
uh why aren't you making my my brain
spin in a good way
um you know in japan japan has been
deficit spending for what two decades
now
and they have a tremendous debt and they
have inflation in check
so it looks like there's a lot of
spending one can do before you get to a
weimar republic
so i guess i want to know what's the
difference between japan and where they
are right now
and getting to the by my republic in
terms of spending
and what happens so i i just did a
paper uh i'm a republican
with phil armstrong it's pretty
interesting so uh
what happened there was they were hit
with war reparations
and they were forced to sell marks to
buy franks to buy pounds to buy gold
and there was what they called an agent
general was set up to do this the agent
general had the authority to sell the
german currency to buy this and it was
equal to like fifty percent of gdp
or more like five percent a month that
they were selling
marks you know market knew they had to
do it all the global markets do it and
so the
exchange rate just went down down down
you know and a lot of their things were
imported like food and things like that
because
their economy had been devastated and so
the price of imports went
up which becomes and the government paid
the higher prices for those imports
to redefine the value of the market
lower so when it bought for an exchange
at
higher prices paid more marks for the
same number of pounds
frank's then uh it was
inflating its currency redefining it at
a lower amount and when it
paid for food and other imports at
higher prices it was saying okay
you know the mark's worth that much less
and i was doing it every month
for increasing amounts and it didn't
stop until the allies changed the war
reparation
formula so they didn't have to do that
anymore and when it did stop
because a guy named shots was head of
this central bank there
the inflation went to zero as soon as
the government was no longer forced to
pay higher and higher prices for all
these things
inflation went to zero so it's it's a
one-time event inflation it's not
something where if it starts to get out
of control it runs away
it's it's got to be nurtured
by policy forcing the government or
voluntarily the government voluntarily
just paying more and more for the same
things
whenever it stops the inflation stops
oh uh uh robert you're muted
sorry so the united states honestly
could never get to a vinyl war republic
correct like when people throw that back
at you and say hey you know we don't
want to be like that
there were so many other things that
happened to make that happen
how could we ever get that you know our
inflation out of control
i guess what i'm saying would you agree
yeah you know we could see i i
i would say generally yes and you know
what happens is
you look at venezuela or places like
that
and they they
lose control of the executive takes over
the justice system
they lose control of the society in
general and they have an agenda
to sell the currency for foreign
exchange
to just put a block with the line in
their own pocket
please do is google
corruption venezuela and
you'll see these people in miami were
caught in dollars
oh yeah thousands of soldiers buy
dollars and
bought condos in miami or something
yeah the that's one guy right the
venezuelan currency
the venezuelan term for that is uh uh
enchufalo
uh which basically means the plugged in
ones so
yeah yeah the insiders yeah so the
insiders are
sell are getting phony loans loans on uh
insider loans for banks without any
pretense of paying back
they get foreign exchange they sell it i
mean they they get boulevard they sell
it they take the foreign exchange
investors
you know in the us or whatever and when
they sell their own currency to get the
dollars
they borrow their own dollars from their
local bank
their own currency the boulevards they
then sell those which drive exchange
rates
take the dollars and use them elsewhere
and so uh
you keep driving the foreign exchange
rate down by those numbers
every day and imported prices go up
and uh that's your inflation rate and
then the government pays off it gives it
pays its employees enough to pay those
prices and now
the indexation of wages to imports just
sustains the whole process
it doesn't end until you do something
about that
and it's very very difficult to do
anything about that form of corruption
it's non-violent and it's it's insidious
and it's it's uh
pervasive so
we actually have a candidate for u.s
congress here uh miss christina livo
would you like to make a statement
before you go
hi thank you so much i i'm actually at
work which is why i'm hiding
but but i just wanted to say that i
am so happy i i'm a progressive i
lean very far to the left i push a lot
of these policies
of medicare for all um
well i even push universal basic income
and a lot of people say how are you
going to get the money for it where is
it going to come from and my
number one thing is you know cutting the
military spending and
and taxing taxing big corporations
um and so now i almost feel like i need
to
re-strategize after listening to this
today but
um i'm just so grateful that you took
the time out
thank you well thanks for being here
please read my book
and i ran for senate in 2010 i didn't
get very many votes in connecticut
but i did get to meet dick blumenthal
and spend some time with him
and he eventually won and he read the
book and we went through and he says oh
yeah it's just like we learned in
harvard
you know when i went to school there and
he says you know but i can't is there
anybody else in congress
who understands this because i can't
just do this on my own
i don't know i'll let you know when
they're right so i agree
i agree like this whole time thinking
how could i even relay this to anyone i
can't do this on my own
people will think that i'm just making
this up
the other guy who understands it
implicitly is a guy named
uh hollins in uh virginia i think
spent a lot of time with him and same
thing he was very good he's very sharp
guy and he says yeah but i can't do this
so he's just he was just intellectually
dishonest otherwise
and so uh but if you could uh dick cat
partner is now gone
uh and then i was with dasho and those
guys there he's gone too
uh if you can get any of these people
together maybe
they get the courage to like explain how
the monetary system works i don't know
yeah warren i mean if you're if you uh
you know if you'd like to
uh you know post any kind of contact
information um
on the chat uh if even if you'd like to
just watch my facebook
am i on facebook okay in chat
i will definitely reach out to you on
facebook um only because
i'm a regular person running for
congress it's not like i'm a politician
so sometimes i need to hear the
information maybe once or twice before
it actually
you know i can actually regurgitate it
back you know that's what the book you
like the book because it's short
number one and it's it's non-technical
completely non-technical
uh it's got good examples you can use to
show people how it works and also i'm
warren.mosler
gmail.com
that's my email perfect all right
so we're just over 237 um
so i think i think that pretty much
settles it unless there's any last uh
question
okay i think we're good um so
warren i wanted to thank you so much for
being so generous with your time not
just today but really the last uh
i mean how long has it been now three
decades at least
yeah since 1990 two whatever
yeah right so before i was born uh you
know not to that's to make you feel you
know
but literally um you know but i am
trying to get a lot more
of my contemporaries uh up to date on
this information
um you know i know that uh robert
dempster uh who is with the the
miami-dade party
uh you know we could probably set
something up with them as well
um because i think that you know
having mainstream politicians understand
this stuff
um especially younger democrats
is going to be one of the ways where at
least in the long run
uh you know we can we can we can win the
argument
so we very much appreciate your time
it's not another
message there but i've got stephanie
kelton has something like over 100 000
followers on twitter
and i've got maybe i got 18 or 19 000 so
there's a presence there
definitely definitely yeah and we're
also going to work on getting uh
professor kelson
on as well so uh so thank you everyone
for showing up
good thank you thank you
thank you
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