The IMF finds that a dollar of spending increases output by nearly $3
October 7, 2014
It has been joked that the letters IMF stand for "it's mostly fiscal." The International Monetary Fund has long been a stalwart advocate of austerity as the route out of financial crisis, and every year it chastises dozens of countries for their fiscal indiscipline. Fiscal consolidation – a euphemism for cuts to government spending – is a staple of the fund's rescue programmes. A year ago the IMF was suggesting that the US had a fiscal gap of as much as 10 per cent of gross domestic product.
All of this makes the IMF's recently published World Economic Outlook a remarkable and important document. In its flagship publication, the IMF advocates substantially increased public infrastructure investment, and not just in the US but much of the world. It asserts that when unemployment is high, as it is in much of the industrialised world, the stimulative impact will be greater if investment is paid for by borrowing, rather than cutting other spending or raising taxes. Most notably, the IMF asserts that properly designed infrastructure investment will reduce rather than increase government debt burdens. Public infrastructure investments can pay for themselves.
Why does the IMF reach these conclusions? Consider a hypothetical investment in a new highway financed entirely with debt. Assume – counterfactually and conservatively – that the process of building the highway provides no stimulative benefit. Further assume that the investment earns only a 6 per cent real return, also a very conservative assumption given widely accepted estimates of the benefits of public investment. Then, annual tax collections adjusted for inflation would increase by 1.5 per cent of the amount invested, since the government claims about 25 cents out of every additional dollar of income. Real interest costs, that is interest costs less inflation, are below 1 per cent in the US and much of the industrialised world over horizons of up to 30 years. So infrastructure investment actually makes it possible to reduce burdens on future generations.
In fact, this calculation understates the positive budgetary impact of well-designed infrastructure investment, as the IMF recognised. It neglects the tax revenue that comes from the stimulative benefit of putting people to work constructing infrastructure, as well as the possible long-run benefits that come from combating recession. It neglects the reality that deferring infrastructure renewal places a burden on future generations just as surely as does government borrowing.
It ignores the fact that by increasing the economy's capacity, infrastructure investment increases the ability to handle any given level of debt. Critically, it takes no account of the fact that in many cases government can catalyse a dollar of infrastructure investment at a cost of much less than a dollar by providing a tranche of equity financing, a tax subsidy or a loan guarantee.
When it takes these factors into account, the IMF finds that a dollar of investment increases output by nearly $3. The budgetary arithmetic associated with infrastructure investment is especially attractive at a time when there are enough unused resources that greater infrastructure investment need not come at the expense of other spending. If we are entering a period of secular stagnation, unemployed resources could be available in much of the industrial world for quite some time.
While the case for investment applies almost everywhere – possibly excepting China, where infrastructure investment has been used a stimulus tool for some time – the appropriate strategy for doing more differs around the world.
The US needs long-term budgeting for infrastructure that recognises benefits as well as costs. Projects should be approved with reasonable speed. The government can contribute by supporting private investments in areas such as telecommunications and energy.
Europe needs mechanisms for carrying out self-financing infrastructure projects outside existing budget caps. This may be possible through the expansion of the European Investment Bank or more use of capital budget concepts in implementing fiscal reviews.
Emerging markets need to make sure that projects are chosen in a reasonable way based on economic benefit.
What is crucial everywhere is the recognition that in a time of economic shortfall and inadequate public investment, there is for once a free lunch – a way for governments to strengthen both the economy and their own financial positions. The IMF, a bastion of "tough love" austerity, has come to this important realisation. Countries with the wisdom to follow its lead will benefit.
The writer is Charles W Eliot university professor at Harvard and a former US Treasury secretary.
Economics for the People TLDR on money. cc: Randall Wray and he probably cc's: David Graeber
Where did money comefrom in the first place?economicsfor thepeople@Ka Burbank
so i've addressed a little bit about where dollars come from in a modern context.
but i have not yet talked about where money came from in human civilization.
and there's a really interesting story that you'll find in economics classes that is simply not true.
and i want to take us through that story and then explain a little bit about how it actually happened and where money really came from so the story goes like this there's a fisherman and someone who grows grain and there's a system of barter and trade and the fisherman trades fish for grain which requires the fishermen needing grain at the same time the man who grows grain needs fish.
and this didn't happen very frequently so they needed some medium of exchange so they started using seashells now they trade the seashells for the grain and that makes things easier except for the fact that seashells are perishable.
and so they start using things that are more valuable and eventually start using gold now gold is very valuable so much so that people will rob you of it and goldsmiths had dealt with this problem that's why they have safes so people started bringing their gold to the goldsmiths to store in the safes.
and they would issue a receipt then people started just using these receipts as the medium of exchange because it saved them the trouble of going to get the gold and they could always bring them back and redeem them for the gold with the goldsmiths and so the idea is that the receipts are the precursor to money now the goldsmiths realize not everyone's going to bring their receipt at the same time so they don't need to keep all of the gold in the safe just a reasonable fraction of it and so this became the modern deposit expansion process this is not how it actually happened.
uh they'll tell the story that the goldsmiths are the precursor to banks um but actually money predates markets and there's no real evidence of a full system of barter and trade and so this really turns the story that we've been telling ourselves on its head in fact the first money only came from authorities from what we can tell and money predates writing so we don't have something to read that will tell us the whole story the first writing that we've ever found is accounts of money and debt from what we can tell.
and so that really changes things so the first money that we can really point to is being issued by kings and leader we're running out of time.
we'll finish this in part two.
so where does money really come from.
i left off by saying that kings and authority figures were the original people who created money and issued currency.
and what this looked like in europe was it was in the form of tally sticks.
and they would create scores in the tally sticks and each score meant 20 which is it's still a term we used today and they would break the tally sticks and there would be a stock and a stub which are still terms we use today.
and they have to match up when they pay taxes so that the king knows you're not counterfeiting so why is the king making the people pay taxes does the king need the tally sticks no the king creates the tally sticks but when there's a demand for the currency because everyone has to pay this tax or else face punishment.
they will work to get the currency and so the authority figures manage society via money to get people to grow food and teach people and do all the necessary things for a society to function.
and we can look at a more modern example with something like the virginia colony which is an example that randall ray uses and the virginia legislator issued their own notes or virginia pounds at the same time they issued the notes they imposed a tax on the people there which uh created a demand for the currency it allowed people in the colony to do all the necessary things they they needed them to be doing to to build a new society and you might be wondering what they did when they got the notes back did they need their tax revenue did they need the money for anything no they issue the currency when they got the money back they burned it and so money is a tool for people to organize society.
and now we can look at who the authority figures have been throughout history who have issued the currency and managed monetary systems and almost always these systems have not been democratic and so we need to move towards a system of managing a fiat currency which means the authority figure or the government issues the currency that the people in that society use and they are the sole authority of issuing that currency. um when we have a fiat currency we need to move towards democratically managing that money in a way that the monetary system benefits everyone um sure we we probably still want to use money because it's a useful tool for organizing society but we haven't really been using it in the right way and that's what this whole thing modern monetary theory is that i talk about on my page and in the economics for the people playlist uh so if you want to learn more about this.
i would definitely look into randall ray and stephanie kelton, their great resources.
let's talk about money. cash. dollar bills. we use dollars every day but i bet if we went to a room with people and we asked everyone individually: where do dollars come from？ each person would give a slightly different response if not wildly different response from the next. this does not sit right with me. if we are all to participate in the monetary system, we should know how it works, something i heard when knocking doors and talking to voters all of the time was: i like the idea of better public education, and universal health care.. but i don't want my taxes to go up and this is one of the many lies we are told. is that in order for the government to spend money they must tax it out of the economy and collect it. this is not the case. the government must first issue the dollars in order to be able to collect them. the government has to spend first and then tax. Otherwise where does the money come from? who creates those dollars? it is illegal for private entities like you or me or business to print their own dollars. the dollars must come from the government. warren mosler has this great analogy of a football stadium- it doesn't collect tickets and then sell them. the issuer of anything must get it out there before they collect it, including the issuer of us dollars, the government. the federal reserve is an agent of the government. a lot of people are commenting on my videos saying ‘the federal reserve is this private entity’ this is not the case. uh by law if congress votes to pass spending, the fed must credit the account with the dollars. many people have this belief that we're still using the gold standard, and it's quite funny because we haven't since 1934. if you go to the federal reserve with a dollar you can't exchange it for anything except for maybe change. the fed's role is to be the scorekeeper for the us dollar. so think about a card game if i win the scorekeeper will say plus 100 points to jessica. however the scorekeeper is not losing 100 points. the scorekeeper just writes them down. and therefore they exist when banks have their accounts credited by the fed. the fed simply hits a button on the computer and it puts the money into the bank's accounts. in a similar way to the scorekeeper not losing anything when they give me 100 points. they wouldn't gain anything if they took points away from me as part of the game either the federal reserve when they spend money into the economy. they're not losing anything they have similarly they're not truly gaining anything when they tax it back. they're simply the score keeper. they control the amount of dollars that are out there in the economy that's how the government can and does credit its own accounts. and i talk about that more in this video. thanks for watching.
so i want to break that down it
is a big misconception that every dollar
we print or every dollar we put out into
the economy devalues every other dollar
already out there that's cute
that's an oversimplification it's not
how it works it's much more complicated
than that can we print more dollars?
yes.
are there limits to spending?
yes.
but we
are not spending enough right now when
we create dollars and when i say we i
mean the federal government we call this
deficit spending this is a bit
misleading don't think of a household
budget when you or i spend money we
don't have we take on debt that we have
to pay back but the federal government
is a currency issuer and they have a
different framework for making decisions
when it comes to managing our money
supply their red ink is our black ink so
when the federal government spends money.
they write it down in their red ink this
money goes out that money is black ink
somewhere someone gets that money those
dollars exist in the economy what we
really need to think about is how much
is going out there who gets it and what
are they using it for we do need to
think about inflation and how to
mitigate it we do not want prices to
rise faster than people's incomes.
and
thankfully we have economists like
warren mosler and stephanie kelton who
have given us a decision-making
framework on this the question.
becomes
how do we know how much to spend every
economy has its own internal speed limit
of sorts.
uh it's set by the real
productive resources in the real economy
so think about things like technology
workers land and resources now you need
money to put that stuff to use you've
got to pay workers and and front the
money that it costs to start a business
now that money
needs to come from somewhere and if the
private sector is not employing everyone
that suggests that the federal
government can step in
and spend some money to employ some
people to get things going to full speed.
so that we're using all of the real
productive resources that we have we
could allow the private sector to employ
as many people as they can and allow the
federal government to run programs like
building infrastructure and we would
employ the remainder of the working
population to do things that are useful
for everyone what we wouldn't do is
spend money into an economy that's
already running at full speed.
and zero
unemployment is a really good indicator
of that as stephanie kelton would put it
when we run our economy below its
productive capacity we are living below
our collective means we're not just
going out and throwing dollars out of a
helicopter
uh what we're doing is carefully making
decisions about what dollars should be
spent on in a way that increases
economic productivity
and yes that includes spending money on
education and healthcare.
mentioned nairu in my last video and got questions about it already, and realized there's not a great explainer of this anywhere on the internet um and it's really important it affects aspects of american life in every possible way. so what it is is it's an acronym for non-accelerating inflationary rate of unemployment. basically the federal reserve decides there is this magic number.
where unemployment rates must stay the theory is is if they drop below this number uh too many people will be employed they'll have jobs have money spended into the economy which increases demand and therefore increases prices inflation is up.
some food for thought would be if more people are working more people are being productive therefore supply increases as well. the federal reserve does not see it this way. so when you have unemployment rates dropping below this number. uh they increase interest rates now the federal reserve controls the money in the united states they make it more expensive for banks to get money and interest rates for loans go up as well for people who want to you know borrow money. and you need money you need capital to do anything in our economy you've got to buy tools you've got to pay workers etc. so if interest rates go up the idea is less people will want to do this and therefore less people will become employed in unemployment rates go back up similarly if unemployment rates go above this magic number they decrease the interest rates to get things going again. the problem is that they get this number that's very important wrong. and jerome powell the chairman of the federal reserve has admitted this.
unemployment has fallen about three full points since 2014 but inflation is no higher today than it was five years ago given these facts do you think it's possible that the fed's estimates of the lowest sustainable unemployment rate may have been too high?
absolutely.
i would argue that unemployment rates should be zero but in any case the federal reserve is getting this really important number wrong and it has real consequences millions of people are out of work uh unable to feed their families keep a roof over their head etc. because of this arbitrary number and you might be thinking well they're the federal reserve they have these sophisticated models maybe they figured it out and they're saving us all from the plague of inflation .
i don't believe that's the case.
uh the former fed governor daniel tarullo admitted that they have no working theory of inflation to inform their day-to-day decision-making similarly.
you know people have argued that these models are unproven if not unprovable.
自然失業率に非常によく似たものに、NAIRU（Non-Accelerating Inflation Rate of Unemployment、インフレ非加速的失業率）があり、両者は時に同一視される。NAIRUとはインフレ率を安定的に保つ失業率の閾値であり、失業率がNAIRUを下回るとインフレ率は上昇していくとされる。逆に述べると、インフレ率を上昇させ続けないという維持可能な経済において、もっとも雇用状態がいい場合の失業率がNAIRUである。長期均衡での失業率という概念的な面の強い自然失業率と異なり、NAIRUはただの閾値であり実際的な面が強い[5]。
COVID Teach In: The Deficit Myth and COVID Relief w/ Stephanie Kelton
Join People's Action and Stephanie Kelton Friday, December 18th for Part 2 of our COVID Teach-In Series!
WHO: Stephanie Kelton is a leading MMT (Modern Monetary Theory) economist and the author of New York Times Bestseller, The Deficit Myth. Kelton served as economic advisor to Sen. Bernie Sanders in 2016, and Chief Economist on the U.S. Senate Budget Committee. She was named by POLITICO as one of the 50 people most influencing the policy debate in America.
WHO:Jessica Burbank delivered a Ted Talk at Brown University on "A New Direction for the U.S. Economy," worked on the Bernie Sanders Presidential campaign in 2020, lectured in the International Studies department at Wells College as a Teaching Assistant, and is currently the Distributed Data Lead at People's Action.
WHAT: Stephanie and Jessica will lead us through a training and discussion about the realities of public spending, the infamous "deficit myth." and how we can engage in meaningful conversations about COVID Relief and the long term economic policies that our communities deserve.
… ever it deems appropriate right and the money will be there so i'm going to close on this the the answer that i usually give when people say you know how are you going to pay for it is you know the votes fund the spending
if you can find the votes you have found the money it's as simple as that so if you know uh senator sanders and senator hawley could go around and collect enough votes to support this 1200 payment that they have jointly um proposed then the money would be there it's just as simple as that the votes always are there when it comes to defense
right they're always there there's never a lack of votes and that funding always happens regularly every year there is an appropriation and an authorization for the military budget and they top it up over time because they feel generous and they say well we should probably put in a another 10 or 20 billion this year uh you know just because we can
um it's only when it comes to other priorities that we think our pockets are empty that the hand ringing starts over the deficit we got to stop falling for this.
and democrats in particular need to stop falling for it because they've been playing.you know.
Charlie brown to Lucy in the football for the last couple of decades at least and they continue to fall for this and every time they get in office they say you know we have to be the party of fiscal responsibility so i have to start working on the deficit and then republicans get in and they just disregard uh you know the deficit entirely and they focus on passing their agenda they're just laser focused say what do we want to accomplish let's pass our agenda democrats need to do that too what is it we want to accomplish approach the budgeting process in a mission oriented way what do you want to see happen do you want to see child poverty rates cut in half in the next four years let's do that
do you want to drive them to zero over some short period of time let's do that
do you want to see everybody who wants to work in this country able to find a job right with a job that that they can provide for their family with a living wage and and benefits let's do that like what is it we're trying to accomplish set the mission and fit the budget to the mission instead of pretending that the budget is some fixed allotment and we can only incrementally fiddle around and nibble away at some of the the real problems that we face so in the book i have a chapter called the the deficits that matter
and that's what i think we need to focus on there are so many deficiencies in our economy
the the thing we call the federal deficit is not a problem
it is not a problem it's not a problem today it wasn't a problem 10 years ago when we had the deficit commission and the simpson bowles and all that kind of stuff it wasn't a problem
then it isn't a problem now and it's not going to be a problem going forward we just have to flip that script and try to get everybody focused on the deficits that matter recognize that whatever is financially feasible if we have the know-how if we have the workers if we have the raw materials if we have the capacity in our economy to do things the money can always be there we just have to find the votes.
B:
thank you so much stephanie we have so many amazing questions coming in the chat but i want to start with this so you are a brilliant economist you could you know theoretically make so much money working for like goldman sachs uh but instead you've chosen um and not to go to places like harvard but instead to go to the new school and not to pursue working at places like goldman sachs where you make a lot of money but to tackle the deficit myth and do work that uh is really good for the people uh so where did you learn to care and why are you tackling the deficit myth when you could be doing anything else?
Kelton:
no it's a it's a funny question that you phrased it the way you did because um when i was finishing up my undergrad uh one of my well the the most influential professor in my life took me to lunch and he invited another professor along.
and the point of the lunch was to introduce me to this other professor and to have him give me some advice about where i should go to graduate school and so uh the the professor that i was introduced to said go to harvard.
and the professor who took me the lunch said no no no don't listen to that so the two of them started you know kind of arguing about whether and why i should or should not uh try to get into harvard and you know i i think that it was easy for me i i have a stubborn streak.
um i don't have as uh my former boss senator sanders puts it um what did he say in the interview with the new york times editorial board.
i'm not someone who tolerates particularly well.
i think we're his exact words and i am i think cut from a similar cloth in that respect i just um i couldn't do it i could not do that type of training i i could not um i knew enough to be dangerous i suppose in the sense that i had enough of an understanding of you know how the financial system works how banking works and that if i went through a more conventional program that i was going to be asked to swallow a lot of uh stuff that you know is it's just wrong it's i don't know how else to say it.
and i didn't want to do that so um and the new school you know has a long tradition of um fighting the good fight and being i think on the right side of a lot of policy uh fights and advocating for um you know people who are are struggling there it's a it's an institution that's very special in in its history and so i felt more at home in a place like like that.
B:
amazing all right now that we know that uh professor kelton is on our side generally um let's get into some of the questions there are some very good ones uh including i think we should start with this but how should we think about the deficit what is the deficit how does it exist in the world maybe you know what's the role of a treasury bond?
Kelton:
okay well so as i i said the deficit is just the difference between two numbers i mean we shouldn't make this harder than it is you know it's the word it's the word that gets in the way because the word has a connotation a deficit is a shortfall right if you're a sports fan and you turn on uh you know the game.
and you see that it's getting close to halftime and you hear the announcer say,
oh if the bills are going to come back and win this thing they're going to have to overcome a 14-point deficit oh my god you know that's what a deficit is it's something to overcome it's a problem situation.
but it's not when we're talking about the federal government's finances so we've chosen this really lousy word to describe the budget outcome at the end of the year what happened did the government add more than it subtracted or did it subtract more than it added that's all we're talking about and most of the time it's a pretty good thing that the government is making a contribution a financial contribution to some other part of the economy.
right it gets to add more dollars than it subtracts from the rest of us that lets somebody accumulate more financial assets but then you mentioned the bond part.
and this is where the the deficits lead to um an addition to this other thing that we call the national debt.
so when i say suppose the government spends a hundred dollars in and subtracts 90 away they've left ten dollars in some part of the economy except they don't leave that ten dollars when the government runs a deficit it sells bonds u.s government bonds treasuries.
and so those ten dollars that the government is making available through its deficit get subtracted back out and replaced with government bonds.
so think of 10 u.s treasuries now sitting on someone's um in someone's portfolio.
right?
so if the government does this let's say the government does uh infrastructure and it wants to build a bridge it can do two things right one thing is it could say well i don't want to add to the deficit because i i'm somehow you know opposed to that.
so i want to spend a trillion dollars on infrastructure but i don't want that spending to add to the deficit so i'm gonna subtract a trillion dollars away from people by taxing.
so i'm gonna take a trillion dollars away from some people in the economy i'm gonna add a trillion dollars to other pockets so the construction workers who get hired to do the infrastructure the corporations who manufacture and sell cranes and concrete mixers and all that kind of stuff right they get paid a trillion dollars and some segment of u.s taxpayers you know.
you get your account subtracted with dollars so what happens well you fix some bridges that were crumbling and uh and that's it america gets crumbling infrastructure this segment of the population gave up some dollars and this segment of the population got some dollars and it's net to zero nobody has any net new dollars but we have some better infrastructure.
okay that's one way to do it the other way to do it is to say the government is going to fund the infrastructure investment it's going to just spend a trillion just like the cares act we're just going to spend a trillion dollars.
so the government spends a trillion dollars some workers get jobs doing infrastructure repair and and so forth some companies get some additional dollars right for selling heavy machine equipment and that sort of thing and america gets better infrastructure so we get better safer bridges to drive across and somebody ends up with a trillion dollars right uh as a result now with the deficit it's a trillion dollars of bonds it's like saying the government is making uh some of its payments in the form of u.s treasuries so some people end up holding bonds now who are those people well there tend to be wealthier people right who have dollars that they can transform into u.s treasuries treasuries are interest bearing dollars.
so somebody's getting to give up their dollars to hold treasuries which amplify which pays some interest but look you hired some people workers did infrastructure investment they got paid the contractors got paid the corporations made some money and we got better infrastructure it's like you know you could do it either way but in the second way the government is actually increasing the financial assets out there somewhere in the economy as payment for the improved infrastructure.
burbank:
now there's i love the phrasing of this question it was a question from the chat is there a point where debt spending becomes unsustainable or do we indeed have an infinite credit card and the word credit card is reminding me of obama's 2008 stump speech.
Kelton:
yeah so i don't you know you're right uh when i'll say it for those who who don't know what you're talking about.
but when barack obama was running for president first time he was stumping around the country and he was you know lamenting this national debt that we have he said you know it's irresponsible he said it's unpatriotic it's like you take out a credit card from the bank of china.
right a credit card from the bank of china the government doesn't have a credit card don't don't analogize the federal government's finances to that of a individual household that gets you going on the wrong off on the wrong foot.
does the does congress have the capacity to commit to spending whatever it deems appropriate the answer is yes.
it can afford to purchase whatever is available and for sale in its own currency that's the limit right you can't buy what's not available so all the money in the world would not help the government get ventilators and ppe back in march.
it wasn't available you couldn't have it but you can afford to hire all unemployed workers who are looking for jobs that pay us dollars looking for a job in with wages paid in us dollars you can afford to hire everybody.
uh and employ everyone who wants a job but can't find one anywhere else in the economy so the upper limit is what's available and for sale in your own currency.
it's not the same as saying the government should go out and buy everything that's available for sale it's recognizing that that is the upper limit.
right.
it is what's available and for sale in your in your currency so is there a limit yes right you try to push beyond the limit the punishment is inflation it's not insolvency with a credit card if i charge up my credit card right.
and and i can't pay it the punishment for me is bankruptcy right that's not going to happen to the federal government of the united states the punishment is inflation not insolvency.
burbank:
yeah i think there are so many questions about inflation so let's dig into those um yeah is inflation going to be a problem if we spend you know three trillion dollars on another covet relief package.
Kelton:
3 trillion no but there is a limit okay look i'm drinking a glass of water i have to wipe the lipstick off i'm holding up a glass of water.
yes this let's suppose this is a 12-ounce glass if we could agree that this is a 12-ounce glass and if if it were empty and i had a 12-ounce can of soda unopened.
we could agree that i could open that can and safely pour every drop of liquid into my empty 12-ounce glass.
it wouldn't overflow i wouldn't create a mess that's the capacity of the glass 12 ounces.
the economy has like a carrying capacity right there are also ecological constraints.
but there's a spending constraint.
and the government has to share space in the economy with everyone else who wants to spend and remember that households do the vast majority of spending in our economy,
accounting for some two-thirds to 70 percent of all spending it's us we take up most of the space in the glass.
but if the glass isn't full to the top,
in other words if we're not at full employment and there's extra space available then the government can pour some liquid into the glass take up that space and move us closer to full employment.
as you as you begin to run out of space right in the economy people are all working who is the government going to get to do infrastructure or you know if you want to do medicare for all and you want to pledge that everybody can have mental health care and dental and vision and long-term care.
if you don't have the doctors the nurses the optometrists the health healthcare professionals if you don't have the beds and the capacity to make good on that promise.
then you can't deliver in spite of all the money in the world.right so the limits are your economy's real productive capacity there is a constraint you can spend up to full employment.
you have to share your spending space with everyone else in the economy who wants to spend.
but you can safely spend up to the point of full employment and would three trillion dollars risk overflowing the glass and producing an inflation problem no we are too far from full employment um for that for that to happen so three trillion is i think almost all economists would agree a safe number at this point given how depressed our economy is.
burbank:
and are there economic consequences to not spending money into the economy right now.
if we don't do another stimulus.
Kelton:
just incredible ones yeah like you know you you probably have heard this term scarring people talk about long-term scarring effects of.
um you know people who lost jobs that were we talked about this supposed to be temporary job losses maybe you were furloughed the expectation was that your boss was going to bring you back onto payroll uh restore your wages and benefits and so forth after we hit this pause button on the economy but now your your job is gone permanently.
you know the business has gone under it's not there for you to return to.
so how long can people remain unemployed before they become unemployable right because that's what happens employers do not like to hire the the long-term unemployed.
they don't they will hire around them.
they will do everything they can to avoid hiring someone who's been out of work for 12 or 16 months or more.
why?
because you know your skills can deteriorate your work habits can do they just employers don't like to do that and i'm just giving you one example i mean think about the small businesses whole cities are going to look very different um six months from now compared to you know the start of this year there was an article i was reading the other day it really broke my heart because i spent 17 years living in and immediately around kansas city.
and the stories were about how many businesses you know small business restaurants in particular right just going under in the kansas city area and i thought by the time i make it back to kansas city to see old friends.
i probably won't recognize much of the place you know it will have so changed with businesses going under and so what are you left with you're left with the larger and larger corporations who you know managed to survive through this fewer small businesses um more long-term unemployment those scarring effects um you know whole industries that are downsized if we don't get the support to the airlines and and retail and so yeah it's the the damage is potentially um you know lasting and that just makes it that much harder to climb your way out of it.
burbank:
yeah so this is not a question from the chat but i think it's a good time for it uh .
can you tell me about your views of spider-man?
「大いなる力には、大いなる責任が伴う」スパイダーマン ”with great power comes great responsibility.” Spider-Man pic.twitter.com/lbnUWwHd0C
well look i'm a huge uh of all the people in my family my son and i are the two complete you know marvel and dc i mean i like all of that stuff so i know you're bringing this up because i um i make some references to spider-man in the book right and i said look spider-man's a hero everybody knows spider-man's a hero why is he a hero because he you know he swoops in and saves the day when there's a crisis moment and nobody would think of spider-man as a hero.
if he refused to act he just sat there and and watched you know the the the train go careening over.
the you know the track is gone and he just was like yeah i'm gonna let it go over um he's a hero because he takes action and you know the stan lee line is that um with great power comes great responsibility.
and in the book i say that's what congress has they have great power it's called the power of the purse you know they have the power of the purse if they wanted to tonight they could walk away with a three trillion dollar bill.
that's much closer to what we need than this 900 whatever billion dollar i mean it changes almost by the minute right.
if they wanted to provide that level of support for this economy for people who are hurting in this economy to shore up incomes and protect families and communities and and get money to state and local governments they could with this with a stroke of a pen right it's just the votes all they have to do is vote for it and walk out they don't have to hurt anybody they don't have to say well we had to raise these taxes on this group of people and folks that they could just literally cast the votes provide the funding and walk away for the holidays feeling good about what they've done right to help like spiderman right.
we're rescuing families we're saving people we're saving lives we're literally saving lives people who are losing their health care people who can't feed their families people who are facing eviction.
we can deal with so much pain and distress in this economy and we have the power to do it and it's as simple as casting that vote.
and yet they won't do it.
and so that spider-man reference is about you know the responsibility side of this you have great power but it doesn't do anyone any good if you don't use it.
and what they're trying to do is use use it as um as frugally as possible and so it leads to a lot of gratuitous suffering.
文字起こし people living in the United States the wealthiest country on earth are unhappy with their material conditions we have more than enough resources to make everyone entirely comfortable but under our current economic system many people's most basic needs are not met if the purpose of the economy is to manage resources and organized labor to meet our material wants and needs the economy is not realizing its purpose it is failing what is going so terribly wrong let's analyze a basic example of production let's say we have a company they produce something we will call it widgets we have some made-up currency that only has value because you and I agree it does right now it's called US dollars I'm just kidding we'll call it coins you have a widget shop owner and a worker the worker is paid a wage of ten coins an hour and they're pretty good they make about 20 widgets every hour or 140 widgets in a day widgets are sold for six coins each subtract raw materials and operating costs for a profit of about five coins per widget in a day the worker is paid 80 coins they make 140 widgets with their own two hands and then the owner sells these widgets and after labor costs make six hundred and twenty coins in a day to make that money what work did the owner do none and what is the definition of getting things for free doing no work yourself to earn them this is how corporations make profits paying workers less per hour than their labor is worth to be productive we need things we need resources tools machinery land the means of production a small group of people own almost all of the means of production the rest of us who do not have them do not have the ability to be productive on our own accord to do so we must sell our labor it has become normalized for a company to purchase a person for a given amount of time control what they do in that time and how they present themselves and take ownership of everything they make while they're working but we have to participate in this system because we need to earn money in order to purchase the basic necessities and when we spend our money on rent water and food the money's just going right back to the owners of corporations in our economy the working class must do labor for someone else to profit off of in order to survive this is called wage slavery in our economy we do not work together we work for those who own the means of production we can observe this on a macro level gross domestic products the total dollar value of goods and services we produce as a country in one year increase steadily over the past 50 years yet our wages are decreasing and have been for the past 50 years so workers are extremely productive but are not receiving the money made off of their productivity so where is it going over the past 50 years profit margins for corporation owners increased substantially people work more and more produce more and more and make less and less while owners of corporations make more profit and use this money to get even wealthier quite perplexingly this all does not mean that our economic system is broken it is in fact functioning as intended the definition of capitalism is an economic and political system in which trade and industry are controlled by private owners for profit think about what this system has led to 15 million households do not have enough food to eat yet 30 to 40% of our food supply is wasted annually perfectly good food just thrown away because people couldn't pay money to buy it there are five hundred and fifty three thousand homeless people yet luxury rental properties accounted for 87% of apartment construction in 2018 to be productive we need to produce things but what is profitable is not always what we need and want do we make new medicines to cure diseases and produce enough for everyone who needs them or do pharmaceutical companies patent drugs to hike the prices and profit off of someone's desperate need to buy them in order to live what fueled imperialism and colonization does our government violently intervene in societies abroad to fight for justice or to secure more markets and resources and who controls our government military and intelligence when we wage these wars the American people or a small group of elites who profit off of US military intervention and who pays the trillions of dollars in taxes to fund these wars the profit ears or the workers back home who gives their lives in these wars the people who start them or innocent young people who see joining the military as a more viable option than working a minimum-wage job back home do we use our resources sustainably or are we destroying the environment and depending on infinite economic growth despite living in a finite ecosystem think about the nature of the work people do all day is it meaningful or are most people on the clock for set hours making money for someone else this system cannot persist without catastrophic consequences in the early to mid 1900s poor people working people rose up in the masses waging violent wars against the wealthy owners the ruling class but these wars only happened in a few places around the world evidence suggests that if present trends continue war is the likely outcome oppressed people will fight for freedom what if instead of allowing private owners to control our resources and use our workers to make profits we organize our economic system democratically we agree that the primary purpose of the economy should be to meet our material wants and means we all have a say and how the resources are managed we organize labor so that workers can elect their leaders and own the means of production we utilize excess resources and excess labor power for innovation we will not have liberty and justice until we have economic rights Americans love liberty and justice until it is called socialism the ideas that I just described our socialist socialism has been put in a box with the label bad on it so that people won't bother to look inside but I looked inside that box and I found that the problem is not that people fundamentally disagree with socialist principles the problem is that people have been taught to hate a word without ever defining it you might notice that nothing I've said sounds like anything you've heard about socialism it does not refer to centralized authoritarian control we have been given many misleading narratives about socialism from the wealthy owners of corporations and media companies who have a lot to lose when we discover a more viable alternative economic system we spend the majority of our waking hours working any democracy wins we have an inherent right to have a say over the choices that affect our daily lives democratic socialism insists we apply those democratic principles to our economic system for an economy run by and for the people inevitably we wonder how the sort of system will manifest let's think about energy we need energy in the form of electricity to do just about anything these days let's focus on fossil fuels which we burn to make electricity I can imagine no reason why one person nor small group of people deserves to own an entire oil deposit or mineral deposit no one today was around 300 or 150 million years ago when organic materials settled to the bottom of lakes and oceans and through heat and pressure formed oil no one did the work to make that oil no one does work to make coal in a coal mine all human beings were born on this planet as equals no one person should own an entire natural resource and be able to personally profit off of extracting it we can instead demand a vote to take public ownership of our resources we can make electricity affordable and nationalize the energy grid we can allocate economic gains to fund public infrastructure development we can agree to transition to 100% renewable energy and apply these same concepts to solar wind or geothermal on the front of labor we can have 100% worker owned businesses and for more mobile workers we can develop collective bargaining systems that determine hours benefits and set wages across entire sectors not just employer by employer this will ensure our people are paid a fair wage that compensates them for the work that they do we can take back the freedom to work reasonable hours and spend more time doing what we enjoy we can work so that we only need one job people can choose a job they like not just the job that they can get to make ends meet we can have a universal single-payer health care system that will one day be seen as fundamental as our public education system we can make broadband available for everyone in a similar way to how we once worked to make roads and highways a public good the Internet has given us unprecedented access to information and capacity to communicate we can make it more profitable for the few by making it more exclusive but everyone can benefit from making it accessible human progress does not happen when we creatively make more advanced luxuries to be enjoyed by the people at the top human progress happens when we raise the bottom line we can allocate capital towards what is most valuable for humanity instead of allowing private owners to allocate all of our resources towards what will yield the highest return in dollars for them we can organize our labor and resources however we want to but we are told the tale that the economy is an autonomous entity it regulates and controls itself this is simply not true the economic system is comprised of human actors making decisions economic systems are not something we can see touch or feel they exist only in our minds the economic system is comprised of many individuals thinking a certain way about the economy and acting accordingly so then how do we change our economic system we have a new and better idea about what the purpose of our economy should be we behave differently redefine the norms rewrite laws make new policies and make the change human beings have the capacity to act as a collective we have yet to devise structures for economic decision-making that is democratic it is time to devote ourselves to a new direction for the US economy and adopt a better economic system we can wait until our society destabilizes or we can band together for a political revolution that revitalizes I prefer revolution [Applause] 英語 (自動生成)
mentioned nairu in my last video and got questions about it already, and realized there's not a great explainer of this anywhere on the internet um and it's really important it affects aspects of american life in every possible way. so what it is is it's an acronym for non-accelerating inflationary rate of unemployment. basically the federal reserve decides there is this magic number.
where unemployment rates must stay the theory is is if they drop below this number uh too many people will be employed they'll have jobs have money spended into the economy which increases demand and therefore increases prices inflation is up.
some food for thought would be if more people are working more people are being productive therefore supply increases as well. the federal reserve does not see it this way. so when you have unemployment rates dropping below this number. uh they increase interest rates now the federal reserve controls the money in the united states they make it more expensive for banks to get money and interest rates for loans go up as well for people who want to you know borrow money. and you need money you need capital to do anything in our economy you've got to buy tools you've got to pay workers etc. so if interest rates go up the idea is less people will want to do this and therefore less people will become employed in unemployment rates go back up similarly if unemployment rates go above this magic number they decrease the interest rates to get things going again. the problem is that they get this number that's very important wrong. and jerome powell the chairman of the federal reserve has admitted this.
unemployment has fallen about three full points since 2014 but inflation is no higher today than it was five years ago given these facts do you think it's possible that the fed's estimates of the lowest sustainable unemployment rate may have been too high?
absolutely.
i would argue that unemployment rates should be zero but in any case the federal reserve is getting this really important number wrong and it has real consequences millions of people are out of work uh unable to feed their families keep a roof over their head etc. because of this arbitrary number and you might be thinking well they're the federal reserve they have these sophisticated models maybe they figured it out and they're saving us all from the plague of inflation .
i don't believe that's the case.
uh the former fed governor daniel tarullo admitted that they have no working theory of inflation to inform their day-to-day decision-making similarly.
you know people have argued that these models are unproven if not unprovable.
自然失業率に非常によく似たものに、NAIRU（Non-Accelerating Inflation Rate of Unemployment、インフレ非加速的失業率）があり、両者は時に同一視される。NAIRUとはインフレ率を安定的に保つ失業率の閾値であり、失業率がNAIRUを下回るとインフレ率は上昇していくとされる。逆に述べると、インフレ率を上昇させ続けないという維持可能な経済において、もっとも雇用状態がいい場合の失業率がNAIRUである。長期均衡での失業率という概念的な面の強い自然失業率と異なり、NAIRUはただの閾値であり実際的な面が強い[5]。
the us used the dollar to reinforce their role as an imperial nation and make economies of developing countries dependent on the united states of the united states could more effectively extract wealth people think we got rid of the gold standard in 1944.
what happened in 1944 was we made it so that foreign countries could not take dollars to the federal reserve and exchange them for gold u.s citizens had to stop doing this in 1934 when we passed the gold reserve act now what's important about bretton woods in 1944 is that then we decided to bring this idea that foreign nations who were developing could get a loan of a bunch of dollars and pay them back with interest but these dollars were not backed by anything we essentially created new dollars and gave them to foreign countries and then made them pay this money back with interest we didn't really give them anything other than dollars with the promise that dollars would be worth something in the international economy and if we didn't pay it back.
we decided to say okay well you still owe us something so give us something of value and this is how we entered in these really predatory agreements to steal resources from developing countries this happened a lot in latin america and then we decided we were going to make sure that us-based multinational corporations could continue to profit even if these nations gained political power and decided to stand up to us. we developed the cia and engaged in covert operations and coups whenever there was a leader that would challenge you know what the us was doing in these countries and by the way. the international organizations that were responsible for managing all of this debt were the international monetary fund and the world bank so whenever i would lecture on this i'd be like this really happened like we really printed money and just like gave it to people and made them pay us back with interest it's insane when you think about it actually i'm not a proponent of universal basic income i support a jobs guarantee and strong social safety nets for those who are unable to work. who wants to have a job should have a job and the job should pay a living wage and so whatever the private sector cannot employ the federal government should pick up that slack and employ those people for fair living wages so that we reach our full productive capacity i actually did some consulting work for the communist party of china a few years ago and i didn't sign an nda but it's really interesting they were deciding where to put their port in africa and they were deciding between kenya and djibouti basically i i said not kenya it would be too disruptive for the local economy and they are making decisions about you know how can we help develop these nations but they're sending a lot of their own workers in to do the work and they're being pretty predatory as well people would like to point to oh well they're you know creating roads and helping these countries develop. but at the end of the day they're really establishing flows for china to be more predatory and extract more resources from other parts of the world keep track of it it's just a net calculation of how many dollars we've put out into the economy how many dollars exist that have not yet been taxed back out and that's important but we shouldn't think about it as like a debt that will have to pay off one day i believe power concedes nothing without a demand and we don't make a demand unless we organize. and i see good organizing happening all of the time and that makes me optimistic are they monkeys maybe are they wrong yes we should have a fiat currency there's no reason our money should be backed by anything of intrinsic value money is a tool to manage society and the economy that's it. but it's not cause for concern because we're putting real productive resources to use and employing people and hopefully uh putting them to work doing things like creating a sustainable energy grid which has a huge return on investment brian atwood we don't agree on everything but he's a friend he ran usaid under the clintons and he would say and i would say things like public goods infrastructure health care things that help the economy formalize and become independent from the dollar no but on a related note i really like the idea of a computer tax attacks on computing power so algorithms doing work um i think that would be a useful source to fund public goods. i have to believe these things to wake up in the morning.
i don't think it will be medicare for all i don't think it will be an adaptation of the medicare medicaid system i think it will have to be an overhaul of health care and universal public health care the u.s has far more severe economic inequality than sweden does and some people can't afford bank accounts some people can't afford phones and computers so this would be a lot harder in the us probably not in our lifetime every time i have to turn my iphone sideways to use the calculator to calculate stuff about how much money the billionaires have my mental health declined significantly.
i honestly don't know i think we will see the bubble in the housing market pop um or burst but i think we did a really good job spending that 1.9 trillion dollars to avoid the impact of this recession we have to tax the rich we have to tax the rich their income their wealth and capital gains taxes honestly um that's what we have to do not for raising revenue but for mitigating inequality in the link tree in my bio there is a google doc of econ readings and recommendations the first book is the deficit myth and then i would recommend a jobs guarantee by pavlina chernova i think a jobs guarantee and getting rid of nairu. once we manage the monetary system and we can make democratic decisions about the monetary supply we can achieve a lot of other things very easily of course like the barriers political will and having a society ran by people running very effective propaganda machines. um and so that's that's the challenge teach econ we can teach econ in k through 12. econ is seen as this like esoteric especially difficult field it is not we should be teaching basic economics in public school that's like a big one and then accurate history political will on behalf of our elected officials who are supposed to be representing our interests but are not because they're paid by lobbyists so we could either elect different people which is hard or just get in the streets and demand it this sounds like pr but it's not.
um we need to make it more accessible for everyday people and the left especially we need to gain the trust of the left and make it not so technocratic.
and stephanie kelton's really good at this basic needs are met um public goods are controlled by the government and publicly provided and we make collective decisions about how to spend our resources and land and manage the monetary system who did you exploit today do you need a napkin to wash off the blood on your hands. you disgust me citizens rise up this is actually the lower end of the estimates probably just the calculation of the cost of food but there are a lot of reasons for hunger and addressing the cause that the source is more expensive which is why the upper end of the estimate is like 256 billion. i think this just reinforces their dependency on existing fiat currencies and we'd rather see them invest in their own productive capacity towards having their own fiat currency possible yes but i don't think we would want everyone using the same currency having a variety of fiat currencies and having more fiat currencies proliferate will be good to insulate the international economy from shocks in certain economies to certain currencies.
《『不思議の森の妖精たち』（ふしぎのもりのようせいたち、原題：FernGully: The Last Rainforest）は、オーストラリアの長編アニメ映画。1992年。妖精たちが住んでいる美しい熱帯雨林を舞台にして、森の外へ冒険と森の救援に中心的なファンタジー物語を展開させている。》
ja.wikipedia.org/wiki/%E4%B8%8D… 《『不思議の森の妖精たち』（ふしぎのもりのようせいたち、原題：FernGully: The Last Rainforest）は、オーストラリアの長編アニメ映画。1992年。妖精たちが住んでいる美しい熱帯雨林を舞台にして、森の外へ冒険と森の救援に中心的なファンタジー物語を展開させている。》 pic.twitter.com/elR5duqzgF
『不思議の森の妖精たち』（ふしぎのもりのようせいたち、原題：FernGully: The Last Rainforest）は、オーストラリアのファンタジー劇場用長編アニメーション映画。1992年4月10日にアメリカ合衆国より先行公開されており、オーストラリアは同年9月17日に公開されている。ディズニーの名作アニメーション映画『美女と野獣』を手掛けたスタッフが制作されている。妖精たちが住んでいる美しい熱帯雨林を舞台にして、森の外へ冒険と森の救援に中心的なファンタジー物語を展開させている。
okay so i'm looking at the comments and i see this comment from occam's taser says.
i think jessica is just jank with a jessica mask on to make it look like he is taking time off i don't think so.
you'll notice that jessica hasn't once screamed at the top of her lungs and i don't think that she's done an accent yet as like some sort of like british royal or anything.
i'm gonna go of course.
of course.
you haven't dropped anything.
i don't know the evidence it just isn't there um but with that said.
we do have news to get to perhaps she'll go on an epic screaming rant.
