2020/11/14 ケルトン Interview: Stephanie Kelton Talks MMT and More ❧ Current Affairs
軍事の比喩が特徴的
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：無料2020/12/02公開版
26:50~1:04:30
同シリーズ、チャーネバ 2021/05/10(2020/12/03)
2021/02公開無料版:
これとは違う
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Interview: Stephanie Kelton Talks MMT and More Current Affairs
2020/11/14ケルトンインタビュー：ステファニーケルトンがMMTなどについて語る❧時事
https://www.currentaffairs.org/2020/11/interview-stephanie-kelton-talks-mmt-and-moreインタビュー：ステファニーケルトンがMMTなどについて語る
経済学と公共政策の専門家であるステファニーケルトンが神話的でしばしば語る-ネイサンとスパーキーとの現代貨幣理論の誤解。
Nathan Robinson
Sparky Abraham
は、2020年11月14日にインタビューで提出
しました。このトランスクリプトは、わかりやすくするために少し編集されています。元のインタビューはここにあります。
ステファニーケルトンストーニーブルック大学の公共政策と経済学の教授です。彼女はまた、現代貨幣理論に関する世界有数の専門家の1人であり、経済学の分野で激しい議論を呼んでいます。最近、ケルトンは編集者のネイサンJ.ロビンソンとスパーキーアブラハムと一緒にCurrent Affairsポッドキャストに出演し、MMTフレーバーの未来がどのようになるかについて話し合いました。Patreonでインタビュー全体を聞くことができます。次のトランスクリプトは、わかりやすく文法的に編集されています。
NATHAN J. ROBINSON (以後NJR)
こんばんは、CurrentAffairsリスナー。私の名前はネイサン・ロビンソンです。CurrentAffairsの編集者です。私は同僚で財務編集者のSparkyAbrahamと一緒にいます。こんにちは。
SPARKY ABRAHAM (以後SA)
こんにちは、ネイサン。
NJR
そして今日、私たちは信じられないほど特別なゲストが加わりました。ステファニーケルトンは、ストーニーブルック大学の経済学と公共政策の教授です。彼女は以前、上院予算委員会で民主党のマイノリティスタッフのチーフエコノミストを務めていました。彼女は2016年のバーニーサンダースのキャンペーンの経済顧問であり、ブルームバーグのコラムニストであり、「赤字神話：現代貨幣理論と人民経済の誕生」の著者でもあります。
ケルトン教授、ご参加いただきありがとうございます。
ステファニーケルトン(以後SK)
私の喜び。お招きいただきありがとうございます。
NJR
それで、この本はお金がどのように働くか、連邦政府がどのように働くかについての多くの人々の先入観に挑戦します。人々はあなたが話していることを完全に理解するためにそれを読まなければならないでしょう、しかし私は誰もが彼らが考えるのと同じように連邦政府の予算について考えるように条件付けられた方法で始まるのではないかと思います世帯。
あなたが上院議員と一緒に働いていたとき、あなたは上院議員と仕事をしていたとき、彼らがビジネス会計について考えたのと同じように連邦政府について考えました。小切手帳はバランスが取れていました。あなたは、バラク・オバマのような民主党員の間でさえ、これがどのようにあるかについて話します、私たち全員が政府について考える方法になります。
なぜそれが間違っているのですか？
SK
ええと、あなたがこれを言ったのが好きです。それが私が本を始めた場所なので、おそらくそれは出発点です。第1章は「世帯のことを考えないでください」と呼ばれています。それはほとんどすべての点で人々が始めがちで、すべてが軌道に乗らないところだと思います。それを修正できれば、他の多くの間違った考えを修正するのはかなり簡単だと思います。政府の財政に関する公の言説のほとんどすべてが、この家計のレンズを通して私たちに提示されているので、それは私たちのせいではありません。
ですから、私たちは政治家の話を聞き、記事や新聞を読み、ニュースをオンにし、誰かが私たちに最も馴染みのある言葉、つまり私たち自身の個人的な財政を使って連邦政府の財政について話しているのを聞きます。だから人々は政府が財政の家を整える必要があると言うでしょう。「家」という言葉を使うだけで、その家計、つまり台所のテーブルが呼び出されます。あなたは台所のテーブルの周りに座って、入ってくるお金と出て行くお金のバランスが取れていることを確認するのがどのようなものかを知っています。あなたは自分の手段を超えて生きていて、返済する余裕のない借金を引き受けているわけではありません。それは正しいです。
私たちは、私たちが最もよく知っているレンズを通して政府の財政を理解するように条件付けられています。それが私たち自身の[家計]です。それの何が悪いのかというと、連邦政府は家計のようなものではないということです。彼らと私たちの他の人々との主な違いは、彼らが通貨を発行できることです。米国政府はドルの発行者であり、私たちの残りの部分はそれを使用しています。したがって、家計、民間企業、州および地方自治体は、ドルを使う前にドルを取得する必要があります。彼らはお金を稼がなければなりません。連邦政府は、私たちの他の人がそれを手に入れる前に1ドルを費やさなければならないので、彼らはまったく異なる一連の規則に従って行動します。
NJR
あなたがアドバイスしたバーニー・サンダースでさえ、しばしば「あなたはそれに対してどのように支払うのですか？」について話すことに失敗します。質問して答えを考え出す、「まあ、これは税金がそれをカバーする方法です。」
しかし、あなたが提案するのは、税金と政府支出の間の1対1の相関関係を考えるべきではないということです。税金は重要ですが、それらは非常に異なる機能を果たし、これら2つのことは私たちの心の中で[分解]されるべきです。それは非常に難しいことです。「まあ、賢明な国民皆保険プログラムです。これがそれをカバーする税金であり、予算が加算される理由です。」
しかし、フレームワーク全体を破棄することをお勧めします。
SK
ええ、あなたは正しいです。それは役に立たず、また良い経済学でもありませんし、これら2つのことを結びつけ続けることも良い政治ではないと思います。あるプログラム（おそらくそれはヘルスケア）で経済に1ドルを費やしたいときはいつでも、それを支払うために経済から1ドルを出さなければならないと主張するために。これらを切り離して個別に分析すれば、政治的にも実際の予算編成プロセスや経済学の観点からもはるかに良いと思います。税金を上げるべきですか？そして、私たちは引き上げについてどのような税金を考えるべきですか？そして、なぜ私たちはその税金を増やすことができるのでしょうか？支出を増やすべきですか？教育、インフラストラクチャ、ヘルスケア、そしてどのくらいですか？そして、どのような目的に？ポリシーの目標は何ですか？
これらは別々の議論になる可能性があり、そうあるべきだと思います。しかし、その通りです。私たちは、政府がさらに1ドルを使いたいのなら、1ドルを考え出さなければならず、それから政治家に青写真を出して、彼らが言うことができるようにするという考え方に縛られています。 「私はこのプログラムに参加しています。」あなたは、「まあ、あなたはそれに対してどのように支払うつもりですか？」と言います。[彼らは答えます]「まあ、私はこの税金を上げるか、これらの抜け穴を塞ぐことによって、私が必要とするすべてのドルを集めるつもりです」、またはどんな場合でも。
NJR
はっきりさせておきたいのですが、あなたが運用している枠組みは現代貨幣理論と呼ばれています。あなたは、多くの従来の教義に挑戦している、いわゆる「異端派経済学者」の学校の一員です。あなたのフレームワークの似顔絵は、政府がプリンターにアクセスできるので無限のお金を使うことができるということです。したがって、無限のお金を使うのは賢明であり、政府の財布に制約はありません。残酷なのは、MMTは「魔法のお金の木」の略で、政府は好きなだけお金を印刷できるので、好きなものを何でも手に入れることができます。
今、あなたはそれを言っていません。あなたは、政府が何を使うべきかについて非常に現実的な制約があり、過度の支出は否定的な結果をもたらすと言います。政府が実際にいくら費やすことができるか、あるいは実際に使うべきかについて、私たちはどのように考えるべきでしょうか？
SK
まず、いわゆる印刷機や財布の力があっても、欲しいものが何でも手に入るわけではないことを認識しましょう。正しい？人工呼吸器、マスク、その他の個人用保護具（PPE）の観点から、3か月前、または率直に言って今日でも私たちがいた場所を見てください。議会はそれが望むすべての支出を承認することができましたが、何を推測しますか？それらが利用できなかったので、私たちはそれらのものを手に入れることができませんでした。彼らは生産されていなかったか、他の国などに行っていました。余裕があったとしても、手に入れることはできませんでした。それが最初のポイントです。
2番目のポイントはあなたが絶対に正しいということです。[認識]ソブリン通貨の発行者である政府が厳しい財政的制約に直面していないことは、自国通貨を発行している政府が制約に直面していないと言うことと同じではありません。制限があります。現在、議会は数兆ドルの支出法案をスピンアウトしています。下院は5回、上院は4回通過しました。ハウスはさらに3兆ドルを手に入れました、彼らは行く準備ができています。議会が6〜7兆ドルを費やしているのを見ることができました。これは、非常に短い順序でのようなものです。
問題は、それは過剰でしょうか？私の答えはノーです、この経済環境ではありません。どうして？何千万人ものアメリカ人が失業したために経済が非常に落ち込んでいるからです。なぜなら、企業は顧客を安全でオープンなドアに引き込むのに苦労しているからです。この経済環境の中で、政府が[財政支援]を提供する余地はたくさんあります。
今、ある時点で、神は喜んで、経済は完全雇用に近づくでしょう。回復し、労働市場は逼迫し、財政スペースは縮小し始めます。それは良いことです。なぜなら、議会はそれほど多くの財政支援を提供する必要がなく、その時点で数兆ドルの紙幣を通過させ続けると、その罰はインフレの形で現れるからです。
あなたが求めている限界は、私たちの経済の実際の資源容量です。私たちには人がいて、機械があり、工場があり、技術があり、原材料があります。これらが私たちの生産手段です。それらは私たちの物質的な手段です。私たちがそれらを使い果たしたら、それらがすべて使用されて使用されると、限界に達した経済に費やす追加の試みは、生産とインフレ圧力のボトルネックを生み出すでしょう。
SA
では、それをどのように判断しますか？それをどのように計算しますか？どうやってそれを理解しますか？予算についての間違った考えが[行く]ので（それはほとんど経験則です）、あなたが取るより多くを使うならば、それは悪いことです。しかし、それが正しい考え方ではないことを認めた場合、何が多すぎるのかをどのように理解しますか？
SK
いい質問ですね。[想像してみてください]私は12オンスを持っています。おいしいダイエットドクターペッパーの缶。今、私が12オンスを持っていたとしましょう。ガラス。空っぽです。私は空の12オンスを持っています。ガラスと私は12オンスを持っています。炭酸飲料の缶。私はそのソーダの缶をグラスに空にすることができ、それを一番上まで満たすことができることを知っています、そして私は私があまりにも速く注いでいるかどうかを見ることができるので、測定され制御される方法でそれを行うことができます泡が溢れ出します。【その場合】カウンターなどにベタベタします。または、非常に制御された慎重な方法でそれを行うことができ、波及効果を回避することができます。
ガラスが見えるので簡単です。私はそれが12オンスであることを知っています。ガラスと私は自分が何を扱っているかを正確に知っており、すべてを制御することができます。
経済はそのようなものではありません。経済の全能力を見ることができません。私たちにできることは、測定値を取得しようとすることです。あなたは経済が熱くなるために温度を取ろうとしています。ここに入るのはどれくらい暑いですよね？あなたは何を見ていますか？あなたは失業を見ます。容量使用率を確認します。このようなデータがあります。人々は外に出て実際に企業を調査し、「現在、総容量のどれだけを使用していますか？」と言います。「私たちは約68パーセントを使用しています」と彼らは言います。さて、私は予備の容量がたくさんあることを知っています。
あなたは職業によってそれをすることができます。大規模なインフラストラクチャプロジェクトを検討していて、職業別の失業率を見ると、建設労働者の失業率はそれほど高くありません。[エンジニア]、建築家、彼らはほぼすべて完全雇用されています。その業界の価格に圧力をかけることになるので、その中で大きなインフラストラクチャプロジェクトを展開することは望まないでしょう。
私が言っているのは、私たちは以前ここにいたことがあるということです。私たちは第二次世界大戦でこれを行いました。私たちは政府支出を大幅に増やしましたが、それは戦争だったので、あなたが迅速に行動しなければならないので、私たちは多くの予見なしにそれをしました。労働者は2倍と3倍の残業、賃金圧力、価格圧力で働いていましたが、私たちはそれをかなりうまく管理しました。ハイパーインフレーションのエピソードなどはありませんでした。私たちは戦争に勝ち、それからその時点までの我が国の歴史の中で最も長い平時の繁栄の期間に終わりました。
それは不完全になるでしょう。完全に確実に経済を運営することはできませんが、エコノミストには、限界を超えて物事を押し進めないようにするためのモデルと調査、および方法があります。
SA
私が時々これについて考えていることに気付く1つの方法は、それが1つの大きなバケツのようなものですよね？それは一杯のグラスと一杯の缶のようなものです。しかし、あなたが説明していることは、それよりも少し微妙なニュアンスがあるように聞こえます。あなたは実際にセクターごとに見る必要があります、あなたはあなたが正しい量をしているのか、多すぎるのか少なすぎるのかを決定するためにあなたがお金を入れている[正確な場所]を理解しなければなりません。
SK
丁度。それが戦時中と戦後の彼らの行動です。国家資源計画委員会や局などと呼ばれるものがありました。組合の指導者、業界、ビジネスの指導者、政府関係者、経済学者、統計学者が一堂に会し、政府が復員兵援護法案への支出を増やして防衛への支出を縮小したため、戦後のインフレ圧力の管理に人々が協力しました。多くの追加教育があり、すぐに[Lyndon B. Johnson]で、メディケアやその他のプログラムを取得しました。人々は大変な仕事をしなければなりません、しかしあなたは絶対に正しいです、それは微妙です。
NJR
あなたはインフレについて言及しました、そしてこれはもちろん、誰もがMMTについて聞いた最初の瞬間に最初に持ち出すものです。彼らは言います。「もっとたくさんのお金を印刷すると、[通貨]の価値が下がるでしょう。私たちが持っているお金が多ければ多いほど、その価値は少なくなります。インフレが始まるだろう。これはすべてばかげています。」
しかし、この本で興味深いのは、実際にはインフレについてどれだけ話しているかということです。実際、それが重要だとあなたは言います。[何]あなたが心配しなければならないのは収入ではなく、経済への支出の影響です。
SK
丁度。[私たちは]バランスの取れた予算を促進することである公共政策の目的と目的を考えることから逃れ、代わりに私たちが解決しようとしている問題は何かを考えることができます。「TheDeficitsThat Matter」という章があり、経済における無数の課題や危機に焦点を当て、すべてを解決することはできないことを認識させようとしています。あなたが議会の予算を何でも使う余裕があるからといって、それはあなたがすべてをするための本当の資源能力を持っているという意味ではありません。あなたはまだ優先順位を付ける必要があります。予算編成は依然として優先順位付けに関するものです。
予算をバランスをとる必要があるものとして考えることから逃れることができれば、予算を達成するための、または広くバランスの取れた経済を構築するためのツールとして考える必要があります。これらの欠陥の？これらの問題にどのように対処できますか？そして、インフレ問題を起こさない方法で予算を使ってこれらの問題に取り組むことができれば、各会計年度末に予算枠からいくつ落ちてもかまいません。それは重要ではありません。重要なのは：私は健全なバランスの取れた経済を持っていますか？
NJR
あなたは本の中で、人々は彼らが借りている莫大な金額についてしばしば言われると述べています。これは、「あなたは46,000ドルの借金がある」と書かれている、このTIME誌の表紙のようなものです。これは[あなたのチャンク]の国債だからです。あなたのポイントは、人々がそれをこのように考えるべきではないということです。アメリカが負っている金額ではないのなら、彼らは赤字が何であるかをどのように考えるべきでしょうか？
SK
あなたが今言ったことで重要な2つの言葉があります：赤字と借金、そしてそれらは異なります。それらはしばしば混同されるので、聞いているすべての人がそれらの概念の違いを知っていることを確認しましょう。
赤字は2つの数値の差です。これは、政府が毎年経済に費やすドル数と、政府が毎年経済から差し引くドル数（主に課税を通じて）の差です。したがって、政府が100ドルを費やし、90ドルを課税する場合、政府は徴収した金額よりも多くを税金に費やしているため、政府の赤字とラベル付けします。政府の本の赤字は-10を読むでしょう。それは私たちが記録した赤字だと言えます。私たちが忘れているのは、政府の赤字が財政的貢献をしているという事実に注意を払うことです。彼らが100を入れて90を引くと、誰かが10を得ましたよね？つまり、それは他の誰かのバランスシートの+10であり、政府の赤字は経済の他の部分で財政黒字を生み出します。
政府が毎年赤字を出している今、それは国債、米国債を売ることによってその赤字支出と一致します。したがって、赤字が10ドルの場合、政府は10ドルの国債を売却します。何が起こるかというと、誰かから10ドルを奪い、それを国債に置き換えるということです。存在するすべての国債は、私たちが国債と呼んでいるものです。米国債は人の資産であるため、その言葉を使って米国債の未払いの備蓄を説明するのはひどいことだと思います。彼らは彼らを握っていて、それは基本的に米国通貨の利子付きの形です。それらは[蓄積する]関心のあるドルです。
政府は人々に利子のあるドルを提供する必要はありませんが、そうします。そうすることを選択します。歴史的に、発行および再発行されたすべての債券は、私たちが国債と呼ぶこのものを構成しています。国の債務は歴史的な記録に過ぎません。それは、政府がこれまでに実行したすべての過去の赤字を追跡し、米国債を誰かの手に渡したものであり、私たちはそれを国債と呼んでいます。
SA
なぜそうするのですか？そして、私たちはする必要がありますか？なぜ赤字1ドルごとに国債を発行するのですか？
SK
これは、おそらくすべての財政において、最も質問が少なく重要な質問です。あなたの質問に[答える]のに役立つかもしれない話をします。
1990年代のオーストラリア政府は予算のバランスを取り、予算の黒字を出していました。政府が赤字を出しているとき、それは国債を売っていることを忘れないでください。しかし、それが黒字を出しているとき、それは借金を返済し、満期を迎える債券を引退させ、それらをロールオフさせ、そして人々はそれ以上得られないことになっています。
これがオーストラリア政府が予算の黒字を出し、オーストラリア政府の債務を返済し、投資家が夢中になったことです。彼らは国債を求め始めました。「ねえ、私たちのリスクのない報酬はどこにありますか？」これらは安全でリスクのない資産であり、利息を支払うからです。あなたはリスクなしでリターンを得ます。あなたがそれを手に入れることができれば、それは甘い、甘い取引です。そのため、投資家は国債の増額を求め、オーストラリア政府は、予算が黒字であったとしても、このリスクのないリターンに対する投資家の欲求を満たすために国債の発行を開始しました。したがって、答えの少なくとも一部は、金融市場はこれらのものに非常に似ているということです。
SA
現在、国債への投資が多かれ少なかれ必要とされるさまざまな機関が存在する全体的な構造が整っていますね。
SK
それはまさに真実です。もちろん、議会がそれを変更したいのであれば、それらすべてを変更することができます。そして、そのような変化を考えることの利点は、政治が非常に腐食性であり、今すぐ経済を支援するために議会が法案を可決する必要があること、そしてそれが赤字支出につながることを理解していることだと思います。私たちはそれを理解しています。問題は、それが私たちが国の債務と呼ぶこのことを増加させ、それが皆を不安にさせることです。しかし、人々を非常に狂わせるような追加の債務なしに、私たちの経済が必要とする赤字を抱えることができれば、それは価値があるかもしれません。
SA
債券の[発行]には、相殺効果がありますか？それはある意味で、赤字1ドルごとにそれらの債券を売るために経済からお金を奪うのでしょうか？
SK
それは実際により多くのお金を投入します。政府が債券を売らずに赤字を実行した場合、どうなるでしょうか。それは経済に100ドルを費やし、90ドルを課税し、[そして]貸借対照表に10ドルを残します。現在、[連邦準備制度]はこれらの準備金残高に利息を支払うことを選択できますが、それらは経済に閉じ込められ、銀行システムに閉じ込められ、金融システムに閉じ込められています。しかし、FRBは必要に応じて利息を支払うことができます。
私たちが今していることは、国債を売却し、ドルを有利子ドルに置き換えることです。そのため、時間の経過とともにドルの数を増やしていき、それらは人々の年金に含まれる可能性があります。私はそれらを買うことができるので、彼らは振り返ってそのお金を使うことができる人々の利子収入になることができます。
SA
と[財務省]自体も取引できます。
SK
そうですね。
NJR
あなたの枠組みについての1つの質問は、米国連邦政府が非常に特殊な種類の政府についてどの程度話しているかということです。人々が[理解する]のが難しいことの1つは、地方自治体や州政府は通貨を発行しないため、依然として[家計のように]考える必要があるということです。そして、[金銭的主権]を持たない他の国の政府の多くは、家計と同じように予算について考えなければなりません。それで、米国連邦政府は非常に財政的に強力であり、この法外な特権を持っているので、たまたま当てはまる非常に特別なことについて話しているのでしょうか？
SK
いいえ、これまでの会話は[他の政府にも]同様に当てはまります。日本について少し話しましたよね？日本は通貨発行政府のもう一つの例であり、必要に応じて、関連する制約がインフレである無限の財政能力を持っています。英国はその1つです。カナダはその1つです。オーストラリアはその1つです。ニュージーランドはその1つです。中国は非常に高度な金銭的主権を持っています。私たちが話しているように、国内で完全雇用を最大化することを目的とした方法でマクロ経済政策を実行するための政策スペースを楽しむために、グローバル準備通貨発行者である必要はありません。
しかし、あなたは正しいです。もう1つのポイントは、主権通貨を放棄したユーロ圏の州政府、地方政府、および国です。彼らは通貨に対して非常に異なる立場に身を置いていました。イタリアはアメリカ合衆国ができることをすることができません。カリフォルニア州とニューヨーク州は、連邦政府ができることを行うことができません。ちなみに、両州の知事が連邦政府に訴え、州政府と地方政府に援助を求めるよう議会に求めてきたのはそのためです。あなたが言ったように、彼らは通貨発行能力を持っていないからです。
NJR
MMT について非常に重要な記事 がありました[MMTが提唱する]同じ政策目標に多くの点で非常に共感している左翼の雑誌であるJacobinで書かれています。この記事であなたに提起された質問をしたいと思います。現代貨幣理論家が何を信じているのか理解するのが難しい場合があると言われています。彼らは、連邦政府が平時は小さな赤字を、危機時には大きな赤字を実行しても大丈夫だと言っているだけですか？それとも、赤字をまったく心配するべきではないということですか？国内総生産（GDP）に対する連邦債務の比率の上昇と、金持ちの債券保有者への贈り物である債務返済に充てられる支出のシェアの増加について心配する必要はありませんか？そして[ジャコバン派の記事の著者]は、どの時点で債務が気になるかを述べ、MMTの人々は決してあなたにこれを言わないと結論付けました。
SK
あなたが言及している作品はわかりませんが、MMT奨学金や文献を読んでいない人が書いたようです。あなたが今提起したすべてのポイントは、MMTの奨学金、ビデオ、および講義の25年にわたって遍在していると私は言います。これはすべて、Googleマシンを持っている人なら誰でもすぐに利用できます。一度に1つずつ取り上げることもできますが、これらのすべての点については非常に明確です。私だけでなく、ランディ・レイとビル・ミッチェル、ウォーレン・モスラー、スコット・フルウィラー。それらの点のそれぞれについて非常に明確である私たちの全体の束があります。
あなたと私はここに座って、債務とGDPの比率と実際の限界について話しました。私はすでにその質問に答えました。あなたが育てたばかりの他の何人かを思い出せません。
[赤字に関して]、[私たち]はまた、特定の年の終わりに予算枠からいくつが外れるかは気にしないと言いました。したがって、MMTは、景気の低迷、黒字、またはサイクル全体のバランスの取れた予算の赤字ではありません。それだけではありません。予算の結果は決して正しい政策目標ではありません。デットレシオについても同様です。デットレシオは決してターゲットにするものではありません。
そして、債券保有者への収入について、あなたと私はこれについて話しました。リスクのない報酬であるため、このようなものを段階的に廃止したいと主張しました。ウォーレンモスラーはそれを金持ちのためのUBIと呼んでいます。それは普遍的な債券保有者の収入ですよね？すでに裕福で、利子付きのドル貯蓄に交換できるドル貯蓄がある人々に支払われる支払い。だから誰が[ジャコバン派の記事]を書いたのかはわかりませんが、彼らは宿題をしなかったようです。
SA
うん。これはネイサンがちょうどあなたに尋ねていたものとは少し異なります、しかし私はちょうど私に起こったこの考えを持っていました。
政府は軍隊に多額のお金を費やしていますよね？軍隊にたくさんのお金。目の前に数字はありませんが、基本的には政府支出が最初であり、それが経済を動かし、経済成長を動かすものです。[もし]あなたが政府が軍隊にあまりにも多くの方法を費やしたと思った人になるとしたら、[それなら] MMTで言えば、それは単に軍隊への支出を[削減]してから[達成]するだけの問題ではないということです。バランスの取れた予算。本当にそれが意味することは、私たちがまだ容量を下回っている場合、そのお金を使うためにどこか他の場所を見つける必要があるということです。軍事費を削減するのであれば、どこか別の場所で支出を増やしたいと思うでしょう。そうですか？
SK
明らかに肥大化した年間7000億ドル以上の戦争機械を除けば、軍事予算を削減する正当な理由は必要ないと思いますよね？私は、軍事予算を10％削減するという非常に強力な主張をすることができました[お金を解放すると言って正当化することなく]貧しいコミュニティや他の人を助けるプログラムなどに費やすことができました。
あなたの質問は少し異なります。
SA
それは一種の反対です。それはほとんど、「どこか他の場所に費やすことなく軍事費を削減できるか」ということです。デフレを回避するために軍事費を削減するのであれば、どこか別の場所で支出する必要はありませんか？
SK
そうです、もしあなたがいくらかの支出を削減すれば、政府が費やすすべてのドルは誰かにとっての収入のドルですよね？したがって、他のカテゴリの支出を置き換えることなく軍事予算を削減する場合のリスクは、誰かを奪ったことです。たとえば、10％削減すると、700億ドルになります。 。あなたは経済から700億ドルを引き出しています。
それがどれほど有害になるかは、その支出削減などに関連する乗数効果に関連する多くの要因に依存します。しかし、ほとんどの場合、その通りです。政府の予算でさまざまな項目をぶち壊し、経済が同じ速度で成長し続けることや、悪影響がないことを期待するだけではありません。
SA
私はこの点が好きです。それは、それが単なるゼロサム、1対1の種類のものではないことを実際に示しているからです。私たちの唯一の目標が軍事費の削減であるべきではありません。それは、私たちが実際にすべきことと軍事費を削減すること[そしてそれに密接に参加すること]であるべきです。
SK
私が思うに、どのカテゴリーでも支出を減らすと、実際にいくつのリソースを解放できますか？実際のリソースを解放します。さて、それを行うことのさらなる公的な目的は何ですか？失業労働を含む多くの実際の資源を解放しようとしているなら、あなたはいくらかの失業を生み出すでしょう。あなたはその労働を再雇用する意図を持っているべきです、さもなければその労働を解放することに関連する公的な目的は何ですか？
SA
重要なのは予算ではなく、リソースです。
SK
まさに、ええ、まさに。
NJR
もう2つ質問がありますが、非常に重要だと思います。1つ目は税金です。これも、神話の1つであると思います[MMTについて最初に聞いたとき、人々は信じています]。税金で彼らの分け前を払ってください。」彼らのシェアは実際には必要ないので、これは減税するか、金持ちへの増税をしないためのライセンスです。しかし、あなたは税金が実際には信じられないほど必要であるという事実について話します。[として]実際のところ、別の見方をしても、現在の税制に似たものを見るかもしれません。
SK
ええ 数年前、私はワシントンDCでの会議で講演しましたが、それは愛国心が強いミリオネアの最初の会議だったと思います。あなたはこの組織に精通していますか？ですから、これは非常に裕福な人々のグループであり、唯一の目的のために組織を形成しました— [多分]それは少し誇張です—しかし主な目的は「ねえ、私たちはたくさんのお金を持っています教育やインフラストラクチャなどにもっと寛大な資金を提供できるように、もっと多くの資金を調達する必要があります。私たちに課税してください、私たちに課税してください！」
それで、彼らは私をこの会議に来て、いくつかの発言をするように勧めます、そして私はMMTの観点からこれをします。つまり、私は彼らのお金を必要としないこと、連邦政府がインフラ投資、教育、医療などを賄うために彼らのお金を必要としないことを知って、このグループに足を踏み入れました。しかし、メッセージは「私たちはあなたのお金を必要としないので、あなたたちは元気です、私たちはあなたに触れません」ではありませんでした。メッセージは、「私たちはあなたのお金を必要としませんが、とにかくそれを取る必要があります。」でした。手形を支払うのにあなたのお金は必要ありませんが、私たちはこの国に非常に極端な富と収入（特に富）が集中しているので、それは私たちの経済の働きに悪いだけでなく、私たちの民主主義を腐食させます。そして、それらの富の集中がその極端になるとき、あなたはそれについて何かをする必要があります。
毎年2％減税される富裕税は、素晴らしい「支払い」であり、億万長者に与えられたメッセージは、「心配しないでください。実際には、それを感じることすらありません。あなたの富ははるかに速い速度で成長するので、実際にはあなたはまだますます豊かになります。[あなたの]富は時間とともに成長するでしょう、2パーセントは[とても低い]あなたはほとんど何も感じないでしょう。」
それが問題だと思います。彼らがほとんど何も感じないのであれば、あなたは私たちの政治的プロセス、私たちの民主主義を非常に腐食させる富の不平等の集中に対処していません。ですから、私は税法の改革を目的とした議題にもっと野心的に取り組み、物事のバランスを取り戻すために不平等に積極的に対処します。
したがって、MMTは裕福な人々をカバーしていません。それはただ…本物にしましょう。空腹の子供を養ったり、崩れかけた橋を修理したりするために、[億万長者の税金]に頼る必要はありません。私はそれが好きではありません。それらなしでは前進できないという考え。私たちは進歩的な議題全体またはあらゆる公共政策を人質に取っています。なぜなら、金持ちに課税できなければ、それを支払うことができず、それを手に入れることができないからです。私はそれにノーと言っています。
NJR
[とはいえ]この実資源の観点から考えると、富の集中は、これではなく、富裕層のニーズの満足に向けて管理および向けられている実資源のセグメントであるという感覚があります。[だから]ヨットの建造に向けられているすべてのリソースが橋の修理に向けられているわけではないという感覚があります。
SK
それは本当です。それについては疑問の余地はありません。しかし、75〜78,000人の富に対する2％の税金（これを例として使用しています）が、大きくて野心的なことを行うのに十分な実資源スペースを解放するとは思いません。私の言っていることが分かりますか？彼らは支出者というよりは節約者であるため、実際には多くの実際のリソーススペースを浪費しているわけではありません。
SA
ですから、節約者と支出者の質問は、私が尋ねようとしていたことに関連しているのかもしれません。税金は、社会の公平性のためのツールであることに加えて、インフレを制御するためのツールでもありますよね？もし私たちがすべての税金を廃止し、政府支出を現状のままにしておけば、インフレ問題はすぐに起こると思います。
SK
そして通貨の崩壊。
SA
そして通貨の崩壊。あなたが説明したように、税金は基本的にお金を生み出すものです。
SK
ドルは税額控除です。それらは税額控除として流通します。
SA
そうです。しかし、経済がキャパシティに近づくにつれ、支出するためにはまだ税金が必要であるという議論をすることができるようです。それはあなたが税金を使っているからではありません。それはあなたがインフレをコントロールしているからであり、税金はそれを行うためのツールです。そうですか？
SK
はい。ですから、資源が使い果たされたとしても、完全雇用環境であっても、政府がそれを追求しなければならないほど優先度の高いものがあると思うなら、あなたはこう言います。すべてのアメリカ人のための医療」または「私たちが望む教育システムがありません。」[そして]どのような場合でも、[私は]さらに5兆ドルまたは2000億ドルなどをコミットする必要があります。
しかし、この評価でそれを行うと、人々が快適に過ごせるレベルを超えてインフレを押し上げるリスクがあるため、いくつかのオフセットを作成する必要があります。追加できるようにする必要があります。今、私は私の12オンスを取りました。缶とグラスがいっぱいになっているので、もう少しお金をかけたいです。スプーンを用意する必要があり、そのためのスペースを確保する必要があります。それが税金の役割です。彼らは。で来て、追加の支出のためにその安全なスペースを作成し、離れて何人かの人々からいくつかの購買力を取る
SA
の人々がredistributionaryシステムなどの税金の話をするのでそれの面白いを、そして、それはそのような状況にあるように思える彼らは[redistributionarylシステムになる]が、直接ではありません。あなたは何人かの人々からお金を取り、他の人々にそのお金を与えていません。もう少し複雑です。
SK
ええ 貸借対照表の借方記入と貸方記入を行っています。教育サービスや医療サービスを提供する人々の貸借対照表にクレジットを付けたいので、納税者のサブグループからいくつかのドルを取り除くためにいくつかの貸借対照表を借方に記入します。
SA
そう です。そして、いつ、どれだけそれをしなければならないかは、予算ではなく、現実の世界に依存します。
SK
その通り。
NJR
最後に聞きたかったのは、ケルトン教授です。これはあなたの本の非常に重要な部分だと思うので、「重要な赤字」という章があります。これは、人々が自分の考えを再概念化するために重要だと思います。不足として。[あなた]は、私たちができることと実際に行っていることとの間のギャップにもっと焦点を当てるべきだと言います。私たちがこの種の実際の資源を持っていて、私たちの国が何ができるかを見始めると、私たちは、私たちが持っている可能性に応えられない大規模な失敗と大規模な欠如のこれらすべての領域を見る。[それ]は私たちの注意のほとんどを占めるべきものです。
NJR
最後に聞きたかったのは、ケルトン教授です。これはあなたの本の非常に重要な部分だと思うので、「重要な赤字」という章があります。これは、人々が自分の考えを再概念化するために重要だと思います。不足として。[あなた]は、私たちができることと実際に行っていることとの間のギャップにもっと焦点を当てるべきだと言います。私たちがこの種の実際の資源を持っていて、私たちの国が何ができるかを見始めると、私たちは、私たちが持っている可能性に応えられない大規模な失敗と大規模な欠如のこれらすべての領域を見る。[それ]は私たちの注意のほとんどを占めるべきものです。
SK
ええ、バックミラーを見るとどれだけ何もしていないのがわかるので、それはとても残念ですよね？私たちができたはずのことはすべて、できなかったのですが、コストがかかりますよね？怠慢には機会費用がかかります。ヘルスケアを提供された可能性があるが、ヘルスケアを提供されなかったすべての人々は、治療されずに死亡した病気を患っていました。それは社会にとって本当の損失です。
崩壊していたインフラストラクチャーはすべて修復されず、橋が倒れ、40人が死亡しました。それにはコストがかかりますよね？生成および生成された可能性のあるすべての潜在GDPには、捕捉されなかった真のメリットがあります。生み出されたであろう収入、人々が利用できたであろう仕事。富、貯蓄、それは私たちが私たちの手段、私たちの完全な可能性に応えなかったので、時間内に私たちに失われました。
[私は]それは悲劇だと思います。今後の目標は、人々が赤字と赤字支出をその手段を超えて生きている国として説明しているのを聞くことを認識することです。本、赤字は過剰支出の証拠ではありません。インフレは過剰支出の証拠です。ですから、赤字はそれ自体が財政の管理ミスの証拠であり、やりすぎ、やりすぎの証拠であるという考えを超えなければなりません。私たちは自分の可能性をはるかに下回り、今では私が本を書いたときよりもはるかに多く生きています。
NJR
私があなたの仕事をとても気に入っている理由の1つは、あなたが今まで聞いた最初のエコノミストであり、何百万人もの失業者をなんとなく良いまたは自然なものとして受け入れるということです。 。[あなた]生産的で働きたいと思うこれらすべての人々がいますそして…
SK
それは本当に[設計による]人身御供ですよね？政策の選択として、物価の高騰を回避するために、数百万人を拘束し、雇用から締め出し、傍観し、怠惰に保ち、強制失業させる必要があると私たちは信じています。これらの人々が仕事を見つけることを許可された場合、それは私たちが耐えられないと考えるあるしきい値を超えてインフレを押し上げるだろうというこの信念。したがって、失業は常に政策の選択です。
NJR
スパークリー、他に何かありますか？
SA
はい、他にも無限のことがありますが、時間が不足していることは理解しています。
NJR
長くお付き合い したくはありませんが、ケルトン教授、どうもありがとうございました。お時間を割いていただき、誠にありがとうございます。
SK
どういたしまして。私を招待してくれてありがとう。
NJR
誰もが赤字の神話を読むべきです。あなたの提案の主要な部分である、私たちが到達することさえできなかった仕事の保証を含めて、議論することはまだまだたくさんありますが、ええ、赤字の神話を取り上げてください。ありがとうございました。
SK
大丈夫です。気をつけて、二人とも。
この記事を楽しんだら、私たちの壮大な印刷版を購読することを検討してくださいまたは寄付をする。Current Affairsは100％読者がサポートしています。
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Interview: Stephanie Kelton Talks MMT and More
Stephanie Kelton, economics and public policy expert, talks the mythical and oft-misunderstood modern monetary theory with Nathan and Sparky.
Nathan Robinson
Sparky Abraham
filed 14 November 2020 in INTERVIEWS
This transcript has been lightly edited for clarity. The original interview can be found here.
Stephanie Kelton is a professor of public policy and economics at Stony Brook University. She’s also one of the world’s foremost experts on modern monetary theory, which has sparked heated debate in the field of economics. Recently, Kelton appeared on the Current Affairs podcast with editors Nathan J. Robinson and Sparky Abraham to discuss what an MMT-flavored future might look like. You can listen to the interview in its entirety on Patreon. The following transcript has been lightly edited for clarity and grammar.
NATHAN J. ROBINSON
Good evening, Current Affairs listeners. My name is Nathan Robinson and I’m the editor of Current Affairs. I’m here with my colleague, financial editor Sparky Abraham. Hello.
SPARKY ABRAHAM
Hello, Nathan.
NJR
And we are joined by an incredibly special guest today. Stephanie Kelton is professor of economics and public policy at Stony Brook University. She previously served as chief economist for the Democratic Minority Staff in the Senate Budget Committee. She was an economic advisor to Bernie Sanders’ campaign in 2016, she is a columnist for Bloomberg, and she is the author of The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy.
Professor Kelton, thank you so much for joining us.
STEPHANIE KELTON
My pleasure. Thanks for having me.
NJR
So, this book challenges a lot of people’s preconceptions about the way money works, the way the federal government works. People are going to have to read it to fully understand what you’re talking about, but I wonder if the place to start is with the way that everyone has kind of been conditioned to think about the federal government’s budgeting the same way they think about households.
You talk about when you were working with senators, those that came out of [the] business [world] thought of the federal government the same way they thought about business accounting: you had to take in money and you had to make sure that your checkbook was balanced. You talk about the way this has sort of, even among Democrats like Barack Obama, [become] the way that we all think of government.
Why is that wrong?
SK
Well, I like that you said this. It is probably the place to start because that’s where I started the book. Chapter 1 is called “Don’t Think of a Household.” I think that is in almost every respect where people tend to start and where everything goes off the rails, and if you can correct that, then I think it’s pretty easy to correct a lot of other wrong-headed thinking. It’s not our fault because almost all of the public discourse around government finances is presented to us through this lens of a household.
So we hear our politicians, we read articles, newspapers, we turn on the news and we hear somebody talking about the federal government’s finances using language that is most familiar to us: our own personal finances. So people will say the government needs to get its fiscal house in order. Just the use of the word “house,” invokes that household budgeting, that kitchen table. You know what it’s like to sit around the kitchen table and make sure that the money coming in and the money going out is balanced. You’re not living beyond your means and taking on debt that you can’t afford to pay back and so forth. That is correct.
We have been conditioned to understand the government’s finances through a lens that we’re most familiar with. That is our own [household finances]. What’s wrong with that is that the federal government is nothing like a household. The key difference between them and the rest of us is that they get to issue the currency. The U.S. government is the issuer of the dollar, and the rest of us just use it. So households, private businesses, state and local governments have to get the dollar before they can spend it. They have to get money. The federal government has to spend a dollar before the rest of us can get it, so they play by an entirely different set of rules.
NJR
Even Bernie Sanders, who you advised, often lapses into talking about the “how do you pay for it?” question and coming up with the answer, “Well, this is the way that the taxes would cover it.”
But what you suggest is that we shouldn’t even think of a one-to-one correlation between taxes and government spending. Taxes are important, but they serve a very different function and these two things should be [taken] apart in our minds. That’s very difficult because we always think, “Well, [for] a sensible universal healthcare program, here’s the taxes that would cover it and here’s why the budget adds up.”
But you kind of suggest throwing away the whole framework.
SK
Yeah, you’re right. It is not helpful, nor is it good economics, and I don’t think it’s good politics, either, to continue to link these two things. To insist that every time you want to spend a dollar into the economy on some program—maybe it’s healthcare—you have to have a dollar coming out of the economy to pay for it. I think it would be much better, both politically and in terms of the actual budgeting process and the economics, if we decouple these things and we have separate analysis. Should we raise a tax? And what tax should we think about raising? And why might we increase that tax? Should we increase spending? On education, infrastructure, healthcare, and by how much? And to what aim? What is the policy goal?
These can be, and I think should be, separate discussions. But you’re right: We are locked into this mentality that tells us that if the government wants to spend another dollar, it’s got to come up with a dollar, and that then forces politicians to put out a blueprint so that they can say, “I’m for this program.” You say, “Well, how are you going to pay for it?” [They respond,] “Well, I’m going to collect up all the dollars I need by raising this tax or closing these loopholes,” or whatever the case may be.
NJR
I just want to be clear—so the framework that you operate in is called modern monetary theory. You are part of a school of what is called “heterodox economists” who are challenging a lot of conventional dogmas. The caricature of your framework is that the government can spend infinite money because it has access to the printer, therefore it is sensible to spend infinite money and there are no constraints on the government’s purse. The cruel thing is MMT stands for “magic money tree,” we can just have anything we want because the government can print as much money as it wants.
Now, you’re not saying that. You say there are very real constraints on what the government should spend and excessive spending will have negative consequences. How should we think about how much the government can or should really spend?
SK
So first, let’s recognize that even having the so-called printing press, or the power of the purse, doesn’t mean that you can have anything you want. Right? Look at where we were three months ago, or frankly even today, in terms of ventilators, masks, and other personal protective equipment (PPE). Congress could authorize all the spending it wanted, but guess what? We couldn’t have those things because they weren’t available. They hadn’t been produced or they were going to other countries or whatever. We could not have them even though we could afford them. So that’s the first point.
The second point is that you’re absolutely right. [Recognizing] that governments that are issuers of a sovereign currency face no hard financial constraint is not the same as saying governments that issue their own currency face no constraints. There are limits. Right now Congress is spinning out multi-trillion dollar spending bills. The House has passed five, the Senate has passed four. The House has teed up another $3 trillion, they’re ready to go. We could see Congress spending $6-7 trillion, something like that [in] very short order.
The question is, would that be excessive? My response is no, not in this economic environment. Why? Because the economy is so depressed because tens of millions of Americans have lost jobs. Because businesses are struggling to get customers into the door where it’s safe and open to do so. There is a lot of room for the government to provide [fiscal support] in this economic environment.
Now at some point, God willing, the economy will get closer to full employment. We will recover and the labor market will tighten up and the fiscal space will begin to diminish. That’s a good thing, because then Congress will not need to provide as much fiscal support and if we were to continue passing multi-trillion dollar bills at that point, the punishment for that would show up in the form of inflation.
[The] limit that you’re asking about is our economy’s real resource capacity. We have the people we have, we have the machines we have, we have the factories we have, we have the technology we have, we have the raw materials. Those are our means of production. Those are our material means. Once we exhaust them, once they’re all used and being put to use, then any additional attempt to spend into an economy that is maxed out is going to produce bottlenecks in production and inflationary pressures.
SA
So how do you determine that? How do you calculate that? How do you figure that out? Because the wrong thinking about the budget [goes]—it’s almost just a rule of thumb—if you spend more than you take in, that’s bad. But if you accept that that’s not the right way of thinking about it, then how do you figure out what’s too much?
SK
It’s a good question. [Imagine] I’m holding up a 12 oz. can of delicious Diet Dr. Pepper. Now, suppose I had a 12 oz. glass. It’s empty. I have an empty 12 oz. glass and I have a 12 oz. can of soda. I know that I can empty that can of soda into my glass and I can fill it all the way to the top, and I can do it in a way that is measured and controlled, because I can see if I’m pouring too fast the foam is going to pour over. [In that case] I’m going to have a sticky mess on my counter and so forth. Or I can do it in a very controlled and deliberate way and I can avoid the spillover.
Now that’s easy because I can see the glass. I know it’s a 12 oz. glass and I know exactly what I’m working with and I can control the whole thing.
The economy is not like that. We can’t see the economy’s full capacity. What we can do is attempt to get measurements. You’re trying to take a temperature for the economy’s heating up. How hot is it getting in here, right? What do you look at? You look at unemployment. You look at capacity utilization rates. We have the data for things like this. People go out and actually survey businesses and say, “How much of your total capacity right now are you using?” They say, “We’re using about 68 percent.” Okay, well I know that there’s a lot of spare capacity.
You can do it by occupation. If you’re looking to do a big infrastructure project and you look at the unemployment rates by occupation and you see: wow, construction workers, there isn’t much unemployment in construction. [Engineers], architects, they’re almost all fully employed. You don’t want to roll out a big infrastructure project in that because you’re going to put pressure on prices in that industry.
What I’m saying is we have been here before. We did this in World War II. We massively ramped up government spending and we did it without a whole lot of forethought because it was war so you’ve got to act fast. We had workers working double and triple overtime, wage pressure, price pressures, but we managed it pretty well. We didn’t have a hyperinflation episode or anything like that. We won the war and then we ended up with the longest period of peacetime prosperity in our nation’s history to that point.
It’s going to be imperfect. You can’t operate an economy with perfect certainty, but economists have models and surveys and ways to attempt [to] avoid pushing things beyond the limit.
SA
One way that I sometimes catch myself thinking about this is it’s kind of just like one big bucket, right? It’s like the one glass and the one can. But it sounds like what you’re describing [is] a little bit more nuanced than that. You have to actually look sector by sector, you have to figure out [where exactly] you’re putting the money in to determine whether you’re doing the right amount or too much or too little.
SK
Exactly. That’s what they did during and after the war. There was something called [the] National Resources Planning Board or Bureau or something. It brought together union leaders, industry, business leaders, government officials, economists, and statisticians, and people worked together to try to manage inflationary pressures post-war as the government scaled back spending on defense with an increased spending in the GI Bill. There was a lot of additional education and then pretty soon with [Lyndon B. Johnson] you got Medicare and other programs. People have to do the hard work, but you’re absolutely right, it is nuanced.
NJR
You mentioned inflation, and this is, of course, the first thing that everyone brings up the first moment they hear of MMT. They say, “Printing a bunch more money, that will devalue [the currency]. The more money we have, the less it’s worth. Inflation is going to take off. This is all absurd.”
But what’s interesting about the book is actually how much you talk about inflation. You say, in fact, that’s what matters. [What] you should be concerned about is not revenue but the effects of spending on the economy.
SK
Exactly. [We] could get away from thinking of the object and aim of public policy being to promote a balanced budget and instead think what are the problems we’re trying to solve. I have a chapter called “The Deficits That Matter” where I try to get us to focus on the myriad of challenges and crises in our economy and recognize we can’t fix everything. Just because you can financially afford to spend whatever Congress budgets, it doesn’t mean you have the real resource capacity to do everything. You still have to prioritize. Budgeting is still about prioritizing.
If we could get away from thinking about the budget as a thing we should try to balance and think about the budget as a tool to achieve or to build a broadly balanced economy, how can we re-balance conditions in education or in infrastructure or all of these deficiencies? How can we address those problems? And if we’re able to tackle those problems using the budget in ways that don’t create inflationary problems, I don’t care what number falls out of the budget box at the end of every fiscal year. It’s unimportant. What matters is: Do I have a healthy balanced economy?
NJR
You mention in the book that people are often told about the vast amounts of money that they owe. It’s like this TIME magazine cover that says “You owe $46,000,” [because] this is [your chunk of] the national debt. Your point is that people shouldn’t think of it this way. How should they think of what the deficit is, if it’s not the amount that America owes?
SK
There are two words that are important in what you just said: the deficit and the debt, and they’re different. They’re often conflated, so let’s make sure everybody listening knows the difference between those concepts.
The deficit is the difference between two numbers. It’s the difference between the number of dollars the government spends into the economy each year, and the number of dollars the government subtracts out of the economy each year (mainly through taxation). So if the government spends $100 in, and taxes $90 out, we label it a government deficit, because the government has spent more than it collected in taxes. The deficit on the government’s books will read -10. We’ll say that’s a deficit we’ve recorded. What we forget to do is pay attention to the fact that the government’s deficit is making a financial contribution. If they put 100 in and subtract 90 out, somebody got 10, right? So that’s a +10 on somebody else’s balance sheet, so government deficits create financial surpluses in some other part of the economy.
Now each year that the government runs a deficit, it matches up its deficit spending by selling government bonds, U.S. Treasuries. So if the deficit is $10, the government will sell a $10 government bond. What happens is that it takes the $10 away from someone and replaces that with a government bond. All the government bonds that exist are what we call the national debt. I think it’s awful that we use that word to describe the outstanding stockpile of U.S. Treasuries because those are people’s assets. They’re holding onto them and it’s basically an interest-bearing form of U.S. currency. They’re dollars that [accumulate] interest.
The government doesn’t have to offer people interest-bearing dollars, but it does. It chooses to do so. Historically all of the bonds that have been issued and reissued comprise this thing we call the national debt. The national debt is nothing more than a historical record. It’s kept track of every past deficit the government has ever run, where it has placed U.S. Treasuries into somebody’s hands, and we call that the national debt.
SA
Why do we do that? And do we need to? Why do we issue treasury bonds for every dollar of the deficit?
SK
It’s the most under-asked and important question maybe in all of public finance. I’ll tell you a story that might help [answer] your question.
The Australian government in the 1990s balanced its budget and was running budget surpluses. Remember, when the government is running a deficit, it’s selling Treasuries. But when it’s running a surplus, it’s supposed to be paying down debt, retiring maturing bonds, letting them roll off and then people don’t get more.
So here’s the Australian government running budget surpluses, paying down Australian government debt, and investors went crazy. They started clamoring for government bonds. “Hey, where’s our risk-free reward?” Because these are safe, risk-free assets that pay interest. You get return without risk. It’s a sweet, sweet deal if you can get it. So investors clamored for more government bonds and the Australian government started issuing government bonds to satisfy the appetite of investors for this risk-free return, even though they were running budget surpluses. So at least part of the answer is that financial markets very much like these things.
SA
We’ve got whole structures in place now where there are various institutions that are more or less required to invest in government bonds, right?
SK
That is exactly true as well. All of that can be changed, of course, if Congress wanted to change it. Then I think the advantage of thinking about making changes like that is that the politics are so corrosive, that we understand [we] need Congress passing bills to support the economy right now and that that results in deficit spending. We understand that. The problem is that it increases this thing we call the national debt, and that gets everybody anxious. But if we could have the deficits that our economy needs without the added debt that makes people very crazy, maybe that’s worthwhile.
SA
Does [issuing] the bonds have any counter-balancing effect? Does that in some sense take money out of the economy to sell those bonds for every dollar of the deficit?
SK
It actually puts more money in. If the government ran the deficit without selling the bond, what would happen? It would spend $100 into the economy, tax $90 out, [and] leave $10 sitting on balance sheets. Now the [Federal Reserve] can choose to pay interest on those reserve balances, but they’re just trapped in the economy, they’re trapped in the banking system, they’re trapped in the financial system. But the Fed could pay the interest if it wants to.
What we do now is we sell Treasuries and replace the dollars with an interest-bearing dollar, so now you’re multiplying up the number of dollars over time, and those can be in people’s pensions. I can buy them, so they can become interest income to people who can turn around and spend that money.
SA
And [Treasuries] themselves can be traded as well.
SK
Right.
NJR
One question about your framework is the extent to which [you talk] about a very particular kind of government that the United States federal government is. One of the difficult things for people [to understand] is that local and state governments, because they don’t issue currency, still do have to think [like] households. And lots of other countries’ governments that don’t have [monetary sovereignty] have to think about their budgets the way households do. So are we talking about a very particular thing that happens to apply because the U.S. federal government is so financially powerful and has this exorbitant privilege?
SK
No, the conversation that we’ve had so far is equally applicable [to other governments]. We talked a little bit about Japan, right? Japan is another example of a currency-issuing government, that has, if you like, infinite fiscal capacity where the relevant constraint is inflation. The U.K. is one. Canada is one. Australia is one. New Zealand is one. China has an extremely high degree of monetary sovereignty. You don’t have to be the global reserve currency issuer to enjoy the policy space to run your macroeconomic policy in a way that’s aimed at maximizing full employment domestically, which is what we’ve been talking about.
But you’re right. Your other point was [regarding] state and local governments and countries in the Eurozone that gave up their sovereign currencies. They did place themselves in a very different position vis-à-vis the currency. Italy can’t do what the United States of America can do. California and New York can’t do what the federal government can do—which by the way is why the governors in both of those states have been pleading with the federal government, imploring Congress to get aid to state and local governments. Because as you said they don’t have the currency-issuing capacity.
NJR
There was a very critical article about MMT written in Jacobin, which is a leftwing magazine that is in many ways very sympathetic to the same policy goals [as MMT advocates]. I want to ask the question that was posed to you in this article. It said sometimes it’s hard to figure out what modern monetary theorists believe. Are they just saying that it’s okay for the federal government to run a small deficit in normal times and big ones during crises? Or that we shouldn’t worry about deficits at all? Should we not worry about the rising ratio of federal debt to gross domestic product (GDP) and the increased share of spending devoted to debt service, which is a gift to rich bond holders? And [the author of the Jacobin article] said at what point would debt become worrisome, and then concludes MMT’ers never tell you this.
SK
I don’t know the piece you’re referring to, but it sounds like it was written by someone who hasn’t read the MMT scholarship, or the literature. Because every single point that you just raised is, I would say, omnipresent across two and a half decades of MMT scholarship, videos, and lectures. It’s all readily available to anyone with a Google machine. We could take those one at a time, but I can tell you that we’re very clear [on] every one of those points. Not just myself, but Randy Wray and Bill Mitchell, Warren Mosler, Scott Fullwiler. There are a whole bunch of us who have been quite clear on each of those points.
You and I just sitting here have talked about debt to GDP ratios and what the real limits are. I’ve answered that question already. I can’t remember what some of the others were that you just raised.
[Regarding] deficits, [we] also said I don’t care what number falls out of the budget box at the end of any particular year. So MMT is not about deficits in a weak economy, surpluses or balanced budget over the cycle. That’s not it at all. The budget outcome is never the right policy goal. The same goes for the debt ratio. The debt ratio is never the thing to target.
And on the income to bond holders, you and I have talked about this. I just made the case that maybe we want to phase this stuff out because it’s a risk-free reward. Warren Mosler has referred to it as UBI for rich people. It’s a universal bond-holder income, right? A payment that goes to people who are already wealthy enough to have some dollar savings that they can trade up into interest-bearing dollar savings. So I don’t know who wrote [the Jacobin article], but it sounds like they didn’t do their homework.
SA
Yeah. This is a little bit different from what Nathan was just asking you, but I just had this thought that occurred to me.
The government spends a lot of money on the military, right? A lot of money on the military. I don’t have the numbers in front of me, but what you’re talking about is basically that the government spending comes first and that’s what drives the economy and drives economic growth. [If] you were to be someone who thought that the government spent way, way, way too much on the military, [then] in MMT-speak it’s not just a matter of [reducing] spending on the military and then [achieving] a balanced budget. Really what that means is we need to find somewhere else to spend that money if we’re still below capacity. If we were to reduce military spending, you’d want to increase spending somewhere else. Is that right?
SK
I don’t think you need any justification for cutting the military budget apart from the obvious [fact it’s] a bloated, $700+ billion annually war machine, right? I could make a very strong case [for cutting] the military budget by 10 percent [without justifying it by saying it would free up money to] spend on poor communities or programs that help others or so forth.
Your question is a little bit different.
SA
It’s kind of the opposite. It’s almost, “can we cut military spending without spending somewhere else?” Don’t we kind of need to spend somewhere else if we’re cutting military spending in order to avoid deflation?
SK
I think that yes, if you cut some spending, every dollar the government spends is a dollar of income to someone, right? So the risk, if you want to call it that, in cutting the military budget without replacing that spending in some other category, is that you’ve deprived someone of—if we’re cutting it by 10 percent, let’s say, $70 billion. You’re pulling $70 billion out of the economy.
How harmful that’s going to be is going to depend on a lot of factors related to the multiplier effects associated with that spending cut and so forth. But mostly yes, you’re right. You don’t just go around whacking different line items in the government’s budget and expect that the economy is going to continue to grow at the same rate, or that there are not going to be negative consequences.
SA
I like this point in that it really shows it’s not just a zero-sum, one-to-one kind of thing. It’s not like our only goal should be cutting military spending. It should be cutting military spending [and joining it closely] with what we actually should be doing.
SK
The way I would think of it is: How many real resources are you freeing up when you reduce spending in whatever category? You free up real resources. Well, what is the further public purpose of doing that? If you’re going to free up a lot of real resources, including unemployed labor, you’re going to create some unemployment. You should have the intention of re-employing that labor, or else what is the public purpose associated with freeing that labor up?
SA
The key is the resources, not the budget.
SK
Exactly, yeah, exactly.
NJR
I just have two more questions for you that I think are quite important. The first is on taxes, because I think again one of the myths [people believe when they first hear about MMT is], “Ah, rich people are going to love this because it says that we can do everything we want without people having to pay their share in taxes.” Because their share isn’t actually needed, so this is a license to cut taxes or not increase taxes on the rich. But you talk about the fact that taxes are, in fact, incredibly necessary. [As a] matter of fact we might look at something that is similar to the current taxation regime even if we think about it a different way.
SK
Yeah. A couple of years ago I gave a talk at a conference in Washington, D.C., and I think it was the inaugural conference of the Patriotic Millionaires. You’re familiar with this organization? So this is a group of very wealthy people who came together, formed an organization for the sole purpose—[maybe] that’s a little bit of an exaggeration—but for the main purpose of saying, “Hey, we have a lot of money and you should take more of it so that you can afford to fund education more generously, or infrastructure, or whatever it is. Tax us, tax us!”
So they invite me to come to this conference and give some remarks and I do this from an MMT perspective. Which means I walk into this group knowing that we don’t need their money, that the federal government does not need their money in order to be able to afford infrastructure investment, education, healthcare, or whatever. But the message was not, “We don’t need your money therefore you guys are fine, we won’t touch you.” The message was, “We don’t need your money, but we need to take it anyway.” We don’t need your money to pay the bills, but we have such extreme concentrations of wealth and income (especially wealth) in this country that it’s not just bad for the working of our economy, it is corrosive to our democracy. And when those concentrations of wealth get that extreme, you need to do something about it.
A wealth tax that peels off 2 percent annually is a nice “pay for” and the message that was given to the billionaires was, “Don’t worry, actually you’re not even going to feel it. Because your wealth is going to grow at a much faster rate, so that in fact you’re still going to become richer and richer and richer. [Your] wealth is going to grow over time, 2 percent is [so low] you won’t hardly feel a thing.”
I would say that’s the problem. If they’re not going to hardly feel a thing, then you’re not addressing the concentration of wealth inequality that is so corrosive to our political process, our democracy. So I would go in much more ambitiously with an agenda aimed at reforming the tax code, dealing in an aggressive way with the inequities in an attempt to rebalance things.
So MMT is not cover for the wealthy. It’s just … let’s be real. We don’t need to depend [on billionaires’ taxes] to feed a hungry kid, or fix a crumbling bridge. I don’t like that. That idea that we can’t move forward without them. We hold hostage the entire progressive agenda or whatever public policy because unless we can tax the rich, we can’t pay for it so we can’t have it. I’m saying no to that.
NJR
[Although If] we think in terms of this real resources perspective, there is a sense in which concentrations of wealth are a segment of those real resources that are being controlled and directed towards the satisfaction of the needs of the rich rather than this. [So] there is a sense in which every resource that is directed to building yachts is not being directed towards fixing bridges.
SK
That is true. No question about that. But I don’t think that a 2 percent tax—I’m using this as an example—on the wealth of 75-78,000 people shakes free enough real resource space to allow us to do big, ambitious things. You see what I’m saying? They’re savers rather than spenders, so they’re not actually gobbling up a lot of the real resource space.
SA
So maybe [the] savers vs. spenders question is related to what I was going to ask. Which is: taxes are still, in addition to being a tool for equity in society, [still] a tool to control inflation, right? If we abolished all taxes and kept government spending where it is, I assume we would have inflationary problems pretty quickly.
SK
And a collapse of the currency.
SA
And a collapse of the currency. As you explained, the taxes are the thing that creates the money, basically.
SK
The dollars are a tax credit; they circulate as tax credit.
SA
Right. But it seems like you could still make the argument that as the economy approaches capacity, you still need taxes in order to spend. It’s just not because you’re spending the tax money. It’s because you are controlling inflation and taxes are a tool for doing that. Is that right?
SK
Yes. So if you reach the point where your resource capacity is exhausted, but you still think there’s something that is of such high priority that government ought to pursue it, even in a full employment environment, you say, “Well, we don’t have healthcare for every American” or “we don’t have the education system that we want.” [And] whatever the case is, [I] need to commit another half trillion or $200 billion or whatever.
But if I do that in this evaluation, I risk pushing inflation above a level that people are going to be comfortable with, so I need to create some offsets. I need to be able to add. Now I’ve taken my 12 oz. can and my glass is full, and I want to pour some more spending in. I’ve got to get a spoon and I need to make room for that. That’s what taxes do. They take some purchasing power away from some people, create that safe space for additional spending to come in.
SA
It’s funny because people talk about taxes as a redistributionary system, and it seems like in that circumstance they [become a redistributionaryl system], but it’s not direct. You’re not taking money from some people and giving that money to other people. It’s a little bit more complicated.
SK
Yeah. You’re debiting and crediting balance sheets. want to credit some balance sheets of people who provide educational services or healthcare services, and I’m going to debit some balance sheets to remove some dollars from subgroup of taxpayers.
SA
Right. And when and how much you have to do that is dependent on the real world, not on the budget.
SK
Exactly.
NJR
The last thing I wanted to ask you, Professor Kelton—because I think it’s such a crucial part of your book—is you have a chapter called “The Deficits That Matter,” and I think this is critical to people reconceptualizing what they think of as a deficit. [You] say that we should focus far more on the gap between what we’re capable of [vs] what we are actually doing. When we have this kind of real resource and we start to look at what our country could do, we see all these areas of massive failure and of massive lack of living up to the potential that we have. [That] is what should occupy most of our attention.
SK
Yeah, it’s such a shame because you look in the rearview mirror and you see how much inaction, right? All of the things we could have done—but didn’t do—have costs, right? There is an opportunity cost to inaction. All of the people who could have been provided healthcare but weren’t provided healthcare, who had illnesses that went untreated and died. That’s a real loss to society.
All of the infrastructure that was crumbling that wasn’t repaired, and the bridge fell down and killed 40 people. That has a cost, right? All of the potential output that could have been generated and produced has a real benefit that wasn’t captured. The income that would have been generated, the jobs that would have been available to people. The wealth, the savings, it’s lost to us in time because we didn’t live up to our means, our full potential.
[I] think that’s a tragedy and the goal going forward should be to recognize that you hear people describe deficits and deficit spending as [characteristics of] a country that’s living beyond its means, [but as] I try to say very clearly in the book, a deficit is not evidence of overspending. Inflation is evidence of overspending. So we have to get beyond that idea that deficits are in and of themselves evidence of mismanagement of finances and trying to do too much, trying to have too much. We are living well below our potential and now even more than when I wrote the book.
NJR
One reason I like your work so much is you’re the first economist I’ve ever heard who talks about just [how insane] it is that we accept millions of unemployed people as somehow a good or natural thing, when it’s such a squandering. [You] have all these people who could be productive and want to work and…
SK
It is really a human sacrifice [by design], right? As a policy choice we believe we need to hold some number of millions of people and lock them out of employment, hold them on the sidelines, keep them idle, forced unemployment, for the purpose of avoiding an acceleration in prices. This belief that if these people are allowed to find jobs, it would push inflation above some threshold that we consider intolerable. So unemployment is always a policy choice.
NJR
Sparky, do you have anything else?
SA
Yes, I have infinite other things, but I understand we’re running out of time.
NJR
We don’t want to keep you too long, but thank you so much, Professor Kelton. I really appreciate you taking the time to talk to us.
SK
You’re so welcome. Thanks for inviting me.
NJR
Everyone should read The Deficit Myth. There’s so much more to discuss, including the job guarantee, which we didn’t even get to, which is a major part of your proposal, but, yeah, pick up The Deficit Myth. Thank you.
SK
All right. Take care, both of you.
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Interview: Stephanie Kelton Talks MMT and More
Stephanie Kelton, economics and public policy expert, talks the mythical and oft-misunderstood modern monetary theory with Nathan and Sparky.
Nathan Robinson
Sparky Abraham
filed 14 November 2020 in INTERVIEWS
This transcript has been lightly edited for clarity. The original interview can be found here.
Stephanie Kelton is a professor of public policy and economics at Stony Brook University. She’s also one of the world’s foremost experts on modern monetary theory, which has sparked heated debate in the field of economics. Recently, Kelton appeared on the Current Affairs podcast with editors Nathan J. Robinson and Sparky Abraham to discuss what an MMT-flavored future might look like. You can listen to the interview in its entirety on Patreon. The following transcript has been lightly edited for clarity and grammar.
NATHAN J. ROBINSON
Good evening, Current Affairs listeners. My name is Nathan Robinson and I’m the editor of Current Affairs. I’m here with my colleague, financial editor Sparky Abraham. Hello.
SPARKY ABRAHAM
Hello, Nathan.
NJR
And we are joined by an incredibly special guest today. Stephanie Kelton is professor of economics and public policy at Stony Brook University. She previously served as chief economist for the Democratic Minority Staff in the Senate Budget Committee. She was an economic advisor to Bernie Sanders’ campaign in 2016, she is a columnist for Bloomberg, and she is the author of The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy.
Professor Kelton, thank you so much for joining us.
STEPHANIE KELTON
My pleasure. Thanks for having me.
NJR
So, this book challenges a lot of people’s preconceptions about the way money works, the way the federal government works. People are going to have to read it to fully understand what you’re talking about, but I wonder if the place to start is with the way that everyone has kind of been conditioned to think about the federal government’s budgeting the same way they think about households.
You talk about when you were working with senators, those that came out of [the] business [world] thought of the federal government the same way they thought about business accounting: you had to take in money and you had to make sure that your checkbook was balanced. You talk about the way this has sort of, even among Democrats like Barack Obama, [become] the way that we all think of government.
Why is that wrong?
SK
Well, I like that you said this. It is probably the place to start because that’s where I started the book. Chapter 1 is called “Don’t Think of a Household.” I think that is in almost every respect where people tend to start and where everything goes off the rails, and if you can correct that, then I think it’s pretty easy to correct a lot of other wrong-headed thinking. It’s not our fault because almost all of the public discourse around government finances is presented to us through this lens of a household.
So we hear our politicians, we read articles, newspapers, we turn on the news and we hear somebody talking about the federal government’s finances using language that is most familiar to us: our own personal finances. So people will say the government needs to get its fiscal house in order. Just the use of the word “house,” invokes that household budgeting, that kitchen table. You know what it’s like to sit around the kitchen table and make sure that the money coming in and the money going out is balanced. You’re not living beyond your means and taking on debt that you can’t afford to pay back and so forth. That is correct.
We have been conditioned to understand the government’s finances through a lens that we’re most familiar with. That is our own [household finances]. What’s wrong with that is that the federal government is nothing like a household. The key difference between them and the rest of us is that they get to issue the currency. The U.S. government is the issuer of the dollar, and the rest of us just use it. So households, private businesses, state and local governments have to get the dollar before they can spend it. They have to get money. The federal government has to spend a dollar before the rest of us can get it, so they play by an entirely different set of rules.
NJR
Even Bernie Sanders, who you advised, often lapses into talking about the “how do you pay for it?” question and coming up with the answer, “Well, this is the way that the taxes would cover it.”
But what you suggest is that we shouldn’t even think of a one-to-one correlation between taxes and government spending. Taxes are important, but they serve a very different function and these two things should be [taken] apart in our minds. That’s very difficult because we always think, “Well, [for] a sensible universal healthcare program, here’s the taxes that would cover it and here’s why the budget adds up.”
But you kind of suggest throwing away the whole framework.
SK
Yeah, you’re right. It is not helpful, nor is it good economics, and I don’t think it’s good politics, either, to continue to link these two things. To insist that every time you want to spend a dollar into the economy on some program—maybe it’s healthcare—you have to have a dollar coming out of the economy to pay for it. I think it would be much better, both politically and in terms of the actual budgeting process and the economics, if we decouple these things and we have separate analysis. Should we raise a tax? And what tax should we think about raising? And why might we increase that tax? Should we increase spending? On education, infrastructure, healthcare, and by how much? And to what aim? What is the policy goal?
These can be, and I think should be, separate discussions. But you’re right: We are locked into this mentality that tells us that if the government wants to spend another dollar, it’s got to come up with a dollar, and that then forces politicians to put out a blueprint so that they can say, “I’m for this program.” You say, “Well, how are you going to pay for it?” [They respond,] “Well, I’m going to collect up all the dollars I need by raising this tax or closing these loopholes,” or whatever the case may be.
NJR
I just want to be clear—so the framework that you operate in is called modern monetary theory. You are part of a school of what is called “heterodox economists” who are challenging a lot of conventional dogmas. The caricature of your framework is that the government can spend infinite money because it has access to the printer, therefore it is sensible to spend infinite money and there are no constraints on the government’s purse. The cruel thing is MMT stands for “magic money tree,” we can just have anything we want because the government can print as much money as it wants.
Now, you’re not saying that. You say there are very real constraints on what the government should spend and excessive spending will have negative consequences. How should we think about how much the government can or should really spend?
SK
So first, let’s recognize that even having the so-called printing press, or the power of the purse, doesn’t mean that you can have anything you want. Right? Look at where we were three months ago, or frankly even today, in terms of ventilators, masks, and other personal protective equipment (PPE). Congress could authorize all the spending it wanted, but guess what? We couldn’t have those things because they weren’t available. They hadn’t been produced or they were going to other countries or whatever. We could not have them even though we could afford them. So that’s the first point.
The second point is that you’re absolutely right. [Recognizing] that governments that are issuers of a sovereign currency face no hard financial constraint is not the same as saying governments that issue their own currency face no constraints. There are limits. Right now Congress is spinning out multi-trillion dollar spending bills. The House has passed five, the Senate has passed four. The House has teed up another $3 trillion, they’re ready to go. We could see Congress spending $6-7 trillion, something like that [in] very short order.
The question is, would that be excessive? My response is no, not in this economic environment. Why? Because the economy is so depressed because tens of millions of Americans have lost jobs. Because businesses are struggling to get customers into the door where it’s safe and open to do so. There is a lot of room for the government to provide [fiscal support] in this economic environment.
Now at some point, God willing, the economy will get closer to full employment. We will recover and the labor market will tighten up and the fiscal space will begin to diminish. That’s a good thing, because then Congress will not need to provide as much fiscal support and if we were to continue passing multi-trillion dollar bills at that point, the punishment for that would show up in the form of inflation.
[The] limit that you’re asking about is our economy’s real resource capacity. We have the people we have, we have the machines we have, we have the factories we have, we have the technology we have, we have the raw materials. Those are our means of production. Those are our material means. Once we exhaust them, once they’re all used and being put to use, then any additional attempt to spend into an economy that is maxed out is going to produce bottlenecks in production and inflationary pressures.
SA
So how do you determine that? How do you calculate that? How do you figure that out? Because the wrong thinking about the budget [goes]—it’s almost just a rule of thumb—if you spend more than you take in, that’s bad. But if you accept that that’s not the right way of thinking about it, then how do you figure out what’s too much?
SK
It’s a good question. [Imagine] I’m holding up a 12 oz. can of delicious Diet Dr. Pepper. Now, suppose I had a 12 oz. glass. It’s empty. I have an empty 12 oz. glass and I have a 12 oz. can of soda. I know that I can empty that can of soda into my glass and I can fill it all the way to the top, and I can do it in a way that is measured and controlled, because I can see if I’m pouring too fast the foam is going to pour over. [In that case] I’m going to have a sticky mess on my counter and so forth. Or I can do it in a very controlled and deliberate way and I can avoid the spillover.
Now that’s easy because I can see the glass. I know it’s a 12 oz. glass and I know exactly what I’m working with and I can control the whole thing.
The economy is not like that. We can’t see the economy’s full capacity. What we can do is attempt to get measurements. You’re trying to take a temperature for the economy’s heating up. How hot is it getting in here, right? What do you look at? You look at unemployment. You look at capacity utilization rates. We have the data for things like this. People go out and actually survey businesses and say, “How much of your total capacity right now are you using?” They say, “We’re using about 68 percent.” Okay, well I know that there’s a lot of spare capacity.
You can do it by occupation. If you’re looking to do a big infrastructure project and you look at the unemployment rates by occupation and you see: wow, construction workers, there isn’t much unemployment in construction. [Engineers], architects, they’re almost all fully employed. You don’t want to roll out a big infrastructure project in that because you’re going to put pressure on prices in that industry.
What I’m saying is we have been here before. We did this in World War II. We massively ramped up government spending and we did it without a whole lot of forethought because it was war so you’ve got to act fast. We had workers working double and triple overtime, wage pressure, price pressures, but we managed it pretty well. We didn’t have a hyperinflation episode or anything like that. We won the war and then we ended up with the longest period of peacetime prosperity in our nation’s history to that point.
It’s going to be imperfect. You can’t operate an economy with perfect certainty, but economists have models and surveys and ways to attempt [to] avoid pushing things beyond the limit.
SA
One way that I sometimes catch myself thinking about this is it’s kind of just like one big bucket, right? It’s like the one glass and the one can. But it sounds like what you’re describing [is] a little bit more nuanced than that. You have to actually look sector by sector, you have to figure out [where exactly] you’re putting the money in to determine whether you’re doing the right amount or too much or too little.
SK
Exactly. That’s what they did during and after the war. There was something called [the] National Resources Planning Board or Bureau or something. It brought together union leaders, industry, business leaders, government officials, economists, and statisticians, and people worked together to try to manage inflationary pressures post-war as the government scaled back spending on defense with an increased spending in the GI Bill. There was a lot of additional education and then pretty soon with [Lyndon B. Johnson] you got Medicare and other programs. People have to do the hard work, but you’re absolutely right, it is nuanced.
NJR
You mentioned inflation, and this is, of course, the first thing that everyone brings up the first moment they hear of MMT. They say, “Printing a bunch more money, that will devalue [the currency]. The more money we have, the less it’s worth. Inflation is going to take off. This is all absurd.”
But what’s interesting about the book is actually how much you talk about inflation. You say, in fact, that’s what matters. [What] you should be concerned about is not revenue but the effects of spending on the economy.
SK
Exactly. [We] could get away from thinking of the object and aim of public policy being to promote a balanced budget and instead think what are the problems we’re trying to solve. I have a chapter called “The Deficits That Matter” where I try to get us to focus on the myriad of challenges and crises in our economy and recognize we can’t fix everything. Just because you can financially afford to spend whatever Congress budgets, it doesn’t mean you have the real resource capacity to do everything. You still have to prioritize. Budgeting is still about prioritizing.
If we could get away from thinking about the budget as a thing we should try to balance and think about the budget as a tool to achieve or to build a broadly balanced economy, how can we re-balance conditions in education or in infrastructure or all of these deficiencies? How can we address those problems? And if we’re able to tackle those problems using the budget in ways that don’t create inflationary problems, I don’t care what number falls out of the budget box at the end of every fiscal year. It’s unimportant. What matters is: Do I have a healthy balanced economy?
NJR
You mention in the book that people are often told about the vast amounts of money that they owe. It’s like this TIME magazine cover that says “You owe $46,000,” [because] this is [your chunk of] the national debt. Your point is that people shouldn’t think of it this way. How should they think of what the deficit is, if it’s not the amount that America owes?
SK
There are two words that are important in what you just said: the deficit and the debt, and they’re different. They’re often conflated, so let’s make sure everybody listening knows the difference between those concepts.
The deficit is the difference between two numbers. It’s the difference between the number of dollars the government spends into the economy each year, and the number of dollars the government subtracts out of the economy each year (mainly through taxation). So if the government spends $100 in, and taxes $90 out, we label it a government deficit, because the government has spent more than it collected in taxes. The deficit on the government’s books will read -10. We’ll say that’s a deficit we’ve recorded. What we forget to do is pay attention to the fact that the government’s deficit is making a financial contribution. If they put 100 in and subtract 90 out, somebody got 10, right? So that’s a +10 on somebody else’s balance sheet, so government deficits create financial surpluses in some other part of the economy.
Now each year that the government runs a deficit, it matches up its deficit spending by selling government bonds, U.S. Treasuries. So if the deficit is $10, the government will sell a $10 government bond. What happens is that it takes the $10 away from someone and replaces that with a government bond. All the government bonds that exist are what we call the national debt. I think it’s awful that we use that word to describe the outstanding stockpile of U.S. Treasuries because those are people’s assets. They’re holding onto them and it’s basically an interest-bearing form of U.S. currency. They’re dollars that [accumulate] interest.
The government doesn’t have to offer people interest-bearing dollars, but it does. It chooses to do so. Historically all of the bonds that have been issued and reissued comprise this thing we call the national debt. The national debt is nothing more than a historical record. It’s kept track of every past deficit the government has ever run, where it has placed U.S. Treasuries into somebody’s hands, and we call that the national debt.
SA
Why do we do that? And do we need to? Why do we issue treasury bonds for every dollar of the deficit?
SK
It’s the most under-asked and important question maybe in all of public finance. I’ll tell you a story that might help [answer] your question.
The Australian government in the 1990s balanced its budget and was running budget surpluses. Remember, when the government is running a deficit, it’s selling Treasuries. But when it’s running a surplus, it’s supposed to be paying down debt, retiring maturing bonds, letting them roll off and then people don’t get more.
So here’s the Australian government running budget surpluses, paying down Australian government debt, and investors went crazy. They started clamoring for government bonds. “Hey, where’s our risk-free reward?” Because these are safe, risk-free assets that pay interest. You get return without risk. It’s a sweet, sweet deal if you can get it. So investors clamored for more government bonds and the Australian government started issuing government bonds to satisfy the appetite of investors for this risk-free return, even though they were running budget surpluses. So at least part of the answer is that financial markets very much like these things.
SA
We’ve got whole structures in place now where there are various institutions that are more or less required to invest in government bonds, right?
SK
That is exactly true as well. All of that can be changed, of course, if Congress wanted to change it. Then I think the advantage of thinking about making changes like that is that the politics are so corrosive, that we understand [we] need Congress passing bills to support the economy right now and that that results in deficit spending. We understand that. The problem is that it increases this thing we call the national debt, and that gets everybody anxious. But if we could have the deficits that our economy needs without the added debt that makes people very crazy, maybe that’s worthwhile.
SA
Does [issuing] the bonds have any counter-balancing effect? Does that in some sense take money out of the economy to sell those bonds for every dollar of the deficit?
SK
It actually puts more money in. If the government ran the deficit without selling the bond, what would happen? It would spend $100 into the economy, tax $90 out, [and] leave $10 sitting on balance sheets. Now the [Federal Reserve] can choose to pay interest on those reserve balances, but they’re just trapped in the economy, they’re trapped in the banking system, they’re trapped in the financial system. But the Fed could pay the interest if it wants to.
What we do now is we sell Treasuries and replace the dollars with an interest-bearing dollar, so now you’re multiplying up the number of dollars over time, and those can be in people’s pensions. I can buy them, so they can become interest income to people who can turn around and spend that money.
SA
And [Treasuries] themselves can be traded as well.
SK
Right.
NJR
One question about your framework is the extent to which [you talk] about a very particular kind of government that the United States federal government is. One of the difficult things for people [to understand] is that local and state governments, because they don’t issue currency, still do have to think [like] households. And lots of other countries’ governments that don’t have [monetary sovereignty] have to think about their budgets the way households do. So are we talking about a very particular thing that happens to apply because the U.S. federal government is so financially powerful and has this exorbitant privilege?
SK
No, the conversation that we’ve had so far is equally applicable [to other governments]. We talked a little bit about Japan, right? Japan is another example of a currency-issuing government, that has, if you like, infinite fiscal capacity where the relevant constraint is inflation. The U.K. is one. Canada is one. Australia is one. New Zealand is one. China has an extremely high degree of monetary sovereignty. You don’t have to be the global reserve currency issuer to enjoy the policy space to run your macroeconomic policy in a way that’s aimed at maximizing full employment domestically, which is what we’ve been talking about.
But you’re right. Your other point was [regarding] state and local governments and countries in the Eurozone that gave up their sovereign currencies. They did place themselves in a very different position vis-à-vis the currency. Italy can’t do what the United States of America can do. California and New York can’t do what the federal government can do—which by the way is why the governors in both of those states have been pleading with the federal government, imploring Congress to get aid to state and local governments. Because as you said they don’t have the currency-issuing capacity.
NJR
There was a very critical article about MMT written in Jacobin, which is a leftwing magazine that is in many ways very sympathetic to the same policy goals [as MMT advocates]. I want to ask the question that was posed to you in this article. It said sometimes it’s hard to figure out what modern monetary theorists believe. Are they just saying that it’s okay for the federal government to run a small deficit in normal times and big ones during crises? Or that we shouldn’t worry about deficits at all? Should we not worry about the rising ratio of federal debt to gross domestic product (GDP) and the increased share of spending devoted to debt service, which is a gift to rich bond holders? And [the author of the Jacobin article] said at what point would debt become worrisome, and then concludes MMT’ers never tell you this.
SK
I don’t know the piece you’re referring to, but it sounds like it was written by someone who hasn’t read the MMT scholarship, or the literature. Because every single point that you just raised is, I would say, omnipresent across two and a half decades of MMT scholarship, videos, and lectures. It’s all readily available to anyone with a Google machine. We could take those one at a time, but I can tell you that we’re very clear [on] every one of those points. Not just myself, but Randy Wray and Bill Mitchell, Warren Mosler, Scott Fullwiler. There are a whole bunch of us who have been quite clear on each of those points.
You and I just sitting here have talked about debt to GDP ratios and what the real limits are. I’ve answered that question already. I can’t remember what some of the others were that you just raised.
[Regarding] deficits, [we] also said I don’t care what number falls out of the budget box at the end of any particular year. So MMT is not about deficits in a weak economy, surpluses or balanced budget over the cycle. That’s not it at all. The budget outcome is never the right policy goal. The same goes for the debt ratio. The debt ratio is never the thing to target.
And on the income to bond holders, you and I have talked about this. I just made the case that maybe we want to phase this stuff out because it’s a risk-free reward. Warren Mosler has referred to it as UBI for rich people. It’s a universal bond-holder income, right? A payment that goes to people who are already wealthy enough to have some dollar savings that they can trade up into interest-bearing dollar savings. So I don’t know who wrote [the Jacobin article], but it sounds like they didn’t do their homework.
SA
Yeah. This is a little bit different from what Nathan was just asking you, but I just had this thought that occurred to me.
The government spends a lot of money on the military, right? A lot of money on the military. I don’t have the numbers in front of me, but what you’re talking about is basically that the government spending comes first and that’s what drives the economy and drives economic growth. [If] you were to be someone who thought that the government spent way, way, way too much on the military, [then] in MMT-speak it’s not just a matter of [reducing] spending on the military and then [achieving] a balanced budget. Really what that means is we need to find somewhere else to spend that money if we’re still below capacity. If we were to reduce military spending, you’d want to increase spending somewhere else. Is that right?
SK
I don’t think you need any justification for cutting the military budget apart from the obvious [fact it’s] a bloated, $700+ billion annually war machine, right? I could make a very strong case [for cutting] the military budget by 10 percent [without justifying it by saying it would free up money to] spend on poor communities or programs that help others or so forth.
Your question is a little bit different.
SA
It’s kind of the opposite. It’s almost, “can we cut military spending without spending somewhere else?” Don’t we kind of need to spend somewhere else if we’re cutting military spending in order to avoid deflation?
SK
I think that yes, if you cut some spending, every dollar the government spends is a dollar of income to someone, right? So the risk, if you want to call it that, in cutting the military budget without replacing that spending in some other category, is that you’ve deprived someone of—if we’re cutting it by 10 percent, let’s say, $70 billion. You’re pulling $70 billion out of the economy.
How harmful that’s going to be is going to depend on a lot of factors related to the multiplier effects associated with that spending cut and so forth. But mostly yes, you’re right. You don’t just go around whacking different line items in the government’s budget and expect that the economy is going to continue to grow at the same rate, or that there are not going to be negative consequences.
SA
I like this point in that it really shows it’s not just a zero-sum, one-to-one kind of thing. It’s not like our only goal should be cutting military spending. It should be cutting military spending [and joining it closely] with what we actually should be doing.
SK
The way I would think of it is: How many real resources are you freeing up when you reduce spending in whatever category? You free up real resources. Well, what is the further public purpose of doing that? If you’re going to free up a lot of real resources, including unemployed labor, you’re going to create some unemployment. You should have the intention of re-employing that labor, or else what is the public purpose associated with freeing that labor up?
SA
The key is the resources, not the budget.
SK
Exactly, yeah, exactly.
NJR
I just have two more questions for you that I think are quite important. The first is on taxes, because I think again one of the myths [people believe when they first hear about MMT is], “Ah, rich people are going to love this because it says that we can do everything we want without people having to pay their share in taxes.” Because their share isn’t actually needed, so this is a license to cut taxes or not increase taxes on the rich. But you talk about the fact that taxes are, in fact, incredibly necessary. [As a] matter of fact we might look at something that is similar to the current taxation regime even if we think about it a different way.
SK
Yeah. A couple of years ago I gave a talk at a conference in Washington, D.C., and I think it was the inaugural conference of the Patriotic Millionaires. You’re familiar with this organization? So this is a group of very wealthy people who came together, formed an organization for the sole purpose—[maybe] that’s a little bit of an exaggeration—but for the main purpose of saying, “Hey, we have a lot of money and you should take more of it so that you can afford to fund education more generously, or infrastructure, or whatever it is. Tax us, tax us!”
So they invite me to come to this conference and give some remarks and I do this from an MMT perspective. Which means I walk into this group knowing that we don’t need their money, that the federal government does not need their money in order to be able to afford infrastructure investment, education, healthcare, or whatever. But the message was not, “We don’t need your money therefore you guys are fine, we won’t touch you.” The message was, “We don’t need your money, but we need to take it anyway.” We don’t need your money to pay the bills, but we have such extreme concentrations of wealth and income (especially wealth) in this country that it’s not just bad for the working of our economy, it is corrosive to our democracy. And when those concentrations of wealth get that extreme, you need to do something about it.
A wealth tax that peels off 2 percent annually is a nice “pay for” and the message that was given to the billionaires was, “Don’t worry, actually you’re not even going to feel it. Because your wealth is going to grow at a much faster rate, so that in fact you’re still going to become richer and richer and richer. [Your] wealth is going to grow over time, 2 percent is [so low] you won’t hardly feel a thing.”
I would say that’s the problem. If they’re not going to hardly feel a thing, then you’re not addressing the concentration of wealth inequality that is so corrosive to our political process, our democracy. So I would go in much more ambitiously with an agenda aimed at reforming the tax code, dealing in an aggressive way with the inequities in an attempt to rebalance things.
So MMT is not cover for the wealthy. It’s just … let’s be real. We don’t need to depend [on billionaires’ taxes] to feed a hungry kid, or fix a crumbling bridge. I don’t like that. That idea that we can’t move forward without them. We hold hostage the entire progressive agenda or whatever public policy because unless we can tax the rich, we can’t pay for it so we can’t have it. I’m saying no to that.
NJR
[Although If] we think in terms of this real resources perspective, there is a sense in which concentrations of wealth are a segment of those real resources that are being controlled and directed towards the satisfaction of the needs of the rich rather than this. [So] there is a sense in which every resource that is directed to building yachts is not being directed towards fixing bridges.
SK
That is true. No question about that. But I don’t think that a 2 percent tax—I’m using this as an example—on the wealth of 75-78,000 people shakes free enough real resource space to allow us to do big, ambitious things. You see what I’m saying? They’re savers rather than spenders, so they’re not actually gobbling up a lot of the real resource space.
SA
So maybe [the] savers vs. spenders question is related to what I was going to ask. Which is: taxes are still, in addition to being a tool for equity in society, [still] a tool to control inflation, right? If we abolished all taxes and kept government spending where it is, I assume we would have inflationary problems pretty quickly.
SK
And a collapse of the currency.
SA
And a collapse of the currency. As you explained, the taxes are the thing that creates the money, basically.
SK
The dollars are a tax credit; they circulate as tax credit.
SA
Right. But it seems like you could still make the argument that as the economy approaches capacity, you still need taxes in order to spend. It’s just not because you’re spending the tax money. It’s because you are controlling inflation and taxes are a tool for doing that. Is that right?
SK
Yes. So if you reach the point where your resource capacity is exhausted, but you still think there’s something that is of such high priority that government ought to pursue it, even in a full employment environment, you say, “Well, we don’t have healthcare for every American” or “we don’t have the education system that we want.” [And] whatever the case is, [I] need to commit another half trillion or $200 billion or whatever.
But if I do that in this evaluation, I risk pushing inflation above a level that people are going to be comfortable with, so I need to create some offsets. I need to be able to add. Now I’ve taken my 12 oz. can and my glass is full, and I want to pour some more spending in. I’ve got to get a spoon and I need to make room for that. That’s what taxes do. They take some purchasing power away from some people, create that safe space for additional spending to come in.
SA
It’s funny because people talk about taxes as a redistributionary system, and it seems like in that circumstance they [become a redistributionaryl system], but it’s not direct. You’re not taking money from some people and giving that money to other people. It’s a little bit more complicated.
SK
Yeah. You’re debiting and crediting balance sheets. want to credit some balance sheets of people who provide educational services or healthcare services, and I’m going to debit some balance sheets to remove some dollars from subgroup of taxpayers.
SA
Right. And when and how much you have to do that is dependent on the real world, not on the budget.
SK
Exactly.
NJR
The last thing I wanted to ask you, Professor Kelton—because I think it’s such a crucial part of your book—is you have a chapter called “The Deficits That Matter,” and I think this is critical to people reconceptualizing what they think of as a deficit. [You] say that we should focus far more on the gap between what we’re capable of [vs] what we are actually doing. When we have this kind of real resource and we start to look at what our country could do, we see all these areas of massive failure and of massive lack of living up to the potential that we have. [That] is what should occupy most of our attention.
SK
Yeah, it’s such a shame because you look in the rearview mirror and you see how much inaction, right? All of the things we could have done—but didn’t do—have costs, right? There is an opportunity cost to inaction. All of the people who could have been provided healthcare but weren’t provided healthcare, who had illnesses that went untreated and died. That’s a real loss to society.
All of the infrastructure that was crumbling that wasn’t repaired, and the bridge fell down and killed 40 people. That has a cost, right? All of the potential output that could have been generated and produced has a real benefit that wasn’t captured. The income that would have been generated, the jobs that would have been available to people. The wealth, the savings, it’s lost to us in time because we didn’t live up to our means, our full potential.
[I] think that’s a tragedy and the goal going forward should be to recognize that you hear people describe deficits and deficit spending as [characteristics of] a country that’s living beyond its means, [but as] I try to say very clearly in the book, a deficit is not evidence of overspending. Inflation is evidence of overspending. So we have to get beyond that idea that deficits are in and of themselves evidence of mismanagement of finances and trying to do too much, trying to have too much. We are living well below our potential and now even more than when I wrote the book.
NJR
One reason I like your work so much is you’re the first economist I’ve ever heard who talks about just [how insane] it is that we accept millions of unemployed people as somehow a good or natural thing, when it’s such a squandering. [You] have all these people who could be productive and want to work and…
SK
It is really a human sacrifice [by design], right? As a policy choice we believe we need to hold some number of millions of people and lock them out of employment, hold them on the sidelines, keep them idle, forced unemployment, for the purpose of avoiding an acceleration in prices. This belief that if these people are allowed to find jobs, it would push inflation above some threshold that we consider intolerable. So unemployment is always a policy choice.
NJR
Sparky, do you have anything else?
SA
Yes, I have infinite other things, but I understand we’re running out of time.
NJR
We don’t want to keep you too long, but thank you so much, Professor Kelton. I really appreciate you taking the time to talk to us.
SK
You’re so welcome. Thanks for inviting me.
NJR
Everyone should read The Deficit Myth. There’s so much more to discuss, including the job guarantee, which we didn’t even get to, which is a major part of your proposal, but, yeah, pick up The Deficit Myth. Thank you.
SK
All right. Take care, both of you.
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