let's get this done that's what
president biden said before heading to
the g20 in rome he wanted congress to
pass his proposed 1.75 trillion dollar
climate and social spending bill and 1.2
trillion infrastructure bill
both have had their price tags halved
and they're still hand-wringing over how
much they cost but does the cost really
matter
stephanie kelton is a professor of
economics and public policy and the
author of the deficit myth
welcome stephanie um one of the things
that you have talked about in your book
and and uh is that when we think about
this question of are we spending too
much will this kind of deficit spending
cause problems like inflation.
you say
it's as if the last 30 years of history
didn't happen
tell us what you mean by that?
Kelton:0:52
well fareed for so many years we have
been taught to think about government
deficits as something that's inherently
irresponsible maybe in a time of crisis
like after the financial crisis in the
great recession or during the covet
pandemic we make allowances and we say
well okay we have to run some deficits
because it's a moment of crisis but in
more normal times we're told that
deficits are something that we ought to
strive to avoid that governments ought
to balance their budgets that they
should effectively balance like a budget
like a household
that deficits are dangerous because they
do things like driving up interest rates
making our long-term debt unsustainable
producing a slower growing economy
putting us at risk of national
bankruptcy and solvency turning into
greece the kind of thing that we saw in
2010 with many countries in europe
struggling with debt.
so we've been
taught to think of deficits as something
that's uh inherently
dangerous and risky and
i think the last 30 years as you just
said
really should cause us to rethink a lot
of that.
Z：
and and explain what you mean by that
that we we have been going through we've
been spending we've run up large
deficits countries like japan have run
up huge deficits and
no inflation．
Kelton：
yeah japan's been running large fiscal
deficits for the last three decades and
and you're right with little inflation
to show for it the u.s has been running
fiscal deficits basically my entire life
with the exception of really four years
during the clinton presidency and you
know we have just witnessed
in the last 18 months or so congress
commit about five trillion dollars to
fighting the pandemics supporting the
economy.
and what did we end up with we
ended up with the shortest recession in
u.s history so we have demonstrated the
power of fiscal policy what it is
possible to do lifting nearly half of
all the kids in this country out of
poverty supporting families supporting
small and large businesses protecting
this economy through the pandemic and it
works and it works without producing all
of the negative consequences that we've
been taught to associate with deficits.
Z：
what about the argument that now you are
seeing inflation larry summers has
argued that with that right now because
of the really the covet relief spending
um that was that was in his view too
much.
uh you are seeing inflation uh some
as i should explain does support a lot
of the social spending in the
infrastructure bills but he feels like
all of it together
is producing inflation and the numbers
do seem to be ticking up right?
Kelton：3:45
well look one of the first things that
we teach students in their very first
economics course is not to confuse
correlation with causation so yes we
have had two things happen we have had a
huge increase in fiscal support so large
government deficits that have supported
the economy and pulled us out of a
recession very very quickly.
and yes we
have higher than normal inflationary
pressures not just here in the u.s
foreign but of course around the world.
and so you could look at these two
things and say they're happening
alongside one another therefore it must
be evidence that the government has
pushed too far with fiscal policy that
in fact the spending is creating the
extra inflationary pressures we see
today i don't think that's right at all.
and if you look at what let's say the
san francisco federal reserve bank
they've got a research staff and some of
their researchers just within the last
two weeks published a study
asking this exact question how much of
the current inflation we're experiencing
can we trace to the 1.9 trillion dollar
covid relief package that was passed in
march in other words is larry right is
larry summers right that that is what's
been driving a lot of the inflation that
we are currently experiencing what they
found uh is that the answer is
unequivocally no that this year
uh that spending will add something like
0.3 percentage points to the inflation
index that the federal reserve cares
most about and that next year
it will add about 0.2 percent to
inflation.
5:10
in other words it is
practically negligible.
and what we're
dealing with our supply chain and
reopening the pressures related to those
kinds of challenges are pushing
inflation higher.
but it doesn't appear
that
it is correct to say that the government
pushed spending too far.
Z：
um and what about the long-term issue of
entitlement spending medicare social
security all going you know the people
say look we're facing a future where
spending is going to take off so we have
to be careful today?
Kelton：
well look we have commitments that we
have made to retirees to dependents to
the disabled in the form of social
security and we have commitments that we
have made to people
receiving medicare and so there are two
separate questions here right one is can
the federal government afford .
Z：
stephanie, i i'm i'm i'm so sorry i'm so sorry i i
realized i got the timing wrong we we
are out of time we're gonna have you
come back and talk about all this more.
i
just want to give one one thought leave
the viewers with one thought which is
the spending is over 10 years it's
important to keep in mind and it's about
3 trillion
america's gdp over that 10 years will be
about 300 trillion dollars.
Earlier today, I joined CNN host Fareed Zakaria to talk about deficits, inflation, and whether we’re focusing on the wrong things when we debate the price of the Build Back Better agenda and how to “pay for” it. I knew ahead of time that we would have only 5-6 minutes to cover a lot of ground, and I did my best in the short time we had.
Here’s the the full clip of our conversation. I think Fareed was hoping to squeeze in one last question, even as his producers were trying to tell him to wrap up. So I began, but was unable to finish, responding to his last question.
Longtime followers of MMT, and those who’ve read my book, probably know what I was about to say. For those who were left wondering, here’s the short answer to Fareed’s question, “What about the long-term issue of entitlement spending—Medicare, Social Security…?"
I wouldn’t have said this in my response, but since I have (with your indulgence) more time to respond in this forum, let’s start by thinking about what motivates this question in the first place.
If Fareed had posed this question to just about any other economist in the country, he would almost certainly have gotten a very different response from the one I was in the process of offering. That’s because virtually the entire economics profession —liberals, moderates, and conservatives—agrees with the basic premise of his question—i.e. that programs like Social Security and Medicare pose significant challenges because it’s going to cost a lot of money to sustain them in the year’s ahead.
A few years ago, The Washington Post featured dueling opinion pieces (here and here) with seemingly divergent perspectives on the issue. The first was authored by a group of senior fellows and economists at the conservative Hoover Institution. It was titled, “A Debt Crisis is Coming.” This is how the authors of that piece assigned blame for the looming fiscal crisis.
“As is well-known, our deficit and debt problems stem from sharply rising entitlement spending. Without congressional action, the combination of the automatic spending increase per beneficiary provisions of these programs and the growth in entitlement program recipients as the population ages will cause entitlement spending to continue to rise far faster than U.S. national income and tax revenue.”
In response, The Washington Post carried a piece titled, “A Debt Crisis is Coming. But Don’t Blame Entitlements.” It was written by five former Chairs of the Council of Economic Advisors (CEA), including familiar names like current Treasury Secretary Janet Yellen and Harvard economist Jason Furman. They wrote:
The federal budget deficit is on track to exceed $1 trillion next year and get worse over time. Eventually, ever-rising debt and deficits will cause interest rates to rise, and the portion of tax revenue needed to service the growing debt will take an increasing toll on the ability of government to provide for its citizens and to respond to recessions and emergencies….
None of that is in dispute. But the Hoover economists then go wrong by arguing that entitlements are the sole cause of the problem…
Just as entitlements are not the primary cause of the recent jump in the deficit, they also should not be the sole solution. It is important to use the right wording: The main entitlement programs are Social Security, Medicare, veterans benefits and Medicaid. These widely popular programs are indeed large and projected to grow as a share of the economy, not because of increased generosity of benefits but because of the aging of the population and the increase in economywide health costs.
There is some room for additional spending reductions in these programs, but not to an extent large enough to solve the long-run debt problem…
As we focus on the long-run fiscal situation, our goal should be to put the debt on a declining path as a share of the economy.”
So both camps agreed that programs like Social Security and Medicare are contributing to our nation’s long-run fiscal challenges. The “debate,” such as it is, revolves around how much to blame democrats for feeding the beast and how much to blame republicans for starving the government of much-needed revenue.
I could never have signed either letter.
Why? Because the U.S. did not then face—and does not now face—a debt crisis. And that’s true regardless of projected spending on programs like Social Security and Medicare.
I wrote an entire chapter explaining all of this in my book. Laying it out in sixty-seconds for a television audience is tough. But the bottom line is that a currency-issuing government, like the United States, can afford to meet any payment obligation it has—even the really big ones—as long as the bills are payable in the government’s own currency.
Now, that doesn’t mean that we should triple Social Security benefits or carry on allowing Medicare to get swindled into paying the highest prices in the world for prescription drugs, simply because we can afford the bill. It just means that the financial costs aren’t the binding constraint. Inflation is.
And that’s exactly what Alan Greenspan tried to explain to Congressman Paul Ryan, when he was asked about the long-run challenges facing programs like Social Security. I really love this clip, because Greenspan gets it exactly right. It’s not about the money or the spending. Covering the costs of these programs is easy—as long as there is sufficient political support to maintain them. The challenge, as Greenspan explains, is making sure that the money can be spent into an economy that is productive enough to deliver the realgoods and services that program beneficiaries will want and need in the years ahead.
Greenspan: "There is nothing to prevent the government from creating as much money as it wants."
2014/03/25
Greenspan: "There is nothing to prevent the government from creating as much money as it wants."
2014/03/25
so having personal retirement accounts is another way of making a future retiree benefits more secure for their retirement. and also do you believe that personal retirement accounts as a component to assist in a solvency does help improve solvency because when you have a personal retirement account policy. it's a company with a benefit offset with that feature in place do you believe the personal retirement accounts can help us achieve solvency for the system and make those future retiree benefits more secure？
well I wouldn't say that the pay-as-you-go benefits are insecure in the sense that oh there's nothing to prevent the federal government from creating as much money as it wants and paying it to somebody the question is.
how do you set up a system which assures that the real assets are created which those benefits are employed to purchase.
so it's not a question of security it's a question of the structure of a financial system which assures that the real resources are created for retirement as the state from the cash.
the cash itself is nice to have but it's got to be in the context of the real resources being created at the time those benefits are paid so that you can purchase real resources with the benefits which of course are cash.
今日の初めに、私はCNNのホストであるFareed Zakariaに参加して、 赤字、インフレ、そしてBuild Back Betterアジェンダの価格とその「支払い」方法について議論するときに、間違ったことに焦点を合わせているかどうかについて話しました。たくさんの地面をカバーするのに5〜6分しかかからないことを前もって知っていたので、短い時間で最善を尽くしました。
In a past interview you said, “…let's start by recognizing that inflation, as you say, is a dynamic process, it is a continuous increase in the price level, it's not a one off. It's a complex phenomenon, there isn’t economist on Earth who can write down for you a model of inflation that will apply in all times across, space and time, nobody can do it.” While in this piece you say, “… the financial costs aren’t the binding constraint. Inflation is.”
If inflation is the binding constraint within the MMT framework and modeling inflation over time can’t be done, then how would you calculate in advance the spending limits? Could you write a piece that goes into explaining how the theory could be actually implemented in a calculated predictable way? Or is that not possible?
Bill K9 hr ago In a past interview you said, “…let's start by recognizing that inflation, as you say, is a dynamic process, it is a continuous increase in the price level, it's not a one off. It's a complex phenomenon, there isn’t economist on Earth who can write down for you a model of inflation that will apply in all times across, space and time, nobody can do it.” While in this piece you say, “… the financial costs aren’t the binding constraint. Inflation is.”
If inflation is the binding constraint within the MMT framework and modeling inflation over time can’t be done, then how would you calculate in advance the spending limits? Could you write a piece that goes into explaining how the theory could be actually implemented in a calculated predictable way? Or is that not possible?
Bill K9 hr ago
返信削除In a past interview you said, “…let's start by recognizing that inflation, as you say, is a dynamic process, it is a continuous increase in the price level, it's not a one off. It's a complex phenomenon, there isn’t economist on Earth who can write down for you a model of inflation that will apply in all times across, space and time, nobody can do it.” While in this piece you say, “… the financial costs aren’t the binding constraint. Inflation is.”
If inflation is the binding constraint within the MMT framework and modeling inflation over time can’t be done, then how would you calculate in advance the spending limits? Could you write a piece that goes into explaining how the theory could be actually implemented in a calculated predictable way? Or is that not possible?