more on what that recovery will need i'm joined by stephanie kelton former chief economist for democrats senate budget committee now a professor of economics and public policy at stony brook university um stephanie it was interesting to me to i i follow and read a lot of macroeconomic commentators reporters and and economists um and across the political spectrum some folks who are more sort of finance and wall street people some people who are republican aligned some that are democrat liberal everyone was kind of freaked out by the jobs report today why was that?
kelton:
well i think because it's just further evidence of what we've all recognized has been taking place for a period of time and that is that you know this economy is really in the midst of a slow motion train wreck that this recovery which was uneven and bifurcated to begin with that's why people like uh president-elect biden have been referring to it as a k-shaped recovery we already had problems with the recovery in the sense that it wasn't bringing everyone along now we see that the recovery bifurcated and uneven as it was is beginning to slow down and so we know that what lies ahead is really you know it's renewed carnage chris in the economy and we all saw it coming.
msnbc :
someone made this point which was interesting to me you know this whole year is weird right i mean it's almost like a it's like an exam question on a a macro exam right like what happens if you shut down the economy and then try to restart it um that you know you can get into a situation whether it's local federal budgets or its businesses closing where there's a cascading effect where things get worse where the sort of snowball starts rolling down the hill how much is that a worry?
kelton:
it's a huge worry and if i were putting this on an exam for my students i would put it you know be the first or second question on the exam because that's where you try to build up the confidence of your students you give them the easy questions first and the hard stuff comes later so you know this is exactly what i'm talking about when i say renewed carnage when we talk about removing income support from the economy at the same time that a lot of the you know deferrals the the moratorium on rent student loan debt when we told people and the federal government said you know what hang on to that money don't send it in right now don't pay that rent don't worry about the mortgage don't worry about the student loan debt they didn't say don't worry about it forever they said it's building up on you right we're going to defer those payments but but at some point the bills come due and so the bills are coming due at the end of the year many of those programs those uh the moratorium expire meanwhile the income support isn't there so you have this toxic combination of the bills are due and where is the income to make good on all those payments so this is uh this is really the easy question we all know exactly how this ends it ends the way you said if people start missing payments you get a cascading wave of defaults and you have the real risk that this economic crisis can start to lead over into the financial system and then we're dealing with a whole different kind of crisis on top of the health crisis and the economic crisis we're already facing.
msnbc :
i should note some welcome news today that betsy devos did announce that they will continue the forbearance on on those uh student debt payments uh for a bit longer they extended that the the the big obstacle here and we saw it you know when republicans basically when nancy pelosi and the house democrats pass that bill right the senate republican caucus said we don't like it we don't need more money and also we haven't talked about the deficit in years but we've now rediscovered it as an issue and we really think it's a real problem i have also noticed a real shift in the center of the conversation across the ideological spectrum at a time of record low interest rates and unprecedented challenge for the macroeconomy on the deficit that that that you have people who even back during the great recession we're starting to get a little nervous saying this is not the time we need massive support have you seen the same thing.
kelton:
oh yes i have i mean i think that you know academic economists are definitely shifting uh the the positions that they're taking this time look very different from where we were let's say a decade ago when we were fighting against the great recession so everyone understands chris that this economy is not going to recover people like jerome powell the fed chairman is telling congress is telling the world we don't have this we do not have the tools to lay a foundation for a sustainable robust economic recovery without our fiscal partners that means the white house that means congress that means we're going to have to have fiscal support and that's going to mean deficits for a prolonged period of time you got to keep the fiscal support in place until the economy is strong enough to stand on its own.
msnbc :
stephanie kelton uh who has been a sort of prophet i think on this particular point uh and who's watched the consensus move towards her particularly since the great recession luckily let's hope it holds uh into the future stephanie thank you very much thank you so much chris next what happens when leaders
.@StephanieKelton is right: we're facing a toxic combination of bills due with no income support to make those payments. The little aid we've given Americans is about to expire and Congress has yet to pass a stimulus package.
This is an economy on the verge of renewed carnage. We need *substantial* relief now. Whatever we get won’t be nearly enough. Congress needs to stand ready to provide ongoing support, as needed, come January. https://t.co/WCrQ4ybpQA
This is an economy on the verge of renewed carnage. We need *substantial* relief now. Whatever we get won't be nearly enough. Congress needs to stand ready to provide ongoing support, as needed, come January.
