MMT: Half Hoax, Half Fraud.

today is an occasion for us
to pay a visit to a once again renewed popular idea called modern monetary theory the person whose name is most on it stephanie kelton was an advisor to bernie sanders campaign four years ago um alexandria ocasio-cortez many of the new progressives on the left have associated themselves with her her ideas her publications and this theory so i think it is fair to say that it is a theory that it resides and is frankly gaining popularity on the progressive left yeah not all economists think the national debt is something we should worry about one of them is stephanie kelton she's a professor of economics and public policy at stony brook university i'm the former chief economist on the u.s senate budget committee for the democratic staff and i'm the author of a new york times bestseller the deficit myth that book has a lot of interesting ideas about government debt the last thing that she says about taxes specifically before i move on to the rest of the book is that she says the purpose for taxes the main purpose the biggest one is to create a demand for the currency she gives an example of a dad who wants his kid to do chores and so he says i'll give you these these dad coupons and they said we don't want those dad coupons and he says okay well at the end of every week you owe me 30 dad coupons or else you know you're in you know you're grounded and so in order to create a demand for those dad coupons which are really worthless to him he says well you owe them to me or else there will be a punishment and so all of a sudden now they have to go and do all these tours in order to you know get these accumulate these dad coupons so that at the end of the week they can pay some of them back to him and ultimately he doesn't care what they are he could destroy them he doesn't need them he made them up he printed them and so she says this is exactly what the government does the government just you know they have to include taxes in the system in order to create a demand for the currency if you don't turn in a certain number of their fake printed money at the end of the year you go to jail we should put modern in quotation marks because it's a very old idea thousands of years old if the truth be told but once again it is being presented as new and it is this it is the idea that governments can spend as much as they want to pay for it they simply print the cash they create the money because of course the bank which they own in our case the bank of canada has a monopoly on the creation of that currency so why not just create more money in order to spend it if the state wishes to spend more it can do so only by bottling your savings or by taxing you more and it's no good thinking that someone else will pay that someone else is you there is no such thing as public money there is only taxpayers money can i ask you about another policy and sort of fixation of economists right now modern monetary theory yeah can you just in shorthand describe it for our viewers no okay i cannot describe reviews because it makes no sense no one no when you try to talk to the mmt people you say so this is what you're saying they say no you just don't get it the only limit on the amount that can be spent is when said money creation leads to inflation at which point modern monetary theorists say the solution is to simply raise taxes in order to reduce the demand that was driving up the inflation in the first place now all this sounds magical you know creating something from nothing but as it has been said there is nothing new except what is forgotten i quote reinhart and rogoff two harvard professors that have studied 800 years of debt crises and they say and i quote early on across the world as already noted the main device for defaulting on government obligations was that of debasing the content of the coinage modern currency presses are just a technologically advanced and efficient approach to achieving the same end so you sort of dismiss them as as for being you know cranks on the far left yeah well no no i'm not even sure it's on the far left it's not at all clear that an mmp perspective whatever that is because they're very hard to decipher the content is not actually a special leftist not more so than conventional keynesian view in the uh uh if anything that's about to get too technically here but if anything i would say that conventional painting view gives you more room for deficit spending than mmp does i think that people we could look at what republicans have done both with the tax cuts and with the 300 billion or so in spending and say they seem to kind of get mt when governments print money they drive up the price of two things one the things that the rich own and two the things that everyone else buys so if you are a millionaire mansion owner you're getting extremely rich your house is making a lot more money than you are you're sitting in your rocking chair and cash is just falling out of your attic on your head but if you are a working class person who rents in order to have a roof a roof overhead your rent is going up your food is going up your gas is going up everything you buy is going up except your wages are not and guess what that dream of owning a house it's getting further and further away deficits do matter but they don't matter in the ways that we've been conventionally thinking about them and the way we usually think about a deficit is that it's evidence of excessive spending and that's just wrong i'm not worried about the 22 trillion in debt because all the national debt is is a historical record of all of the dollars that the government spent into the economy and didn't tax back that people are currently saving in the form of u.s treasuries i'm not worried about 22 trillion in u.s assets being held in portfolios and pensions and so forth although what if interest rates mean what i'm worried about getting a little short on time steph the only reason i'm jumping in is so if interest rates go right now they're very low which means the the borrowing cost or the deficit right now is very low and for the debt that you mentioned so if interest rates go up a little bit how do you propose to pay for that do you continue to just expand the money supply the honourable member for kingston and the island i just want to know amanda figure if there's going to be a test on this history lesson afterwards uh and uh if i should be expecting that to come when the member is done partly point of order the honorable member for carlton well the test has been running for four years now and they've been getting an f year after year after year my sling is editorial explicit material briefcase show live and stereo flow fill me