Original subtitles

- It's in a sense risky to try

to change the entire narrative.

When I show up for an appearance, it's like walking

into the lion's den.

But because I've done it

so many times, I get a good response.

It depends a little bit how much time they give me.

If they give me 45 minutes, it's a little tougher.

If they give me an hour and a half,

I can almost convince the whole crowd.

With two hours, everybody's pretty comfortable

with the ideas.

So much of the public discourse, it's like we're going

through life with one eye shut and one eye open

and we're only getting half the picture.

And then somebody like me comes

in and says, "Well, let's make sure we see the full picture."

For as long back as I can remember

there's been this drumbeat of a narrative.

When politicians talk about spending more money

on healthcare for all,

inequality, housing,

or our climate crisis,

the first question they're usually confronted with is,

how in the world could we possibly spend more?

We're already trillions in the hole.

And people point to the size of the national debt.

- We must begin to make some

payments on our enormous national debt if we are to avoid

passing on to our children an impossible burden of debt.

- New worries today over

the exploding federal debt.

- Already the national debt is at record high.

- We wanna lift this crushing

burden of debt off of our children and grandchildren.

- The national debt is exactly the opposite of what

the orthodox story tells us.

- An unconventional economic

theory is gaining some traction.

Modern Monetary Theory, MMT.

- And one of its leading proponents

is Professor Stephanie Kelton.

- One of the most influential

and indeed controversial economists in America today.

- In conventional wisdom, surpluses are good,

deficits are bad.

- Deficit spending should not be a feature of our budget.

- They think of the federal government like a household.

Government deficits are completely different.

- We must bring those deficits down.

If we don't, we will leave an unconscionable burden

of national debt for our children.

- The government debt is not a burden on anyone.

- We're borrowing trillions of dollars from China.

- Does the government have to borrow dollars?

No, of course not.

The federal government is

where the money comes from.

- When a fringe economic theory goes mainstream,

you better pay attention.

- Six presidents have come before you to warn

of the damage deficits pose to our nation.

- We owe it to our children and grandchildren to act now.

- To make sure we aren't buried under a mountain of debt.

- It is very difficult to reverse a paradigm.

- We will address the catastrophic

crisis of climate change.

- How do we pay for climate mitigation?

- How are we gonna pay for it?

- You're asking the wrong question.

Finding the money is the easy part.

- They don't find the money they create it.

- The true story of money is not

the story that I've been told.

- That's beautiful.

I love stuff like this because how can you have more fun

on Twitter to be honest?

I would like to work on my book project

and I know that my publisher would like me working

on my book project and spending less time on Twitter,

but I think I have to engage in these battle of ideas.

People don't make the connection that the

national debt is nothing but all these safe assets.

It's just our savings.

You could take the national debt clock that scares everyone

and just rename it the US dollar savings clock.

And I think everybody would have a very different

kind of reaction.

And so I think 95% of the problems

that we have getting better policy is probably down

to the words we use to describe what's actually happening.

- Thanks everyone for coming.

Tonight we have with us, Stephanie Kelton.

She is a professor at Stony Brook

She's also an economic advisor

to the Bernie Sanders campaign.

You've probably heard in the news

about Modern Monetary Theory.

- Modern Monetary Theory. - Modern Monetary Theory.

- You have this Modern Monetary

- What do you think of that idea

Because it's being bruited as a way to spend more money

on infrastructure on the Green New Deal.

- What is MMT about

and why has it suddenly sort of exploded?

MMT starts with the understanding

that the federal government is the issuer of the currency.

- Every dollar that exists was created by the US government.

- We issue the US dollar.

The federal government can issue more dollars

at any time it likes.

People like Alan Greenspan

or Ben Bernanke have said the same things we|re saying.

- There's nothing to prevent the federal government

from creating as much money as it wants

and paying it to somebody.

- We simply use the computer to mark up the size

of the account that they have with the Fed.

- We won't run out of money.

- But usually the narrative

goes something like this.

- A national debt of $11 trillion dollars

At what point

do we run outta money?

- Well, we're outta money now.

You know, we're operating in deep deficits.

- We're broke. America's broke.

- The federal government is broke!

- We're bankrupting our country.

- We have no savings account.

Congress has spent all the money

- What MMT is trying to say is,

of course, the US has its own currency.

Of course it can't run out of money.

Of course it can't end up broke.

- In her talk, Professor Kelton will cast a different light

on the ongoing fueds

over the budget deficit, arguing that Democrats

and Republicans are both missing the bigger picture

when it comes to paying for our future.

Thank you. Thank you very much

What can we afford?

If we have all of these ambitious things

that we as a nation might like to do,

the really important debate is do we have the resources

to do it?

Because the US government is never going

to run out of the US dollar.

- Hi everyone. Thank you so much for joining us.

- Congress holds the power of the purse.

They don't need to come to the rest of us

to get dollars in order to be able to spend dollars.

They're the source of the US currrency.

Yeah, in a real sense, it is as simple as that,

but you have to be able to trace through all

of the implications of that observation

and that's where the story gets much richer.

- Today, I nominate Jared Bernstein. An old

friend who's been with me a

long time, a brilliant thinker.

- White House economic advisor,

Jared Bernstein joins us now from the White House.

- Thanks so much.

The US government can't go

barnkrupt because we can

print our own money.

- It obviously begs the question

why exactly are we borrowing

in a currency that we print ourselves?

I'm waiting for someone to stand up and say,

"Why do we borrow our own currency in the first place?"

- Like you said, they

print the dollar, so why

does the government even borrow?

- Well, um, the uh,

- So the, I mean, again,

some of this stuff gets,

Some of the language

and concepts are just confusing.

I mean, the government

definitely prints money. And it

definitely lends that money.

which is why, um, the government

definitely prints money

and then it lends that money

by uh, by selling bonds.

Uh, is that what they do?

They, they um

They yeah they, they um,

They sell bonds.

Yeah, they sell bonds, right?

Since they sell bonds

and people buy the bonds

and lend them the money.

Yeah, so a lot of times,

at least to my ear with MMT,

the language

and the concepts can be kind of unnecessarily confusing,

but there is no question that the government prints money

and then it uses that money to um,

uh...

So, um...

let|s see, uh...

Yeah, they print money and they use that money to...

Um.

They sell bonds, they borrow.

Um.

Yeah, I guess I|m just, I can't really talk.

I don't get it.

I don't know what they're talking about like

'cause it's like, the government clearly prints money.

It does it all the time and it clearly borrows

otherwise we wouldn't be having this debt

and deficit conversation.

So I don't think there's anything confusing there.

- We were always asking ourselves the question,

do conventional economists understand

what we're speaking of, but yet not talking about it?

Or is it that they actually don't understand?

- I believe some of the things that are preventing us

from taking bolder action are really just myths

and misunderstandings about how our monetary system works.

- It's an honor to be here

in the presence of future Senators and Congresspeople.

I grew up in the Middle East.

This is what the map looks like in the summer

when they show the weather forecast.

Within my lifetime, the Middle East will be uninhabitable

within the summer months,

which means hundreds of millions

of climate refugees will be moving across the planet.

A Green New Deal was proposed as an ambitious set

of policies to improve everyday Americans| wellbeing

and prosperity while we transform

and decarbonize the economy.

The planet is on fire.

Millions of people want to work and can't find work,

and yet we're told,

"There's nothing we can do.

It's too expensive.

We can't afford this.

We're broke. The government doesn't have money.

We have to borrow from China."

- Democrats unveiling their

radical, extreme

Green New Deal today to address

catastrophic climate change.

- The Green New Deal has

an estimated price tag

of $7 trillion.

- Where's the money coming from?

- It's gonna mean big time taxes

- It is unrealistic.

- How do you pay for it?

- I can't 'cause there's no way to pay for it.

- MMT goes, "Hang on, hold up."

The question that we should all be asking

of a currency issuing government, is not

how are we gonna pay for it?

We should replace that question with

how are we going to resource it?

Not the financial resources, but the real resources.

- How did we pay for World War II?

World War II came right after the Great Depression.

- This was a time of desperation

Uncle Sam didn't take his hat off and go around

to the population in the depths

of the Depression asking people

to chip in just a little bit.

This is when the economist, John Maynard Keynes wrote

that little book and he called it "How to Pay for the War".

And just judging by the title of the book

you would think, oh, it's gonna tell me

where the government got all the money

to pay for World War II.

And it turns out it has nothing to do with that.

It wasn't about how to pay for the war,

where to get the money, it was about

how are we gonna spend all of this money to win the war

without causing inflation?

That's what the whole book is about.

- So where did the money come from?

The federal government has the authority

to spend money into existence.

The federal government is the only issuer of the currency.

- Since war production began, we've had more money

than there were things to spend it on.

- The war started and we start spending money

into existence like crazy to build for the war effort.

- The government was gonna spend a lot

of money, hire a lot of people.

- By the end of the war, they tell me

that we Americans will have billions of dollars saved up.

- So if you wanted, you'll be going out

on a shopping spree and bidding up car prices

and home prices, you'll be causing inflation.

- And the government was like, "Wait a minute.

I don't want you trying to spend a lot of money

at the same time."

- Step two.

The government started selling freedom bonds

or war bonds.

- The war bonds weren't

about financing the government spending.

They understood really well

the purpose of the war bonds.

- There are things we

as individuals can do right now.

First, continue to save our money.

To buy and hold all the war bonds we can afford.

- Do me a favor.

Delay your consumption.

Wait until after we win the war.

- Buy only what we really need.

And pay no more than ceiling prices.

- Economists understood,

the government can't run outta money.

They were focused like a laser on finding the resources

and releasing resources from other uses

so that we could build the tanks and the fighter planes.

- The city of Detroit was completely transformed.

Detroit didn't produce any new cars between '42 and '45.

To solve climate change, we need

to move probably around 10% of GDP

or the nation's production,

to decarbonize transportation, energy, agriculture, housing.

- We've done this before.

- We had to move 50% of the nation's production

to fight the war.

We did it.

- So the experts tell us that we have less than a decade

if we're gonna avert the worst impacts of climate change.

The clock is ticking.

Do we have the resources to do what needs to be done?

Finding the money is the easy part.

That's the simplest part of this whole conversation.

Where will the money come from?

What matters is whether any proposed new spending

carries heightened inflation risk.

What doesn't matter is whether it adds to the deficit

or whether it increases the size of the debt.

- Well, the hottest debate

in the economics world

right now is over MMT

or Modern Monetary Theory.

Many economists have pushed back

on some of MMT's core ideas, including Larry Summers

formerly Treasury Secretary and

an advisor to President Obama.

- I think MMT is today's

version of voodoo economics.

It promises a free lunch.

- This crackpot Modern Monetary Theory idea.

- Most Republicans rightly lampoon this quackery.

- The weird thing about MMT is I still can't figure out

what it actually is.

- The last thing we need

is some harebrained theory

that basically says

there's a free lunch.

You don't need to worry about it

- First they ignore you, then they ridicule you,

then they fight you,

and then you win.

Previous years we were taking off.

The wind was at our backs.

Now it's more like a hurricane.

Okay. Hi.

It's more interviews than I can keep up with.

Nice to meet you.

Thanks everybody. Nice to talk with you.

- Thank you. - Okay.

And it's a lot of work because with each new day

there's some people who encounter the ideas

for the very first time.

- So what is the role of taxation?

- So in MMT, we don|t think about taxation

as providing the government with revenue.

A government that issues its own currency clearly does

not need to tax me in order to get the dollar.

They|re the issuer of the dollar

Next one is here? Okay.

- Thank you so much. - You are so welcome.

- Thank you so much. - Thank you very much.

- Thank you so much

- Okay, I'm so sorry.

- No problem. - You|re my third.

Come on in.

There's a lot of confusion

and sometimes opposition to MMT,

which I actually understand

because when I first came across these ideas,

I was skeptical too.

- So the story I'm writing

I want to introduce the concept of MMT,

and also trace the intellectual origins of it.

- Where do I start?

At the beginning? - Yeah.

- Warren Mosler.

That's where MMT I think really in a sense is born.

I was a graduate student

at Cambridge University, the first time

that I remember hearing Warren Mosler's name.

It was 1996 and Warren was getting active

on this listserv, We called it the PKT,

the Post Keynesian Thought list.

Mat Forstater was there,

and Randy Wray.

- And this guy named Warren Mosler started posting comments.

- He starts floating these ideas

and he starts saying things like

- The government doesn't need your dollars

to be able to spend.

- "It's not the government that needs

the dollars.

It's the rest of you that need the dollars."

And everybody's like, "Wait, what?"

- I did not fully understand everything

that Warren was talking about on day one.

It took me quite a while before it seeped all the way in.

- Warren Mosler wasn't trained as an economist.

He worked in finance.

He was a bond trader.

So financial markets

and monetary operations were his bread and butter.

- For me, the story starts in college.

- One of my students, Pavlina Tcherneva

- I was looking for an internship.

I went to work with Warren.

He would come in and he would say,

- Here you've got these Congressmen saying they need

to get dollars first by taxing or by borrowing

in order to spend them.

- That's the only story I'd ever heard.

- In fact, it's the reverse.

The government, which is the issuer of the currency,

has to spend first before it can collect taxes.

- Immediately, it sparks a lot of debate.

It sounds too easy in a sense.

I remember thinking, "This has got to be wrong,"

but I couldn't quite figure out why,

and I couldn't let go of it.

So I told Randy it can't be right.

- It was all a little bit puzzling

- And Randy said, "You should write a paper.

You should write it up because if he's wrong,

he would wanna know it."

- It's not obvious from just watching from a distance,

but it's fairly simple

if you think of the government from the beginning.

- In the American colonies,

colonial paper notes were widely used.

Colonial governments collected

their taxes in these notes.

But where did the notes come from in the first place?

Americans didn't have colonial currency.

and they couldn't have colonial currency,

until that currency was spent into the economy.

- The government didn't collect taxes

before they spent.

- Governments have to spend first.

How can you tax money

that no one has?

- Then people would pay their taxes with the paper money.

When the paper money came back in,

once those notes are returned to them,

they burn 'em.

They burn all of them.

I don't know if that's gonna bother people to find out

that when they pay their taxes,

the government just burns it.

But we'll come back to that.

- All right.

You wanna go work?

Warren always said

he wasn|t proposing a new way of doing things.

He was just trying to explain

accurately how the monetary system works today.

The one we have already.

But it all felt really backwards to me.

So I sat down and I thought

that I was gonna do this more carefully than Warren had.

I spent most of the year reading

Treasury and Fed manuals, really digging into the mechanics

of the federal budgeting process

and the clearing of payments and all the balance sheets,

and just the how it all works.

I started getting on the phone

and talking to people at Treasury, at Fed.

- Modern Monetary Theory, even the proponents admit

that it's not necessarily a theory

as much as it is a description of reality

of how things appear to work.

The US government is not like a household.

The government creates the money

You don't have to ask the question of

where do you get the money.

These are factually correct statements

so it's very hard to argue against them.

- Then I started writing, the title of the paper was

"Do Taxes and Bonds Finance Government Spending?"

Naturally, I thought the answer was yes.

That's what I had been taught to believe.

And I didn't know when I started this paper

where it was gonna end up.

I just let the story take me wherever it's gonna take me,

and when I worked out all

of the operational mechanics,I ended up

at exactly the same place where Warren ended up.

The government does have to spend before it can tax.

Going through the mechanics, although it flips your world

upside down, makes everything seem more clear.

- Hey everybody, this is Barack Obama.

I've got my chief economist, Jason Furman here.

- I mean, Modern Monetary Theory is not something

we teach our students.

It's not something that's in our textbooks.

I think the biggest issue is that sometimes

Modern Monetary Theory seems to play a word game.

where it says, oh, we don't need to worry about the deficit

for this reason, but actually we do need to worry about it

for some other reason, like inflation.

Well, all of those get you to roughly the same place

in your thinking about budget deficits.

- No, I mean the difference is not a trivial one.

It changes everything.

- It changes our view of the nature of money.

- What is money and what gives money value?

- Money is what you use for transactions and it has value

because we all believe it has value.

If suddenly we decided

that it didn't have value, it would not have value.

- Money is this really important

mode of interacting economically

so we don't have to barter.

I don|t, you know, I think if you drill too far down into some

of these questions, I feel like you lose the thread.

- Didn't they tell you?

You never touch the money question.

When Paul Krugman was a student at MIT, one of his peers

in graduate school was an economist named Bernard Lietaer.

- Paul Krugman, told me personally

- And Lietaer wanted to talk about money.

- "Didn't they tell you?"

- Never touch the money system.

You can touch everything else.

- There's a theory that says we

should not be looking too closely at money

or almost even talking about money too much.

- What is money and where does money come from?

- We could rip off the veil of this thing

and openly look at how it works,

but maybe that would lead us to some dangerous places.

- It's just best to let that be.

- When I wrote the first book on MMT,

I wrote a letter to Robert Heilbroner and asked him

if he would write a blurb for the book.

and he said, "I can't because the topic is money

and your book is going to scare the hell out

of everyone, okay?"

And he was right.

- There are two words that

scare the pants off of people.

They are the national debt

and the deficit.

- We don't talk about finance, banking, debt, money.

These are questions that will put you on a path

that leads you to Siberia.

- You don't wanna step out

and contradict the entire underlying principles

of your profession.

It's a very dangerous kind of lonely place to be.

- You're killing yourself academically

if you touch the money system.

- We coalesced at the University of Missouri in Kansas City

where Fadhel and Lua were students of ours,

but for many years we felt ignored.

This is what Bernard Lietaer said.

He said they took all the MMT people,

and they put them in the equivalent of Siberia

because MMT starts with the money question,

the question you're not supposed to raise.

- The first kind of business was barter,

but what would you trade in a hardware store

for a gallon of paint?

Money has evolved from an age old search

for a satisfactory medium of exchange.

Money should be something of value.

Gold and silver emerged

as the most durable, most satisfactory money.

For greater convenience, men started eking out gold

and silver coins with values imprinted on them.

Later, governments took

over the exclusive function of coining money.

- Everything is wrong with that story.

- If you look at any economics textbook

it's almost exactly always the same story.

- The barter story fits into the mainstream ideology.

They want to start with the market, the private market

with no government, and then

much later in their story, the government comes along.

- To use some of that money like the rest of us.

- The problem with that story,

number one, when was there ever this barter market?

- Money has existed for thousands of years

before markets were developed.

And rather than gold for most of time people have used clay,

or sticks or shells or paper.

Things that don't have apparent intrinsic value.

Why?

There are monies that you will not even see

in physical form.

If we take ancient Egypt, the Deben never changed hands.

It was simply a virtual record,

and the reason is because money is not a physical object.

It's a unit of measure.

And it's a record of a social debt relationship.

The earliest forms of money

that we find are Mesopotamian clay tablets.

- It appears that in the very beginning,

the authorities would impose taxes

in kind, say two goats or maybe one cow.

- You could think of money much the way we think

of centimeters, inches, pounds.

- The development of a money unit of account

is conceptually a bit more difficult.

Because you can use it to value things

that have apparently nothing in common.

A bushel of wheat versus a goat.

- Ancient Mesopotamia

had complex social organization structure, production systems,

and like every society, they had to keep track of things.

The clay tablets were accounting records.

They were like little ledgers.

- In fact, these are

the earliest records of writing.

So writing wasn't invented by poets,

it was invented by accountants.

- To solve the problem of producing

and distributing real resources

like bread, labor,

livestock, beer.

- Money is not itself a real resource.

Money is a tool invented by political authorities

to organize and mobilize real resources.

I was not originally interested in economics,

but many of the issues

that I was concerned about, poverty, unemployment,

environmental sustainability, came down to economics.

But I didn't know the terminology,

so I couldn't argue against it.

Joan Robinson famously remarked, "We study economics

so as not to be fooled by economists.

I, early on, a young assistant professor

and still trying to grasp the ideas myself,

I would observe Warren explaining these issues

and see how people reacted, the questions

that they would ask.

For example, if government can create the money,

then why do we have to pay taxes?

- Let's say a colonial government wants

to hire people to build roads.

They have a new colonial currency and they offer people

so much a day to come work building roads.

- But the people looked at their currency

and they say, "Why would we work hard

in order to get your money?

What would we do with that?"

- In fairly short order, they were like, "Oh wait, taxes."

- They impose a tax that is only payable

in the colonial currency.

- We only take this special thing.

We only take this money thing.

- Now everyone has to obtain that money

to pay their tax

or go to jail.

- Suddenly they had a demand for the currency.

What do you get? Folks who need the thing

that the sovereign is demanding in payment.

The government did not need the money.

What the government wanted and what they needed

for their purposes was for the people to need the money.

- Now the authority can go out

and purchase the goods or labor it wants, when it wants.

- The tax is that motor,

that engine of transferring those resources.

Money is really the vehicle.

- It is the taxation system

that gets the whole monetary system going to begin with.

- The federal deficit is on track

to exceed $1 trillion next year.

The deficit is the difference

between the amount the

government takes in

often through taxes,

and what it spends.

- If you total each of these yearly deficits

over the history of the United States,

we call that the national debt.

- Our nation's out of control debt.

- The debt is the biggest threat

to our economy.

- Those debts get passed on to our kids.

- I refuse to leave our children

with a debt that they cannot repay.

- We have piled deficit upon deficit, mortgaging our future

and our children's future.

- We are mortgaging our future.

We're mortgaging our children's future.

- I need more coffee.

Nice to meet you. - Nice to meet you too.

- Absolutely.

- So I'm at the New York Times

and I'm working on a piece about budget deficits.

Do you mind if I record you?

- No.

- All right. There we go.

- If someone said, what's the strength of MMT?

It's monetary operations.

No question about it.

It's how it all actually works.

People will sometimes say MMT is the school of thought

that says deficits don't matter.

Obviously that's wrong.

Deficits do matter.

They can be too big, they can be too small.

So if the government is running a budget deficit,

it just means they're spending more

into the economy than they're taking out, right?

That's all the deficit is.

It's like we're going through life

with one eye shut and one eye open.

Well, let's make sure we see the full picture.

- Please join me in welcoming Dr. Stephanie Kelton

to the stage.

- First, what is the deficit?

People naturally think, "Wait, government deficit bad.

This is a negative thing.

Let's stop this right now."

And I say, "Hang on, let's open the other eye."

So I want us to suppose that I'm the federal government.

If I'm government and I

spend a hundred dollars

into the economy...

The government spends a hundred

into the economy, taxes 90 back out.

We record on the government's ledger

a budget deficit of 10.

Minus 10, government deficit.

But we forget that on the other side of the ledger.

Guess what?

When they spend a hundred in

and they only tax 90 out,

somebody gets left with 10,

that's your surplus.

Their deficit is your surplus.

Oh, right, you got your surplus

from the government's deficit

and all of a sudden they start realizing

that they've been missing part of the story.

That's when I show the sector balance graph to audiences.

It's the most important chart in the world.

Government deficits are almost always seen

in a negative light, nothing but a sea of worrying red ink.

That's not how I look at it.

Here's what I see.

I see what's happening on the other side

of the government's ledger.

On the other side

of the government's deficit is a non-government surplus.

Their minus 10 is matched by a plus 10 on

somebody else's balance sheet.

So my red ink is your black ink.

That graph is really the one that when I show it

to audiences, it changes everything.

So when you see a headline like this one.

"Trillion Dollar Deficits Could Be The New Normal."

This is meant to shock and frighten,

but take a breath and read it this way.

Watch the word deficit.

Don't you feel better?

Don't you feel better?

Trillion dollar surpluses

to the private sector could be the new normal.

Oh, all right. I'm down.

- We were trying to figure out

how to communicate these ideas

and Warren came up with the suggestion

that our department create our own currency.

So welcome everyone,

back to principles of macroeconomics.

Around 2000, we decided

to organize our community service program

through a monetary system.

We decided to impose a tax

of 20 Buckaroos per student per semester,

or you don't get your grades.

And that was enough to enforce it.

Here's the Buckaroo because we here

at UMKC are the kangaroos or the Roos, right?

There were so many things

that you could explain through this.

For example, it was impossible,

from the very beginning,

for the UMKC Economics Department

to run a surplus.

Suppose that you perform 10 hours of community service.

Okay, 10 Buckaroos.

Now the economics department is running a deficit

of 10 and the student population has a surplus of 10.

I can collect 10 Buckaroos back at the end of the semester,

but I cannot collect back 11.

How can you collect more in taxes than you've spent

into the economy?

It's impossible.

So if you all the students want to save any Buckaroos

for a future semester or in case you would get sick,

if the currency issuer does not run a deficit,

then people cannot save in that currency.

So the normal situation for a currency issuer is

to be in deficit.

- Tonight I come before you to announce

that the federal deficit will be simply zero.

Now we are on course for budget surpluses

for the next 25 years.

- During the late nineties

and early 2000s, most economists

to them, this looked like a Goldilocks economy.

- We ran a surplus for four years

and I was Comptroller General then, ok.

We paid down debt two of those four years.

My name's Dave Walker.

I think I may have the record for the most testimonies

in Congress by an individual.

I've got about 350.

- I recognize David Walker

the former head of the Government Accounting Office.

- After nearly 30 years of deficits,

the combination of hard choices

and remarkable economic growth

has led to a budget surplus.

- A lot of people missed what was going on at the time.

- You know, we had a surplus when Bill Clinton was president.

- That means extra money. - Extra money.

- The government sector is in red in this graph,

and except for the Clinton years, it is always

in deficit below the line.

Private sector is blue.

It's almost always in surplus except

for the decade after 1996.

- It was the private sector

that was spending more than its income.

We were running the deficits.

- The sectoral balances approach

means every time you say the government

should run a surplus, you are saying

that everybody else should collectively run a deficit.

- This is an accounting identity

The total spending has to equal the total income

because every dollar spent is received

by somebody as income.

It doesn't end up on Mars or something yet.

So it has to be here somewhere.

- No. Never seen it before.

Never heard of it.

You know, doesn't make sense to me.

- Nobody could possibly disagree because just a fact.

- I'm in the Accounting Hall of Fame

and it isn't common knowledge.

- If the government runs a budget surplus,

it will be reducing our income.

- Go and look at the United States.

How often have we put the government's budget in surplus?

Seven times in our nation's history.

We did it from 1817 to 1821.

What happened?

Had a depression that started in 1819.

We did it again.

Depression, depression, not recession, depression.

The last time we did it was under President Bill Clinton.

Randy could see the writing on the wall.

- We knew the private sector

was vastly over-indebted.

By 1998,

we were predicting a big crash would come.

- What happened?

The economy went into recession in 2001,

and we ended up with the great recession just a handful

of years later.

- Because it's actually not possible

for the government sector to be saving, running a surplus

and the private sector to be saving,

that is running a surplus.

This is not possible for the United States.

- If you're not thinking

about it, you can be led into mistakes.

- The idea that when the government ran a surplus,

that that was negative for the private sector,

uh, I don't get it.

- If you put the budget in surplus

it means you're drawing down

the non-government surplus.

That's what it means.

- It doesn't mean the government is looking around

and successfully finding more dollar bills out in the world

so that it has a bigger pile of dollars that it can spend.

- Because money, it's not something we dig out

from the ground, we create it.

It's an accounting device.

And money always has two sides.

- Most people think in medieval Europe,

that kings collected gold coins in tax payment.

In reality, most of the spending

and taxing was done in tally sticks.

Tally sticks were hazelwood,

and first they would put score marks on it.

Then they would split the stick in two.

Into stock and stub.

The king would purchase a wagon

by issuing half of a tally stick

You will take the stick

if you can use that to pay your taxes.

And the treasury would keep the stub or debt half.

So when tax time came, the kings would send

out the tax collectors.

They would match the stock and stub

to make sure nobody had counterfeited.

Once you had delivered back your half

of the tally stick, your taxes were paid.

So although most of the revenue was in the form

of tally sticks, there's no reason

to collect them and save 'em.

Once the stock and stub were matched,

they were always burned.

- And still today,

when the government receives tax dollars,

they are destroyed.

- That's the nature of IOUs.

When they come back to the issuer, they're just destroyed.

- Imagine a group of people living

in an organized community.

They decide everyone should contribute weekly chores

like gardening, cooking, or cleaning.

So doing your chores is like paying your taxes.

The Community Center, like a government,

could record when each person finished their chores.

Or the Center could pay chore credits.

Say each adult needs to turn in 10 chore credits a week

to meet their obligation.

Some might choose to earn more credits than they need.

So they could use the credits to pay other members

for special things they produce, like baskets.

Those members can then pay their own tax

with the chore credits.

The value of the chore currency

is determined by what you have to do to get it.

For example, one chore credit for one hour of labor.

The chore credit would be an I.O.U. of the Community Center

It says I owe you

a reduction in your chore obligation account.

The currency is simultaneously

a credit and debt relationship

based on a two sided

accounting ledger.

The Center tallies a liability

when they create their I.O.U.

the chore credit, and it circulates around the community.

whenever the I.O.U.|s come back

from any member to be

redeemed for tax payment,

the credit debt relationship

is complete.

The numbers on the balance sheet

go back down,

and the credits and debits

disappear.

Government spending operates exactly the same way.

Currency is the government's IOU

The US dollar is a US tax credit

Money always has two sides

and so the currency itself is the government's debt.

That green piece of paper, we call it the dollar bill,

that is a debt of our Fed.

- Nobody can hold a financial asset

unless somebody has issued a debt.

- I don't think so, no.

- That's just plain wrong

Anyone can look at the Fed's balance sheet

and reserves are on the liability side.

- Currency notes

are a liability.

What is the Fed liable for?

- They're liable for redeeming the government|s

outstanding tax credits.

- Once these come back to the government,

they're not assets to the government.

- It's not that the

government gets something

when you pay taxes.

It's just that you have fewer

credits on your account.

- The government is no longer in debt

when it receives back its I.O.U.

so it burns it.

- So federal reserves and cash, are those

recorded as a liability

on the Fed's balance sheet?

- Yes. They're again accounting.

- It's accounted for by the Fed,

but it's not an asset or a liability, okay?

- Money is always a two-sided relationship.

- It's a medium. It's a medium.

- And so that's what most people

are probably not understanding.

They're thinking of physical notes changing hands.

- I'm talking about the currency notes, okay?

A means of exchange.

- Which I think goes back to the myth of barter.

- Gold and silver emerged

as the most satisfactory medium of exchange.

- The media of exchange is relatively unimportant.

Money has always been the debt of the issuer.

The only thing that has changed is the technology used

to store and transfer records

of the debts and the credits.

- For greater convenience, men started

eking out gold and silver coins with values imprinted on them.

- The oldest coins never had a value stamped on them

and the issuer would often change the value.

Just announce a new value for the coins.

They were worth whatever the emperor said they were worth

in payment of taxes.

So even the gold coin was a debt of the king that issued it

because there is no such thing as money without debt.

- The hearing will come to order.

- I will emphasize that debt is

on an unsustainable course

in CBO's projections.

- Mr. Hall, what are the consequences of high debt?

- The most important is that if people start asking

for a premium to lend the government money

to run the government, interest rates could be much higher

than we project at the moment.

- When the government runs

a budget deficit,

it pushes interest rates up.

That's because the government's

trying to borrow more money

and interest rates are like the price.

And whenever people want more of something,

the price of it goes up.

There's a big debate as to how much interest rates go up,

but that's definitely the direction they go.

- How can he he say that?

How can he say it knowing

what we have been doing for decades?

- As our debt has risen

in recent years, interest rates have fallen

to historic lows.

- The national debt goes like this,

and the interest rate the whole entire time,

decade after decade.

- What is the reason for that?

Well, I don't know.

What is shocking though is

that even expert economists can't really explain it either.

Here is the former chief

of the IMF basically admitting as much.

- Interest rates on bonds have come down steadily

since the mid eighties.

It's a very long trend.

And we have no explanation.

- Yeah, economists really have no fucking idea.

- Why did we have near zero interest rates?

Why does Japan have near zero interest rates for 25 years?

It's because the central bank sets the interest rate.

It's wherever the central bank

wants it to be.

It's not set by the market.

- What they're talking about is

something called the loanable funds model.

There's this finite supply of savings.

- So when the government is borrowing,

it's borrowing part of that pool of private savings.

That means there's less private savings

for other things.

- When the government spends money on something

some business or private person has less money to spend.

- It is exactly the opposite.

- The reality is,

it is the budget deficit

that increases the private sector's saving,

dollar for dollar.

- Deficits don't shrink the supply of savings.

It's augmenting, It's adding to private saving, you see?

It's exactly the opposite

of what the orthodox story tells us.

- We owe the Chinese massive amounts of money.

- We're borrowing trillions of dollars from China.

- Like America's in so much debt

at this point, I'm waiting for China to pull up

and just tow one of the states away.

Just gonna be like, "Yeah, you didn|t pay.

We're repoing this, man."

- No, the US government is not borrowing dollars from China.

- Okay, all right.

So let's start with trade.

China holds all this US government debt, right?

And people get anxious about that.

- It could impoverish future

generations because they would

need to pay back monies to

the foreigners we borrowed from.

- So why does China have all of these US Treasuries?

Where did they get them?

They bought them. Using what?

US dollars.

Where did they get the dollars?

- It's 'cause we buy stuff from China.

We buy more from China than China buys from us.

- They end up with US dollars.

So when Donald Trump talks about trade,

how does he think about trade?

- When was the last time anybody

saw us beating let's say China?

China's killing us.

- When he says China's killing us.

- And if you look at China.

- And Japan is killing us,

- You look at Japan.

- And Mexico's killing us.

- And if you look at Mexico,

they're killing us.

Every country we lose money with

- The dollars are going out to the rest of the world.

What is he missing?

So when I was watching the debates with my son who was nine

at the time, and there is Donald Trump and he's saying...

- They send their cars over by the millions.

- Japan is sending us all these cars and what do we get?

And my son turns to me and he goes, "The cars?"

And I said, "That's right, Bradley."

The cars, right?

This is the piece he's missing.

There's stuff that's coming in.

- If you look at what your real wealth is as a nation,

you can consider your real wealth your pile of stuff.

Your imports add to your pile of stuff that you have

and your exports lower it.

Our policy makers have this completely backwards.

- Why did China end up with so many dollars?

cause they sent us so much stuff

So they end up with effectively

a checking account at the Fed.

- Then usually the Central Bank of China will ask the Fed,

"We would like to have some government bonds instead

of reserves because we would like to earn some interest."

It's like a checking account and a savings account.

- Debit their checking account at the Fed

and credit their securities account.

We've borrowed from China.

- China doesn't create any US dollars.

Every dollar that China got came from the US.

And all that happens when they buy a bond, it's not

that they're lending to the government

so Uncle Sam can spend in America,

it|s that we|re allowing them

to transfer funds from their checking account

to savings account and they get to earn some interest.

- That's all it means to borrow from China.

- We can't keep borrowing and borrowing.

- We are borrowing from the American future.

- We should not even use the term borrowing.

- We refer to the government

selling Treasuries as borrowing.

But here's what's really happening.

The government says, "Okay,

whenever I run a deficit, I "borrow".

I did $10 worth of deficit spending

so I have to sell this $10 Treasury.

Who wants it?"

And sure enough, there's someone in the economy

that's holding $10 in cash,

it was put there by the government's deficit.

So the reason we don't wanna call it "borrowing" is

because the government is first putting the money in

and then taking the money back out and replacing it

with a bond.

So the $10 comes out and a $10 bond replaces it.

That's just interest bearing currency.

That's part of someone's financial wealth,

part of their savings.

- The bonds you buy, they're an obligation

of the government in the same way as a dollar bill

in your pocket, but with special privileges.

- You can name someone in the family

to own it with you, which means

that you both own the bond

like a joint savings account.

- But we call that borrowing

and we label the bonds, the national debt.

And that's where everything starts to go haywire.

- What's the national debt?

It's a monster.

♪ School House Rock ♪

- Reporting from the debt clock

in New York City,

- You know we're already 14 and

a half trillion dollars in debt.

- The national debt is now $15 trillion.

- I want you to take your attenttion

to these debt clocks that are here.

- When I began this campaign,

it said it was 15 trillion.

- Our debt just crossed the $20 trillion mark

and it ain't stopping. - Now we're gonna have

21 trillion in debt.

We don't have any money.

- We're now at 27 trillion. - We're about

$28 trillion in debt.

- 2024, $45 trillion.

- Wow.

So what I would like this afternoon

to be is essentially a form of group therapy

because we need it, okay?

The national debt is nothing more than a historical record

of all of the times the US government spent more dollars

than it took out, and those dollars got transformed

into US Treasuries

Whether bonds or cash,

they're both our assets.

- Under my proposal,

the national debt will be completely eliminated

by the year 2012.

- We're saying let's get back to

a path of paying the debt off.

a debt-free nation for your children.

- The US government debt that we're leaving

to our grandchildren is their financial wealth.

- That's absolutely correct.

It turns out that all that debt

on that debt clock, it's also private sector wealth.

So that debt clock may

as well just say private sector wealth.

- Now that you know what the national debt is,

You can look at that debt clock and watch the name.

It becomes the US dollar savings clock.

So now we don't have to get so anxious

because it doesn't have the word debt any longer.

Now we know it's just recording all of the dollars

that are currently being held as somebody's savings.

So now don't you feel better?

If you can get people to that understanding,

this thing is not a monster, it's not a cancer,

it's not a threat to future generations,

it's not immoral.

It's just our savings.

Then you start getting people

focused on the things that matter.

We're still gonna have disagreements about the best way

to use the deficit,

but at least we would be having the right debate.

What can we afford?

The question isn't, will it increase the deficit?

The question is, will it increase inflationary pressures?

At that point, I'm gonna take a deep breath, huge sigh

of relief and I'm gonna go spend some time with my kids

because I'll know we finally did it.

All right, good boy, let's go.

That's how he sleeps.

I don't know if it's the breed

or if this is just a particularly weird dog.

Whoa baby.

- Thank you so much Professor Kelton

for joining us here today.

I wanna ask,

why is it that we're letting everybody, you know,

continue with this misunderstanding

of how things work?

- You know, who's gonna align with you,

if you step out first?

You're gonna be a target.

Those ideas are gonna be a target.

But MMT it|s always been a group of us

that sacrificed a lot to make the professional decision

to say things that are so different from

what everyone else is saying.

Knowing that you're gonna be not just challenged

but ridiculed along the way, you gotta have some thick skin

to get through it.

But if you're convinced

that the work that you're doing is important

and that the ideas will hold up to scrutiny,

then you just keep pushing forward.

- I wanna talk about Modern Monetary Theory,

which basically states

that countries can finance their operations

by continuously printing money

without really the fear of inflation.

- We can print as much money

as we want and we can spend

as much money as we want,

and there are no consequences.

That's crazy.

- That's not what we say.

We would say,

sure, Congress can always authorize the spending,

but if they authorize too much, you'll get inflation.

It's at the center.

It's inflation is the constraint

We're not removing the limits.

- The true constraints

on government spending are the resources that are available.

- Our people, our land,

water and agriculture, our factories, our infrastructure

and transportation, education

and technology, our healthcare.

All of us recognizing

that we don't want punishing inflation.

We don't want inflation to get outta control.

And the MMT position is

that the best defense against inflation is a good offense.

It's to think about it ahead of time.

It's to consider before you allow a vote.

If you wanna do $2 trillion of infrastructure investment,

what are the real resources that we're going to need?

Where are you gonna get the contractors

and the architects, the engineers,

the steel, the concrete, the machines?

Show me that you have access to the real resources

or are you gonna have to compete for those?

And that tells me that you're gonna be bidding up prices.

If they say,

if you do this trillion dollars

without raising taxes, inflation will go to 3.5%.

Then you go, "Whoa, okay.

I need some offsets before we vote on this."

You do it before the vote.

And that's why it's so important

to have a careful evaluation.

And economists can do this.

- You have to analyze

where the economy is at the moment.

If we're in a recession with lots

of unemployed people and resources, and factories,

the government can spend a lot more,

no matter the size of the debt.

Whereas if we're in a boom

when the economy is already close to full capacity,

the government needs to be much more careful about

how much and what they spend on.

- Some kinds of spending will be inherently

more inflationary than other kinds of spending.

- But private banks also create money

that can add to inflation too.

- Banks create bank money.

They create it every time they make a loan.

- But this isn't in the textbooks either.

- This mainstream textbook reads,

"A primary job of banks is to take in deposits from

people who want to save and use these deposits to make

loans to people who want to borrow."

- No, it's not correct.

Banks don't lend other people's money.

- If they operated that way,

we wouldn't get global financial crises.

We would not get speculative bubbles in housing.

- I would have my students rip that chapter out of the book

and then I would teach them how banking works.

If you walk into a bank and you sit down

with a loan officer, the loan officer doesn't look to see

if they have money available to lend to you.

They look at you. They look at your employment

and your income,

and if a bank thinks you're a good credit-worthy customer

and I can make money by granting this loan to you,

then the loan officer

acquires the loan.

That is, they put it on the asset side

of their balance sheet and they say, "This is now my asset.

$50,000 loan to Mr. X."

And Mr. X on the other hand has his own balance sheet

and he's just taken out a loan.

So he's added a liability to the liability side

of his balance sheet.

$50,000 has been added in debt.

And they put $50,000 in

the customer's bank account.

They simply change the numbers in Mr. X's bank account.

That's on the liability side of the bank's balance sheet.

Balance sheets have to balance,

so both of their balance sheets are in balance.

Where do the banks get the money that they loan out?

They get it from their chartered authority

to issue deposits.

That's where it comes from.

Got the money from the keyboard.

- Your checking account deposit is your bank's I.O.U.

That is their liability or debt.

And when you repay the loan,

just like the I.O.U.s,

the money disappears.

Because they have this ability

to create money, banks need to be regulated.

They can make good loans and they can make bad loans.

In the lead up to the crisis, Wall Street financed all

of these fraudulent mortgages, trillions of dollars

of bad loans that went bad.

- We start 2009 in the midst of a crisis

unlike any we have seen in our lifetime.

Many businesses cannot borrow or make payroll.

Many families cannot pay their bills or their mortgage.

Many workers are watching their life savings disappear.

- In the 2000s,

I was a lawyer at a really big law firm.

I'm on Wall Street.

The task that I got was

to explain how did this financial crisis

that we've been plunged into happen?

Millions of people lost their jobs.

It was horrible.

The deficit and debt automatically go up

as people are thrown into unemployment.

- This past weekend,

the federal debt passed the $12 trillion mark.

- At the beginning of 2010, in the midst

of this terrible deep recession, Obama's team pivoted

to the deficit.

- We will not be adding more to the national debt.

Because in these hard times,

we have to do what families across America are doing.

Save where we can so that we can afford what we need.

- And I think it's a fair bet

that the United States will default.

- If foreign lenders lose

confidence in our ability to

put our government's financial

house in order,

we could experience a dramatic

increase in interest rates.

- That's what he was hearing.

- You know, Greece was borrowing at relatively low

rates until it wasn't.

A debt crisis.

A ruinous debt crisis.

- Fiscal policy turned negative.

- We're trying to cut the deficit by $4 trillion dollars

over the next decade.

- This freeze will require painful cuts.

- This was a time when bank money was

rapidly disappearing.

Because households were trying

to pay back unsustainable private debts.

And banks weren't making many new loans,

as jobs, income,

and prices were down.

Spending was in a downward spiral.

- Good afternoon. My name is Reverend Delman Coates.

I'm the senior pastor of Mount Ennon Baptist Church

in Clinton, Maryland.

Prince George's County, where I pastor leads the state

of Maryland in foreclosures.

I would have these sessions here

at the church and we'd have thousands of people here.

- At the height of the Great Recession,

800,000 Americans were losing their jobs each month.

Our factories weren't operating

anywhere near their full capacity.

Machines were lying idle.

We had a housing bubble burst

so we had all these contractors and engineers

and architects and electricians.

All these people are outta work.

We have lots of people who know how to build stuff.

The US easily could have spent $2 trillion

into the US economy,

repairing, modernizing America|s

third world infrastructure,

with no new taxes,

because we had all the slack in the economy

to absorb that spending,

without the risk of inflation.

- We have work to do

in society, work to address our greatest existential threat

right now, which is climate change.

The federal government has the power of the public purse

to put every American

who desires a dignified job

to work.

- But people were the most worried

about the national debt at precisely the time

when the federal government could have spent more than

at any time since the Great Depression.

- That was a disastrous missed opportunity

to employ those resources to benefit the country

That was a tragic mistake.

But Stephanie Kelton was not speaking to

Obama at this stage of history.

- You know, I have a computer screen, I have a phone,

I have an iPad, and I have a laptop.

So without being on Twitter, I can be aware of Twitter.

- For several years

after the financial crisis, the MMT people had a lot

of small victories,

but they didn't really have a major breakthrough.

- You know, we were writing and publishing

and we were largely ignored.

We wanted to have a voice in the policy debates.

And the way to do that is not to write a journal article

that goes under review and two years later gets published,

that doesn't get you kind of in the debate.

You had to thrust your way in somehow.

I remember going to Randy

and saying, "I'd like to start a blog, will you contribute?"

And he said, "What's a blog?"

- The blogosphere, that's where I came across it.

- And it was fun.

- Hey, what's that new group over there that|s

saying something different?

We were making some pretty big calls,

and what people call finance Twitter

they paid attention first.

- Wall Street seems very receptive,

more so than the economics profession.

- They just wanna get their bets right.

That made people pay

a little bit of attention.

And then they started laughing at us.

- Modern Monetary Theory, kinda like a kid coming up

with a modern dietary theory that says it's okay

to eat cookies for every meal.

- And we sort of celebrated

because we said, "Okay, well, we left the first stage.

We're not ignored anymore.

Now we're to the, 'then they ridicule you stage.'"

So that was actually moving on up.

That felt kind of good.

- No, you know, this is the thing.

It's a matter of emphasis and rhetoric.

You can look at the pronouncements

of people like Stephanie Kelton

saying "Look, we keep repeating

that real resource constraints

are what really matter."

The modern monetary theorists do say

there's ultimately scarcity of resources.

But too often they treat the world as if the norm is one

of generally unemployed resources and plenty of 'em.

But I must say in the last 20 years

of course, since 2008, there've been more times

when we haven't been constrained than when we have.

But the question is, all right,

what do they think we should do

to actually control inflation when it's upon us?

- Breaking news on the economy.

At any moment now,

the Federal Reserve is expected

to raise interest rates

for the sixth time this year.

- The Fed's goal to tamp down

inflation which is now

at a 40 year high.

- Americans are paying more

for gas, food, clothing, and cars.

- In the US, Congress has given the Fed a dual mandate.

We want full employment, we want low inflation.

Go get 'em, tiger.

We say to the Fed, "It's your job."

They have one tool.

One tool.

The overnight interest rate.

Find the magic interest rate

that puts the whole US economy in balance.

- The Fed cannot tax, the Fed cannot spend.

The Fed can only set interest rates.

Interest rate policy's a very blunt tool.

- I mean, you have to understand

what the driver of the inflation is.

- When you have a water leak flooding your basement,

you better identify the correct source of the leak

if you wanna solve the problem.

Is the inflation coming from an increase in demand?

Or a decrease in the supply

of goods and real resources?

- Perhaps from a global

that disrupted factories, workers going to work,

supply chains and shipping.

Perhaps its severe flooding that cut food production

in a country by 90%.

Or is it OPEC

or an oil embargo increasing the cost of energy?

- In 1973, the price

of oil jumped four times higher than before.

- So what policies can address inflation

by targeting where it's coming from?

If it's coming from a shortage in the energy sector.

- We can reduce our consumption of oil

with policies to conserve, drive less, fly less, no fees

for public transit, work from home, shorter work weeks.

And we can also increase the capacity of that sector

to relieve some of the

pressure and bottlenecks.

- You can actually spend money

and reduce inflationary pressures

- Money that builds new capacity, building mass transit

and converting to a hundred percent renewable energy.

So healthcare,

education, housing,

and energy and transportation.

The Green New Deal includes those areas specifically not

because it's the favorite shopping list

of the progressive movement.

Well, because these are the sources of inflation.

We|re gonna include them in the Green New Deal

because that's how you increase availability, reduce cost.

- Or are corporations taking advantage

of a natural disaster, war,

or pandemic,

to mark up prices much higher

than the cost of production?

In World War II, they didn't just leave it to the market or

the Federal Reserve's one tool

of raising interest rates,

to manage inflation

and allocate scarce resources.

That would never have worked

to prevent real shortages

or rising prices.

- Don't grab for more than your share.

- But what if we want to increase government spending

and the economy is already at full capacity?

- Then the resources have to be freed up or created.

How do you do that?

- We can first look at where are we wasting resources?

- You know, I think of Medicare for All

as a huge opportunity in this respect.

We have the biggest, most expensive healthcare system

in the entire world, roughly 18% of US GDP.

If we were to transition

to a leaner, more efficient form of healthcare delivery,

it's gonna save us a lot of resources.

You know, eliminating the middleman.

- If you want to fight inflation

you need to release resources.

- Defense, the military industrial complex,

and we have this behemoth of a finance sector.

- We got like

over 20 million people tied up in this stuff

that could be doing something else.

They could have cured cancer, built out

all the green infrastructure.

- And remember, private banks create money

that adds to spending pressure as well.

Banks have a special banking license

that allows them to issue credit

and that license was given to them by the federal government

for a specific public purpose.

But over time, we forgot about the public purpose

and we just let them loose.

Government spending on bricks and mortar

to build hospitals is not more inflationary

than private spending on bricks and mortar to build casinos.

If we're really at full capacity

we have to prioritize

how do we use the physical capacity?

Like we did during World War II.

And that means reregulating the kinds and quality

of loans that banks create.

Do we really need 20 more casinos this year?

Maybe we should have 20 more hospitals instead.

- But the ultimate inflationary pressure in front

of us is climate change itself.

So we will need to very carefully manage our real

resources, while we decarbonize the economy

if we wanna keep prices stable in the future.

MMT doesn't solve all our problems.

Being able to create money doesn't solve all our problems.

But finding the money is often

the least important challenge.

The real challenge revolves around

how we can organize our collective resources

to allow humanity and the rest of the living world to thrive,

within planetary boundaries.

If we have a vision for a better future, money is

not the scarce resource we need to go out and find

before we can start building it.

Money is the organizing tool we can use

to mobilize our people and real resources to make

that vision a reality.

So what role does the government play in the economy?

- The textbooks tell you

that money originates in private markets.

- And then later, much later

in history, governments came in.

- Later, governments

took over the exclusive function of coining money.

- But when you actually

look at the historical record.

- What comes first is law

and a decision to organize the social provisioning process

through this mechanism called money.

- Only later did markets develop

and markets could really only develop after you had money.

- Now why does it matter that we tell the right story?

- Because this story is the basis

of free market ideology.

- The state is not some force

that steps into market relationships

that disrupts the market mechanism.

Markets don't spring up on their own.

- They need laws enforcing

and protecting private property in order to operate.

- There has never been a market economy

with no government.

- But we have been tricked into believing

that the government shouldn't have anything to do with it.

- Economics originally was called moral philosophy.

The reason why economics tries to claim

that it is a science studying natural laws is

because they want to pretend

that they're not making moral judgements.

- These are the laws of the economy

and they produce these outcomes, inequality,

and we make people believe that that's just nature.

Then people will just accept

there's nothing you can do about it.

- If money is natural, who has the money is natural as well.

- The economy is extremely complex, but it's important

to understand that it's a human creation, guided

by rules and laws.

We can change those rules and laws.

- Bernie called two weeks before Christmas, 2014.

- It was definitely a pivotal moment when Bernie Sanders

contacted Stephanie Kelton to offer her the job as

chief economist of the Senate Budget Committee.

I think the first question he asked me was,

"What would you do if you were me?"

And so I just immediately said, "Second Bill of Rights."

- A second bill of rights.

The right to a useful and remunerative job.

The right of every family to a decent home.

The right to adequate medical care.

- Saying that people have rights to a job, rights

to housing, rights to healthcare

It's very powerful language.

- We must take up the unfinished

business of the New Deal

and carry it to completion.

And two weeks later, I had an apartment in DC.

- Bernie Sanders last night on Fox

laying out his policy proposals.

But how much would those plans actually cost?

- All the presidential candidates

want to spend much more of your money.

- You know, whose money are we spending?

And the simple answer is: your money.

The government is not some entity that has its own money.

The government only has money because people pay taxes.

- He's just absolutely wrong.

- Government spends by creating money,

and when it taxes, it destroys money.

- Really making absolutely clear

that the government does not need your money to act.

- Our next speaker is Stephanie Kelton.

- We believe the government has no money of its own.

That's what Margaret Thatcher told us.

- There is no such thing as public money.

- There is only taxpayer money.

- She told us.

The only way government can fund programs is

if it can "find the money".

So naturally you have to go where the money is

and that means tax the rich.

Without them, we can't afford to feed a hungry kid,

care for our planet, meet the imminent threat

of climate change.

None of these things can be accomplished unless

and until we get your money.

You people are nice, you're lovely,

but the truth is, we don't need you.

We don't need you.

- We don't need the rich people's money.

We need to tax the rich people because they're too rich.

- We don't want an oligarchy.

We don't want a world where a smaller and smaller number

of people have a larger and larger concentration

of the wealth and income.

It screws up the functioning of our economy

and it screws up the functioning of our democracy.

- But how much should we tax?

- It's not that they're not paying their fair share.

It's that they're taking more

than their fair share, much more than their fair share.

- So you have to decide, what is too rich?

What threatens democracy?

And you remove that and then you leave the rest.

And it's not because Uncle Sam needs the money, okay?

You don't stop when you get enough revenue.

If we get revenue from them, we're gonna burn it anyway.

Our air

- We are the generation

that will lead international action.

- Now!

- We demand a Green New Deal.

When I say save you say Earth. Save. Earth.

- Change is coming whether they like it or not.

- And then this debate blew up.

And MMT got fired at from all angles by everybody.

- Bill Gates recently took exception

with MMT, calling it crazy talk.

- That's garbage.

- Trash, garbage.

- This theory is complete nonsense.

I don't even think it's a theory

- Free money for everyone.

- We already know it doesn't work.

- And so we|re in the "fight you stage".

- They defy the laws of arithmetic.

- A bunch of malarkey.

- So do I think we're gonna win?

I won't say no, but it's gonna be a hell of a fight.

- We should not be servants of money.

Money is fundamentally a public utility.

- The true story of money

makes it a political decision, a political choice.

- We have to shift from their money to our money.

Money belongs to us.

It's the people's money.

Our money. - Our power.

- Our money. - Our power.

- In a democratic society, we get to

decide what the priorities are

for the national provisioning of resources.

- In Dr. King's words, "We deserve an economic bill

of rights." Good jobs promoting the public good,

restoring our neighborhoods and our ecosystems.

- What do we want? - Jobs.

- When do we want 'em?

- MMT economists come in

and show you what kind of a world is possible.

- What can we do to improve our educational system?

What can we do to improve our healthcare system?

- Money is a tool and we need to figure out how

to deploy that tool.

- I just want to empower people

to fight back against all of the kinds of things

that stand in our way

of building a better future, building a better world.

And many of the reasons that we've been told we can't build

what we would like to build are not legitimate obstacles.

- One of the biggest obstacles is this idea

that the government simply can't find the money.

Once we drive a stake through the heart of this myth,

then we open up the possibilities for public policy

that can deliver the public good.

- There's a famous quote of

Keynes, I'll have to paraphrase.

He says, when I find new evidence

I change my mind.

What do you do?