Comments
Transcript
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SSBut Rohan has made a point about JP Morgan's work around Crypto currencies. Qoin is a JP Morgan byproduct. So do you think JP Morgan is working with the Australian government to roll out Qoin in Australia? interesting.....
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SSRohan bud, you are clueless about Australia! we've had autonomous currency called Barter Dollars for over 25 years. Know your own history. Australian businesses have been transacting with each other under a system called "Barter Card" for a long time now. Very recently they launched their own cryptocurrency called Qoin on Ethereum. It's already got 8000 merchants transacting in Australia now....damn rohan!!!
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ANRohan was very impressive., well read and very eloquent.... a lawyer that also has great insight about macro economy and politics.
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RTRohan was a terrible participant in this interview. Naive and dogmatic know it all. He is just trying to push a political agenda and is not adding value to the discussion.
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DNFunny to come back to this interview now. In 2020, What bank at davos is currently not talking about funding climate change
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JFGosh listening to that I can understand why we export some Australians. Lets hope he has little say in what goes on in Australia. How about we petition to reform the banks and let them sort them selves out. So some of them buckle - they deserve it. Then we could petition for smaller governments and maybe, maybe we could lead a better life. Free from all this madness.
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RRI agree with the comments about Rohan. Way out of his depth. He sounded more like a campaign manager for Bernie than a serious student of economics. This is a very important topic however that I want to see more of. Please just get someone who isn't all about reinforcing current Democratic memes.
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LBBoy, what a waste of time this was! Worse, it's scary that people like Rohan even gets invited to speak about money is an insult to my intelligence. God help us all if lawyers become the driving force in money matters.
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DWGreat discussion. Kevin did an excellent job of explaining MMT from a trading perspective, and I was even able to glean some insights from Rohan in spite of all his political meandering. But I would be remiss if I didn't comment on Rohan's political views which I found grotesque. It was beyond disturbing how he would just flippantly say "oh government can just ban lending to such and such industry." And then use the excuse that the state doesn't allow lending for dog fighting as is if illegal dogfighting and energy production are morally the same. His view of what "freedom" is also a strawman's argument. Freedom is freedom to action and from coercion. People who own more land or assets or has more wealth than you are not "coercing" you, as Rohan would like you to believe. And the state is not granting them this wealth because they uphold property rights and the rule of law which is consistent with the small l liberal order that all free marketeers subscribe to. I could go on with countless other examples of Rohan being intellectually dishonest, but I will leave it with those two examples.
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EHEd Harrison here: A few comments from me on this. I look at this Exchange as one in a series, and hope to keep this debate about MMT going. I know this is tough material for the more libertarian and hard-money-minded of you. Don't downvote it because you don't like it. Watch it with a suspension of disbelief and appreciate that RV has this diversity of content. Personally, I think the MMT debate critical to understanding the operational constraints of governments and the political dimensions of economics. On the political side of this, I found it interesting how much more comfortable Rohan is with government intervention than Kevin. You could chalk this up to their simply being different. But the sense I get is that Millennials have a different reference point than Gen X'ers or Baby Boomers and are, thus, more comfortable with government intervention than those two groups. Even within the MMT community, I get the sense that the younger crowd is more comfortable making full-throated policy choices, using MMT as the justification, where Mosler and some older MMT advocates seem less comfortable. My personal view is that marrying the operational aspects of MMT with policy choices has made MMT a political vehicle, an economic school viewed as partisan, with a partisan agenda. And that means MMT cannot be divorced from politics in the future. It will be interesting to see how this debate develops when the next recession hits the US and Europe.
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BPthis whole interview is a great example of a real life trader talking from experience vs. complete sophistry from an illusory lawyer.
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BPRohan is incredibly naive in thinking the state would even consider allowing an alternative currency.
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KSI have been thinking about MMT and gold (fixed exchange rate) and these two camps. It seems most people are in one camp or the other. You either believe in fiat Keynesian economics or you are Hard Money Gold standard guy who believes one must always be on guard against the government and its politicians for spending and putting us into the ever present danger of hyperinflation. I think what is missed in all of this is private banking and THEIR MONEY CREATION. The US Federal Government does not have a monopoly on money creation - PRIVATE BANKS create money “out of thin air” every time they make a loan, it is called Fractional Reserve Banking. When you step back and look at our FAKE Financialized Economy (Wall St vs Main ST) you see that it is NOT the Federal Govt Debt and Deficit spending that is killing the “real economy” it is the DEBT that is created by private banks that is killing people and turning them into debt slaves. People have no money to spend into the real economy because they are spending all their money servicing mortgages or student debt. What is a house worth? What is a college education worth? Answer: The amount of money a private bank will lend on it. Our enemy is not the Federal Govt and its spending - it is private banks money creation and fractional reserve lending. These private commercial banks need to be on a gold standard and thus limiting their ability to create debt slaves and drive up housing and education costs. A government should NEVER have to be on the gold standard because it limits their ability to foster economic growth through research and infrastructure, it limits their ability to help citizens in a time of need, and it limits their ability to spend on defense to protect their citizens. I am for both --- HARD MONEY for private banks and private sector --- Fiat for Govt. MMT is not a theory or an idea it is an accurate description of what we have now. PRIVATE BANKS are the ones destroying the economy, the ones creating massive income inequality and the ones responsible for much of unrest and misery we have today. "It’s fractional reserve banking, stupid". My interpretation of James Carville Quote --
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SBPerhaps this should have been categorized on RealVision as: Real Vision Trade Ideas: The Case for Gold ;)
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SBThe problem is not starting MMT, its stopping MMT. Free money is the most addictive substance known to politicians. And, if hypothetically some of our politicians are corrupt, all the better.
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RCI feel fear when I hear people like Gray speak, the disconnected, marxist, "i know better than thou" mentality just makes me nauseated and concerned that these people have spread like a virus thru the word. But what made me hopeful, appreciative, and excited for the future was reading thru the RV viewers comments. They can see thru this pandering elitist choking on platitudes just the same as I. Cheers to you all, you're great company.
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MMI really enjoyed this interview. I don't understand what everyone has against Rohan Grey. He seems to understand very well the monetary system. This quote of him is of crucial importance: Rohan: . "So every time a private bank makes a loan, nobody's standing outside going, what about the inflationary impact? What about the inflationary potential there? Even though that might lay claim on real resources that otherwise could be employed in other ways." Almost all the money that is being created today by private banks goes to real estate, no wonder it is so expensive. But nobody is complaining that the banks are creating money to blow up the real estate prices. And when the idea comes that the government can create money, everybody loses their mind. The private sector has been creating money for decades with enormous consequences (housing bubbles etc). I see no problem whatsoever with the government creating money because it already happens by the private sector. The real question is, what is the money used for? And then you can debate if climate change is the right thing. Read the history of Japan after WWII, they went from total destruction and huge debts to one of the most productive countries in the world because they knew how the money system worked and they used it to their advantage by using credit guidance to invest in productive sectors. In the 80s banks started to lend money to real estate and that is when the bubble came and popped. So creating money is not the problem, the allocation is.
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SHGreat commentary and insights from Kevin Muir as always. Far too many analogies, euphemisms and tangents from Rohan Grey. On too many occasions his responses avoided the question completely and began with a simple logical construct, “can we agree this is a table” and never referenced back to the question. I suspect he was both out of his depth or nervous about the interview as he did not really fall back on the economic concepts, factual constructs or even separate the economic from the political. A shame really, always like hearing different views, they sharpen the focus, here I’m not sure what I heard. Rohan if you are reading this feedback please do feel free to reach out, happy to help shape specifics for you.
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SPMushy as soggy cornpone. No takeaways. Then at the end the lawyer perks up about digital currency but wants to have universities or communes or some such issue it. Then he says he is in favor of decentralization for these.
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HvF*#k it. Just exercised my capitalist right and bought the album. I know what I’m doing for the next hour.. hehe.
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evI am not sure how this Mohan Gray will be taken by most of the people in this forum. But he does not pass the smell test. He has an agenda. That type of agenda needs a lot of non-thinking people to make MMT "work" I am not looking forward to this unproven experiment. Gray is a bag of hot air. Reminds me of a used car salesman.
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HvAnd now just listening to Crime of the Century. Supertramps finest. Thanks Rohan!!
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HvPart way through this interview I got up to play Supertramps “Dreamer” on my big huge awesome sound system. It’s been 45 years since I’ve listened to that. Thanks for the throw back! And a couple of realizations: 1). The smartest people in the room tend to say the least. 2). Was his minor in “kindness”? 3). What’s with everyone wanting to change the world? Things ran better when we left it alone. Have a great day, Hannah
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CJListening to Rohan honestly scares me.... Not the MMT portion as much as his belief in centralized power. Sure because that's worked so well throughout history. The ole create a national emergency to concentrate power trick.... I'll risk an uncertain climate change future to maintain our form of government every single time.
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DYThis just ended up being too painful to watch and I had to turn the interview off. Listening to a couple of guys pontificate on how the world economy should work is really painful. We need to go back to free market capitalism and get rid of this crony government pseudo capitalism. The reason why the economy is in a mess is because of central bank policies and crony government intervention.
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zzDude has to realize that when people spends tax money they do not care. Assuming government to be benevolent is not even funny.
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CGBrilliant. Both speakers were spot on. Both were aware of the preponderance of the data in the areas each discussed and could discuss policy in the context of data. They did not devolve into into prejudice and name calling, as many of the comments on this post do. RV needs to stay on these topics.
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SSI’m a huge Market Huddler and LOVE Kevin Muir, and appreciate his pragmatism with regards to the inevitable MMT, but thanks to him being coupled with this commie, totalitarian lunatic I could only get half way through this discussion before the nausea became intolerable. Can’t understand why Kevin wasn’t given his own segment. As an agnostic I’m praying my butt off that this cocky little despot never makes it to the halls of power. God help us all if he does.
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BGAny zipper head who believes in global warming lose all credibility in my mind when it comes to monetary policy. What a dueche bag
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GBIt seems like an MMT'r is allocating realvision viewing resources. Waiting for the guest who soundly slam dunks these socialist ideas in the trash bin.
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JSI enjoy listening to Kevin Muir and his reasonable position (market huddler here), but Rohan Grey is difficult to agree with. He doesn't believe that having a Government set zero percent interest rates on loans leads to bad investments. He also believes that Governments should determine all investment choices by criminalizing areas that they deem unfit. His position on climate change seems extreme to say the least. I cringe at the idea of his Socialist society becoming a reality. Traditional free markets need to return to fix our crony capitalist system.
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JASooooo... lemme see. I have this paycheck that I get periodically. MMT begins to reduce my purchasing power by creating inflation (hidden tax), so MMTers solution to remedy inflation is to directly tax me more so I can’t “over spend”? First, I’d love a definition of that term. Who decides when I am over spending, pray tell? Second, I have a question: Who ends up with ALL the money? Please read your monetary history. Every fiat currency in history has gone down in flames because the government no longer has any restraint on what it can print and spend. These guys are way over-educated, and sadly, haven’t learned some of the most important stuff, when it comes to monetary systems. Hang on to your hats, people. May you live in interesting times.
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OBI couldn't listen to more than 10 minutes these guys are hardcore leftists
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JGInteresting discussion but I think quite a few very smart guys have been educated beyond their intellect. Trying to feed and raise a family, and make ends meet while working for a manufacturing company or retail outlet might considerably change their perspective as to who should be making decisions about what is best for all of us as they trying to manage an economy. I would prefer to make my own choices thank you and. If Real Vision has not done so I would really like to see an intelligent debate on the reality of climate change.
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RCI appreciated Kevin’s balance on the understanding of MMT and on the awareness of its risks. While it was hard to listen to Rohan, I think it’s incredibly important to understand how these people think as they are driving the conversation and it feels like MMT (in some form or fashion) could be here sooner than we think. Like most extremist monetary policies, I’m sure MMT will work great until it doesn’t.
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SAThat was a good discussion and Kevin was good antidote to Rohan. The only thing I would like to mention that while we are all enamored with MMT right now and with the concept of the government creating money, we have to understand that MMT and government backed money is a fairly recent concept. As recent as 2008 when QE in the US was launched. Historically, money is created when a bank issues a loan and the original FED notes were issued in exchange for bank loans and those loans were backed by 1/3 gold (or whatever the original requirements were). So the original "reserves" were gold and loans and thus money supply was tied to economic activity in the private economy. Later on, the FED started accepting US treasuries (or government spending) as backing for money to fund WWW1 and WW2 military buildups but really the concept of government spending as backing of money is mostly from 2008 on. So the reality is that we are in a mixed money regime, where some of money is backed by government debt, some of it by gold and some of it by bank (private) loans. While it is important to use MMT, it would be foolish to think that government money is all there is. The creation of the FED was a 5 year process and a ton of legislative sausage had to be put through to come up with its Federal design and the FED is still primarily run by bankers and not politicians. This wild monetization of all kinds of government spending that people like Rohan envision is simply not going to happen, partly because majority of the money supply does NOT come from government spending! The bankers who are the holders of the private savings have a major say and better believe it, the government can't walk all over them. I mean it can, but then you have the USSR and I don't think anybody wants that, even a guy like Rohan.
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PCSomeone please tell Rohan not to use scientific terms like 'heat death' that he does not understand. It is a thermodynamic term referring to a system in a state of maximum entropy. Even if you did want to use it in a more general sense, the earth is not going to experience a heat death, although it will probably become uninhabitable in a few billion years' time when the sun turns into a red giant. Describing climate change using terms like heat death or extinction events harms the cause of environmentalism because it makes its supporters sound like they are spouting pseudo-scientific claptrap.
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DRI couldn't listen to this unfortunately, this Rohan Grey guy is to much.. Mabey I have a low tolerance for acidemia logic these days but, MMT, in my opinion, is only worth discussing if it's honestly applied to the real economy.. Grey over speaking with platitudes is a big red flag. Maybe I'm just over MMT, meaning I understand the intent of it's creators and advocates.. if being honest MMT's net effect will largely be determined by receptive psychology, which changes every day and is extremely difficult to forecast as an investor. I think conservatively MMT is an undefined risk, until implemented and proven otherwise. I lean toward MMT staking more risk on government and pushing investors and households into more complacent behavior over the long run.
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DCStatist says "basically the govt. should run everything"... i just saved you a watch.
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PCI think one of the most fundamental objections to MMT is simply that it places monetary policy under the control of politicians. Millennials have not sussed this out yet, but politicians are ignorant, stupid, incompetent and frequently corrupt. This is not a statement about any particular political colour, it is universal. Anything that is placed under the control of policitians they will find a way to screw up. MMT theorists like to think that politicians will introduce just the right amount of monetary and fiscal stimulus to eliminate unemployment and they will pull back just at the right point where inflation starts to rise too high. Politicians will not do this. They will use stimulus money to buy votes and they will direct money towards their own supporters. And they will be unwilling to put the brakes on when inflation rises because an economy that has come to depend on stimulus will go into contraction when it is removed. Too many economists, especially younger ones, are blasé about price inflation because they have never had to live with it. It is very, very bad. In the west, most people have become complacent because high inflation has not happened in their lifetime. Elsewhere in the world, a great many people know from experience that fiat currencies can experience a catastrophic loss of purchasing power when politicians screw up.
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DDRohan didn't come across as a good rep for MMT in this interview. When someone comes into a discussion only wanting to get their own narrative out there and then starts waving their obnoxious finger about what's morally right or wrong..I struggle to listen. He didn't even answer some of the questions but instead went into rants about 'planet earth burning' and how 'uber is not an investment' and 'doesn't do any social good.' Kevin Muir's head drop in response to one of these rants at 20.37 says it all.
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KDOutstanding interview one of my favorites of all time. The critics of this interview either don't get it or they're so clouded by their political biases that they can't accept that MMT accurately describes how the economy works, and how applying that understanding can improve the economy and therefore people's lives. And Rohan, mate, lay off the politics... you need to persuade the world so the economic
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MTI have a confession to make. I understand how important to be able to listen to views very different to my own, I tried, gave it 20 mins then I couldn't take it any more and shut down. I await with interest to see if Mr Grey reponds to my previous question does he trade/invest himself?
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WMRV and Ed are right to focus on MMT because it's going to be at the center of all our political and economic considerations in the next few years or longer. Ed Harrison's excellent comment below about the generational difference in perception about MMT and greater government control is spot on. Even if we're uneasy about all this...as investors and as citizens we ignore it at our peril...
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SSThis interview sounds more like the promotion of politics, more taxation and climate change foolishness. Man has no ability to change the friggin climate. Man only has the ability reduce pollution and protect the environment where possible. Germany turned off it's nuclear plants after Fukushima, them had to fire up it's coal plants as the electric grid has failed and not enough power to run the country. Most of this discussion is a bunch of opinions that Peter Griffin would say, who the hell cares. Government miss manages everything and in the world today, does nothing for the people. Not sure the point of all this nonsense.
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JLget off the climate change bandwagon, seriously. if you're so smaert, how come you can't figure out this hoax?
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BAWe need the academic types to theorise and we need the practitioners to bring things back to reality. Kevin Muir is the kind of practical, thoughtful guy that I would trust with implementation strategy. For sure, monetary policy has reached a ridiculous extreme and new approaches are needed. I just hope that there are enough 'Kevins' out there to help guide us into this new world. Great job by Ed.
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DMInflation is already here, no? Student loans (US), housing... the expansion of private credit is key, not just the government spending money into existence.
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HKman, what a mismatch in the level of the two interviewees!
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DSI agree with Mr. Grey statement: “I think Uber is a regulatory avoidance scheme masquerading as a company.” Along with other “sharing” programs like Airbnb it does deregulate from the bottom up that which could not be deregulated from the top down. Now that the new “sharing” enterprises are being regulated more locally, they will fit the community better. Nothing will be perfect, but I do think that the “sharing” businesses do provide a public and individual benefit. DLS
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DCSomeone needs to glue a pointy goatee onto Raoul and get seriously confrontational with one of these MMT guys. I just want answers to basic questions. Though I do appreciate the civility in today's world, I still feel like we're traipsing around very basic issues with MMT, like "how do you so glibly underestimate Chinese overcapacity as a force for deflation?", "how on earth can you advocate central planning, given literally every experience, ever?", etc.
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DC"I'm Australian, I have no vested interest in keeping the American empire alive" Are you kidding me, dude? Rohan seems to believe it's a natural state of affairs for a superior, resource hungry nation to pay market prices for raw materials. That one comment alone serves as an indication of Rohan's disconnectedness from actual reality. Simplifying investment decisions to "casinos vs schools" is a gross underestimate of how complex resource allocation is in the real world. The complex questions that arise in allocating resources over the entire world economy can only be addressed through free markets. Advocating for centralized control or a firmer hand on resource allocation makes problems worse. Also, the way he always slides back into HIS goals for money betray the fact that MMT is just the newest way certain members of society wish to control it. No thank you.
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DCCan't do it. It sure appears the MMT people will eventually get their way, which will make any seemingly absurd bitcoin projection come true. Note to self; since you cannot stop the inevitable stock up on popcorn and enjoy the show.
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JBAustrian School Economists have been debating MMT people for a decade. And it's nothing new. It's most similar to the economic of John Law.
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TJI somehow managed to watch this to the end, but it was a struggle listening to many of Rohan's arguments. He strikes me as being a classic Keynesian, incredibly smart and intelligent with all the answers, at least on paper, and as always the answer to every economic problem is more debt. Monetary debt's ability to stimulate developed economies is spent so now let's open the spigots on the fiscal pumps, and hey we will worry about excessive inflation or worse after the fact. Obviously Rohan believes strongly in climate change but seems oblivious to the fact that many, possibly most other people whom have done the research are not so convinced, but that's another story. More importantly, I appreciate as Ed says that I need to have an open mind on diverse opinions other than my own, and so I am happy to listen to the views of people like Rohan but I look forward to the episode when hopefully you have the economics scholar and successful institutional investor Dr Lacy Hunt on your show to talk about MMT.
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TCColor me shocked that an academic (and a lawyer no less) would be in favor of MMT. I am afraid this (MMT) is coming and it is going to be disastrous. I agree that our current policies are less than ideal but MMT may just be the medicine that will kill the patient.
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SWHow does an economist escape from a deep hole into which he's fallen? He assumes a ladder... These MMT folks assume specific concepts can be interchanged without consequence. But their arguments are sleights of hand. In the real world one produces something valued by the community and through exchange obtains the valued produce of others. Generally money serves as a proxy for valued produce. In the (fake) world of MMT, one is paid money for a job - any job - and wealth is "created". That this works just fine in certain models with certain assumptions does not however mean it will translate. Wealth derives from that which is grown, caught, or mined, but not from that which is merely printed.
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CBDo Kevin and Rohan use methamphetamine? Probably not. Why not? Because they have a sense that never sleeping is unhealthy. Yet some how the economy must never sleep, must never cease to grow, must never be tested. Why would a system that is a part of nature be treated as though it is apart from nature. MMT is not a bad idea, it's just an idea. An idea that may not be necessary if we have a market place of competing ideas.
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rrWell Done Ed, keep it going w the MMT series (Hunt, Koo, Rickards et al). Let’s find out what if anything may really hold up with MMT. Kudos Kevin, well placed questions & comments. Sorry Rohan, the lawyerly answers sucked. Every answer = central “authority” control omg.
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JMThe speakers are assuming that government fiscal policies have been too tight because there hasn't been enough inflation but make no mention of negative population growth in many western countries (incl. Japan) or population aging, or globalization. Haven't all these other forces depressed inflation?
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THRohan is essentially proposing Soviet Union 2.0 with centralized money price & availability control. That such proposal is gaining acceptance, is outright scary.
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DSUsing MMT to understand an investment is one thing, but to enable Congress and the Administration to print money at will is another. Even without MMT the US has the greatest deficits of all time. Why allow Congress to add unlimited fuel to the fire. Does anyone think that the common good will constrain Congress? The only benefit I can see in MMT is that Washington lobbyist will kill each other trying to get to representatives first, thereby reducing the population. Mr. Harrison, I would very much like to hear Mr. Koo opinions in an interview with just you as soon as possible. He proposes, I believe, government spend money on constructive assets like infrastructure when corporation are paying off debt and not investing in constructive assets. At least every Japanese coastal village has a new harbor. DLS
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SWAlways amazing to hear folks like Rohan say that governments around the world have engaged in needless austerity. Debt/GDP ratios in the developed world have been marching higher for at least 20 years, entitlement reform seems impossible, states like Illinois have unmanageable obligations, etc. Seems like Keynesians will never admit the error of their ways.
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AVIf one agrees to MMT's principles and wants the economy to run at full employment, one can choose and defend reducing taxes to zero to everyone and having the govt just print the money equivalent to govt spending (instead of printing money and at the same time taxing the hell out of the rich); Also govt can print and send an equal amount of currency to everyone (instead of giving debt jubilee to a few, or instead of embarking on large government employment programs, or green new deals or whatever). So no Rogan, MMT is not an excuse to justify any of your policies.
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MFThe first 10 minutes of how the world can be acceptable with much greater central planning is precisely why I believe that although MMT will likely ascend for some time the loss of freedom in so many ways will be the outcome. . Maybe I am too old to believe that more government (political) control l is a healthy idea.
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VBRohan is emitting too much CO2.
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OBthe guy pretending is the economy is running under its full capacity when places like Europe and Japan have overcapacity and zombie companies is mind boggling
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AMThis is total crap. I couldn't watch to the end. The interviewers skills are lost in the process. Sorry. I was expecting something much better than this.
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ARHi Ed, We laid out a number of holes in MMT, including the Policy rate being set to 0%, the fact that the Job Guarantee rate is actually the Minimum wage, and various other non-starters for this economic collection of ideas called MMT. I would have thought we would have tried to address some of those issues in this video. Perhaps it is time to go back to the Real Vision Video from Richard Koo in 2016 when Richard Koo explains exactly what is happening in Europe, and what is going to happen next in this Global Balance Sheet Recession. Certainly worth another watching in this environment. https://www.realvision.com/tv/shows/interviews/videos/breaking-down-balance-sheet-recessions
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MSUnfortunately MMT is the almost inevitable response to the de-evolution of capitalism over the past generation into the current system of cronyism. And Trump, as the epitome of crony leadership, is the exact wrong person to be able to prevent this from becoming reality. Either we find new leadership that can steer us clear of the iceberg, or in 10 years (or sooner) the whole thing is going to blow up.
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PUOMFG! These two guys are SOCIALISTS! Ed did a great job. I would have walked out on them. Complete rubbish!
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MSThe more I see of Ed Harrison, the more I like him.
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MTquick question for Rohan Grey, do you trade/invest yourself? I really hope you are able to respond to this simple question.
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TEI sometimes think the debate is completely upside-down. Its a politico-finance agenda to have constant growth in a finite world and this constant fiddling of books via 'creating inflation'. Why the need to "create inflation". Should we not just have a spell and just let prices of assets come down to affordable levels? Would this not (big picture) be the natural way to solve this? Just let go. The reason that nature's not allowed to take its course is because system driven and gets stretched by political and financial interests.
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LJHave Jim Rickards debate Rohan on Causes of Climate Change.
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JSMMT and the Great Climate Hoax!
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DTThere's something about Rohan that doesn't sit well. His alarmism re the environment is guiding his thinking which seems to lead to less freedom and more government, which is something I doubt any of us watching real vision want to see. smart guy obv but potentially dangerous ideas. great interview tho id love to see and hear more from these MMT proponents! cheers RV
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kmRohan calls it "private" investment. Yet, for him, its all about forcing savings in things that he likes (like sustainable energy), taxing to reduce some people's "purchasing power" etc. - HE gets to decide - using your money. The real problem here? So- called capitalists have egregiously gamed the system for years (artificially low interest rates and crony capitalism). In other words, the world abandoned real capitalism and markets years ago. Consequently, even the most idiotic and dangerous ideas cannot be called unreasonable. Bernie, AOC etc. ask why its worse to bail out students than it was to bail out banks. And, because the capitalists sold their souls, they have no answer for this....
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BHBecome a fan of Kevin Muir
KEVIN MUIR: I wish I had come across MMT before I'd fallen for the Bill Gross kind of German boon short.
ROHAN GREY: I wish the problem that we had today was that it's the politicians who are running the economy too hot. I think what you're seeing around the world is the opposite, actually.
KEVIN MUIR: The main tenets of MMT, the descriptive part about how a modern fiat money based system works, are correct. What you do once you understand those things is a political decision.
ED HARRISON: All right, I'm Ed Harrison for Real Vision. And we're actually going to be talking about Modern Monetary Theory. About a couple of weeks ago, we had an interview on Real Vision with Warren Mosler, who I would describe as the progenitor of Modern Monetary Theory. And there were a lot of questions about that.
So I have two what I would call interested parties in Modern Monetary Theory to talk to us today. So first, we have Kevin Muir, who is the author of The Macro Tourist newsletter and a market strategist. And we also have Rohan Grey, who is a doctoral fellow at Cornell Law School and the president of the Modern Money Network.
So thank you both for coming and talking to us today. Really looking forward to the conversation. Actually, I want to start with you, Kevin, because one of the things that I found really interesting was that Warren Mosler-- actually, when he thought about Modern Monetary Theory, he thought about it as monetary operations. And really, the genesis for him was about understanding the money system that we're in and making money as a result of that.
KEVIN MUIR: Right.
ED HARRISON: So one of the things I wanted to ask you is, you're somewhat sympathetic to MMT. What kind of trades-- what kind of investments are you seeing right now that you think MMT is good at informing you in terms of being able to profit from?
KEVIN MUIR: Well, there's a whole host. Warren highlighted the fact that on the JGBs, which was the killer trade that got the most macro traders, they shorted the JGBs for years and decades and lost lots of money. He said the MMT guys had basically avoided that trade. I think that I wish I had come across MMT before I'd fallen for the Bill Gross kind of German boon short. Because it's kind of ending up being the same trade over and again.
And what I mean by that is the fact that Europe is currently doing an extreme monetary madness with fiscal austerity. And the MMT guys will tell you that that is not going to work. You are not going to get inflation. Yet all the old money guys that are kind of using old textbooks would tell you that, no, it's going to come. This is a great trade. Bill Gross, it kind of knocked him out of the game.
And so there's a perfect example of something that you can avoid. And by understanding MMT, you avoid falling into that trap. And not only that, you know what to look for in terms of when that will turn. And namely, that is once Europe starts spending and once the governments kind of abandon this idea of doing fiscal austerity, that is the point you should be buying European equities and shorting boons. But until then, stay away from it.
ED HARRISON: Well, you mentioned inflation. So Rohan, tell me a little bit about this, because that was one of the big questions that commenters had on the Mosler video, that inflation eventually is going to be a problem. That is, is that at some point, politicians just can't get enough of a stimulus. And they are going to run the economy beyond. It's a real resource constraints.
ROHAN GREY: I wish the problem that we had today was that it's the politicians who are running the economy too hot. I think what you're seeing around the world is the opposite, actually. That most politicians are needlessly engaging in austerity to the point that we're seeing huge lost output, huge lost productivity, and a lost generation of people my age and younger who have no prospects in an economy that is drastically undershooting.
So I'm not so worried about this inflation bias of politicians, other than politicians aren't likely to try and push the interests that they represent. So we see huge tax cuts for certain demographics. We see corporate subsidies for certain industries. We see certain kinds of corruption in grift that we should be dealing with. Those problems are problems that undermine the way the economy should work.
And if we want to deal with inflation, what we really need to be doing is investing in productivity-enhancing investments that include full employment, that include the kinds of technologies that are going to get us to address the climate crisis we're in, things like the student debt cancellation proposals that we've just seen come out today from various politicians in the United States, that are attempts to actually rebuild the base of any productive economy, which is its workers, its people, and its social fabric.
So I think there are ways to deal with inflation. And more importantly--
ED HARRISON: What are those ways?
ROHAN GREY: Well, in order to address it, we need to know what the actual underlying causes of inflation are. So on one hand, there are sources of excess demand-led inflation. But in order to know whether that's a problem that is caused by, and therefore best addressed by, excessive government spending or an excessively loose government budget, we need to look at all the other sources of demand in the economy.
So every time a private bank makes a loan, nobody's standing outside going, what about the inflationary impact? What about the inflationary potential there? Even though that might lay claim on real resources that otherwise could be employed in other ways. When people invest in speculative investments or create new forms of financial instruments that increase balance sheet net worth in ways that could be distortionary, we don't complain about that. We call that innovation.
So if we want to deal with the core causes of price increases, we need to first diagnose where they're coming from. And that could be quite different in different contexts. There are contexts where certain people have too much spending power. We could reduce that. One way to reduce that is through taxes. Another way historically is through savings policies, either voluntary or involuntary savings policies.
Another way is through things like credit guidance and credit controls. We're seeing right now, in places like the United Kingdom, central bankers and politicians are proposing forms of credit guidance that reduce our investment in fossil fuels and increase it in other forms of sustainable energy. So that's an example where we are transforming the direction and scope