The Fantasy of Modern Monetary Theory

Published on
June 19th, 2019
Duration
8 minutes

The Fantasy of Modern Monetary Theory

Future Fears ·
Featuring Stephanie Pomboy and Grant Williams

Published on: June 19th, 2019 • Duration: 8 minutes

Stephanie Pomboy, founder and president of Macro Mavens, joins Grant Williams to discuss the emergence of MMT as the idea gains traction. Pomboy discusses the multitude of economic and political factors leading to MMT’s rapid expansion. This clip is excerpted from a video published on Real Vision on April 18, 2019 entitled “The Startling Consequences off Monetary Policy.”

Comments

Transcript

  • F
    Floyd .
    24 June 2019 @ 20:10
    I agree the video could have been better formatted and the topic of MMT could have been discussed in more detail and the theory dismissed with more eloquence. None the less at best MMT will work until it doesn't and suggesting that we can ignore the crippling results of unrestrained ,spending,debt accumulation and the ultimate destroying of purchasing power through rapid inflation and the erosion of confidence in the economy is foolhardy. Once again deriving an economic theory from a mechanical government funding process could only come from individuals that don't have an in-depth knowledge of how the economy functions and are naive socialists that think they know how to create the false utopia that has been tried and failed.
  • DL
    David L.
    24 June 2019 @ 17:29
    Poor video based only on misinformed opinions
  • AG
    Aidan G.
    24 June 2019 @ 14:07
    whats the point of these 8 min videos? You are going to discuss MMT in 8 min? This business model is broken. There is too much junk in the name of "democratizing" finance. The longer, value-added insights are gone. The problem started when they replaced Grant's Adventures in Finance--a great podcast, with some BS gameshow format dribble... That apparently didnt last, and they cancelled it, but doubled down on the strategy: tons of garbage, dig for the nuggets of value, but yeah, "democratization"
  • MC
    Mike C.
    24 June 2019 @ 13:37
    Stephanie's insights were more valuable to *me* than Grant's grammatical error was shocking. Grant, you have let yourself down, let Real Vision down, and let our once great nation down.
  • DS
    David S.
    20 June 2019 @ 18:23
    Both parties in Congress will use MMT in order to spend money which will markedly increase the current deficit. The only difference is who will receive the benefits of the spending - rich or poor. QE, lowering taxes without compensation revenues, MMT, they all generate much larger US deficits. It is the world we live in. Deal with it as best you can. Good Luck. DLS
    • DS
      David S.
      21 June 2019 @ 18:41
      How is printing more fiat currency, MMT, any different than debasing the coinage of the realm? The assumption is that politicians will only use MMT until it is no longer needed. Does anyone believe that? Raise your hand. DLS
    • KS
      Kathleen S.
      23 June 2019 @ 12:04
      Boy, I can’t believe how difficult it is for people to understand how our system actually works. I saw the Mosler interview and read his book 7 Innocent Frauds and I saw what he was saying immediately. David do you not understand that when you debase a currency, it means you on a fixed exchange rate (gold standard) are we on a gold standard?? I mean how hard is this?? David do you not realize when you create your own money that debt or deficits incurred in this currency can always be paid. So what if Congress increases the deficit -- IT DOESN’T MATTER. Congress can never run out of USDs and we can always pay our debt denominated in USD.
    • WC
      Wilson C.
      24 June 2019 @ 14:13
      bingo! Kathleen, what you imply "might" work if the US was a closed system, unfortunately it's not esp with USD as the world reserve currency. but you seem to have drunk the kool-aid on MMT, only time will tell and by that time, if it's the wrong decision it's too late and the next generation will have to pay the piper.
    • DS
      David S.
      24 June 2019 @ 14:46
      Kathleen S. – Sorry, I really should be saying MMT will be increasing the money supply and not deficits. Sorry poor diction. I do not dispute that a country can pay back its own debt by printing its own currency. My problem is what will you pay for the same a loaf of bread after the money supply is doubled with MMT; even in a closed monetary system. To quote Harley Bassman from his latest interview with Mike Green: “Although you will get paid back in the currency and we could print it. Now, the question is, how many loaves of bread can you buy with the currency? DLS
  • KS
    Kathleen S.
    19 June 2019 @ 13:13
    Wow, Stephanie is a very smart woman and I have the utmost respect for Grant but this is not a critical analysis against MMT. If anything it just shows how two smart people can be so dismissive of something they know nothing about. Stephanie’s argument that the US is different than Japan, because Japan internally fund themselves and the US depends on the rest of the world - is fundamentally WRONG. The US does exactly the same thing as Japan and we do not need China to fund us. In fact the US does not need to sell treasuries at all. The rest of the piece goes on about corporate bonds - which again just shows their ignorance on MMT. MMT can only work when the country creates its own currency and has debts denominated in its own currency. Corporations that sell bonds can not create USDs, Greece can not make Euros, Weimar Republic couldn’t create gold, see a theme? Any entity that holds debt in a currency that they can not create is subject to default, thus US can never default. Modern Money Theory is an inaccurate name for what this really is - MMT is a description of how our system actually works. You think that if for your whole life doctors where giving these screeching dire warnings that you are at death's door - yet year after year you never die, and then finally one day a self taught doctor who was not indoctrinated in a corrupt medical system (that gets every diagnosis and every forecast WRONG -something you and your friends point out over and over again) saw you and said -- Your not going to die, in fact you can never die - this is just how your body works - you would have a EUREKA MOMENT. Nope, you and your friends don’t bother to go do your own research on what this new doctor has told you -- you rather call him crazy and prefer to keep believing you are going to die. Read his book and then decide if he is crazy. I read it and it points out things that until he points them out, I didn’t see.
    • DS
      David S.
      21 June 2019 @ 18:59
      Kathleen S. - If you double the money supply with MMT, keep the velocity of money the same and have the same number of goods, what do you think will happen? Do you think the value of the dollar vis-à-vis gold and FX currencies will be the same? The Fed tried to get the economy going with QEs, etc. Instead all the money went to bail out the banks and big investors who invested and inflated the value of hard assets. The wealthier got wealthier as they did not need to consume more. The corporate tax cut could have been phased in over time, but it was not. Where did most of the money go? Not into profitable investments. Corporate buybacks which profited the executives seems to be the big winner. The consequences of MMT, adding additional money to the money supply will depend on what projects that you spend the money on. The Japanese spent it on infrastructure. Now they have nice ports in every village. I do not think we will be so smart even though we need thousands of new bridges. The fault is not in economic theory but in politicians that we elect who abuse the economic theory to get reelected. DLS
    • WC
      Wilson C.
      24 June 2019 @ 14:10
      my understanding is Japan "self-funds" due to the people's propensity to save, so you can say that the japanese people are "paying" for the japanese debt while the US doesn't have a high savings rate, thus need other countries to purchase the debt.
    • DS
      David S.
      24 June 2019 @ 15:10
      Wilson C. - You may be correct for the moment as the Japanese are great savers. What happens, however, if the Japanese citizens decide to change their saving habits or feel that their savings are safer outside of Japan. Secondly, I believe that most of the bonds issued by the Bank of Japan are purchased by the government or institutions, not individual Japanese citizens. The Japanese savings is more of a counterbalance to the massive government debt. It would be great to get Mr. Richard Koo back to discuss this on RVTV. DLS
    • KS
      Kathleen S.
      24 June 2019 @ 17:10
      Sorry Wilson, but being the world reserve currency has NOTHING to do with MMT. Any country that creates its own currency can do MMT. Follow this --- A country that issues its own money can BUY anything that is for sale in that currency. The USA can buy ANYTHING that is sold in USD and can print money to do it -- the fact that the USD is the world reserve currency means it can buy everything. The US chose not to take advantage of this, which seems ridiculous, but that is what it did. I have many theories as to why this is, mostly having to do with globalists wanting to bring down the US and its rule of law and replace it with a more Chinese style state with bureaucratic rule and complete citizen surveillance (see Kyle Bass/Steve Bannon on this). Back to MMT - it does not MATTER if a country has world reserve currency standings or not, what MMT says it an issuer of a currency can buy anything for sale in that currency. Let’s say the USD is no longer reserve, so now only resources it can buy are within US borders. Good NEWs --- US has great resources within its borders --- many natural resources, ability to grow food, energy sources, educated labor force, hardest working most innovative people in the world, and lastly a rule of law that is backed up by a constitution. You couldn’t ask for anything better. The US can print dollars not to give people a basic income (which creates nothing but a nanny state with population forever dependent on government) - but to put these great natural resources to work. Print dollars to use unemployed labor force to build state of the art infrastructure, use dollars to fund research that can be used in private business to create organic economic growth - not fake ponzi debt based growth like we have had since 1980’s. All this is possible once you understand how a fiat system can work to benefit society. A gold standard, which is exactly what the ruling elites want, will shackle all of a country's potential because it does not have the gold to unleash the possibilities I just wrote about above. Once you start looking at the system from a different angle.
    • KS
      Kathleen S.
      24 June 2019 @ 17:17
      David, you keep giving the same arguments over and over again - after I have debunked them. ONE MORE TIME: If there is too much money in the system -- it is a ONE OFF. You remove the money out of the system by cutting govt spending or by raising taxes. GET IT!!! We are not on a fixed exchange standard, and we do not have debt denominated in a currency we do not create.
    • DS
      David S.
      25 June 2019 @ 03:11
      Kathleen S. - I know that I sound like a broken record re: the money supply. I am the same way about the law of gravity and the speed of light. Keynes stated that deficits must be paid back when the economy is good. Has this ever happened? Do you really think that Congress or the administration will raise taxes to reduce the money supply when “appropriate”? Money flows for politicians are a one-way street. If I see Congress or the administration voting to decrease the money supply at the appropriate time, I will happily state that you are correct. Oscar Wilde said that he can resist anything but temptation. I do believe that MMT is too irresistible for Congress on either side of the isle. We will be able to see if you are correct. Until then I will keep adding a little gold to my portfolio in case you might be wrong about the backbone of our politicians. Thanks. I always enjoy your comments. DLS
    • KS
      Kathleen S.
      25 June 2019 @ 11:48
      MMT is not something new --- it is an accurate description of the fiat monetary system we have now. Issues are fiscal and not monetary that is the point. It is hard to have a real debate with someone who doesn’t really understand how the current system works, and then when he is proven wrong keeps moving the goalposts. This is not a debate on politicians on what they will or will not do. Good luck , if you want to learn something I suggest you read Mosler’s book - “7 Innocent Frauds” it is free on line.
    • DS
      David S.
      25 June 2019 @ 16:30
      Kathleen S. - After reviewing the thread, I see our disagreement is the belief that Congress will stop increasing the money supply at the appropriate time. It is not MMT in theory that bothers me, but the Congressional implementation and consequences on the money supply that I worry about. I hope that you are correct, and Congress will do the right thing. My goal will be to live long enough to see how it plays out. Thanks for your help in focusing me on the issue. DLS