Finding the Money (8/10)

by Tony Medley

95 Minutes.

NR.

As the fly said when it walked across the mirror, I never looked at it like that before. This is a paean to Modern Monetary Theory (MMT). Its John the Baptist figure is Stephanie Kelton, who is called “an American heterodox economist…a former Chief Economist on the U.S. Senate Budget Committee (Democratic staff), and an advisor to Senator Bernie Sanders’ 2016 and 2020 presidential campaigns. She was named by POLITICO as one of the 50 people most influencing the policy debate in America.”

In ordinary language, heterodox means heretical. The argument here is that everyone is looking at the deficit wrongly. What one draws from their argument is that the larger the amount of what we call the “deficit,” the better for us. Kelton and her many cohorts interviewed here (listed below) proclaim that the “deficit” should be called an asset. When we sell bonds to China, she says, that’s good and the “debt” is really an asset.

They say that all the deficit is, is that the government is putting more money into the economy than it’s taking out. If the government puts $100 into the economy and taxes 90% of it out, that’s a deficit for the government, but a surplus for the economy.

L. Randall Wray, professor of economics, Levy Economics Institute of Bard College “MMT” School of Thought is interviewed throughout. He says that it’s not possible for the government to be saving, running a surplus and the private sector to be, saving, running a surplus at the same time.

Produced and directed by Maren Poitras, there are lots of interesting seemingly sacrilegious discussions about what money is and how it has worked throughout the ages. Gray says that when money comes back to the issuer, it is destroyed. It’s been that way for all time. When taxes were paid in the Middle Ages in England, they were paid in tally sticks. When the tally sticks were returned as payment of taxes, they were burned. He claims that when money is repaid to the government, it is burned. I’m not sure if he is speaking metaphorically.

One of the best parts of the film is when Kelton interviews Jared Bernstein, Chair of the Council of Economic Advisors under President Joe Biden. Following is an unedited transcript of how he stammers and mutters after Kelton asks him a simple question. This guy clearly seems to be in way over his head:

Kelton:It 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 don't we borrow our own currency in the first place?

Bernstein:

Well…

The…

So the… I mean…

Again, some of this stuff gets…

Some of the language that the…

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 the government definitely prints money and then it lends that money by… by selling bonds.

Is that what they do?

They, they…

They yeah, they, they. 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 time, a lot of times, at least to my year with with MMT, the the language and the concepts can be of unnecessarily confusing. But there is no question that the government prints money and then it uses that money to…

So… so …the.

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

They sell bonds…they borrow.

Yeah… I… I guess I'm just… I don't… I can't really talk...I don't… I don't get it. I don't know what they're talking about like, because it's like…

The government clearly prints money and does it all the time, and it clearly borrows. Otherwise we wouldn't be having this this conversation. So I don't think there's anything confusing…

There.

Just watching this guy squirm and mumble is worth the price of admission. He sounds like Kamala Harris.

They gave a glimpse of their true colors at the end when the thrust of their goal is advocating for taxing the rich and income distribution.

Even so, I recommend this because their discussions and arguments are interesting and thought-provoking, and their slant on the use of money enlightening if what they say is accurate. Or is it nonsense?  I hope to hear back from people who know more about economic and monetary theory than I.

Below is the cast of characters:

FEATURING: 

Stephanie Kelton is a professor of economics and public policy at Stony Brook University. She is a leading expert on Modern Monetary Theory, a former Chief Economist on the U.S. Senate Budget Committee (Democratic staff), and an advisor to Senator Bernie Sanders’ 2016 and 2020 presidential campaigns. She was named by POLITICO as one of the 50 people most influencing the policy debate in America. Her highly-anticipated book, The Deficit Myth (2020), became an instant New York Times bestseller.

Lua Kamál Yuille: Northeastern University professor of law and business within the School of Law and the D’Amore-McKim School of Business. 

Dr. Mathew Forstater: professor in Economics and the Research Director of the Global Institute for Sustainable Prosperity. 

Jared Bernstein: current Chair of the Council of Economic Advisors to President Joe Biden. 

Fadhel Kaboub: Associate Professor of economics at Denison University (on leave), and the president of the Global Institute for Sustainable Prosperity, 

Warren Mosler: American economist and theorist, and one of the leading voices in the field of Modern Monetary Theory (MMT) 

Pavlina R. Tcherneva, Ph.D., is Professor of Economics at Bard College, the Director of OSUN’s Economic Democracy Initiative, and a Research Scholar at the Levy Economics Institute, NY. 

David Andolfatto: Senior Vice President, in the research division of the Federal Reserve Bank of St. Louis, where he served as a senior policy advisor for James Bullard, CEO and president of the Bank. 

Jason Furman:Aetna Professor of the Practice of Economic Policy jointly at Harvard Kennedy School (HKS) and the Department of Economics at Harvard University.

Olivier Blanchard: Senior Fellow at the Peterson Institute for International Economics, and the Robert M. Solow Professor of Economics emeritus at the Massachusetts Institute of Technology (MIT). 

Peter Coy writes about economics, business and finance for New York Times Opinion

Ben Holland: current economics editor at Bloomberg News

David Dayen: Executive editor of The American Prospect 

Reb. Delman Coates: Senior Pastor of Mt. Ennon Baptist Church in Clinton, MD. Founded the non-profit Our Money Campaign that seeks to mainstream the academic insights of Modern Monetary Theory (MMT) to solve some of our nation’s greatest social and economic challenges. 

George Selgin: Senior fellow and director emeritus of the Center for Monetary and Financial Alternatives at the Cato Institute and professor emeritus of economics at the University of Georgia.