Sure is tough to buy a house or even pay rent nowadays. Driving up asset prices through inflation is a terribly regressive system, i guess we wont call it a tax though.

Can we get an update Ted talk with her explaining inflation?

The scary part is.she kept a straight face throughout. her presentation.

apparently money does grow on trees! or on computers.

She completely glosses over the fact that our government deficit, or debt is borrowed money. People invest in government bonds, because they expect a return on their investment. If there is no return, there is no investment. You also can’t just print, or virtually create money out of nowhere, because it devalues the currency.

Not long after she spoke about government's need to control inflation, we had the highest rate of inflation in 40 years.

She says inflation is the real limit. I guess that limit got hit pretty fast…having this talk right before the biggest inflation period since the 70s 😂

If the issuer of currency can never run out of money, why do we have taxes? Some of the largest growth the country has seen was before there was an income tax.

When someone dismisses a question by saying, "It's the wrong question" (2:55) what that person is really saying is, "You are asking a question that I don't want to answer, therefore you are wrong for asking it." One of the first thing students will be told in an introductory economics class is that "There is no such thing as a free lunch." The notion of something for nothing is a fallacy, and deficits will ultimately have to be paid back in some way; therefore, questions as to how repayments will be made are legitimate and should be fully addressed.

If we can just print money why am I getting taxed?

when you can't lose and only win, somewhere lies a fallacy😳

This is fucking horrific Anyone who thinks this is a good idea should NEVER be allowed to be in control of any monetary policy, ever!

By extension of the logic, there is no need to ever issue government debt, or impose any taxes to obtain revenue. You just print it. Seems like flying blind, using ‘inflation’ (whatever that is) as a sort of financial altimeter while adjusting speed based on the fuel gauge. Could be dangerous in the mountains.

ARGENTINA

I wish I could ask Dr. Kelton one big question about the interest payment on the government issued bonds and treasure notes. The bigger the national debt, the bigger the interest payment. Am I wrong to think that the federal government should reduce the amount of national debt so that the government would not allocate a large percent of its budget to this interest payment.

Wonder what she thinks about modern monetary theory now…as the MMT proponents say, the only thing we have to worry about is inflation…you think? That’s like saying we can jump out of airplanes as much as we want, all we have to worry about is hitting the ground…

No one ever asks "How will we pay for this new war" We've got infinite money for war and tax breaks but never when it actually helps the people

Fiat money has always baffled me, banks create it out of thin air, and I (and the rest of us) spend practically the rest of our life, working away paying back with interest, a mortgage ...its basically an I.O.U system the whole world of money runs on.

If you follow her logic why do we even pay taxes?

This didn’t age well.

inflation is an invisible tax on people who dont have enough money to invest. if you really "care" about inequality and minorities then stop printing money, stop bailing out banks, and start helping people understand what fiscal responsibility entails. its easy to claim MMT will work, but if people cant invest then your saving accnt interest will never keep up with inflation and thus the CPI will slowly outstrip their ability to live comfortably... this is why millennials like myself have a more difficult time affording housing than our parents. also its really easy to say printing money will fix things when you have a tenured position that safe and hermitically sealed off from the markets at large.. shaking my head sadly right now...

Money printer go brrrrrrrrtt

With her logic, we should not need to pay taxes. Simply let the government create whatever money is needed to do whatever is necessary.

This was painful. Deficits are only ok if the money spent had an net surplus to productivity. Paying for social services because ppl could only consume and not save is like throwing good money after bad.

“I’m one of a handful of economists “ On the government pay roll.

There's some interesting ideas here (and in MMT) and I agree that inflation rather than deficit should be a better measure of an economy. However, the MMT idealogues are in my opinion missing two things that always happen in practice: 1. squirting fiat into the economy pretty much always ends up with _residual_ inflation even after government re-balancing measures (through taxation, interest rate hikes, etc.). 2. Governments spend a significant proportion of what she is defining deficit surplus not on the local population but quite often on foreign investments, foreign contracts that don't benefit the tax payers. So you have an open economy. So medium to long term money just leaks out the closed economy to make MMT work. I think it's important to not to be too ideological about MMT. Aspects of it do work but at the end of the day, if you squirt in excessive amounts of money into the system far and beyond what the country can produce then you're going to get inflation. At the end of the day, money (or wealth) is only a measure of the country's output and that's fundamental. And that is what Thatcher was really saying when she made her quote about there is no government money.

A renowned economist on Michael Shermer's podcast had a great comment, "It's not 'modern', has nothing to do with 'money', and does not qualify as a 'theory' '".

Did I miss the part of her talk which deals with the impact of a 6% terminal rate resulting in 40% of the federal budget going to service annual debt costs?

Increasing the monetary supply is just like the taxation of savings. But unlike a direkt tax to savings, stealing the purchasing power of the people via inflation is much easier, because the numbers on their accounts stay the same.

Question: What happens when payments for interest on the debt become the biggest budget item? Does this crowd out other spending? As debt goes up and up will interest payments crowd out more and more? Or is this 6 really a 9?

How does MMT handle debt service? As the Federal Reserve raises interest rates to fight inflation, the US budget must accommodate higher spending for debt service in the yearly Federal budget. The debt service is currently 7% of the budget. Chairman Powell states the current spending is not supportable long term.

MMT is to fiat currency what sub prime loans were to mortgages

Going with the "69" analogy during a public presentation was a bold choice.

Little knowledge is a dangerous thing.

This is what happens when basic human common sense and economic prudence is overridden by pseudo intellectualism and fundamentally leftist policy. I think the very learned economist forgot about the problem of inflation and how common people that she is referring to suffer because of it. In this global financial system, if a country is overleveraged, Sri Lanka showed us what would happen. So for god's sake don't let basic human common sense be forgotten while thinking about economics. Yes. The government must spend on infrastructure and other areas for the betterment of enterprise, people and society.. however.. everything must be paid for. There's no alternative

“Are these things worth doing?” is the correct frame. The problem we face is the monetizers are almost exclusively the ones who are (for lack of a better word) allowed to ask and answer this. Waste water treatment is not and never has been a profit center. Yet it is indispensable. Just saying 🤷🏽‍♂️

6:33 "the government's bank, the federal reserve..." I don't think so. The "Federal Reserve" is a gross misnomer, it's a private institution, NOT a part of the government. So the national debt is owed to private concerns?!

She should go to Argentina. It works very well there.

What is a TED talk? A forum where speakers are applauded for saying things that least represent reality.

She kinda answered it at the end. You can’t have the government spur growth initiatives when there is full employment or a lack of resources cause that leads to inflation.

So there is a magic money tree. My parents were ..$&cking liars.

I recall this speaker being interviewed on a morning show around 18 months ago. She said deficits don't matter in essence, I thought "you're right the don't matter until they do". Talk about short sighted - while the reason for our global inflation isn't entirely government debt spending it certainly was a major contributor. Now we are dealing with the results.

It is frightening to see someone with an ideology so impervious to economic reality. She's never heard of the numerous countries that got into excessive debt, leading to debt default, hyperinflation, mass suffering and social breakdown. Even if the U.S. dollar is the world "reserve currency" right now, one should not forget that before 1945 the British pound had the world "reserve currency" status, which it then lost due to too much debt. The old saying still stands: “There is no new way to go bankrupt…there is only the old way…which is too much debt”.

This is why we have had such high inflation for the last few years and the environment and infrastructure are still degrading. The environment and resources are limited, but they printed tons of money for PPP loans and to stop job losses during Covid. You can spend / print money, but if production is the same, inflation goes up. People have more money to spend on what they want, but there's not more to buy. If production increases, the environment suffers from increased energy and resource consumption. Either way, through debt, environmental damage, and disinformation, we're screwed for generations.

No mention that when printing new currency it WILL, at some point, dilute the existing currency. So YES the tax payer DOES end up paying. Whilst a government budget does differ from a household one the difference does not allow for any government to print new money ad infinitum with no consequences. MMT is an interesting theory but when put into practice the realities of real world economics are sharply defined.

Printing more money comes at the cost of currency devaluation , which if a net importer spells death spiral.

When do i get my government authorised printing press?

The basic point that has been twisted is: just because we have a “deficit” against the government budget doesn’t mean we don’t have the economy to support the spend. That’s all fine and dandy if we could predict next years gdp, the reason we have the budget is to put some restraint on speculating against our future economy. I’d be all for basing the budget on last years gdp or similar, but we spend well beyond our industrial capacity and kill our ability to pull that trigger when a real crisis comes along. Also a 6 does not become a 9 when viewed from the top, it’s just a misunderstood 6, and ironically a good illustration of this talk.

So after telling the public for decades that government debt is bad, now that it can never be repaid, corporate America is now selling it as though it’s not bad..

The best example was why rescue car companies who can’t produce free emission cars? Why rescued banks who knew it wasn’t sustainable(home loans)?why redo roads for fossil fuel cars rather then self driven cars? Why spend on electrical poles instead of looking into tunnels ??

This aged like a bucket of prawns in the sun

It’s legalized counterfeiting. I want her to explain why counterfeiting is bad. If she says it isn’t then at least she would be consistent.

Ah yes, we've gone from "It's a problem" to "It's not a big problem" to "We are literally on a monopoly board".

Inflation is taxation; I mean, come on, man!

This lady did not say the secret part out loud, she just whispered it “countries like the US and England”, Yep, those countries are the only ones that can borrow money from the rest of the world in their own currencies. What she is not saying is that the rest of the world is picking up the tab for “those countries“ deficits. That’s why “those countries” need to have the mightiest armies just in case some other country doesn’t want to take their currency.

The problem is that the United States does not have the physical resources she mentions. The US is issuing money to buy huge quantity of resources from foreign countries. How much federal debt would it take for foreigners to refuse to accept the US dollar any more? 80 trillion? Maybe 267 trillion is acceptable? Better not find out.

So why does the government spend such a large portion of it's budget on "debt maintenance"?

I get the reasoning. If the industry sector that will support the new government spending has the necessary excess capacity, then there shouldn't be inflation in that sector. However, the households employed in said sector, will have more money to spend. Wouldn't that in theory put pressure on the average household basket? I suppose there has to be a bet on where that money will ultimately flow, right? Maybe we just have to hope that the average household has healthy expenditure habits or something like that.

I do not understand why she didn't address the principal concern about the national debt and deficit spending. That an increasing portion of the budget every year is paying interest on the debt and at some point people and organizations around the world will not be willing to keep buy our T-bills if it appears we can not pay the interest. When the budget becomes 90% interest on the debt and only 10% other things how does that make sense? Look I really want to believe what she's saying because it sounds great, but she completely avoided the reason most people worry about the national debt. It's most definitely NOT that the word "debt" and "deficit" sound bad. It's that IRS pie graph that shows that something like 30% of the budget goes to paying interest on the debt. That doesn't seem good to any tax payer. Please tell me why I shouldn't worry about that.

If deficit spending isn’t a problem in the US. Why tax the citizens at all? Why not create all the money for the budget.

MMT is a very interesting theory (which has other authors at the frontline). Yet, the high inflation in US and around the globe (I’m writing this commentary 7 months after the video was posted) challenge some of her assumption and prove that it is not so simple.

If she's an expert in monetary policy we are all in big trouble.

Our Interest payments is now bigger than our Military budget. We pay more for nothing than the largest and best military in the history of the world. Just pay our bills and don’t spend more than you take in. It’s really quite simple.

This lady will put the most powerful countries in the poor house

“We just had the shortest recession in U.S. history.” Well that didn’t age too well.

TLDR; Ignore the debt, but keep inflation in check.

If the surplus is good for one group of benefactors, then equally true is it was bad for another group. The "other group" is the deficit, that needs to be filled.

Government: pay in taxes, or pay with inflation... either way, I'm getting paid

This is the talk I have long been waiting for an economist to make. We pay for wars without questions but can't fund people basic needs. Every country in the world in debt but it only ever seems to be use as a political tool.

To subscribe to this idea one must first make the very naïve assumption that government is a responsible steward of capital. It isn't.

“As a central planner, the question is not about money. It’s about what I, representing The People, want all of you doing.”

If Johnny can't read/write or do math due to equity, of what value is free college. But the good news is that the fed government charges 6% interest in all college loans. Counting on the government to distribute money will always be filled w waste and chronyism.

You will all feel the effects of implementing MMT- very soon.

She must have missed that econ class where they talked about inflation and how it decreases the value of our money. When you deficit spend you create money out of nowhere. More money chasing the same amount of products and services means the prices have to go up unless productivity expands. If the government spends all that productivity increase with deficit spending they are robbing everyone of a possible higher standard of living.

The key is value erosion with MMT the future generations will have to pay for this.

Excellent talk Stephanie and great job in writing the book "The Deficit Myth"! One of the most stunning things I learned about modern economies is that money is created when someone takes out a loan and goes into debt. I was well into my forties when I learned this about modern money. At first I did not believe it and it is certainly not what I was taught about money in my younger days. Modern money is mostly about getting governments, corporations, businesses and people into debt and there is also quite a bit of smoke and mirrors involved. The idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. The cruel joke is that the money given out for the loans that make up this debt does not exist. The money is created by entering numbers into the borrowers account when the borrower takes out the loan. As the loan is paid back, the money that was created for the loan is eliminated and no longer exists, but the institutions that created the money get to keep the interest that was paid. So, the more debt there is, the more money there is and the more interest that is paid to these institutions. The other cruel joke is to get a loan like this, most of us have to put up some collateral, so if you default, they can take ownership of your collateral. So basically, they get your possessions of whatever collateral you put up for free and with no risk since the money they “lent” you did not exist. Supposedly, this has been determined to be a legitimate way to do business! If money really needs to be created by simply entering numbers into accounts or printing it into existence, remember I am saying “if”, then the government should be the only authority allowed to create this kind of money for the nation without “borrowing” any from the private banks since they don’t have it either and just simply create it the same way the government would. This way the government would not have a national debt and would not be paying interest on money that private banks did not have. On the international level, debt has been used as a tool to gain power, status and influence over other countries for centuries. In the past century, the US perfected this technique. In the 21st century, China and some other countries have also learned this trick. Again, the idea is to keep the borrowers continuously in debt so they can continuously keep paying interest to the “lenders”. So if the country defaults, the “lenders” can take ownership of the country’s resources that was used for collateral. They get whatever collateral the country put up for free and with no risk since the money they “lent” did not exist! This is how America and the US dollar has been able to be the dominant player in the world economy but is now being challenged by other countries that have learned the trick. The banks should only be allowed to lend a percentage of money that has been deposited by their customers. If the banks do not have enough money to lend to corporations and businesses so that they can expand or continue to innovate, then the government can create the money to lend them and the government can collect the interest for these loans. This would also reduce the amount of taxes that businesses, corporations and individuals would have to pay governments. For these ideas to work, governments would have to be democratic and elected in fair and free elections which does not always happen! The strategies used to keep the economy growing is by promoting and encouraging borrowing especially government borrowing which of course creates more government debt. The Gross Domestic Product (GDP) represents the size of the economy which is the amount of money the economy is worth. When the economy is continuously growing, the GDP is also continually growing. Similar to any addiction, more and more borrowing is needed to have the same effect on economic growth. When the government debt starts to become greater than the value of the Gross Domestic Product (GDP), technically it will no longer be possible to pay back the government debt. If it continues, the buying power of money will start to be significantly reduced and if the government debt starts to become several more times higher than the GDP, the money and financial systems will probably collapse. If this happens, the system is reset and the cycle is repeated. During the run up there will be some good times but, after the reset times will probably not be good and war is also a possibility. This cycle has been repeated continuously throughout history from the Chinese Dynasties to the Roman Empire to Germany after World War One and to Argentina, Venezuela and to many African, Asian and Middle Eastern nations in the 21st century. If America with the US Dollar can avoid this cycle, they would be the first. The thinking that the economy always has to grow for there to be innovation, progress and prosperity will eventually become a problem on a finite planet with limited resources. This may have worked well in the past when communities and societies did not know the scale of the planet and the environment. I think the focus know needs to be on sustainability not on growth! There needs to be flexibility in the system for the economy to be able to expand and contract and for a contraction to be considered normal and not a problem or a failure and for the contraction to be just as innovative and prosperous as the expansion. For this type of thinking to work, there needs to be some new economic models developed along with some new types of financial systems. If the academics along with the economist, engineers, politicians, corporations, capitalists and entrepreneurs can figure some new economic models that are based on sustainability instead of growth, I am sure there will be some noble prizes awarded. The way this can begin and at the same time improve peace and fairness, is when our business, government and academic leaders along with our wealthiest and brightest and smartest among us can learn to be much more truthful, honest and trustworthy and much less greedy and also learn to avoid being bribed and becoming criminals and with the rest of us start to understand that the wellbeing and happiness of others benefits everyone and is the bases for morality. Capitalism is the best system with the best ideas but some of the ideas of capitalism need to be amended with the primary focus and objective being sustainability not growth. If people are struggling to survive or risking their lives fighting wars, they will not care about anybody else or about the damage and devastation of towns, cities and communities including the planet’s environment. They will also be much more aggressive and willing to commit crimes and behave in violent ways with animosity and hatred toward others that don’t look like them or do not share the same believes and values. I do not agree with all the ideas in these books, such as a basic government income for everyone, but “Doughnut Economics” by Kate Raworth, “Prosperity without Growth” by Tim Jackson, “Confessions of an Economic Hit Man” by John Perkins and "The Deficit Myth" by Stephanie Kelton and organizations like “The Centre for Advancements of the Steady State Economy” are promising developments.

THIS hasn't aged well as economic reality is crushing this new world thought process. Recession is the new reality as is fiscal irresponsibility, outsized inflation and deficits now matter. Time to retool the model Stephanie as the free/cheap money injected into the economy is now showing the contra results...welcome to the reality check!

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior justification for selfishness." John Kenneth Galbraith

Why exactly are we paying taxes?

An interview she did on Feb 8, 2024 titled “Was MMT right about inflation?” at 12:25 she says, “We are getting real GDP numbers that are eye popping”---She is ignoring the elephant in the room which is, how much debt was incurred to get those “eye popping numbers”? In 2023 the US government borrowed $3.2 Trillion, of which only $2.4 Trillion of GDP was recorded. The remaining $800 Billion generated ZERO economic activity whatsoever. She talks about the “multiplier effects” yet every 5 year period since 2006, GDP grew by much less than the increase in the debt which means that money vanished without generating any GDP activity. We would have been far better off taking the entire $3.2 Trillion borrowed and spent it entirely on battle tanks and aircraft carriers. We would have gotten at least $3.2 trillion in economic activity from such wasteful spending and that is with no economic multiplier effect, which is pretty hard to do. This consistent, horrific economic multiplier effect of less than 1, for the last 18 years goes against MMT theory. This theft from the US populace shows that government cannot, and should not manage all but the smallest amount of public money since they are evaporating money in a way that not even the Mafia could do.

Monetary easing is evidence of the reality of government deficit and government debt.

Adding dollars to the economy has to be done where there are available resources. Too many dollars created at once could drive inflation. Simple.

Most economists don't agree with her position. They understand that deficits are sometime necessary but they don't believe they should be limitless. The more money you create the more inflationary pressures you will have down the road. This is empirical science.

Good talk, if the goal is to enrichen the Banksters that we pay the interest to, for the deficits/debt we create. Asset-based currency prevents Bankstering.

What I took away from her speech is that things work better when the government is more involved. And things will work much better when government can exercise more control over not just creating money and allocating its use, but also control other resources such as raw materials, people, education and industry. Once that level of control is achieved we will live in a more perfect world. Why hasn’t someone thought of this before? Actually I think it may have been tried before - my memory is a bit hazy on this. Oh well, I’m sure *this* time our government will perfect the process unlike those in the past. Just trust all those in power.

This has aged like a fine quart of milk

Yes. Not how do you finance that but how do you RESOURCE that?

I get it now. That's why the infrastructure bill didn't do anything for actual infrastructure. We put all this money out, but we just lack for concrete and construction workers.

In a world full of anxieties, remember this verse tonight, “I will both lie down in peace, and sleep; For You alone, O LORD, make me dwell in safety.” Psalms 4:8

"when the country is controlling its own money supply, it practical can't run out of money". The Zimbabwe government used to think the same thing, the rest are now history.

I have been trying to understand the deficit for a long time. This is a solid start for me.

9:02, Lets just flip the graph upside down! Problem solved :)

Now we know why we have high inflation. Since when did economists teach that lunches are free?

"... finding the money to pay the things we need in a Country like USA or UK is never an issue..." The rest of the world must take note on "Contries like USA or UK". Because printing money have been the tomb to the economies of latinamerica for example.

High gov debt is a drag on the economy fuzzy math or not. Wouldn't we be better off with a much lower national debt (and the interest on that debt) and lower interest rates?

This is a really novel idea except when we invest money in students who receive college degrees in subjects that no one is hiring for. Or when we invest in roads and infrastructure like the I-95 project between Washington DC and Richmond that after 5 years of construction still isn't open. The problem is that we are spending our money on things are not yielding a good return on investment. Then the government is looking to cancel the college debt because the loan recipients can't earn enough money to pay off the debt. So we have unemployable college grads that never pay off the money invested in them, so the money is lost on all fronts. Those are not good investments. The problem with the federal government spending money is there is no oversight in how the money is spent, so her ideas are interesting but it is just a method of defending out of control spending.

I’d like to see her and Peter Schiff or Ron Paul debate on this topic

We need labor! Without labor, spending is pointless.

Yeah governments did extraordinary things . Extraordinarily horrendousl destructive things.

Speaking of surpluses, you know what you have, a surplus on natural resources and unemployed people waiting to work.