How Modern Monetary Theory (MMT) Actually Works (w/ Warren Mosler)

Modern Monetary Theory has become a hot topic of discussion. But is it well understood? In this interview with Real Vision’s Ed Harrison, Warren Mosler, the founder of MMT, describes exactly what Modern Monetary Theory is, and how the framework can be utilized. Particularly interesting is Mosler’s ambivalence about the political furor enveloping MMT. He sees the economic framework as more descriptive of monetary operations than prescriptive of policy. Mosler also outlines why MMT’s operational bent made it attractive to finance professionals long before it became a politically-charged debate among academic economists and politicians. Filmed on May 29, 2019 in New York.

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How Modern Monetary Theory (MMT) Actually Works (w/ Warren Mosler)

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[nateo]

BIG upvote for putting the original air date up there. Helps alot.

[unrealspetznaz]

The interviewer was versed in the subject, and had evidently read about Mosler and his work. Compare him with the guys at CNBC that when interviewing Dalio show not ignorance but stupidity, and interrupt him constantly. THUMBS UP RealVision

[העבד]

Guys, don't dislike a video just cause you don't agree with the opinions in it, this video still has a ton of educational value.

If you listen to the insights this guy provides, they are very correct - like saying that Central banks printing money and buying treasuries to control interest rates, all while GOVERNMENT issues treasuries is just an acounting trick- since what really happens is that the government is printing money and then lends it to itself.

Also take note at 33:21 there is no refuting his logic, all this guy is proposing is that we cut the acting and just admit that the government prints the money etc... he just proposes it to be honest, essentially on the logical side of things- NOTHING WOULD REALLY CHANGE.

[jimboamars]

I love how some people dislike what he’s saying in the comments but can’t really articulate a coherent method of critiquing the theory lol

[YourBestFriendforToday]

That rug really brings the room together.

[Chaka]

How do we protect ourselves from economists who refuse the learn the lessons of history?

[jamesmatthew]

This used to be called inflation or currency devaluation. MMT is just an attempt to rebrand something everyone knows is bad as something benign.

[ollywright]

EU-level investment bonds prediction now coming true. Well done.

[jonathanstringer]

Don’t agree with MMT. But glad Real Vision brought him on and heard him out.

[Peter-tgzv]

As I understand MMT simply states that you’ll always have regime provisioning itself thru fiat money backed by taxation. How wisely it provisions itself and invests in its people and is a separate issue entirely.

[jimmythecactus]

Bertrand Russell said the best way understand a concept is to listen and buy into someones argument first, then critique it second. Sadly lacking in comments below!
If you just look for confirmation bias then you will never expand your knowledge.

[austinrogers]

Man, I'd love to see Lacy Hunt and Warren Mosler in the same room. They are similar in that they don't believe more debt will equal higher interest rates, but they radically differ from there.

[crimony]

Countries with debt to GDP ratios of 140%! "this is insane. It cannot work. It'll work fine on the way up, but as soon as you hit your first crisis." 14:42 USA GDP is now 138%.

[soulmate]

MMT = Rearranging numbers around until it fit the equation.

[mrDmastr]

The only problem with MMT is getting people to realize that it’s real. They have been grossly trained to believe in classical economic policies that should of died in 1971; but didn’t.

Outside of that MMT is true and accurate as the sky is blue; but some people are sky green people, even though it’s right in front of them.

[shaileshdhuri]

I started India’s first Money Market Fund when I was 26 years old. Then I became head of one of the first Primary Dealers in India when I was 28 years old. Then at 31 became head of treasury for a French bank india ops. Saw the process of money creation, accounting entries and effects on rates and exchange rates every day from three different perspectives over seven years. I agree that merely printing of money does not cause inflation. When aggregate demand exceeds aggregate supply, it causes inflationary pressures. If one is using government spending to remove constraints in the economy, it can actually lower inflation ( although government spending on mindless subsidies will increase inflation )

[yoshi]

"Treasury has been instructing the Fed to credit accounts since 1913, hasn't created Zimbabwe

[nottheguardian]

Nobody wants money. They want what money can buy. So however you manage the money supply you have to start with that central fact.

[BrianLewisJustin]

You guys should probably address the hyperinflation cases, you keep getting that response from people. In each hyperinflation case, production in that country was devastated. Each country could not support itself from a production standpoint.

[leonardpereira]

This guy was not specific - he seems to understand how it works, but doesn't explain well. That Stephanie Kelton is more clear on explanation.

Bottom line, is spend now, tax later and as long as the debt to GDP is under control, and we have inflation in check, we will be ok.

Inflation is in check for now, because the Fed is buying all the Treasuries available for sale, providing liquidity for the market. That 10 year Tres Note yield is important. The Fed has to make sure it doesn't go up beyond 2-3%.

So if the yield on the 10 Year Note starts to rise, it means people that own these notes are SELLING creating upward movement in the yield. When they sell, they are creating cash for their accounts. BUT if there are no takers for the notes, the Sellers have to drop their Ask price. When sellers drop the ask price, to get someone to buy their notes, it means they concerned that the US may not pay the note - or the threat of inflation. They want to beat that inflationary curve.

However, when the Buyers for the debt drive the PRICE of the US Tres debt down, by not stepping in, the Fed basically prints more money to provide the liquidity and buys all of the debt in the market.

There are two opposing forces that the Fed is attempting


A) the control on inflation - by keeping it under 3% - we continue to have a society based on debt, and people work to pay off debt.

B) The control on deflation - the thinking is that in deflation, people will delay their purchases in anticipation of prices going down. Example when gas prices are going down, you may wait for the next week to purchase cheaper gas.
Deflation means money in essence is "destroyed" is the term used. And that's leads to inactivity in the economy. These are on broad terms.


However, Technology has been a deflationary force example - TVs gone down in price, you can buy more memory for cheaper and computers cost less today, than they did years ago.



So really, with the complexity of the US Economy and the behavior of people's spending patterns - NOBODY really knows. Economists and University professors break their heads in these discussions. We can only LOOK BACK and determine the outcome.