Professor Randall Wray - Modern Monetary Theory in the Time of Inflation

This lecture was recorded on 14 October, 2022, at the University of Cambridge.

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[bradchadley]

"I would reduce the role of finance in the economy." Music to my ears right there.

[josdesouza]

A true masterclass on real world economics.

[haveaseatplease]

Thank you for this video!
Thank you also to professor Randall Wray for a number of refreshing ideas in critical areas (fundamentals) of economy and society at large!

[detectiveofmoneypolitics]

Economic investigator Frank G Melbourne Australia is following this informative content cheers Frank 😊

[masonkerr]

That is not a direct quote from Fed's Jeremy Rudd. He was only quoting as an epigram from the movie The Dain Curse.

[Rob-fxdw]

Good one Randall Wray!! - Fancy someone quoting Samuelson. The same guy who in the early 1960's said that the Soviet economy which was almost half of the size of the US would overtake the US in GDP by the 1980's but no later than 1997 because it was a planned economy. That did not happen but the opposite did and the US economy outpaced the Soviet one even more. Again he repeated it twice when he said it would by 2002 and again by 2012. Well those events did not happen and the opposite happened to make the US economy many times bigger than the soviet economy.

[cecipalacios]

It is always great to listen to MMT great minds! There should have a clarification that Social Security retirement benefits are linked to inflation and since these benefits are reviewed annually the amount will increase in 2023 to match de inflation rate. As such the increase is not because the government wants to give a raise to seniors, it is just doing what it must be done each year! It appears that AOC has forgotten her earlier lessons as she does not talk about MMT

[johnb]

The sound is way way too low. Need every control on near max to hear it!!!

[DiabeticDawg]

Energy costs have risen dramatically. This effects the cost of goods. This is not price gouging.

[jones]

At about 1:05:00 I've been thinking for years that we treat Capitalism/The Market like we used to the Earth. Once we thought our planet was the center of the Universe, and everything orbited us. It was a complicated, messy and wrong model. But it held for centuries. Once we put the Earth in its proper place - 3rd rock from... Things started making a lot more sense. I believe the same is true for the 'Free Market'. There may be a place for that market in a functional/functioning society, but that place is definitely not the center of the Universe - which is, unfortunately, how we currently operate,

[SchrodingersCat]

Coming back to this in July 2024. MMT was right again and the Fed wrong. There was no recession, unemployment stays low, no drop in consumption even. There was very little pain... and yet inflation has been low and stable (3-3.5%) for a year now. Inflation expectations are falling, and as of July 2024 the Fed is discussing a rate CUT this year. I suppose some could argue the Fed rate hike staved off bad times/they got it just right and maybe but given everything else Wray said....seems he was prob right about it not being necessary at all.

[tspark]

I think the word MMT is not appropriate. What is modern?

[WaxMeister]

Where might I find a copy of the Government vs non-government sector deficit/surplus graph found at 10:27 on this video?

[m.h.f]

Temporary price hikes are not inflation, ongoing price hikes followed and then pushed by ongoing wage increases, is inflation.
Just price hikes without wages followed creates mass poverty without inflation, as we are here now.

[SchrodingersCat]

Wow, the Yarmouth comments are very shocking. I've heard from MMTers the story Wray tells, how every politician privately says I get it makes sense "But I cant say that" for someone, and in Yarmouth's position, to openly say it, maybe the times are indeed changing. I know in the 10 years from when I first started learning MMT to now there's been quite a shift in acceptance in my personal experiences with people. And the change in gov policy, big deficit spending, putting $ in states and locales, all the talk of long run supply investment. We may not all be MMTers now, (least publicly) but does feel we're getting closer.

[dkgong]

If we continue on this course, the interest on the debt will exceed revenues. When we have to deal with the consequences of that, I wonder what MMT advocates will say.

[mikealexander]

I find the explanation of inflation as a supply side issue problematic. Consider WW II. Over 1941-1945 *real* output grew at a 10.4%. The fastest previous rate of growth over four years was 6.2% over 1921-25 and 6.4% over 1897-1901. The rapid expansion of the economy demonstrates shows that the economy was capable of producing much more output that it normally does. And yet there was so much inflation that the government felt the need to invoke wage and price controls that clearly were effective since inflation exploded upwards as soon as they were taken off (inflation 5.4% over 1941-45 and 11.4% over 1945-47).

The conventional explanation for inflation at that time was war spending. The government increased its demand for goods and services dramatically in order to obtain the wherewithal to fight the war. In doing so bottlenecks develop. In the absence of this strong government demand, the other periods of strong growth showed very modest inflation of 1.4% over 1921-25 and 0.6% over 1897-1901. Inflation during wartime is a common observation. It was from such observation that the idea that deficits and inflation were related first arose.

[MengerMania]

How can Wray start a lecture on "Money Theory" without first defining "money?" Wray's final comments about the dangers of private finance scare the hell out of me. He does not understand how private finance should work in order to make valid criticisms of the existing system. He wants to substitute nationalized (legalized) counterfeiting for Bank counterfeiting. He does not understand the problems caused by fractional reserve banking and monetary expansion (whatever the source.) His proposals would decimate the market if fully implemented. Scary stuff.

[herbwiseman]

Inflation is the imposition of liabilities on society by those with the power to set and/or raise prices. It requires an ever-increasing transfer of assets from members of society to those who impose the liabilities and set the prices.

When central banks signal the private banks to raise interest rates additional liabilities are imposed on society and more assets are transferred to those setting the higher interest rates.

Thus in addition to the factors fuelling inflation, the means of combatting it ALSO actually increase both inflation and inequality because you facilitate the transfer of wealth to those able to set higher prices and interest rates.

Society then has to find a way to meet the two sets of additional liabilities which is easy for those receiving the assets but not for those on fixed incomes or lower wages. They have no trouble meeting the higher liabilities because they have our assets available.

There is no rule or law that says prices must go up when supply is diminished and demand remains the same or even climbs. We used to call that profiteering.

[TheCommonSNse]

This talk made me realize something about the demand side argument. If inflation is a result of excess money in the system, is that an acknowledgement that inflation is effectively price gouging?

If companies are raising their prices because people have more money and not because their input costs have gone up, that means they are artificially raising their prices above normal market value. They are effectively price fixing because they know they can get away with it.

If you argue that scarcity is the reason the prices are going up, then you are admitting that it’s a supply side problem. You don’t have enough supply to keep up with demand, therefore the cost goes up.