Modern Monetary Theory. Understanding 'MMT'

Modern Monetary Theory is a controversial economic theory that essentially states that large, stable, currency-sovereign nations can run large deficits over sustained periods to fund everything from military and infrastructure spending to social welfare programs - without inducing rampant inflation. There's more to it than that, but that's the basic underlying principle. Today's episode examines MMT in the context of the U.S. debt and deficits.

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ABOUT UNFTR
Unf*cking the Republic (UNFTR for short) is a longform podcast that covers U.S. politics through a progressive socioeconomic lens. Each episode is a deep and delicious audio dive into a particular subject that helps explain how we arrived in Bizarro America, the funhouse mirror version of what was originally intended. The UNFTR YouTube channel is designed to break some of these larger concepts into smaller more digestible pieces.

#Politics #SocioEconomics #AmericanHistory

[Joules]

MMT is not “in use” nor has it only been “around” since we went off the gold standard - it just describes how all economies work, even nations on a gold standard or pegged to the dollar, not just for countries with stable sovereign currencies.

You might want to actually invite Kelton or another actual MMT academic on your program to explain this better.

Appreciate that you’re trying, but there are some things still missing in your explanations.

[umacarrot]

Couldn’t wait for you to pontificate on this subject. I’ve been interested in it for quite a long time.

[northernepicadvenure]

Someone ask Mitch Maconnel "you're telling me America isn't powerful and rich enough to give health care?"

[chrisx]

As a non American … mmt feels a bit like …. Me me me ….bugger everybody else.

[pdhud]

If MMT is right, then why did the US make a deal with Saudi Arabia to price oil for dollars, creating the petrodollar? Being the world's reserve currency allows the US to export its inflation to rest of the world and buy resources from other countries for simply printing dollars.

[john-lenin]

Kelton is afraid to talk about the true implications of MMT so she tries to shoehorn the discussion into traditional economics. Money has no value at all, no matter how you look at it. It's just an abstract way of allocating resources. All debt - both public and private could be eliminated (as was done historically with debt Jubilee.) The government could nationalize all the banks and provide interest free loans to everyone. (And since a loan payment to the government is no different from a tax payment, In reality, the government could just make everything a grant.) We don't need local and state taxes. The government could fund all of those, too - as long as there are enough workers and other resources to accomplish the work. So we don't need a financial or a monetary policy, we need a policy that allocates Resources.

[kathleendimartino]

I'm admittedly a slow learner, but I think I get it. I'm halfway through "The Big Myth" by Naomi Oreskes and Erik M. Conway. How about a little book love for this one?

[iainsneddon]

I've been following unftr for ages on the podcasts, loving move to YT. Keep up the good work enlightening us guys!,

[johndoh]

I love this YT channel so much!!! This is a good talking point: the government doesn't need to have money to do stuff, they just do it.

[RLIUI]

This is one of those facts I came to terms with years ago; my father and I used to debate constantly. I continue to be pro-MMT, but one note you brought up in passing that has created a question: What happens when we have a perception change due to loss of trust in government's ability to function effectively? [I don't believe BRICS will be successful in their desire to overtake us; we are more likely to be our own demise]. My ultimate hope/belief in the trifecta's design will save us from ourselves....currently, the judicial system will need to play Atlas' role until we can get back on an even keel.

[ProgressiveMastermind]

Unfortunateöy, Japan doesnt apply MMT either, despite having no problem with large public debt and low interest rates 😡

[anthraxfan]

Love MMT and the book. This needs to be screamed since no one is listening right now.

[StephenKenW]

I love your videos and other channels /podcasts like it. I just wish the other media wasn’t so dishonest in their takes on conditions and solutions. It is whiplash going from this channel to hearing conservative radio or glancing articles that are void of common sense or morals.

[glideking]

Brilliant! You had me jumping up in my seat. Very well done.

[quaifranklin]

Thanks so much for this explainer. I'm going to have to view it again just to make sure I understand the main points. I'm also in the middle of Stephanie Kelton's book. It's a great read so far.

The whole concept reminds me of my own thought process around money that began in my teen years. To me it is obvious that money/currency is a concept and its value isn't found in actual denominational notes or bank balance. It's all in perceived value in terms of what it can be exchanged for. In my mind MMT spotlights this fact as malleable in a nation whose economy is as large as the nations you mentioned. Economies are all about the allocation of resources and so many of us seem to be fully indoctrinated that capitalism is either the only way or the best system to allocate resources. Fortunately, there are those of us who are opening our minds to different types of economic systems that aren't built around racism, exploitation, violence (emotional and physical) etc., but instead would be designed to reduce those harmful effects and generate widespread prosperity.

After all, humanity as a species has survived and become as powerful as we are because of our ability to cooperate and form communities, which requires communication. It just doesn't make sense to have an economy built around individualism, competition, and communication that is restricted to strategic positioning.

[romtp]

So the Federal Government then can spend any amount of money on what ever it wants and rely on taxes to curb the inflation that might result from it. Sounds like a centralized planning of an economy. The problem is, we've seen that not work time and time again (USSR, Venezuela, East Germany, Vietnam, etc.). Also, what if the rest of the world decides a different currency is a better investment and no one buys bonds from country accumulating massive debt? What if the existing outstanding bond interest cannot be serviced? More money needs to be printed. But like anything else, money or tangible goods, the more there is of something, the less perceived value of that thing. I can understand more of the resistance to MMT than I can for supporting it.

[peterprescott]

1 year later and nothing that you have said is true anymore. You have a huge deficit in understanding of economics.

[andersbenson]

Great follow up explainer after the debt ceiling and student loan videos!

[Robis]

Taxes ARE necessary. This is what MMT get's wrong. The only reason why markets buy up US debt, is because US government has 21% interest on profits of all US corporations, and 37% interest in incomes of people in USA. That's it, that's why they can issue debt, because they will be able to refinance it later, as they have income stream from taxes. It works like every other corporation, except that other corporations have to make profit, government will have income anyway all the time because of the taxes. And it gets better, because they spend most of that income into the same economy, that people and corporations are operating, and it increases their profits and wages, which from government then collects more money. It's a vicious cycle. If they would stop collecting taxes, no one would lend money to the government. Until MMT people understand that no one will take this theory seriously. It's stupid to say, that taxes are not necessary. Au contraire, the countries with higher taxes have better quality of life than USA with lower taxes, because they use it productively.

[jarrodf_]

Thanks eff there are some rational, liberal, economically-sensible, non-reactionary people still left in the world. As an Aussie, looking in, it's a tragedy what the psycho neolibs got away with over the last 50 years there; everywhere to some extent, but the US (and UK) in particular.

When I travelled to the US I was honestly shocked at how shittily working people get treated there: no sick leave (the rest of the world gets at least 10 days); no annual leave (the rest of the world gets four weeks); no public healthcare (the only developed country in the world); declining mortality rates (again, uniquely US); declining real wages; highest infant mortality in the developed world; insane college fees; mass incarceration; insane wealth inequality, etc etc.

Get the money out of politics. Bring in first-ranked voting. Above all, give the neoliberals hell