Is Money Even Real? An Economist Explains | The Problem With Jon Stewart Podcast | Apple TV+

Listen to the full episode:

Money is basically a lie we tell ourselves so the world doesn’t implode. In this week’s podcast, Jon talks to economist and former President and CEO of the Federal Reserve Bank of Kansas City Thomas Hoenig to get to the bottom of our national debt.

Listen to The Problem With Jon Stewart podcast on Apple Podcasts, where available.

Subscribe to The Problem with Jon Stewart’s YouTube channel:

Follow The Problem With Jon Stewart
Instagram:

Twitter:

Follow Apple TV:
Instagram:

Facebook:

Twitter:

Giphy:

Follow Apple TV+
Instagram:


Apple TV+ is a streaming service with original stories from the most creative minds in TV and film. Watch now on the Apple TV app:

#TheProblemWithJonStewart #Podcast #AppleTV

[mathewwillner]

I love Jon in this format. Because so much journalism seems predatory. I like that he keeps it civil, that he allows the guest space to open up. We end up getting much better information, and we get some tangible ideas to look at.

[helenpatterson]

LOL.... over 50 years ago ( when there were no free school lunches) my little brother had a friend who was hungry, his mother had died and his father was disabled, and there were many children in the family. My little brother took his lunch ticket and diligently made a copy and gave it to his friend. This continued for over a month before the people in charge of the money figured out what was going on and both 3rd graders were in the principal 's office and parents called in. My little brother was adamant that the tckets he had drawn were every bit as good as the ones they had printed, in that people couldn't tell them apart.
Try to explain the concept of printed money to a child.
No...he didn't grow up to be a forgery expert. He is a carpenter....you know, like the guy who said feed the hungry.

[s.h]

The reason why bills were called - and are still called, in some countries - "notes" i.e. loans, is because having cash means the government OWES you some equivalent of whatever that money represents. It's nothing in and of itself without an institution owing you something for it.

[quidambrujah]

I listened to the entire audio podcast and I loved how Jon asked several times ‘why didn’t we just bailout homeowners instead of the banks’ and Hoenig just blows past that with ‘because we didn’t’ and doesn’t actually answer the ‘why’. This is why you can’t revolving door the people who run Wall Street and the banks into roles of governance over Wall Street and the banks.

[johnnyoddyssey]

As a financial specialist, I actually still understand where Jon is coming from in this 💯😂

[JoeMama-oqwl]

I love that, "ok, you can levitate, but you Cant spin around"...😂😂😂😂😂

[Burnzg]

When i studied economics, profesor told us, that it's why banks and churches both use so much Marble, to make us feel our faith is solid.

[haliensexist]

I need to see more with Hoenig! He's patient and tries to explain things for the average person to understand. It's very hard to do with this subject but he's trying and I appreciate that!

[kuttermcneil]

This guy didn't really do a good job of explaining any of this to Jon so here we go.

A symbol is some thing that represents something else. Money is a symbol. Previously, when we used the gold standard, every dollar was backed by gold (backed by real assets). So if you had $100 bill, there was $100 worth of gold in fort knox that was represented by that bill. Coins were minted in valuable materials (copper, silver, etc) so that each coin was worth it's own materials (roughly). Gold and other precious metals change value though. So the $100 of gold might be only worth $90 one week and $110 the next and yet the symbol (the $100 bill) stayed only worth $100. It's not good if your money isn't worth what you say it's worth week to week so we got off the gold standard. This is what he means when he says money is debt. As soon as the government puts the $100 into circulation, the government owes you that gold bar and the money is the IOU ticket for it. Well if I only have $100 in gold and I print $200 dollars worth of money, then even though it says you own $200, in reality you own 100÷200=.5 or your $100 is only worth $50 of buying power. This is roughly what inflation is. Your $100 symbol (money) can't actually buy $100 of goods. It's only capable of buying $50 in goods even though it says $100 (Mind you this is a very general, broad, and simplistic explanation of inflation). Well as stated we're off of the gold standard, so we dont print $200 dollars for every $100 of gold. We print (or insert ridiculous number) of bills even though we have only $100 in gold. The US government though says "Trust us, we're good for it" and they destroy tons of money (in order to cut down on the bills (IOUs) in circulation) as they print more. So the money that is printed isn't backed by anything real anymore. It's faith based. You trust that the government is able to pay It's debts (which is why nations have credit ratings). So when you buy government bonds you give the government It's IOUs back (take debt out of circulation becauseyou can't owe yourself) for a time and in return you get a few more IOUs back than what you had. When the feds raise interest rates they also collect some of their IOUs back but unlike with bonds they dont have to pay anything back. So this fights inflation by making sure there are less IOUs out there. Now we get to the modern banking system which is digital. So you give the bank your faith based IOU and in exchange they type in a digital number saying how many IOUs you own. A digital number though is a symbol of what's supposed to be in the real world. So you have a symbol that is a symbol of the trust you have that the US can pay off it's debts. Because the bank doesn't keep your money. It loans it out. But all of that money is backed (to a limit, FDIC) by the government (they can always give you more IOUs). This is where crypto currency comes in. It's digital so it's only worth the money that people pay for it. So it's still a symbol of a symbol of a faith based system but because each one is unique you can't endlessly make copies of it like you can of other things that are digital. So it should (in theory) be able to be somewhat regulated and stable (kind of). I suspect that in a decade or so the US will also have it's own government backed crypto along with other nations and then we'll have a rise of new economists that also have no idea what is going on.

[jasonwaltman]

He said the words. It's all about faith. Currency is only as good as the confidence you have that someone will trade you something you actually want for it. Finally someone said it.

[Wickwok]

Most of the US debt is actually owned by the United States in the form of bonds and loans. China owns a substantial sum but they are locked into the spiral with us. If they call in the debt they’re production focused economy looses its main consumer. Our biggest problem is countries moving off the dollar as the world standard for trade.

[nancyyclu]

Christopher Leonard's book Lord of Easy Money is a good book explaining Jon's question and putting the complexity of the Federal Reserve's function in simpler terms. Highly recommended.

[bobsondugnutt]

Almost got there at the end! ALL money is faith based, even gold. You have to have faith that those around you will keep valuing it.

As a side note, very impressed by Stewart's thought processes on this.

[jf]

I love the genuine attempt by Stewart to break this down with the guest but seriously more confused than when I went in 😂

[george_santos]

I think the best way I understand it comes from my time working in retail. You can't pay off a credit card with another credit card. Both are forms of debt. If you do this, you're just changing who you're in debt to.

[youtubeviewer]

Can’t believe I’ve been sleeping on this show. Time to get caught up. Love seeing John back in the spot light tackling these, as John put it, “Mass delusions” we blindly accept as daily life.

[athena]

"Money *is* debt, Jon." That's all he had to say in plain English. When someone like Mr. Hoenig has been speaking in academic and financial jargon for decades, it gets harder and harder for them to say the truth plainly.

[VotePaineJefferson]

Money isn't debt. CREDIT is debt. We run a global financial system on DEBT and deficit financing. We USED to run it on GOLD and SILVER.

[sonika]

That's what I 💕 about Jon Stewart. He makes me (and probably others) feel less stupid for having the same thoughts by putting them out on air.

[axthelm]

I was waiting for Hoenig to say something about *using* that "trillion dollar coin" and I think that might have cleared up the confusion. The way I think of it (and I'm not sure if I'm right) is that if we "buy" back the debt from China with cash then we are giving them money to put back into the system to buy things. That is the "exchanging of debt" he kept saying. It means we are getting rid of debt by giving them an IOU (which money can be seen as) of our China can then take that money and buy companies, resources, stocks, more bonds, loans, etc. that removes value from American. If we say "no you can't buy things with that money", then it devalues the dollar (hyper inflation) which hurts us just as bad as not paying our debts. At some point we may have to take money out of circulation by selling an asset that the government owns and then just destroying that cash. I think economists are still unsure if that tipping point exists or what its debt-to-GDP ratio is.