Stephanie Kelton - “Finding the Money” & “The Deficit Myth” | The Daily Show

Sanie it's a fascinating documentary um I will say what you're setting out to do correct me if I'm wrong about fundamentally changing the way people view

money

yeah that's a great question and we have about seven minutes yeah I think a place to start is with mmt. right, mmt, if you can help us define what mmt is and I think what the narrative is with the narrative that you hope to convey with mmt, what the new economic narrative is, it's no longer getting up by your bootstraps, what it is. Mmt that tells us that in economics is widely known as the Dismal science because it has to improve on the brand.

Well, that's what MMT is trying to do better brand because you know that in Dismal science everything is about scarcity and we can never have the things we want because there is always a really intrusive problem: how is it going to be paid for, where is it going to come from?

money

and the problem is that we treat money like any other scarce good or service in the economy and what What mmt is doing is saying wait a second, we are no longer on the gold standard. We have this thing called fiat currency and that makes people nervous because a fiat currency opens up space and it's like waiting is money.

After all, it's real, and so MMT is an economic framework that attempts to have an honest conversation that speaks to people like adults, without insulting people by telling them to treat the government budget like a household budget and speak with disdain to the people we love. To be honest about the monetary system, today we have the government's ability to spend when you have a fiat currency and you are not tying your currency to gold and promising to convert it into something that you could run out of, like physical gold, so we are opening a conversation where there are still limits and there are still decisions to be made, but we can have an adult conversation about how the government can actually operate its budget when it doesn't face the same types of limitations as a household or a business faces, I mean, I guess with that I think that the big headline with this is also the way we look at what

deficit

means, right, yeah, like I hear

deficit

, you hear it on the news, you hear all the politicians talking about it, deficit equals bad.

And and the main narrative of mmt uh uh monetary, modern monetary theory is deficit good, right, every deficit is good for someone in purely financial terms and I'll tell you why, because you're right, we use this word and it inherently sounds like something. went wrong if someone is in a deficit, there's a problem, right, you don't want to turn on the sports game and find the announcers saying that your team will have to come back and overcome a seven-run deficit if they want to win. gambling is always a bad thing, right, but in reality, if you think about what the government deficit is, it's just the difference between two numbers, that's all, what a relief, I guess we'll find that everything is fine, well, that doesn't mean everything is fine, it's fine in the sense that it's just benign math like it's the difference between two numbers, it's not even higher order math, it's just how many dollars the government spends in the economy each year versus how many it mostly takes out through taxes, such simple math, if they spend $100 in the economy and only take out $90, we label it a government deficit and someone records it as minus 10 on the government ledger, what we forget to do is recognize if they put in 100 and you only get a 90 and someone gets a 10 so that the government deficit is matched or mirrored by a financial surplus in some other part of the economy this is wait, wait, did they meet backstage or something? mmt, what does mmt mean?

So it's modern monetary theory and again, currency we're not on a gold standard, we're on the Fiat of the modern Fiat era, what is Fiat? Is this a good car that should be purchased or what? what you carry around if you have some of these things in your wallet is a tax credit, so those dollar bills that we walk around with we think are money and we can use them to make transactions. It's used to buy and sell things, we can use it to buy goods and services, and money is good, it's good to have in general and it's really good to have when you have to pay your taxes because this is what the government expects us to deliver. at the end of the day and paying good money is good.

I'm with you so far, but, but, let's do this, what about the government deficit you just mentioned? And I said every government deficit is good for someone, why? Because it is simply a financial deposit in some other part of the economy the question is good for whom and good for what the government can increase its deficit to do things like feed hungry children address the climate crisis fix crumbling infrastructure all those things are ways of using a deficit government that could have desirable outcomes for the people and for the economy, so money is good, deficit is good, so far I'm with you, what's the pro, what's the bad, what's the The problem here, everything, a big part of the problem is the way that I've been taught to think about these things to try to eradicate the deficits, reduce them, see them as inherently dangerous, they're not inherently dangerous and, as I just said, they can be used to help us achieve important goals in the economy.

For example, if I go to Caesar's Palace and borrow like $200 on my credit card, I put it in the red and I lose everything that's good, that's bad, wait, why is that so bad? So, but doesn't it say the casino? What is good for the casino? Don't go to Caesar's Palace either, that's a little ghost first, it's bad, maybe go to MGM or just something, but financially that's bad for him, but it's bad for you, but the point is to try to figure out and understand what is. It's what we're actually capable of doing because we're always told we can't address the big problems we face, we can't address the housing problems or the education problems or the climate infrastructure problems.

Social Security and Medicare always come up and everyone always says the same thing we can't afford it, we have this deficit or we have this national debt, where are you going to find the money to do these things? Then mmt comes in and says look, it's not about

finding

the money, money is created when the government spends what Congress authorizes is the spending and if the votes are there the money is there what you have to take into account is the inflation so it's not like it's a free lunch there are no restrictions there are no limits there are limits and the limit is inflation, you can't run out of money, but you can run out of things to buy.

I mean, correct me if I'm wrong, but if I'm going crazy, this is your essential argument. It's uh, we're not trading back and forth like this, it's uh uh, a gold avatar in our pocket, the government makes money exactly, they can decide how much money goes out, you pay taxes, they don't need our taxes to fix . big problems can make a lot of money, it's up to them to figure out how to spend it and put it into the economy in a way that they can do big things and then private companies are the ones that have the money that the government just has. created that situation and inflation becomes the limit below which they have to act correct well done well done wait well, did you read?

Yes, she is a published author and created a movie and yet she won't do the research, but here's the kickback. here's the push to memorize the Wikipedia page, but here's the argument, this is what's so compelling and Ron is great, he's a useful idiot at this and, um, people are afraid. I don't know much about money and I think the narratives around money. uh teach me to be afraid of it, it's something we shouldn't talk about because I don't understand the basis of it and I think the compelling part of the argument is that we can and have discovered it like World War II. ways to create money and solve big problems, I mean we almost need a giant, we need something big to focus on to solve those problems properly and get the narrative around it, I think that helps and covid was that big thing. during a period of time when governments around the world suddenly stopped asking themselves how are we going to pay for it and what are we going to do about this deficit and just walked away.

I'll use the phrase the money bazooka, the right countries realize that they were going to have to spend a lot of money to shore up people's lives and livelihoods during the pandemic, which is why we spent about $5 trillion on the first 12 months or so of the pandemic and I wish the climate was It's going to be that catalyzing event that forces everyone to have that moment of waking up and realizing that we've been focusing on the wrong types of problems that we can actually address, the problem of climate change, that we can afford it, we have to observe. for inflation, sure, okay, so you're saying that mm mmt can be used to solve problems that we claim we don't have money for basically because the government makes money because that's where the money comes from, right? and you're saying, but you but doesn't that inherently increase inflation if you keep making money?

No, I mean, the government has been in deficits most of my life, with the exception of four years during the Clinton administration, the government budget has been in deficit. Look at a country like Japan. They have had huge deficits every year for the last 30 years or so and they have had no inflation to

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for it and we barely had any inflation. Inflation didn't really become an issue until Covid came and started breaking up supply chains and then wars. Ukraine and food and energy prices, etc., but you can have large and persistent deficits without having an inflation problem, it is when those deficits hit against the backdrop of restrictions in the real economy where the economy cannot keep pace with resources. and meet that demand and that's what happened in the copandemic and in World War II, so if it happened in World War II and it happened during the copandemic where inflation got out of control when we had, you had basically unlimited spending on a single topic.

Second War or Covid, so how can you know what evidence will work? So if we had two real examples, I'm just kidding. I have no idea what I just said. H. Someone just informed me about that and I just repeated it. So the evidence that it works is that MMT is a description of how government finances always operate, whether you have a budget deficit, a budget surplus, or a balanced budget. mmt is working by providing the explanation, so it's not about increasing deficits and running. With large chronic deficits you can have a healthy economy, in some cases with a relatively small deficit or even with a balanced budget, it depends on many other things, so the evidence that it works is a description and we believe that it is more honest A precise and precise description of the monetary system that we have and how governments actually pay their bills now as a I guess in theory, how this has a greater effect and affects our lives and allows great things to be done.

The Green New Deal was a big part of the path towards it being funded, we need to start looking at money through a proper mmt lens, that also presupposes that there is this paradigm shift that we start to see as a country, as a collective, we start to See the use of money differently. but getting people to have a coherent mindset shift in the way they view the world seems impossible from the experiences I've had on the road and at Thanksgiving, it seems that to what extent we live in a culture in which we can experience a paradigm shift or is that in itself an impossibility, I hope.

I mean, Tik Tok is there. I'm kidding, I'm kidding, we're going to get better, no, but it's things like this, right? It's conversations like these that allow people to hear a different perspective and I also think you know, look what over the last few years we've done. in some cases on a bipartisan basis and in some cases just with the Democrats, but we had the inflation reduction bill, which is the largest climate bill we've ever had in the history of our country, we have the chip bill and sciences than big investments in real productive capacity here in the US and the bipartisan infrastructure bill that fixes roads and bridges and you know, taking care of our infrastructure, so those are three big packages that I would say are just An extension in many ways of what the administration began to do with Covid spending and is just another example of how the government can mobilize financial resources to commit to spending. money that you don't have because the money comes from the willingness of Congress to say yes when Congress says yes and writes those bills legislation is the set of instructions that go to the government's bank, the Federal Reserve, and it says we have committed To make these payments, your job as our Fiscal Agent is to make all payments that we have authorized on behalf of the U.S.

Treasury.In the US and that's how government finances work, it's not more complicated than that, but we make it complicated with stories about taxes, loans, debt and everything else, but at the end of the day, spending is very easy to do, you see , you are a very intelligent person, you say things very calmly, thank you and everything seems fine, so how do we get to what people would like if they want to not be sad? When they look at the deficit, this is always their question, How not to be sad? How not to be sad? the deficit is okay and we can okay, so we're okay, so what's the next step?

Why would we say we believe in uh mmt or yes mmt uh what's the next thing I mean is believe enough? I have to pray to mmt and then what has to happen next? Who else? What has to happen next is that the people that we elect to represent us have to go in there and make decisions using the incredible power that they have called the power of the purse that they have to make decisions about whether to fund programs or cut programs, not because they believe that They should operate their budget like a household, but when these decisions come up about Social Security and Medicare or about continuing with the inflation reduction law and staying in the climate change game and going even further than what that legislation did, What I think gives me hope anyway is that we have

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n what we are capable of and that we can build on it and not go back to the old ways of thinking about austerity and the need to reduce deficits, because that's when it hits your economy, is when people lose a decade and that is when, suddenly, you know that the prosperity that is within your reach begins to grow.

It's out of our hands, so when the IRS comes to collect my taxes I just have to tell them my deficit is good, don't worry, don't worry, you need to know what you have to do, you need to take something. a little THC or some DMT and let the mmt wash over you, let the paradigm shift come to you Ronnie J uh yeah, I think I'm on this right now. I think you're on this, okay,

finding

that money will be rented at select theaters. Nationwide and On Demand May 3 For more information, visit Finding Money Film.com Stephanie Kelton