Bernie Sanders’ 2016 Advisor On Modern Monetary Theory

Bernie Sanders’ 2016 Advisor On Modern Monetary Theory

Modern Monetary Theory (MMT) is gaining traction in American politics, energizing the progressive left and roiling deficit hawks. Stephanie Kelton, who advised Bernie Sanders' 2016 presidential campaign, explains the basics.

She also talks about 2020, saying Democrat presidential hopefuls are swinging for the fences with ambitious policy proposals while Trump appears to have changed his thinking on the deficit and debt since his 2016 run. On headwinds facing the economy, Kelton says she sees an "extraordinarily resilient" U.S. economy despite a "real" global slowdown and a small chance of additional rate hikes from the Fed.

With U.S. government deficits increasing again and big spending plans coming from potential Democratic presidential candidates, we thought it would be prudent to have a conversation with Stephanie Kelton. She's a proponent of Modern Monetary Theory (MMT), the economic rational cited by rising political stars like Rep. Alexandria Ocasio-Cortez D-N.Y.

Kelton currently works as a professor of public policy and economics at Stony Brook University. Previously, she served as chief economist for the Democrats on the U.S. Senate Budget Committee and was a senior economic advisor to Bernie Sanders ' 2016 presidential campaign.
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Bernie Sanders' 2016 Advisor On The Economy And Modern Monetary Theory

53 thoughts on “Bernie Sanders’ 2016 Advisor On Modern Monetary Theory

  1. Do you think the government spending more money than it raises in taxes is a problem by itself, or only if it results in inflation, as Stephanie Kelton thinks?

    1. @cnbc are you actually asking folks if she’s correct?..as opposed to what we have now? Then again why would a system point out its own flaws.

    2. MMT offers a more accurate picture of how government spending actually works than more mainstream economics, such as Friedman’s Monetarism. The outstanding question for governments which accept it and use it to influence fiscal stimulus is how to accurately assess the Inflation Risk of such spending (11:25).

    3. As long as the newly printed money winds up in the pockets of the banks and the richest 1%, NO. No risk of inflation 🙂
      Stock owners and people with assets look forward to more insane money printing, so they can enjoy see those without assets have to work even harder.

    1. @M E I love Jimmy, but he is WAAAAY behind the curve on MMT. If he were on the actual cutting edge of it, he wouldn’t shut up about it. Ever.

    2. Xyz Same good info, thank you. This is what I was looking for.

      The whole reserve currency thing is interesting. I asked my PhD Econ professor about it and he basically said reserve currency status had little economic or monetary effect, and hadn’t even heard the basic petrodollar motivating foreign policy idea. Not at all saying he’s right, or that academics are always right (studying Econ showed me how deeply untrue that is lol), but I would like to see some academic work on it. It makes sense to me but it’s strange that it’s such a widely accepted idea in fringey circles and online, and seems literally just entirely absent from other arenas

    3. RuinDweller I’m pretty tired of jimmy lol. I don’t watch him much anymore tho I wanna see his live show. But he doesn’t put the work in to educate himself on most issues. He does have good and unusual interviews often w people who do know tho

    4. @M E She’s been ” a fixture” in economics long before Jimmy Dore had her on—but I still applaud Jimmy Dore for giving her the platform she deserves. Kudos to “the jagoff comedian”.

    5. D Personal you can’t just dismiss people’s arguments by claiming they’re DNC talking points. I support the Green Party, but reactionaries like you don’t do us any favors, and attacking allies on the left like Bernie is just counterproductive. Your holier-than-thou attitude is what prevents third parties from growing.

  2. This is the first time I’ve seen Japan presented as an example of things working well economically. Usually they’re presented as a cautionary tale. Interesting stuff to contemplate here. Basically the problem with previous QE is that all the money wound up with corporations and stock market investors, not reaching the real economy. So all the inflation wound up in the stock market. So the trick is to stimulate the main street economy (investing in infrastructure, education, R&D, etc.) but vetting each policy to make sure it doesn’t cause inflation.

    Result might be Japan’s situation of a stagnant stock market for decades, which hurts the rich, but lots of benefits for the working class. If we shore up social security to make the working class less dependent on the stock market for their retirements, then we further protect the working class from necessary contraction of the stock market to deflate the bubble that was caused by the last QE. Maybe the reason we haven’t been considering these ideas in the government is because those who hold/make great wealth in stocks have controlling influence over our government. Time to change that.

    1. Japan has one of the slowest growth, highest suicide, and no way to sustain it’s own resources like defense. It takes alot of out side support for a culture like that to exist.

    2. Conscious Crypto Japans only problem is its Demand, the real wages doesn’t grow, and have to steadily fight Deflation. Also the Companies are Savers when they used to be Debt takers, now it’s the government role.

    3. Conscious Crypto How are middle class Japanese living though? Never been there but I heard they live quite simple lives, materially. That may be due to astronomical housing costs though

    4. Once the Central Bank, or the Fed, enters the Market it is virtually impossible for it to get out again — that is the end of the Market.

    1. @Mathew Sanders would be better advised by people who have defected from Wall St (Nomi Prins, Jordan Belfort), former Finance Ministers (Varoufakis-Correa), and nuanced entrepreneurs (Andrew Yang – assuming he does not win the nomination). They support him (Sanders), actually know the ropes, and can design policies to curtail corporate welfarism, and privatization-of-gains-versus-socialization-of-losses behavior (i.e. Socialism for the Rich), which is the real scam of capitalism, the only system that have brought mass consumption and unstoppable development of science and technology (USSR-Maoist China-Eastern Bloc-Cuba already proved their economic mediocrity, at best).
      MMT is a theory, with very little (yet) factual basis, no different from other political ideologies masquerading as economic schools e.g. Austrian Economics. I believe academics like Kelton are not going to bring much to real life, but who knows, I could be wrong. And Sanders would help himself if he wouldn’t sound like a broken record with “the top 1 % GRRRRH”.

    2. @MathewA Sanders presidency can easy slip into inflation, not so much by increasing government deficit and debt, but due to supply constraints (now I am sounding like an economist).

    3. Meaning that if Sanders attacks or threatens the profit motives of the entrepreneurial class, they could shrink production or shift it elsewhere. Couple that with a Sanders administration’s proclivity to give money away. Would that mean inflation ?

    4. Jorge Ponce so it sounds like the problem is we’ve allowed a tiny handful of people to become in control of production? Wouldn’t that be solved if we collected their assets through taxes and then democratized them for more efficient production?

  3. I like the format of this type of video journalism where it’s more about the content of the answers than the interviewer.

  4. That makes no sense, just because someone has good credit, they should spend away without worry about being able to pay the debt? We do still sell bonds to other countries right? The deficits lender is not US citizens, so if they get liquidated, dollars will fall.

    1. @D Nickaroo And yet there is no inflation worth speaking of so what are you talking about? You can manage inflation trough growth but since we give all the new money to those with money there just isn’t much growth either.

    2. @Pieter Steenkamp The true Inflation Rate is over 10%. It is a big problem when the correct figures are not published. Trump kept parroting that the US had the “best Economy Ever” when it has been moribund since 2009. The US economy is incapable of the Growth required. The US can expect deflation as it goes into a 1930’s Depression and then inflation or hyperinflation. This is someone who knows what they are talking about: https://youtu.be/NEnuWv38urI and https://youtu.be/Zebg-jBf3BE

    3. Government deficits add to our savings to the penny, if the government deficit last year was $1 trillion it means the net increase in savings of financial assets for everyone else combined was exactly $1 trillion

    4. mrmilkoil the inflation is in asset prices (aswell as the stock market) and massive amounts of excessive reserves banks are holding at the fed as the fed pays interest on reserves as they know the disaster that will follow should this fake liquidity flood the market. Don’t be fooled by these mmters who say there is no inflation, as they are normally referring to consumer price indexes which is a terrible measure to be using to interpret our monetary issues. If you want to see just how excessive all this money printing is getting just look at the feds website and have a look at their stats for the different monetary aggregates.

    1. @Cameron Are you kidding me? You don’t see any issue with paying people to do nothing? Money is only valuable if there are goods and services you can actually exchange it for. If the economy is virtually shut down, as it is right now, there are much less goods and services available, so each individual dollar becomes worth less and less with each new dollar they print. MMT is lunacy.

    2. Larger and larger amounts of Debt have to be created by the Fed just to keep the system going. What she says is already out of date. The Stimulus Bill supplies “unlimited $Trillions” which is being used to Bail out Banks and large Corporations. (The Stimulus Bill was passed unanimously by BOTH PARTIES). This will see the biggest transfer of Wealth in history, leading to a society of impoverished peasants ruled by Billionaire “Lords” and “Barons”. There are now 50 million Americans unemployed , which surpasses the Depression of the 1930’s

  5. 0:20 “I don’t think there are very strong indicators that a recession is imminent.”

    *CORONAVIRUS HAS ENTERED THE CHAT*

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