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I had the privilege of attending this lecture and I’m delighted that this recording has been released.
If mainstream media channels could have this aired on a regular basis, we wouldn’t have to listen to politicians spouting their economic nonsense.
Thanks for sharing this Richard and for bringing MMT framing into your discussions.
I’d have loved to be there
Thanks to your blog, Richard, I heard nothing new, but I met some wonderful people and glad I went.
Thanks for the link. Her time in London should prove to be a valuable contribution to advancing the macro-economic debate over here. She is inspirational. As you know only too well, it’s always frustrating to be ahead of the curve in any area of ‘life’. Analogies abound, so here’s another one. MMT-inspired ‘New Economics’ is moving from adolescence to adulthood. The transition is not be as smooth (e.g. logical) as one would like but it’s unstoppable.
“Progress is impossible without change, and those who cannot change their minds cannot change anything.” (George Bernard Shaw).
https://www.facebook.com/LBC/videos/10156245720231558/
James O’Brien doesn’t get it and he’s one of the better ones.
Thanks for Sharing
NHS spending
Perhaps I haven’t understand this point properly but SK seems to me to make a distinction between government spending that enhances productive capacity and government spending that does not. The former is like a free lunch in that increased provision of goods and services will “soak up” the extra money. However if more money is injected into the economy without the provision of more goods and services, prices of the scarce goods and services just rise without anyone getting any more of them: inflation. Therefore, this type of government spending will eventually have to be taxed back out of the economy.
When it comes to the NHS, I can see how providing nurses and doctors to treat working age patients enhances productive capacity but treating retired people – which accounts for most NHS expenditure – does not do so to anything like the same extent and ought to be treated quite differently from domains that unambiguously drive economic activity (social housing provision, infrastructure investment, etc.).
Did I misunderstand Stephanie Kelton?
You have misunderstood things.
What Stephanie was saying is that the economy can continue to use resources until all those that are unutilised are put to work i.e. there is full employment
She did not say that the benefit resulting has to be applied to those who are directly productive in themselves
I hope that helps
In the section on the Job Guarantee she actually mentioned this would enable more recruitment for jobs in adultcare . She then mentioned these recruits playing checkers with persons in care. One can just imagine Theresa May and Phillip Hammond spontaneously self-combusting when hearing this little gem from Stephanie Kelton!
What a great evening it was and very uplifting that this happened in London. Who’d have thought just a few years ago that such an event was possible! It was also a fitting and inspirational follow up to Fadhel Kaboub’s wonderful presentation at UCL on the Job Guarantee last month. Let’s hope it’s the beginning of a sea-change in economic thought.
It really matters that the public understands the basic statement that the government budget is nothing like a household budget. Only by doing so can we challenge the false economic narratives which are depriving people of jobs, increasing poverty and inequality, dismantling vital public infrastructure and the public services upon which we all depend.
Let’s keep PUSHing.
Dammit, I’ll do one in London next….
It’s really necessary for a fringe at the Labour Party conference!
Excellent presentation but all Guardian commentators seem to buy into the neoliberal consensus. Yesterday it was Rafael Behr today Gaby Hinsliff trotting out the how are you going to pay for it mantra. I feel uplifted when i watch people like Stephanie Kelton, Steve Keen or Bill Mitchell then i come down to earth with a bang when i read the MSM.
The Guardian has not got it
I agree….
Someone at the Guardian gets it, be it Randeep Ramesh or Larry Elliott:
https://www.theguardian.com/commentisfree/2018/jun/15/the-guardian-view-on-the-nhs-cash-boost-pay-for-it-with-deficit-spending?CMP=share_btn_tw
Clearly it’s not one person who writes the editorials because the other week there was an article saying the NHS didn’t need more money.
I think that is Randeep
The key soundbite for me was “We should use the budget to balance the economy rather than make the economy balance the budget”
I don’t often have the time/peace and quiet to listen to a whole presentation of over an hour…. but so interesting! I’m beginning to absorb this MMT theory but because it is SO DIFFERENT to how we have been told things work that it takes some time to absorb. She has changed my mind about a Guaranteed Income (that I was in favor of) because why would we give people money when there are SO MANY THINGS THAT NEED DOING that if the federal gov. can produce the money then it can employ everyone and the society can benefit as well as the individuals who have the joy of being productive rather than just collecting a cheque . One question. I thought there were rules against central banks/federal banks from just spending money directly into the economy… doesn’t it have to go through a couple of convoluted loops to disguise what its doing, like QE where I believe it had to first spend the money to buy bonds through commercial banks….???? This is the bit where I’m still confused. Can you elucidate? Thanks!!
QE effectively a work round of this rule.
The BoE creates an overdraft for the government.
It is cleared by the Treasury selling bonds and returning the proceeds to the BoE
But then the BoE creates new money by loaning money to its own subsidiary which then buys the bonds bak
The recipients of that money then deposit the money back wiuth the BoE.
The bonds have disappeared. New bank created money sits on the BoE balance sheet instead. And the government has no debt left.
So let me see if I understand; By “creating an overdraft “you mean that the BoE credits the government account with Amount X or it just indicates that it will be Ok for the gov to use X amount or that the gov has already used X amount?
The Treasury, that is a part of government sells bonds to.. the public/financial companies etc etc andreturns the proceeds to the BoE so at this point everything is as it was in the beginning of the process?
(So why go through these first two stages?)
Then the BoE creates new money by loaning to its own subsidiary..I understand the money creation through loans but who is” its own subsidiary?” and I assume that if it then “buys the bonds back” they were not sold willy nilly to anyone but to one original purchaser or is that original purchaser the entity responsible for supplying some public service/asset?
Is there a diagram for this! I’m still confused. Why is it so roundabout. Why not just have the BoE create new money directly by loaning it to the government entity it wants to provide a service/asset?
After reading todays news and seeing that Trump is about to spend an extra$500 B on the military while cutting taxes when they already have a huge deficit I am wondering whether the current US gov is already using MMT for the things it wants, fully aware that it will never have to repay, while pretending that it cannot afford/needs to balance the budget for public services? This brings me to another question. If MMT was to ever become mainstream what would prevent governments such as Trumps to just spend unrestrainedly on war, weaponry etc,while still short changing those who need basic services?
Sorry – too pressured today to provide a detailed response
Might anyone else?