Modern Monetary Theory – Say What? | Nicole Sandler – Radio Or Not

55 Responses

      1. @chewitup,
        I don’t know why I put that in as a reply other than to keep it at the top of the comments section. Don’t want people wasting time searching.
        Agree about the interview. I think this was Warren’s best yet. Relaxed and conversational.

      1. @WARREN MOSLER,

        I’ll be trying to get his attention on Facebook.

        I really, really, really like Buddy…until he starts talking deficit nonsense.

        Anyways, will post info if anything comes about.

  1. Great!

    Don’t you have the feeling the intervals between Warren’s public appearances are getting shorter and shorter lately? Nice trend.

  2. excellent interview, warren!! see how easy (and quick) it is to get your points across when you’re being interviewed by someone who’s not adversarial and will not interrupt you when you try to make a point that they have a problem with.

    anyway, this is the best one so far!! keep up the good work!!

  3. Thank you all for putting the time mark where Warren comes in. This lady is UNBEARABLE! She should not be allowed to have her own show.

    1. @Broll The American,
      Agreed. Used to listen to her on my way to work years ago just to get relief from sports + conservative talk. She’s completely clueless about economics. Wished someone from MMT would come on her show and set her straight and ,incredibly, Warren, of all people, has done it. Amazing.

    2. @Broll The American, She was not unbearable in this clip. She represents the average person who doesn’t uncerstand this. She was asking ordinary people’s questions, and represents their confusion about the economy.

  4. wonderful interview. I like listening to your chats with non-economics types because it’s useful to see how you approach examples etc. that I can also try to apply in conversations about MMT. I still love using the ‘hut tax’ example to intro because it shakes people out of the paradigm of who or what controls money and what its purpose is.

    1. @jason m, Yes, taxation is how they ‘turn litter into gold’ as Warren says.
      But most people hold a lot more money then they need for taxes. Or in aggregate a lot more money is held than taxes to be paid. So it looks there is more to it.
      What do you think that is?

      1. @walter, yes, and at this point you can choose not to work because you are not compelled to pay taxes for just ‘being there’. I have been trying to think of the bigger picture as of late on that front. Carney had a debate a while ago about the tax driven currency versus savings desire currency in that we work toward our savings desire (or propensity to buy things beyond what we need to survive). And, indeed as i said we can choose not pay taxes by not working, and in many countries the state will actually give you just enough to live and satisfy very basic needs.

      2. savings desires are a derivative of taxation, as without taxation there would be no savings desires.

        nor is there any downside to the ultimate ratio

      3. @walter, Some people accumulate obsessively. When nobody else values or uses what they accumulate (rubber bands, pieces of string, plastic bags) we don’t notice until the place where the accumulants are stored becomes an attractive (for rodents and other vermin) nuisance. When it’s money that they hoard, it interrupts the flow of commerce and good things turn into wastes (food stores, human brain power, artistic talent, technical skill sets) before our eyes. The effect is much the same as if everyone were suddenly deprived of the tools to read and write. We could still communicate but at a much depressed rate.

      4. hoarding dollars needed do that, as at the first sign of slack demand govt can make an immediate fiscal adjustment- lower taxes and/or increased spending- to offset the leakage

  5. To some extent I can understand the ones who belive that budget deficits can cause inflation but what do the rating agencies have to say?
    Even Greg Mankiw admits that US can pay any debt denominated in dollars.
    Let’s start talking about inflation then. Can’t have all people working cause that’s inflationary.

      1. @jason m, Maybe have to raise taxes initially. I’d like to see more detail, but I’ve heard Warren say several times that a JG would actually help with price stability.

    1. and you’d think the burden of proof is on those who claim it’s all inflationary after watching the worlds central banks try to create excess demand with every trick in their book and never succeed.

      1. @WARREN MOSLER, Trade and exchange are not driven by demand. It’s not possible to demand what isn’t already available to trade.
        Infants believe their demand produces the full teat, but that’s an innocent mistake. Apparently, some people never get over it.
        Trade and exchange are a response to a surplus that one wants to keep from going to waste.
        Sometimes there are direct relationships. Mountains of waste are a clear sign of an economy in distress. As are vacant houses and abandoned stores.

      2. @Monica Smith,

        infant creates demand for diapers, toys, little beds, baby clothes etc…
        If there was no infant – somebody could produce these things, but they would not be sold, so the producer would have to stop producing them.

        Contemporary capitalist economy produces in response to demand. Often it also has to manufacture that demand by devoting substantial resources to advertising. But if there is no demand – production stops.

        Everybody needs food, but food for sale is only produced if there is demand for it. If everybody was a subsistence farmer – food for sale would not be produced (assuming everybody grows and eats the same food). But if there is demand (as in “wanting to buy”) for food – it will be produced for sale.

        Of course, if food production fails – there would be no supply, and thus the prices would skyrocket. And probably not much (if at all) food would be sold. But that does not change the fact that any selling that would take place is because of demand.

        If there is demand and no supply of something – people will try hard to come up with that thing so it could be sold. However, if there is supply and no demand – production for that thing stops – and waste ensues.

        Philosophy… 🙂

  6. Frequency of interviews goes up. Snowball is growing. Well done! Warren.

    About the shifting from checking acct to savings (better: securities acct) and back again:
    The cb shifts from checking acct to securities acct on the instruction of the buyer of the tsy secs.
    The cb shifts from securities acct to checking acct on the instruction of the tsy, repaying debt.

    Key question here is: Will the cb always execute payment instructions from the tsy?

    Like you I am not aware of any cb in the world refusing any payment instructions from its own tsy (federal level).
    In reality though such refusal may happen, since we still have some self imposed restrictions in place that are outdated or not logical anymore, such as the no-overdraft rule, the debt ceiling and the budget process. I refer to last summer when we went through such a ‘Cuba moment’.
    But at the core this question is about ‘How independent is the cb?’.

    The bottom line is that MMT says the cb is NOT independent till the very end. Correct me if I am wrong. Hence the consolidated view when MMT refers to govt, meaning tsy and cb together.

    I think this is one of the few more ‘subjective’ aspects at the core of MMT.

    As far as I know the mainstream axiom that the cb should be independent till the very end is mainly based on previous failures with fiat money.
    How would you fight this mainstream axiom that the cb should be independent till the very end?

    1. @walter,

      The cb isn’t independent. Defying the elected will of the people is not a smart career move.

      cb independence is about boxing in the government so that it can’t look after the people who elect it.

      It is about rule by technocrat bankers rather than elected politicians.

      If that’s what society wants then isn’t it time to disband Congress and give the Presidential job to Bernanke?

      1. @walter,

        You can’t eliminate the Central Bank, but ultimately it is a government function – like the IRS or the courts.

        Trying to pretend otherwise is sheer folly.

        The central bank should be under government, or at least parliamentary/congressional, control.

      1. @WARREN MOSLER,

        any fed employee could refuse orders and walk out.

        And if you read Civil Disobedience by Thoreau you will find that this is a major theme and point of the essay. The point is so simple the profoundness of it can easily be overlooked. Of course there is much more going on in the essay but this is one of them. I actually suspect that Civil Disobedience is where Mark Twain got inspired for the title to Huckleberry Finn…there’s a reference to huckleberry in the essay and I think that in the context of what Thoreau is talking about it fits almost exactly to the motives and themes Twain was shooting for with Huck Finn both as a character and a novel. None the less…I digress. 😉

      2. @Mario,

        “any fed employee could refuse orders and walk out.”

        Mario, I don’t know what news you read, but I hear there have been 2 vacant seats at the fed for awhile now

        The last guy Diamond was thought to be too “old establishment keynesian” and I don’t see the 2 new people being any better. Remember what citigroup chairman John Reed recently said, his jaw is hanging to the floor in astonishment about what has transpired and the many many trillions of dollars worth of lost economic output that any of these people are still listened too or taken seriously and that all the cronies haven’t been eradicted from the system at the government and at wallstreet. The people get the governmet they deserve.

        Perhaps this is why they must hire CHINESE nationals to do work on treasury transaction software code, no americans want to be part of the corruption any longer.

        I feel sorry for someone like Bill Black, how it must twist his guts at night at all the corruption he has spent his lifetime trying to expose being completely ignored by the masses and nothing changing.

      3. @WARREN MOSLER, You keep repeating this joke of the decade, and perhaps of the century. BWAHAHA LOL! That congress controls the money, and that “the people” control congress, it makes many people laugh. Ron Paul just laughed at Ben Bernanke because this “joke” is making many people distrust and hate the government.

        You do get lots of kudos for your sense of humor. That link between the people, congress, and the public money is more damaged than fukushima’s nuke plants.

        You can do better Warren (sigh)

      4. @Save America, The FED was set up because Congress was not to be trusted with the purse strings by a Congress that was not to be trusted. What really transpired was Congress shedding yet another of its obligations and setting up a middleman to blame whenever the economy fails. Triangulation — it works for the Mafia and it works for the Capitol Hill Gang, whose sole interest lies in longevity in office and the power to make mischief that comes with it.
        When government BY the people gained real potential, only one group is threatened–the petty potentates in the legislative bodies who claim to rule the populace, rather than manage our resources and assets for the general welfare. Potentates do not relish the prospect of being transformed from self-important rulers into public servants. Why they think biting the hands that feed them will keep them in office is a puzzlement. Perhaps it’s the only option for the instinct-driven.

      5. the fed was set up during the gold standard period to be ‘lender of last resort’ to prevent another panic of 07
        in 1934 we went off the gold standard but kept the fed anyway.

      6. @Save America, Monica, here is James Koutoulas on RT, he talks about how REGULATION T is being skirted, US financials going to the UK to be able to still lever 20to1, 40to1, and higher – who knows. But Warren says from the ivory tower that the people control congress, who control the fed, who control the banks – LOL! I see lotsa financials doing every trick in and out of the book to avoid regulation, and Citigroup chairman Reeds jaw is opening wider and wider in SHOCK at how all this continues! LOL!

        Koutoulos then goes on how LTCM was being mirrored by its prime brokers and how nothing has changed and all that risk is still out there. About 13 minutes into the interview he talks about how ZIRP (of which warren has spoke about often) is the GREATEST EVIL of all since then you have NO MARKET based system to hold back the evil hands of leverage!

        Warren what can you elaborate on regarding his views about ZIRP being very evil, and can you talk about his concerns about rehypothecation?

        It seems Warren, we are in the bowling alley, where the highest score gets the best hot dog and beer, and some players are getting so much SCORE from corruption and here monica and I sit getting lotsa strikes and our score is still very low, I don’t like the people controlling the score and thier dirty tricks. As a Goldman Sachs VP told me once, life is a game, and money is just the way to keep score. 🙂

        Warren you met personally with Corzine and took a picture with the guy, and from your letter here it seems like he is a real nice stand up guy, so how come this kotoulus is so mad at him about rehypothecation and customer funds in the shadow banking system and skirting REG T. How are the people in control if all the regulations are skirted?

      7. @Save America, Monica this furthers your MEME of corruption by the masters of the universe – read the following in addition to considering what koutoulus says above, that these institutions can go offshore or over to the UK to skirt REG T in the shadow banking system and not be hindered by thier capital ratios like the fed deems critical according to this article:

        (snip) The letter came as the Fed was launching a “stress test” to decide whether the biggest U.S. financial firms could pay out dividends and buy back their shares instead of putting aside that money as capital. It was one of the central bank’s most critical oversight decisions in the wake of the financial crisis.

        “We strongly encourage” that the Fed “delay any dividends or compensation increases until they can show” that their earnings are strong and their assets sound, she wrote. Given the continued uncertainty in the markets, “we do not believe it is the right time to allow transactions that will weaken their capital and liquidity positions.”

        Four months later, the Federal Reserve rejected Bair’s appeal.

        In March 2011, the Federal Reserve green-lighted most of the top 19 financial institutions to deliver tens of billions of dollars to shareholders, including many of their own top executives. The 19 paid out $33 billion in the first nine months of 2011 in dividends and stock buy-backs.


        Many banks are trading below “book value,” meaning the value of their stock is less than what the banks say are the value of their assets. This fact is particularly sobering, because it suggests investors do not trust the banks’ accounting and are skeptical of their future profitability.

        Eventually, the banks will have to raise capital to comply with new international standards, to be in place fully by 2019. The Fed’s decision leaves them further from that goal than they would be otherwise.

        But the Fed’s stress-test decision was lucrative for shareholders and bank executives, who are increasingly paid in stock. Dividend payments are taxed at lower rates than ordinary income. Merely allowing the banks to pay dividends, buy back stock and pay back the government helped boost shares, albeit temporarily.

        “As undercapitalized as many of these banks are, allowing them to return capital, in my opinion, is preposterous. I can’t believe a strenuous stress testing of their mortgage assets, European exposures and other questionable assets would allow them to return capital to shareholders,” says Neil Barofsky


        “It’s like ‘Survivor’: You make certain alliances, but that doesn’t mean you won’t cut the throat of the person the next time,” says a former Fed supervisor.

        The most powerful of the regional banks, the Federal Reserve Bank of New York, rivals the central board in authority and influence. The two institutions often butt heads. The New York Fed is widely seen throughout the rest of the system as overly protective of the two biggest institutions it supervises, JPMorgan Chase and Citigroup. New York returns the view, believing the Richmond Fed to be captured by the biggest bank it oversees, Bank of America, and San Francisco by its charge, Wells Fargo.

        Bank supervisors, especially the ones deployed to work physically inside the banks that they oversee, are, like all regulators, vulnerable to capture by the institutions they police. They sometimes identify with and coddle their banks rather than enforce the rules, according to multiple current and former Fed officials.


        The Fed has taken pains to hide such tussles and compromises. The email describing Bernanke’s decision to override the FDIC, along with many others, was excised from the final draft of the special inspector general’s report. In a footnote in the final, published report, the special inspector general wrote that the Federal Reserve “strenuously objected to the inclusion of a significant amount of text” in earlier versions of the report, citing the need to keep communications with banks confidential.

        Even though the special inspector general wrote that she “respectfully disagrees” with the Fed, she allowed the emails to be excised from the published report.


        In late 2010, Tarullo had at least two conversations about capital planning, not previously reported, with top bank CEOs: JPMorgan’s Jamie Dimon and Citigroup’s Vikram Pandit. Dimon pressed Tarullo about the Fed’s plans for how much capital large banks should be required to have. The JPMorgan CEO, who has been an outspoken critic of the post-crisis regulatory tightening, argued to Tarullo that “it made sense to differentiate between banks,” says a person familiar with the discussion. “If we were healthy, we should be allowed to pay dividends and buy back stock.”

        Bank executives such as Dimon and Pandit stood to gain personally from dividend decisions since much of their compensation comes in the form of stock.

      8. @WARREN MOSLER, “but yes, any fed employee could refuse orders and walk out.”

        Or in brooksely borne’s case, be forced to shut up with threats to her by rubin and summers and crew. Yet you keep saying this is all just ignorance and not by design, you make the best jokes, I guess every kingdom needs a jester 🙂

  7. Great job on the interview.

    I think the ELR jobs program needs some tweaking to appeal to a larger audience. Maybe contrast the current practice of paying willing and able workers to do nothing with your proposal to pay them to do something. That you would stave off criticism that you want more government, are a socialist, etc.. Currently those receiving unemployment checks are employed; they’re just employed to do nothing!

  8. I also wanted to personally thank you Warren for ALL the help and service and education you have provided me personally (and of course sooo many others too) in these economic and other topics. I am in a new job and working and commuting and taking care of myself much more than anticipated (this is a good thing of course), that I am no longer able to frequent my favorite finance blogs and sites and follow the threads and discussions as much as I would have in the past. Perhaps some day I’ll manage my assets and opportunities as they present themselves to me as you have done in your life so I can leverage my time and energy even better than I am now. 😉 All in good time….good things come to those who…

    I am still “hovering” around the various MMT sites of course but more on a week to week basis rather than daily or inter-day basis.

    None-the-less I did want to extend my thanks and appreciation to you and your work.


      1. @WARREN MOSLER,

        Thanks! Hanging out with smart guys like the ones who frequent these types of blogs is great for my competitive advantage in interviews and job skill/performance.

        Following Warren’s blog and learning about MMT should also qualify as part of the JG program imho!!! I mean that seriously too btw.


    1. @roger erickson,

      Guess this sums it up: “Noda has to do something to improve the DPJ’s prospects.”

      Perennial challenge is that our policy SELECTION METHODS constantly lag our situational demands. When that lag reaches critical levels, we have a recession, by one means or another. Our key need is to decrease the lag between emerging situational signals and internal “responsivity”.

      This goes straight to analog network theory, which includes human nations & markets. Only way to lower network response time is via better/faster/leaner sharing of outcomes. Outcomes-based group training.

      This isn’t a balance-sheet recession, it’s a group-“responsivity” recession. If we don’t reform our election process fast enough, our policy apparatus won’t become agile enough, and we’ll continue to generate inappropriate decisions that are increasingly late & short of requirements.

    2. @roger erickson,

      All that debt!! We need to work to pay it off!!

      What do you mean? We owe that debt to ourselves.

      Oh, no! That means we have to work twice as hard!!!!!

      Look, why don’t you just go watch the Bozuko and forget about it for tonight.

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